Governing Law

UCC
governs contracts for the sale of goods
Contract- “the total legal obligation which results from the parties’ agreement.” §
1-201(11))

Common Law
R2K- governs all other contracts
Contract- Promise or set of promises for the breach of which the law gives a remedy, or
the performance of which the law in some way recognizes a duty

Public Policy
Baby M
Case regarding the surrogacy contract between a father and a surrogate to give up the
rights of the child
Surrogacy Contracts are void as a matter of public policy.
Paternalism/ Social Contral v. Autonomy/Freedom of Contract

Surrogacy Contracts conflict with the existing statutes and public policy of the state- void as a
matter of law

Contract unenforceable

Inducement of money

Coercion of Contract

If won, what would the remedy be?

Holmes- pg 1083- “You can always imply a condition in a contract, the question is why do you imply
it? … Because of some attitude of yours upon a matter not capable of exact quantitative
measurement and therefore not capable of founding exact logical conclusions.”

Consideration- Rest. §71

Bargained-For
Not a gratuitous promise
 Bargained-For Legal Benefit to the Promisor OR
Bargained-For Legal Detriment to the Promisee
Courts do not look into adequacy of consideration (peppercorn theory)
We don’t just look at the bargain theory as listed under the Restatements- Courts will
enforce it if legal benefit/detriment
Nephew gave up cocaine- Courts won’t enforce because there isn’t a legal detriment- Nephew never
had the privilege to do cocaine

Reciprocal Mutual Inducement

Bargain is sufficient is both parties induced the other to promise something

Gratuitous Promise

Ch. 3- Promises and Agreements

§2 Promise- A manifestation of intention to act or refrain from acting in a specified way, so made as to justify
a promisee in understanding that a commitment has been made

Other definition- mutually beneficial trade that is efficient at the margins

Efficiency- Pareto (No one loses) vs. Kaldor Hicks (Some lose, but overall win for society)
§4- Promise may be stated in words either oral or written or inferred from conduct
A Promise is a delayed exchange of mutually beneficial trades

Pappas v. Bever- Promises are the manifestation of Intention

Closed college of Charleston attempts to collect on a donor's pledge after his death
The pledge was only a statement of intention and was not intended to be
obligatory
Contra Preferentum- doubtful language in a written instrument is construed against the party who
selected it

Is a statement of intention a promise?

Was there significance in the fact that he made previous payments? "Course of performance"

Embry v. Hardagine, McKittrick Dry Goods Co.- Mutual

Assent as a Reasonable Man
 Man believed he had a contract from his employer for another year, but employer stated
he made no such promise
Embry- Regardless of the Promisor’s subjective intent, if a reasonable man
could infer from their conduct that they intended to enter into a binding and
enforceable contract and the promisee thought the same, a binding and
enforceable contract is presumed to exist.
Promisor's belief doesn't matter according to this test

Promisee + Reasonable Man -> Binding Contract

§3- Agreement- a manifestation of mutual assent on the part of two or more persons

made by words, conduct (§19) or silence (§69) in some circumstances

3.A- Mutual Assent §18 (Words or actions-

§19)- Offer + Acceptance
MCC-Marble Ceramic Center v. Ceramica Nuova
D'Agostino- pg. 181/ 786 CISG § 1/8
Contract for ceramic tiles where both parties said that "stuff on contract didn't apply" but
didn't objectively remove it before signing
Subjective intent of parties to a contract may be considered as long as the
other party was aware of that intent.

Nguyen v. Barnes & Noble- pg. 189

Nguyen ordered a tablet from a "fire sale" but they were out. He didn't see the ToA on the
website.
A website user lacks sufficient notice to a company’s terms of use if, despite
the presence of conspicuous hyperlinks to the terms of use, the website
neither provides notice to users nor prompts users to affirmatively
demonstrate assent.

3.B- Making offers

§24- An Offer is the manifestation of willingness to enter into a bargain (objective), so made as to justify
another person in understanding that his assent to bargain is invited and will conclude it (subjective).

An offer creates a power of acceptance in the offeree and a corresponding liability on the
part of the offeror
 Fairmont Glass Works v. Crunden Martin Woodenware Co.
pg. 202/ §22,24,30/ UCC 2-204
Request for proposal for 10 carloads of mason jars, offer of price, acceptance, rejected due
to impossibility to book. Was it accepted?
Where a party quotes prices and invites acceptance by another party, a
binding offer has been made that cannot be revoked once accepted.
The word “offer” doesn’t need to be used. It is an offer if the offeree has the Power to accept and
change their legal relationship.

Lonergan v. Scolnick pg. 205 §26

Ad in newspaper- wanted to sell land quickly, man responds and views the land, but hears
its sold before accepting, wants to buy. Offer? Acceptance?
If the promisee knows or has reason to know that the promisor does not
intend it as an expression of his fixed purpose until he has given a further
expression of assent, the promisor has not made an offer.

Leftkowitz v. Great Minneapolis Surplus Store pg. 211/

§24/26/ UCC 2-204
Man shows up first to buy $1 fur coat, denied because he wasn't a woman, which was the
house rule.
Where an advertisement is clear, definite, explicit, and leaves nothing open
for negotiation, it constitutes a valid offer.
Distinguishing between offers and invitations to bargain

UCC 2-204(3)- to be binding, need a reasonable certainty of the remedy

Leonard v. PepsiCo pg. 217/ 1001

Kid wants to win the hanger jet listed on the pepsi commercial
An advertisement does not constitute an offer unless its terms are
sufficiently clear and leaves nothing open for negotiation and an
advertisement intended to be a joke cannot be sufficiently clear.
Embry Test/ R2K §24- It is not reasonable that this is an offer than can be accepted

3.C- Accepting Offers

Ardente v. Horan pg. 232/ § 38,39,59,61- Mirror Image Rule
Man wants to buy house, accepts offer with note about furniture he wants in the house.
Offeror becomes offeree and rejects offer.
A valid acceptance must be definite and unequivocal and must not impose
additional conditions or limitations on the offer, unless such conditional
language is clearly independent of the actual acceptance.
Mirror Image Rule- §59- A reply to an offer which purports to accept it but is conditional on assent
to terms additional or different is a counter offer (CISG 19(2))- material modifications is rejection

Battle of the Forms §2-207- Article 2 has abandoned the mirror image rule, providing instead that
the proposal of additional or different terms by the offeree in a de nite and timely acceptance does
not constitute a rejection and counteroffer, but rather is effective as an acceptance, unless the
acceptance is expressly made conditional on assent to the additional or different terms.

Adams v. Lindsell pg. 237/ §40/42/43/63/69- Mailbox Rule

wool dealers and wool manufacturers mailing back and forth-
Mailbox Rule- When a written offer is proposed by an offeror via postal mail, the
offeree’s acceptance of the offer is valid if mailed within the time frame specified
within the offer, if such manner of acceptance is permitted by the offer.

§63- Unless the offer provides otherwise, an acceptance is operative as soon as put out of the
offeree's possession, without regard to whether it ever reaches the offeror (even if it is lost or
destroyed).

Revocations effective upon receipt- 42/43

Rejections effective upon receipt- 40

default rules-

CISG has the receipt rule- 18(2)- acceptance effective upon receipt but offer can't be revoked after
acceptance is dispatched 16 (1)

Carlill v. Carbolic Smoke Ball Co. pg. 243/ § 29(2)/ 30/ 32/
50(2)/ 53(1) and 54
Acceptance by Performance- Unilateral Contract
Woman uses the smoke ball 3 times per day and contracts the flu and wants to collect her $100, but
they say it wasn't a real offer. Wrong

A general advertisement of an award constitutes an offer that is capable of being accepted and
binding the offeror in a valid contract, provided at least contemporaneous notice and some
consideration are present.
 π- Consideration was fulfilled by gaining sales and confidence from the advertising campaign
with the clear offer

∆- Consideration was fulfilled by using the ball 3 times per day as directed in the offer

acceptance of offers contained in general ads treated differently- it is unlikely the advertisers
expected advance notice beyond notice that an advertised condition had been fulfilled

§29/30- Form of Acceptance invited

32- invitation of promise or performance

§ 50- Acceptance of offer defined- A by performance (2)- at least part performance or tender
constitutes a return promise

§54- Unilateral- acceptance by performance- no notice required unless requested by offeror/

due diligence in notification necessary/ actually learns/ notification waived

Is there a condition precedent?

An offer for a true unilateral contract becomes irrevocable once performance has begun. Note
that the unilateral contract will not be accepted until the total act is complete. However, once
the offeree begins to perform, she is given a reasonable time to complete performance, during
which time the offer is irrevocable. Note also that the offeree is not bound to complete
performance— she may withdraw at any time prior to completion of performance.

Petterson v. Pattberg pg. 257/ §50/54/58- Acceptance after

implied Revocation
man attempts to pay off mortgage at the end of offer timeline w/o notice and not timely,
after discovering it was already sold
Any offer to enter into a unilateral contract may be withdrawn before the act
requested to be done has been performed (even knowing offeree's intention
to accept
§58- acceptance must comply with requirements of offer as to acceptance by promise or
performance

§25- Option Contract- pay or seal- consideration

§45- Option Contract is formed by start of tender- then irrevocable

Davis v. Jacoby pg. 270/ § 32-Courts prefer bilateral

Contracts
Caro goes to care for sick aunt and uncle, who die after promising them everything in the
will. Was this binding since she accepted the promise?
 An offer is to enter into a bilateral contract as opposed to a unilateral
contract when only a promise to perform and not actual performance is
requested by the offeror as proper acceptance.
Presumption that offers are bilateral because they protect both parties after acceptance by promise

Court ordered specific performance, treating those who inherited in the will as "trustees"

Hobbs v. Massasoit Whip Co. pg 282/ § 41/69 & UCC

2-204- Acceptance by Silence
π sends eels skins to ∆, who accepted the delivery and never returned them, who says
acceptance by silence is not acceptance
Conduct which looks like acceptance is acceptance.
Silence can be taken as acceptance of an offer if the offering party makes a reasonable assumption
that the offer is accepted. keeping the skins for an unreasonable time is sufficient to warrant an
assumption on the part of the plaintiff that the skins were accepted, and, accordingly, an acceptance.

§41- Lapse of time- reasonable lapse of time if no time was specified

§69- Acceptance by silence only if: doesn't reject while knowing expectation to pay/ where offeror
states AbS/ previous dealings makes it reasonable

69a- acceptance by silence exceptional + 69b- services rendered knowingly w/o interjection must be
paid for

UCC 2-204- K made in any manner that shows agreement/ conduct recognizes existence of contract

3.D- Terminating Offers

Dickinson v. Dodds- pg. 287/ §25/ 35(2)/ 36 /42 /43 &
UCC 2-104 & 2-205
guy makes offer "open til Friday @ 9"- revokes, revocation known by π, tries to accept
anyways, fails bc it was a "nudum pactem", not option K- implied revocation
An offer may be revoked by the offeror without an express or actual
statement of revocation communicated to the offeree provided there has
been no meeting of the minds and the offeree is aware of conduct by the
offeror demonstrating intent to revoke the offer.
§ 25- option contracts defined

§ 35 (2)- power to accept until it has been terminated by §36

 § 36- methods to terminate- rejection/counter offer/ lapse of time/ revocation (communicated by §42
OR 43) / death of offeror/ condition of offer

Revocation is effective anytime after the offer is made but before the offer is accepted.

Revocation by Indirect Communication - The offer may be effectively terminated if the offeree
indirectly receives: (i) correct information, (ii) from a reliable source, (iii) of acts of the offeror that
would indicate to a reasonable person that the offeror no longer wishes to make the offer.

A revocation is generally effective when received by the offeree.

Detrimental Reliance- §87- Where the offeror could reasonably expect that the offeree would rely to
her detriment on the offer, and the offeree does so rely, the offer will be held irrevocable as an option
contract for a reasonable length of time.

Ch. 4- Enforceability- K=MA(O+A)+C-D

Hamer v. Sidway- pg. 93 §17 (bargain) & 71 (bargain sought
for) & 79 (ben./det.not required) & 81 (C as motive)
Uncle promises nephew $5000 if he quits drinking/smoking/gambling til he is 21
A contract constitutes a bargained for benefit to the promisor OR a
bargained for detriment to the promisee
must be a legal benefit/ detriment

Is drinking a legal privilege or legal right?

Hohfeldian legal relationships

gratuitous promises are not enforced

§3- Bargain- an agreement to exchange promises or to exchange a promise for a performance or to

exchange performances

2 sided bargain- reciprocal mutual inducement

Courts do not inquire into the sufficiency of consideration R2K §80 even possibility of value

4.A- Bargain Based Contracts

Kirksey v. Kirksey pg. 326 - §24- distinguishing bargain from
gift
 Man lets sis-in-law stay on his land so she moves her family there, then he asks her to leave
2 years later. K?
A promise to provide free land for a residence that is fulfilled for a finite
amount of time and then revoked is gratuitous and thus unenforceable
despite inducing the promisee to move residences in reliance on the
promise.
setting apart Hamer v. Sidway- uncle didn't do it to be nice, he required detriment to nephew. Here
bro in law wants to help and moving was a condition

§3- Bargain- an agreement to exchange promises or to exchange a promise for a performance or to

exchange performances

Whitten v. Greeley Shaw pg. 330/ §71 (promise must be

bargained for / 75
mistress requires man to buy her house & gifts, in writing, but there is no consideration or
bargain.
If a party’s promise is not bargained for, it does not constitute consideration
for another party’s promise.

McInerney v. Charter Golf, Inc. pg. 335/ 1121- Legal

formalities
man promises to forgo another job in exchange for a guarantee of lifetime employment-
Does this change at-will relationship?
In Illinois, the statute of frauds requires that a contract for lifetime
employment is unenforceable unless it is in writing.
cautioning, channeling, evidentiary functions of legal formalities

Mills v. Wyman pg. 367/ 479- Past consideration and moral

obligations
Dying son promises caretaker his dad will pay, and Dad promises to pay for future services,
but son dies before receiving. No subsequent promise.
A promise based on a moral obligation but made without legal consideration
does not constitute an enforceable contract unless it is tied to a preexisting
legal obligation, or a subsequent promise for past consideration.

Stilk v. Myrick pg. 376- Pre-Existing Duty Rule

 Boat crew demands money for services after some of crew dies. π argues no public policy.
Judge changes argument to consideration
A contract for services cannot be modified without the payment of additional
consideration.
Except when: (i) the modification is due to circumstances that were unanticipated by
the parties when the contract was made and (ii) it is fair and equitable. §89] (Modern
View)

Alaska Packers Pg. 378

Boat workers demand more money after arriving in Alaska where no new workers could
be found without promising more
Where parties enter a new agreement under which one party agrees to do no
more than he was already obligated to do under an existing contract, the new
agreement is unenforceable for lack of consideration.

4.B- Reliance Based Contracts-Promissory

Estoppel
Ricketts v. Scothorn pg. 392 Equittable Estoppel (birth of
promissory estoppel)
Grandfather doesn't want his granddaughter to have to work, then he dies.
Equitable estoppel prevents a promisor from revoking an otherwise
unenforceable gratuitous promise if the promisee foreseeably and
reasonably relied on the promise to her detriment.
Limitations on the bargain principle

Promissory Estoppel- Used offensively to imply an enforceable agreement)- Promise, reasonably

relied upon, actually relied upon, injustice would result if promise was not performed

Equitable Estoppel- Used as a

defensive shield to stop another party from trying to avoid performance by asserting a contract
defense that would result in injustice if parties were excused from performanc

Allegheny College v. National Chautauqua County Bank of

Jamestown
 Pledge to college is considered enforceable WHEN the college relied on it in a scholarship
fund
To constitute an enforceable promise, the promise and the consideration
must be the motives for each other.

Feinberg v. Pfeiffer Co.- Detrimental Reliance

Woman worked for a company her whole life, and they let her have lifetime pension. A few
years later after death of owner, they revoke
A gratuitous (and thus unenforceable) promise is nevertheless transformed
into a binding and enforceable contract if the promisee reasonably and
detrimentally relies on the promise.

Hoffman v. Red Owl Stores pg. 421- §90- Promissory

Estoppel
Man sells everything in reliance on a bakery he is promised to be able to buy
A promise may give rise to an action for promissory estoppel even if it does
not contain all essential details of a proposed transaction and is incapable
of resulting in a binding contract so long as the promise was one which the
promisor should have reasonably expected to induce action or forbearance
of a definite and substantial character on the part of the promisee, the
promise actually induced such action or forbearance, and injustice can only
be avoided by enforcement of the promise.
Remedy should be only enough to prevent injustice

If Consideration substitute- expectation

If separate cause of action or non-contract remedy, reliance (subject to limitation on damages)

Cohen v. Cowles Media Co. pg. 431

Man shares anonymous information with media who publishes his name
Under promissory estoppel, injustice can be prevented by awarding
damages to a confidential source when a news organization has broken a
promise of anonymity.
P.E.- "the remedy granted for breach may be limited as justice requires." §90

Must arise directly and natural in the usual course of things from the breach itself, or are the
consequences of special circumstances know to or reasonably supposed to have been
contemplated by the parties when the contract was made"
 Consequential damages are special damages and reflect losses over and above standard
expectation damages that result from the nonbreaching party’s particular circumstances. Usually,
consequential damages are lost profits resulting from the breach. These damages may be
recovered only if at the time the contract was made, a reasonable person would have foreseen the
damages as a probable result of a breach. Foreseeability is the key issue for consequential
damages. To recover consequential damages, the plaintiff must show that the breaching party
knew or had reason to know of the special circumstances giving rise to the damages.

MLK papers pg. 445

"Promissory Estoppel means that unsealed, unwritten, and unbargained for promises can be enforced
when the person making them should expect another to rely on them and did so."

4.C. Benefit Based Contracts- Unjust

Enrichment
Britton v. Turner pg. 452- Quantum Meruit (as much as
you're worth)
Lady quits her job for no reason, and wants payment for the months she did work.
Where an employee voluntarily breaches a contract for labor by failing to
continue the agreed employment, the employee is entitled under quantum
meruit to the reasonable value of the services provided, unless the contract
specifically provides otherwise.
Quantum Meruit- A claim for the value of benefits provided without a contract, as when the plaintiff
brings a claim for restitution and that value provides a measure of recovery. "as much as he
deserves”

Pg. 455- Courts refused to imply at law a condition precedent that the employee had to complete the
contract, because it is an “invisible” default rule

§86- A promise made in recognition of a benefit previously received by the promisor from the
promisee is binding to the extent necessary to prevent injustice (not a gift (no U.E.)

Cotnam v. Wisdom pg. 464 §370 Quasi Contract/ Implied in

law
Doctor tries to save a patient, because of his legal duty, there was a contract for his services
Where there is no agreement on which the court may enforce a contract
between the parties, as where physicians render services to persons who are
unable to contract due to their condition, the court may use the legal fiction
of a quasi-contract to require payment for those services.
 Bailey v. West pg. 469- Not implied in law/quasi K
Man cares for a horse that no one will take and demands payment from one of the
owners, who disclaimed ownership
A quasi-contract may be enforced between two parties when one party
confers a benefit upon the other party, the beneficiary party is aware of the
benefit, and the beneficiary party accepts and retains the benefit under
circumstances in which it would be inequitable not to pay the other party for
the benefit.
"One who, without intent to act gratuitously, confers a measurable benefit upon another, is entitled
to restitution, if he affords the other an opportunity to decline the benefit or else has a reasonable
excuse for failing to do so. If the other refuses, he is not requires to make restitution unless the actor
justifiably performs for the other a duty imposed upon him by law.

Webb v. McGowin pg. 479 §86- Past and moral obligation

(subsequent promise) Material Benefit Rule
Man diverts falling log to save coworker, who promises to pay him for life. Estate doesn't
want to follow through.
A moral obligation is a sufficient consideration to support a subsequent
promise to pay where the promisor has received a material and substantial
benefit.
Legal formalities- §95- Binding if written and sealed

Connection between law and morality

Coase Theorem

Ch. 5- Remedies
Legal Remedies:
Liability Rules requires only that the violator of a right pay for whatever damage he has
caused.
Restitution interest- prevention of gain by promisor at the expense of the promisee- prevention of
unjust enrichment (restores any benefit conferred on other party)

Reliance- damages to the P for the purpose of undoing the harm which his reliance on the D's
promise has caused him (as good as if K wasn't made)

Expectation- the value of the expectancy which the promise created (as in the Hawkins case)
 Includes luGeneral + Consequential

Hawkins v. McGee- pg. 105/ 505

Doctor promises a perfect hand. Boy has surgery to fix his deformed hand, which turns
into a deformed, useless, hairy hand
The purpose of the law is to put the plaintiff in as good a position as he
would have been in had the D kept his contract.
Property rules force promisor to give promisee the very thing it bargained for (specific performance)

Consequences- jail, fines, punitive damages

Liability rules awards the injured promisee money damages approximating the value of the promised
performance

Only requires violator of a right pay for whatever damage he causes

Breaking a contract because its cheaper than performing is an "efficient breach" (cheaper to pay
damages)

Peevyhouse v. Garland Coal Mining Co. pg. 531 §348-

Diminution in value (how damages can be measured)
Miners get the coal but never restore the land as promised, despite the waived upfront
money for land restoration
Expectation Damages can be achieved by either 1) Diminution in value or 2)
Cost of Completion
Regardless of any agreement of the parties, damages awarded for breach of an agreement to perform
remedial work on property should normally be measured by the reasonable cost of performance of
the work; but, when the contract provision breached is merely incidental to the main purpose in
view and where the economic benefit which would result to the owner from full performance is
grossly disproportionate to the cost of performance, damages should instead be limited to the
diminution in value resulting to the premises because of the non-performance.

Note 8 Pg. 538- π signaled to the court it was worth at least $3,000 to him since he declined that
amount at the time of contracting to negotiate for the repair of the land (Court missed this and made
the worst decision ever)

Disgorgement: R2K §39

Under unjust enrichment theory (not breach of contract, if there was a duty/obligation to perform
and the party fails to perform, the party may be required to give back any gains they received by their
breach

Comparing to Jacob & Youngs v. Kent

 “The willful transgressor must accept the penalty of his transgression there is no occasion to mitigate
the rigor of his transgression.” Cardozo argued that intentional wrongdoers should pay the higher
remedy. Why did this case come out wrong?

The court might have implied a condition here, requiring substantial performance of the land
restoration, opethe failure of which (or settlement between parties) could result in criminal contempt
or punitive damages liability

Limiting Damages
Hadley v. Baxendale pg 574- Foreseeability of Consequences
of Breach
Crank for mill breaks, unique piece, they have to mail it off but it takes longer than
promised by mail carrier.
When one party breaches a contract, the other party may recover all
damages that are reasonably foreseeable to both parties at the time of
making the contract, as well as damages stemming from any special
circumstances, provided those circumstances were communicated to and
known by all parties at contract formation.
General foreseeability- objective- considered to arise naturally

special foreseeability- damages particular parties are actually aware of- subjective

The foreseeability is only in regards to the consequences of breach.

Foreseeability of something causing you to fail to perform your side is NOT a defense if you were
on notice of the consequences

Freund v. Washington Square Press pg. 595 §352 Uncertainty

in remedy
Man relies on a book deal that doesn't go through. What can he recover? Nominal
damages only.
The injured party should not recover more from a breach of contract than he
would have gained had the contract been performed.
You can’t require losing party to pay speculative damages.

Π could have presented evidence of reliance damages but didn’t.

Rockingham County v. Luten Bridge Co. pg. 607 §350 UCC

2-704 Avoidability
 Building a bridge, got notice of breach, continued building.
When a non-breaching party in a contract for services receives notice of
another party’s breach, the non-breaching party must treat the contract as
broken when notice is received, cease performance, and sue for any losses
sustained from the breach as well as profits that would have been realized
upon performance.
Parties have a duty to mitigate damages/ or at least a duty to do nothing to increase the damages it is
incurring

Courts want to avoid Economic Waste (Pareto efficiency)

Interpretation
Frigalament Importing Co. v. BNS International Sales Corp.-
pg. 125/ §201/202
What is a chicken? broilers v. fryers
When parties to a contract subjectively construe an ambiguous term
differently, courts must interpret, courts may consider the plain meaning of
the term, the negotiations between the parties, trade usage, other contract
provisions, market factors, and the course of dealing between the parties.
Court uses default rules to fill in contractual holes

Maxims of interpretation- Noscitur a sociis/ ejusdem generis/ expressio/ contra preferentum

Express Terms, Course of Negotiations, Course of Performance, Course of Dealings, Usage of Trade
UCC 1-303

Generally, π has burden of showing that his interpretation is correct.

Parol Evidence- 4 corners (only K) or Corbin Wigmore (case by case if evidence is admissible)

If there is uncertainty or ambiguity in terms, parol evidence can be received to aid the fact finder in
reaching a correct interpretation of the agreement.

Contra Preferentum

Carnival Cruise Line v. Shute? pg 688- Standardized

Agreements
Boilerplate ticket has no consideration except for general agreement to deal
A forum selection clause is not fundamentally unfair solely because the
clause was not negotiated.
Wood v. Lucy, Lady Duff Gordon? pg. 795- Implied Terms
Woman put her name on clothes she designed and kept profits
(1) A contract may be enforced when there is no evidence of a promise,
exchanged as consideration, in the explicit terms of the contract.
(2) A promise to use reasonable efforts may be implied from the entire
circumstances of a contract, without it the transaction wouldn’t be efficient

Raffles v. Wichelhaus- pg. 747 Vagueness & Ambiguity: §200,

201, 202, 20
Two boats call Peerless
Court holds that there is no meeting of the minds in this case. The price of cotton had increased
significantly, so he didn’t want the December shipment. He wanted the October shipment on a
different boat at the lower price of cotton.

Vagueness: Words aren’t obviously applicable, but not necessarily ruled out.
Chicken could be boilers or Fryers

Ambiguity: One word can have completely different meanings to different people (and
syntax can also cause ambiguity)
Chicken means the bird and that you are afraid.

Parties in Raffles were truly believing two completely different things

Thompson v. Libbey Pg. 759- 4 Corners/ Parol Evidence

Contract for specific logs challenged when logs were damaged by water
When the written agreement is intended to be the entire agreement, parol
evidence cannot be introduced to establish terms of the agreement and parol
evidence cannot be introduced to establish whether or not the contract is
intended to be the entire agreement.
“Where parties have put their intent in writing, it is assumed that the entire agreement between you
is, in fact, in writing.”

Instead of trying to argue what happened outside of the contract should come INTO the contract,
argue what happened as ways to interpret the existing contract correctly.

Pacific Gas & Electric v. GW Thomas Drayage

Performance and Breach
Jacob & Youngs v. Kent- pg. 133/ 522 §241
Contractor uses a pipe in the house that wasn't reading pipe, owner refuses to pay, courts
force payment since value of performance is the same
If a party substantially performs its obligations under a contract, that party
will not be forced to bear the replacement cost needed to fully comply with
the agreement but instead will owe the non-breaching party the difference in
value between full performance and the performance received.
Material breach would constitute damages

Remedy vs. Equitable Remedy (money damages)

Acoustic separation- What courts decide vs. (secret) application reasoning

Conduct Rules are designed to guide behavior, usually the strict rule that courts want you to
believe the law is

Decision Rules- courts can be lenient, and lenity is a surprise

"The willful transfressor must accept the penalty of his transgression… The transgressor whose default
is unintentional and trivial may hope for mercy if he will offer atonement for his wrong.

Defenses
Williams v. Walker Thomas furniture company- pg. 144/
§208- Unconscionability
woman can't pay off her furniture bill when the contract applies the balance pro rata, but
she didn't understand this contract
Unconscionable contracts are unenforceable (absence of meaningful choice
or terms which are unreasonably favorable to the other party
Anaconda clauses

Implied duty of good faith- immutable rule (subjective knowledge of unknown- duty to disclose)
§205

UCC provision for Unconscionability: Pg. 1313- There is no test: “If the court finds, as a matter of
law, the contract or any clause to have been unconscionable at the time it was made, the court may
limit or invalidate it.

§2-302: If clause is unconscionable, judges can: Refuse to enforce the entire contract OR enforce the
contract except for the unconscionable clause OR redraft the clause so it is fair in its application
 Procedural Unconscionability

Absence of another meaningful choice- Bargaining Naughtiness

Substantive Unconscionability:

Evils in the Contract

Even if an agreement is supported by valuable consideration or a recognized substitute, contract

rights may still be unenforceable because there is a defense to formation of the contract, because
there is a defect in capacity (making the obligations voidable by one of the parties), or because a
defense to enforcement of certain terms exists.

Sherwood v. Walker pg. 964 §151/152 Mutual Mistake-

Unknown unknown
Is the cow barren or no? It only matters if it is material to the deal.
When a contract is made based on the mutual mistake of the parties that
relates to a material fact such as the subject matter of the sale, the price, or
some other fact which materially affects the agreement, the parties may
rescind the contract once they learn of the mistake.

Wood v. Boynton pg 971- Known Unknown

Woman sells a gem that she can't identify for one dollar, which is an uncut diamond.
A party may rescind a contract for the sale of a good if she can establish
either fraud or mistake.
Reconciling- the court's traditional response is to let it be Rest. (3) Rest. & U.E. §20.

Unilateral mistake §153- if the other party knew or had reason to know, duty to disclose or contract
is voidable

Party has equal opportunity to become appraised of truth- get it appraised by jeweler with
knowledge of what gem is was

§154(b) Party bears the risk of a mistake when he is aware, at the time the contract is made, that he
has only limited knowledge w/ respect to the facts to which the mistake relates but treats his limited
knowledge as sufficient

to be a defense it must be a mistake, not a mere uncertainty.

Deceit and Coersion

Includes: Misrepresentation, Fraudulent Concealment of Material Fact, Duress of Person
or Goods, Economic Duress, Undue Influence, Unconscionability
Vokes v. Arthur Murray pg. 1003/ §168 ( misrepresentation/
Assertion of Opinions)
Old lady is told by dance instructor that she has tremendous potential, but isn't.
A statement of opinion may be actionable as a misrepresentation where the
party stating his opinion possesses superior knowledge of the truth or falsity
of the statement.
Sales puffery is ok, but reaches a level of impermissibility- misrepresentation induces a party’s
manifestation of assent IF it “substantially contributes to his decision to manifest his assent”

Silence isn't a misrepresentation unless it imposes somehow on the other party

R2K- duty to disclose to prevent previous statement from becoming misrepresentation, to correct a
mistake on basic assumption, non-disclosure in bad faith, correct a mistake on writing, or
entitlement to know based on relationship of trust- If not, fraudulent misrepresentation

Stambovsky v. Ackley pg. 1022- Fraud and Disclosure/ §161

Man finds out he lives in a haunted house (∆ is estopped from stating otherwise as defense
because he represented it with advertising)
The nondisclosure of a condition that materially impairs the value of a
contract and that is within the knowledge of the seller or unlikely to be
discovered by a prudent purchaser constitutes a basis for rescission of the
contract
§160- When action is equivalent to an assertion

§161- When Non-disclosure is equivalent to an assertion

§162- When a Misrepresentation is fraudulent or material

Rubenstein v. Rubenstein pg. 1031- Duress of Person

§174-176
Man's wife's dad is a gangster and she threatens husband that her dad will kill him with
arsenic poisoning if he doesn't give her the house
A contract may be voidable for duress if one party wrongfully induces the
other party to act by creating in the second party a fear of loss of life, fear of
loss of limb, fear of mayhem, or fear of imprisonment.
"The test of duress is not so much the means by which the party was compelled to execute the
contract as the state of mind induced by the means employed."
 Lord Coke + R2K + cases: A 1) threat to use 2) improper, illegitimate, or wrongful pressure of 3) a
sufficiently grave nature that 4) induces a party to act or manifest their assent 5) against their free will

Hackley v. Headley pg. 1034- Duress of Goods

Man is forced to take less for the logs he is selling than he thought because he needed the
money.
A court will find duress when a party is compelled to submit to an illegal
exaction in order to obtain goods or payment from the other party who
refuses to surrender the goods unless the exaction is submitted to.
Court found no duress in this case because public policy would prohibit a rule nullifying every
contract just because the other party is a poor or desperate person.

Note how these relate to the pre-existing duty rule in R2K

The part of the money he already owed is still owed.

Economic Duress (often lumped in w/ Duress of Goods)

Paragraph on 1040- proof that “immediate possession of needful goods is threatened”, but merely
threatening to breach a contract isn’t enough. Must appear that threatened party can’t get the goods
anywhere else and remedies would be inadequate

Odorizzi v. Bloomfield School District pg. 1050- Undue

Influence §177
Schoolboard and Principal come to his house late at night and force him to resign or they
will out him as gay and embarrass him .
Where a dominant party to a transaction uses excessive pressure to persuade
a party whose weakened mental state makes him especially susceptible to
persuasion, the weaker party may rescind the agreement as obtained by
undue influence.
Hybrid Defense: Duress + special or power relationship

“requires a special relation between the parties that makes one of them peculiarly susceptible to
persuasion by the other."

"whether by weakness from one side, or strength on the other, or a combination of the two, undue
influence occurs whenever there results that kind of influence or supremacy of one mind over
another by which that other is prevented from acting according to his own wish or judgement. “

Undue susceptibility in servient party + excessive pressure from the dominant party

Evidence of Excessive pressure- discussion at unusual time/ place, insistent demand to finish at
once, extreme emphasis on consequences of delay, multiple persuaders, absence of 3rd party
advisors, statement about no time to consult attorney or financial advisor
Taylor v. Caldwell- 1079 Impossibility
Music Hall burns down in a fire.
In contracts in which the performance depends on the continued existence of
a given person or thing, a condition is implied that the impossibility of
performance arising from the perishing or destruction of the person or
thing shall excuse the performance.
Courts can imply condition or warranty if policy or equity requires.

Facto v. Pantagis- 1082- Impracticability

Power Failure during wedding reception
Where one party is relieved of its obligation to perform under a contract’s
force majeure clause, the other party is also generally relieved of its
obligation to perform.
The contract is rescinded and the jury decides how much is owed back to each party.

Frustration of purpose- value to promisee goes down

Impracticability- cost of performance goes up for promisor

Krell v. Henry- Frustration of Purpose- p. 1094 §265

Renting an apartment for King’s Coronation, but he got appendicitis
When a condition that is not expressly mentioned in a contract can
nevertheless be implied from extrinsic evidence as being understood by both
parties to be the subject matter of the contract, the nonoccurrence of the
condition may excuse nonperformance of the contract by both parties.
Courts can imply a condition, of which the nonoccurrence of would make the contract voidable.

A cancellation clause in the contract would have allowed them to contract around the default
rule.

Test for Frustration of Purpose (pg. 1098 & R2K §285 (pg. 1280)) - If the parties principle purpose….

1) Look at the agreement itself- Is the nonconcurring thing the basis of the bargain or foundation
of the contract?

2) Was Performance of the contract foundation actually prevented?

3) Was the possibility of that happening in the contemplation of the parties at the time of
contracting?

For exam, go through test on 1098 & R2K and argue for both sides to get full points
 Not mutual mistake because it is not about a presently existing fact at the time of contracting

Note! Was there a pre-existing duty, and they try to modify the contract without additional
consideration?

McInerney v. Charter Golf- p. 1120- Statute of Frauds

Defense
Promise for Lifetime Employment
Under the statute of frauds, a contract for lifetime employment is
unenforceable unless it is in writing.
SoF covers land, marriage, estate, contracts over a year, goods over $500
Must be in writing to be effective (without promissory estoppel)

§110 explains the types of contracts subject to the statute of frauds

Period of one year because evidence becomes stales/ memories fade. There should be a cut off
beyond which people cannot bring their claim.

Purpose of Statute
Pg. 1121

Statute proceeds from sound conclusion that contract exists, but certain contracts shouldn’t exist
without a writing for an evidentiary safeguard

Protects the parties AND the court/ fact-finder

Cost of error (getting it wrong) is minimized or Over-Enforcement (courts enforcing a contract

where one didn’t exist- false positive) or Under-Enforcement (Parties made valid agreement
courts won’t enforce- False Negative)

Balance competing interests by requiring that certain agreements must be in writing, to

eliminate fraud or mistakes by court

3 Functions of Legal formalities

Evidentiary

Cautionary

Channeling

Interpreting language of Statute of Frauds

No action shall be brought on a contract that is not to be performed within one year: Split on
interpretation

1) (Dissent in MacInerney) there is no possibility the contract could be performed

 2) (Majority in MacInerney)- What is the reasonable expectation of the length of the contract
based on the intent of the parties?

Third Parties
Lawrence v. Fox- pg. 157/ 1163 §302 & §304
Party 1 sues party 3 for non-payment of a gambling debt, promised to #1 from #2, when
#2 promised #1 he would pay #3
A promise to repay a debtor's obligation to a creditor in consideration for a
sum of money received from the debtor is valid.
Thinking about legal disputes "ex-post" (what happened and how do we fix it?) vs. "ex-ante" (how
will resolution of this dispute act as future precedent?"

Only intended third-party beneficiaries have contract rights. As the term “intended third-party
beneficiary” suggests, whether a person is an intended beneficiary depends on the intent of the
parties.

UCC Provisions
Essential terms of a contract- price, parties, subject matter,
time
UCC 2-204- some terms may be left out if parties intended to contract and certain
remedy
UCC 2-305-310- Gap fillers for time, price, delivery, etc.
1-304- Good Faith Requirement
2-205 Firm Offer (for merchants only)- a promise to keep an offer open is enforceable even
if no consideration has been paid to keep the offer open. Under Article 2: (i)  If a
merchant; (ii)  Offers to buy or sell goods in a signed writing; and (iii)  The writing gives
assurances that it will be held open (e.g., “this offer will be held open for 10 days,” “this
offer is rm for 10 days,” “I shall not revoke this offer for 10 days”); (iv)  The offer is not
revocable for lack of consideration during the time stated, or if no time is stated, for a
reasonable time (but in no event may such period exceed three months).
UCC 2-715- Buyer’s Incidental and Consequential Damages