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Contracts Attack Outline

What law governs?


UCC Article 2 for sale of goods
Common Law everything else

What is a contract?
o Promise or set of promises which the law recognizes as a duty
and for the breach of which the law gives a remedy (i.e. legally
enforceable promise)
o Requires 2 components Consideration, mutual assent
o Unilateral contract acceptance is completed performance
Dividing line for revocation is between preparation and
beginning performance. Cant revoke after performance
begins.
Promise Would a reasonable person have understood it as a
promise?
Consideration Bargained-for-promise/limit freedom of action
o Promises of both sides must induce other side, look at motive of
promise, not the value of the promise
o Look for a satisfaction clause (usually there is consideration, but
can argue no consideration, not giving up any freedom)
Unenforceable promise
o Gratuitous no consideration
o Conditional condition to be fulfilled before gift made
o Preexisting duty no consideration if already obligated to
perform
o Illusory If/when you feel like it (no limitation on freedom of
action), or reserves choice of alternative performance
Unenforceable becomes enforceable if
o Limit on freedom of action can be implied, OR
o Satisfaction clause
Mutual Assent
o Offer by promisor and acceptance by promise
Offer present intent to contract, identified offeree,
definite terms
Test could you respond with I accept?
Acceptance assent to terms of offer in manner invited by
offer
Common law mirror image (must be exactly same)
UCC can add terms to offer (creates battle of
forms)
Methods of acceptance
UCC reasonable means

Unilateral performance, Bilateral promise or


performance
Silence not acceptance
Options contracts promise not to revoke. Becomes
irrevocable
2-205 (Firm Offer) signed, reasonable time not > 3
months
o Is there mutual assent?
Subjective intent to contract (meeting of the minds)
Objective reasonable person would see intent to contract
Notes on Offers
o Advertisements, price quotes, jokes generally not offers
Specificity - offer. (Think time, place, quantity, who can
accept)
o Rewards generally offers
Notes on Acceptance
o Must know about offer to accept
o Notification? Bilateral must notify, unilateral can accept by
performance
o Mailbox rule acceptance valid on dispatch
Termination of a contract four ways
o Revocation must be before acceptance, so no offer. Direct or
indirect
Revocation valid on receipt
o Rejection/Counteroffer both terminate offer. Valid on receipt
o Lapse time period expires
o Death/incapacity offer dies with offeror (if after acceptance
tho, then K)
Statute of Frauds if in SOF, must have written evidence
o Types of contracts suretyship, more than one year, land
interests, goods valued > $500
o Satisfying SOF Written memo, signature requirement
o Exceptions part performance, UCC exceptions, promissory
estoppel (rare, only for extreme injustice)
Defenses to enforcement
Infancy K voidable by any party under 18
Mental defect if unable to reasonably understand OR unable to
act reasonably and other party has reason to know
Intoxication only if other party had reason to know
Duress improper threat with no reasonable alternative
Concealment/misrepresentation must show actionable
misrepresentation (lie/omission), materiality (affects

value/reasonable persons decision to buy), justified reliance


(reasonable to rely on statements made)
o Levels of misrepresentation (lowest to highest)
Non-disclosure modern trend towards rescission
Half-truth treated as outright lie. Rescission
Active concealment lie, rescission
Affirmative misrepresentation (lie) rescission
Unconscionability usually lose
K enforcement Public Policy
o Usually try to enforce b/c of autonomy, but dont enforce
when paternalism and externalities outweigh autonomy
Contract Interpretation/Construction
Standard Form Contracts boilerplate
o Think about adhesion and thus unconsionability
o No enforcement No notice, no meaningful choice or
unreasonable term
o Think about a public policy argument here
Battle of the Forms conflict bt/wn seller & buyers standard terms
o Common law offer/acceptance must be mirror images
o UCC 2-207 acceptance valid if w/in reasonable time even if
terms differ from offer
Depends on merchant status 2 merchants, terms
become part of contract. One merchant terms are
proposals
Parol Evidence K in writing, one party wants to present evidence
outside of K
o Limits introduction of such evidence, usually only to resolve
ambiguity
o Also depends on integration level of K
Interpretation if both parties have same subjective understanding,
it governs. If one party knows/should have known other partys
interpretation, it governs. Neither partys interpretation more
reasonable? Void the contract
Good Faith & Fair Dealing
o UCC 2-205, every K includes constructed duty of GF&FD
Performance & Breach
Conditions vs. Duties
o Condition event that triggers a duty
o Duty contractual obligation that, if not satisfied, is a breach
o Promissory condition duty of one party, condition of another
Implied Conditions Doctrine series of/concurrent performances,
service before payment
Exceptions to Conditions reduce risk of substantial forfeiture

o Substantial performance condition excused if essential


purpose met
Exception UCC 2-601 (perfect tender)
o Prevention condition waived if one party prevents other from
fulfilling
o Waiver beneficiary may waive right to insist on fulfillment of
condition
o Divisibility if possible to apportion performances. Part
performance must have meaningful value.
LOOK FOR PER UNIT BASIS (i.e. build 5 widgets at $100
each)
Unanticipated/Changed Circumstances
Risk allocation risk lies where it falls
Mutual mistake erroneous belief that precludes true assent
o If risk expressly/implicitly allocated to a party enforce K
Unilateral mistake one party makes mistake.
Impossibility/impracticability change in circumstances that has
such a serious effect on reasonable expectations of parties that it
excuses performance
o Non-occurrence of event must be basic assumption
Frustration of Purpose K altered by external event that affects
value/usefulness and reason for entering into K doesnt exist
anymore
o i.e. buyer able to pay but no longer has use for goods
o Must be so severe that it would be unjust to make party bear
the risk
Remedies/Damages
Punitive not recoverable for breach unless breach is also a tort
Compensatory (specific performance/expectation damages)
o Specific performance goods are unique or $$ damages
inadequate
Or cant measure $$ damages accurately
Bad for services involuntary servitude/administrative
oversight
o Expectation damages put non-breaching party in position
they would have been in had contract been performed
Encourages efficient breach
Loss in value + other losses cost avoided loss avoided
OR: restore to original position (reliance damages) + lost
profits
Reliance Damages when damages uncertain. Put back in position
had promise not been made
Restitution quasi contracts/SOF contracts that dont satisfy the SOF

o Reasonable value of benefit (how much party was unjustly


enriched)
Limitations on Damages
o Mitigation court will assume non-breaching party mitigated
Cannot add to damages by continuing work after breach
EXCEPTION lost volume seller. Can NEVER cover
o Foreseeability (Hadley Rule)
Reasonably arise naturally from breach OR
Were in full contemplation of both parties at time of
contracting
o Reasonable Certainty to recover expectation damages, must
prove damages with reasonable certainty. Otherwise only
reliance damages
o Stipulated Damages think about difficulty of calculating
damages, was it reasonable.
Alternatives to Consideration
o Promissory Estoppel cannot assert no consideration
o TEST
Promisor should reasonably expect promise to induce
action/forbearance. (Negligent inducement of reliance)
Promise does induce such action/forbearance
Promise must be enforced to prevent injustice
o Remedy either expectation or reliance
If only affirmative reliance (out of pocket expenses) then
reliance
If negative reliance as well (turning down other
opportunities to contract) then expectation damages
o Quasi-Contract no contract but obligation imposed by law to
prevent unjust enrichment
o If opportunity to contract then no quasi-k
o Would reasonable person have contracted given the chance?
Yes = quasi-K
No = no quasi-K