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CONTRACTS 2
RALPH STONE, SECTION 2
WESLEY WALKER
SPRING 2016
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The parties if they intend can conclude a K for sale even though the
price is not settled. In such a case the price is reasonable at the time
of delivery
IS PRICE NOT A MATERIAL TERM OF A K?
3. Agreement to Agree
a. Not a contract. Where 2 parties purport to have reached a final binding
agreement, but leave material terms for later negotiation or agreement they
form only an agreement to agree.
No offer
No acceptance
There are not terms
b. Under UCC 2-305(1)
Can find that if for a good there is a K
Even if there is no price
Or the price is left to the parties to agree on and they fail to be
agreed upon
The price is to be fixed in terms of some agreed market or
other standard as set or recorded by a third person or agency
and It is not so set or recorded.
STONE WOULD KILL GLANNON HERE
WWPD?
4. Gap filling goes only so far
a. Deli Case
Gap filling has its limits
Doesn’t specific reasonable quantity
Often times cant find reasonable price
4. Advertisements, Solicitations, and Signatures
a. Advertisements, Rewards, and Price Tags
§ 24
Offer is the manifestation of willingness to enter into a bargain so made as to
justify another person in understanding that his assent to that bargain is invited
and will conclude it
For that reason the Ordinary Advertisement is not an Offer
1. Lefkowitz
a. "first come first served, coat for a $1"
Court ruled this was a contract because there was a specific offer to
one person
This is not the usual rule
2. Rule
a. Ads are not offers, merely an invitation to deal, but an ad is an offer, if it
leads a reasonable person to understand that acceptance is limited to
A discrete group of persons
Persons who perform some specific act.
ii. Offers of reward
1. A reward off is an advertisement but not a normal one
2. Every person who knows of the add is reasonable in believing that he could be
an offeree.
a. But to accept have to have performed the required act
b. Bid Solicitations and Auctions
i. A bid is an offer
ii. K is formed when the Auctioneer bang the gavel
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To accept an offer, the offeree must manifest an assent that mirrors the offeror's
proposal in any and every respect. She must show agreement to each and every one of
the offeror's proposed terms without alteration.
§ 59
A reply to an offer which purports to accept it but is conditional on the offeror's
assent to terms additional to or different from those offered is not an acceptance,
but a counteroffer.
A Mere Inquiry Doesn’t Reject
Rule:
§39 cmt. B
a. A mere inquiry regarding the possibility of different terms, a request for a
better offer, or a comment upon the terms of the offer is ordinarily not a
counteroffer
7. When Acceptance, revocation, and Rejection Take Effect
a. Acceptance is effective on dispatch; revocation and rejection on receipt
i. § 63(a)
1. An acceptance is effective as soon as put out of the offeree's possession without
regard to whether it ever reaches the offeror
ii. § 42
1. An offeree's power of acceptance is terminated when the offeree receives from
the offeror a manifestation of an intention not to enter into the proposed contract.
iii. § 40
1. Rejection or counteroffer sent by mail does not terminate the power of
acceptance until received by the offeror
iv. §68
1. A written revocation or rejection is received when the writing comes into the
possession of the person addressed or some person authorized by him to receive
it for him, or when it is deposited in some place which he has authorized as the
place for this similar communications to be deposited for him.
b. Exception: Acceptance that follows rejection is Not effective on Dispatch
i. Acceptance is effective on dispatch unless the offeree first dispatches a rejection and
then an acceptance, in which case the message received first by the offeror dictates the
outcome.
c. Revocation by indirect Message
i. Effective revocation requires no direct communication from offeror to the offeree. If
an offeree learns not from the offeror but from some other source that the offeror will
not honor her offer, then the offer is effectively revoked.
ii. § 43
1. An offeree's power of acceptance is terminated when the offeror takes a definite
action inconsistent with an intention to enter into the proposed contract and the
offeree acquires reliable information to that effect
8. Mode and Manner of Acceptance: Unilateral and Bilateral Contracts
a. Master or Mistress of the Offer
i. §50(1)
1. "in a manner invited or required by the offer"
a. Can be anything they want it to be
ii. §60
1. If an offer prescribes the place, time, or manner of acceptance its terms in this
respect must be complied with in order to create a contract.
b. When the offeror does not designate a mode of acceptance
i. § 30(2)
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1. Any acceptance can be any manner and by any medium reasonable in the
circumstances
ii. § 60
1. Unless circumstances known to the offeree indicate otherwise a medium if
acceptance is reasonable if it is the one used by the offeror
c. Bilateral and unilateral contracts: What they are and how they differ
i. Bilateral Contracts
1. Are contracts that are at the moment of formation, are executory on both sides
ii. Unilateral Contracts
1. Arises when an offeror allows an offeree to accept only by full performance
from the moment of formation the contract is executory only on the offeror's part
d. Unilateral and Bilateral Contracts: Vocabulary and Warning
i. Offer for unilateral contract
1. Is an offer in which the offeror allows the offeree to accept only by delivering all
(not part) of the performance asked of her.
a. If this happens three events occur in the same instant
The offeree fulfils her side of the bargain
The contract arises
An executory duty is created on the offeror's side only
2. Bilateral Offer
a. Anything but full performance can be done by the offeree
ii. Watch out for "promise in exchange for an act" and "promise in exchange for a
promise"
1. Bilateral k does not equal promise in exchange for a promise
e. Offers for Unilateral vs. Bilateral Contracts: Why do we Care?
i. The construction of an offer is important
1. Typical Controversy around
a. An offer
b. The offeree's attempt to accept
c. The offeror's attempt to revoke of the offeree's attempt to reject
How to avoid unjust enrichment here
f. Notice to the Offeror
i. Where an offeree who accepts by performance should understand that the offeror has
no meaningful way to know that she has done so, she must notify the offeree that she
has in fact, performed. If within reasonable time, she fails to give such notice, the
offeror is discharged from his contractual obligation
ii. § 62(2)
1. The contractual duty of the offeror is discharged unless
a. Offeree exercises reasonable diligence to notify the offeror of acceptance
b. The offeror learns of the performance within a reasonable time
c. The offer indicated that notification of acceptance is not required
g. Reward Offers look to Unilateral Contracts
i. To receive reward you have to know about it
ii. Unilateral contract
9. Offeree who accepts by Performing an Act
a. When the offeror requires acceptance by act
i. Injustice and unjust enrichment can be found generally when an offeror allows an
offeree to accept only by performing some act and the offeree begins to perform, the
offeror looses his right to revoke.
ii. Similar to § 45
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b. Course of performance
c. Course of dealings
d. Usage of trade
b. Interpretation of writings
i. Draft contracts
1. Only the final signed document is the valid one
a. Drafts are drafts
Can only define the K terms with evidence
ii. Printed and handwritten terms
1. § 202 (d)
a. Separately negotiated terms are given higher weight than standardized
terms
iii. Writings are considered against the drafter
1. § 206
a. Writes are LCP and they are writing it so they should know what it means.
b. Approach is to interpret the K in favor of the other party
14. Duress, Undue influence, and Unscionability
a. The Doctrine of Duress
i. § 175
1. If a party's manifestation of assent is induced by an improper threat by the other
party that leaves the victim not reasonable alternative, the contract is voidable by
the victim
ii. When is a threat "improper"
1. When there is "no legal right to make one"
a. Threat of a tort
2. What if the threat comes from a 3rd party?
a. § 175(2)
Party's manifestation of assent is induced by one who is not a party
to the transaction the contract is voidable by the victim unless the
other party to the transaction in good faith and without reason to
know of the duress either gives value or relies materially on the
transaction
b. The Doctrine of Undue Influence
i. Exploitation of trust
1. Exactly what it sounds like
ii. Abuse of Dominant Position
1. Position must be one of dominance
2. Have to have induced acceptance
3. Makes the K voidable
c. The Doctrine of Unconscionablitity
§ 208
If a contract term is unconscionable, the term may be not enforced, or may be
enforced as a whole without the unconscionable term
§ 2-302
Same at § 208
i. How and by who is it decided that a Contract us unconscionable?
This belongs to the judge
Unfairness of the bargaining process
"procedural unconscionablitity"
Oppression of one party
"substantive unconscionablitity"
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a. A party tenders when his is "ready willing and able to perform the
contract"
b. Conditions "intended to Benefit" one or both parties
i. One party
1. Most conditions precedent or subsequent are meant to benefit one party
ii. Both Parties
1. Just look at what a reasonable person would see as the parties intention
iii. Only the party intended to benefit may insist on the Condition
1. The party whom the condition's benefit is intended has the power to insit on the
condition or the "waive it" as she chooses
c. Excuse of a Conditon: Obstruction, Waiver, Estoppel
i. Condition excused by obstruction
1. A and B agree that A will mow B's grass using B's lawnmower and B will pay A
$50, on the condition that A refill the lawnmowers gas tank. If B will not let A
use the lawnmower when A returns to fill the tank, B's obstruction excuses the
condition precedent.
ii. Conditions Excused by waiver
1. Once the party whom the benefit is for has waived that right, it cannot be taken
back
iii. Waiver is Nonretractable Only if the condition is immaterial to the Contract's essence
1. She is bound by the waiver once the other party has reasonably, forseeably, and
detrementally relied upon it.
2. § 84
iv. The Doctrine of Estoppel Touches on the Nonretractable Waiver
1. Cant enduce to do something, if the other party has relied upon it
d. An Implied Condition Precedent: Substantial Performance, Total Breach, and Partial Breach
i. Conditions Implied by Law Call only for Substantial Fulfillment
1. Where a contract provides that party 1 is to perfrom first in time and party 2 is to
perform second in time, the law implies as a condition precedent to Party 2's
duty that Party 1 shall timely deliver a substantial performance
a. What is substantial performamce
Who really knows its up to the court
2. Material Breach, Partial Breach
a. Basically defintions, and then restitution here
3. Seller's Substantial Performance is not enough to trigger Buyer's duty
a. Under UCC 2-206 perfect tender
Can reject if not what they wanted
16. Interpretation as to Allocation of Risk: Mistake, Frustration, and Impracticability
a. Interpretation as to Allocation of Risk
i. Parties allocate risk where they feel that they have it
b. Mutual Mistake
i. §§ 152 and 153
1. A mistake is a belief that is not in accord with the facts and where a mistake of
both parties a the time of a contract was made as to a basic assumption on which
the contract was made has a material effect on the agreed exchange of
performances, the contract is voidable by the adversly affected party.
2. Summary
a. When forming their contract the parties manifest thier mutual belief to the
point of absolute fact, that some set of circumstances is in place
b. B should understand but for that belief, A would be unwilling to enter the
contract
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2. It is not necessary to the creation of an express warranty that the seller use
formal words such as “warrant” or “guarantee” or that he have a specific
intention to make a warranty, but an affirmation merely of the value of the
goods or a statement purporting to be merely the seller’s opinion or
commendation of the goods does not create a warranty.
d. Implied Waranties relating to goods
i. Merchantability
1. UCC 2-314
a. As ordinarily characterizes that same product when sold in industry
b. As renders it suitabe to that purpose
ii. Fitness for a Particular Purpose
1. If a commercial seller of any good knows or should know
a. Of a specific purpose of the goods
b. That the buyer is looking to seller's expertise that the good will serve that
specific purpose
2. UCC 2-315
Where the seller at the time of contracting has reason to know any
particular purpose for which the goods are required and that the buyer
is relying on the seller’s skill or judgment to select or furnish suitable
goods, there is unless excluded or modified under the next section an
implied warranty that the goods shall be fit for such purpose.
3. UCC 2-316
a. Can get rid of implied warranties of Merchantability
i. Can do so
1. Orally
2. Conspicous writing
3. "as is"
18. Third Party Beneficiaries, Assignment, and Delegation
a. Third party Beneficiaries
i. Intended and Incidental beneficiaries
1. Third party to a contract formed between 2 others may sustain an action for
breach if he is an "intended beneficairy" but not if he is an "incidential
beneficary"
a. Intended= meant to benefit from the contract
b. Incidental= one who parties have no reason to understand any benefit is
intended
§ 302
The beneficiary of a promise is an intended beneficiary if
recognition of a right to performance in the beneficiary is
appropriate to effectuate the intention of the parties and the
circumstances indicates that the promisee intends to give the
beneficiary the benefit of the promised performance… an
incidental beneficiary is a beneficary who is not an intended
beneficiary.
§ 304
A promise in a contract creates a duty in the promisor to any
intended beneficiary to perform the promise, an the intended
beneficiary may enforce the duty
§ 315
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1. Ordinarily, a contracting party may assign his contractual rights, and if he does so,
with notice to the obligor, then
a. The obligor must perform for the assignee;
b. If the obligor fails to perform the assignee has an action against her for breach,
but he assignor does not.
2. § 317
a. An assignment of a right is a manifestation of the assignors intention to transfer
it, by virtue of which the assignors right to performance by the obligor is
extinguished, and the assignee acquires a right to such performance.
Obligor
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1. Delegation
a. Each party to a contract is entitled to receive the performance promised by the other, but
neither has, generally, a right to have that other party jimself provide it, wherefore if one
contracting party delegates his duty and the delegatee does in fact perform, the delegator is
not in breach.
i. § 318
1. Delegation of performance does not discharge any duty or liability of the
delegator.
ii. UCC 2-210
1. Same as § 318
2. Assignment and Delegation Together: Assignment of K
a. See Glannon Page 413
b. UCC 2-210 (5)
i. An assignment of "the contract" or of "all my rights under the contract" or an
assignment in similar terms is an assignment of rights and unless the language or the
circumstances indicate the contrary, it is a delegation of performance of the duties of
the assignor and its acceptance by the assignee constitutes a promise by him to perform
those duties.
c. Novation is where both parties agree to relase each other from their original contract becuase
the contract has been delegated to one other party
3. Delegation and the Personal Service Contract
a. § 318
i. Comment C
1. Delegation of performance is a normal and permissible incident of many types of
contract.. The Principal excetions relate to contracts for personal services and to
contracts for the exercise of personal skill or discretion.
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