proposal of new terms in acceptance
invalid at common law -> becomes counteroffer
UCC - if not inconsistent terms but new, forms K, O may accept or reject new terms
UCC merchants ->K includes new terms unless O explicitly objects, materially later, or offer expressly limited
when rejection is effective
when RECEIVED by O
if counteroffer, can never goback and reaccept original offer
when acceptance effective
when SENT - malbox rule
counteroffer legally does what
rejects offer - > creates new offer
indecisive response to offer
offer remains open until terminated by O or lapse of time (reasonable or stated)
revocation of offer
offer terminates when E RECEIVES notice of revoke, even if promise not to revoke unless 1. promise was paid for, 2. UCC merchant has to keep open
an offer can terminate when the E learns of acts by O inconsistent with offer
when offeror dies
offer is still open until E learns of death or insanity
destruction of subject matter of contract
offer terminates as soon as its destroyed
contract made illegal while negotiating
offer revoked as soon as its made illegal
offers in jest or anger
still okay, if appear to be objectively reasonable
definition of offer
1) reasonably appears to indicate willingness
2)to be presently bound
3)to definite commitment
4)upon E's acceptance
future intent or interest in something
is not an offer, i.e., request for quote
advertisements as offers
invitation to an offer only, unless quantity is specific, language is present, and promise is unlikely to be over-accepted
usually not an offer
ambiguities in offer
will be interpreted against offeror
essential terms that must appear in offer
Parties, Subject matter, quantity, price (UCC fills in with reasonable), time for performance (UCC fills in reasonable time)
can be any medium, unless explicitly restricted
performance as acceptance
bilateral (promise for promise) = e may accept by performing, but MUST inform O
unilateral = calls for performance for acceptance, E must actually COMPLETE to accept, not start preparing
can silence be acceptance
only if this has been used in previous dealings
incidental 3rd party benef.
no intent of parties to benefit Z
no rights against promisor or promisee
parties intended to confer gift to Z
has rights upon knowledge and assent of contract - against promisor, stands in shoes of promisee / against promisee, may prevent from rescinding K but may not sue promisee if promisor fails to perform
can sue for reliance
parties intended to confer to Z to satisfy pre-existing debt
Z has rights upon reliance, may sue promisor in shoes of promisee, may sue promisee for original obligation
contract remedy: normal remedy
money damages: should place non-breaching party in position he would have been in had K been performed
7 inclusions of "making whole" for $ damages
1) restitution 2)reliance costs 3)incidental costs (shipping, storage) 4)expected bargained for benefit (not profits) 5)consequential losses 6)liquidated damages 7)punitive (only malicious or intentional)
sales contract breach
$ difference between market price at time of breach and contract price
non-breaching party must mitigate, or have it reduced
liquidated damage requirements
1)must be reasonable
2)must be necessary, real damages difficult to calculate
3)must not be boilerplate, must be tailored to K
1)contract must be valid and enforceable 2)money damages inadequate because unique or amount not ascertainable 3)no problems of enforcement (can't enforce personal services ,slavery)
i.e., can enforce part of will
cancellation of contract, pre-K status
1)mutual mistake, 2)fraud, 3)major breach changing nature of agreement
requirements: notification within reasonable time, restoration of non-breaching party to status quo
reformation by court
court can reform contract if there mutual mistake
no contract, but court finds one to avoid unjust enrichment
money damages based on equity rather than a valid contract
i.e., doctor rendering services to patient who is unconscious
UCC: shipment serves as an acceptance and at the same time a breach
buyer can accept, reject, or accept some and reject the rest
is not a counteroffer, can be an accomodation if he tells E about it
firm offer rule
UCC: a signed writing by merchant which states will be held open is not revocable for stated period, not to exceed 3 months
under UCC: good faith, no consideration required
common law: pre-existing duty rule, new consideration required
statute of frauds -"my legs"
sale of goods ($500+)
parol evidence rule
once agreement is in writing, evdience of any prior oral or written agreements is inadmissible to alter terms
if delivery is impractal , deliveror won't be in breach
subjective impossibility will NOT excuse duties (can't personally do it because something happened)
objective impossibility WILL excuse duties of performance (no one can do it at all anymore)
right to assurances
ucc: if reasonable grounds for insecurity, may demand assurances performance will occur...must be provided within 30 days, and failure repudiates contract
for formation to be effective, E has to know about O's offer terms, (meeting of minds) can't just happen to exist because cross offers have identical terms
unilateral contract revocation
can't be revoked once performance begins
exception to mailbox rule
if offer says "must notify me by X" -> it's only this authorized notification, so no mailbox rule
when a subcontractor agrees with a contractor
subcontractor bound by promissory estoppel
way to overcome statute of frauds defect
care furnished to minor
necessaries, reasonable value mustbe paid, but minor can't enter contract
are oral assignmetns of contracts valid?
however, gratuitous assignments are revocable
which contracts aren't assignable
personal service contracts
does not proven assignment, but can lead to cause of action against original assignor for breach of dmaages (but will be nominal money damages)
implied in fact contract
where the actions of the parties make it seem like there was an acceptance and performance
oral modification at time of contract for service
enforceable, since not forbidden by statute of frauds, and if it does not contradict or vary terms
oral promise to answer for debt of another
prohibited by statute of frauds
agreement subject to oral condition precedent
not within parole evidence rule
e.g., stating orally at contract signing that the goods will be inspected
firm offer rule
an offer by a merchant to buy or sell goods in a signed writing that says ti will be held open is not recovable
buyer will buy all from seller, doesnt matter how much = bilateral contract
If delivery contract for specific time and purpose...
then time is of the essense, and no time need be given if nonconforming - immediate breach
if one shipment for X amount of items, but only given Y amount, then...
breach of contract - can't merely divide up contract,unless it was in installments (certain $ per item)
delegation of duties
not allowed in contract if considered to be a unique skill
The requirements for a valid contract are:
4)legal capacity of parties and legal objective
An Implied in fact contractual obligation is a consensual agreement that...
fails to express entire agreement, i.e., paying reasonable value of services or goods if price is not discussed in advance
an implied in law contract arises where there is...
equitable imposition of a would-be contract
one party bestows benefit on the other
--"quasi-contract" -- party can collect fair value of services rendered
if necessary services are rendered to a person at a time when he lacks the mental capacity to request, then the person rendering services...
can recover the "fair value of the services rendered"
in order to constitute an offer, a party's communication must meet two requirements:
2)signals that acceptance will conclude the deal
the general rule for auctions is that the auctioneer is inviting offers and the responsive bids are offers. the exception is...
if the auction is without reserve, then the auctioneer is making the offer to sell to highest bidder
an offer can be revoked in four ways:
2)death or incapacitation
3)revocation by offeror
4)rejection by offeree
The death of either offeree or offeror will...
terminate the power of acceptance
the offer is free to revoke an outstanding offer, terminating the offeree's power of acceptance, at any time and for any reason, so long as...
the revocation occurs prior to acceptance and is effectively communicated
when an offer is made by advertisement to the public, the power of acceptance is terminated when...
notice of revocation is communicated by advertisement or general notification (functionally equivalent)
--offeree loses the power of acceptance EVEN IF UNAWARE
an offeror is free to revoke an offer any time before acceptance, even if he had expressly promised the offeree that he would hold the offer open. Under modern law, there are two ways to prevent revocation:
1)option contract (offer, subsidiary promise to keep open, valid mechanism for securing enforcement of promise like consideration
2)firm offer (irrevocable offer - merchant can make without consideration)
the majority rule fro construction contracts and the power of revocation is that if a contractor uses a subcontractor's bid to formulate his own, then...
implied contract via promissory estoppel; subcontractor can't revoke
if an offeree makes a counter offer, it operates legally as a ...
rejection of initial offer
if an offeree makes an inquiry about the offer's willingness to negotiate the offer...
will not terminate power of acceptance, because it's not a real concrete counteroffer
an offer asking performance in return is an offer to enter into a..
a reward offer, the offeror pays a reward for the successful performance of some act....the modern rule is that:
once the offeree begins performance an option contract is created and the offeror may not revoke
in a real estate brokerage agreement, the offer is automatically revoked by...
the seller's acceptance of an offer to purchase the property from a buyer not produced by the broker
there are only two general requirements to constitute effective acceptance:
1) under mirror image rule, must mirror the terms of offer
2)acceptance must be communicated to the offeror
an offeree's silence in response to an offer cannot constitute acceptance unless 3 circumstances:
1)reasonable opportunity to reject services and doesn't, takes benefit
2)offeree has reason to know silence will be considered an acceptance and intends it to be
if offeree makes a cross mail and both offers are mirrored of each other, it is...
not a contract, must know of the offer
UCC rejects mirror image rule, and instead applies...
binding contract: non-conforming goods or battle of the forms
if transaction between consumer and merchant or another consumer, then different terms in acceptance are...
mere proposals for addition to the contract
in transaction between two merchants, additional or different terms in acceptance are considered...
part of the contract unless.....
1)offer limits acceptance to terms of offer
2)terms materially alter
3)offeror objects within reasonable time
consideration can take 4 forms:
1)return promise to do something 2)return promise not to do something 3)actual doing of an act 4)refraining from doing some act
there are two basic elements of consideration:
legal detriment and bargained for exchange
for the purposes of consideration, a bargain is defined simply as...
an exchange, beneficial or detrimental
if a promise to perform leaves perrformance to the discretion of promising party, it...
is an illusory promise and isn't consideration
a condition on gratuitous proimise...
does not satisfy consideration
a condition is something a promisee must do to avail himself of promisor's benevolence
a promisee who reasonably relies to his detriment on a grautitious promise may be able to enforce that promise under promissorry estoppel, which requires:
4)injustice if not enforced
the statute of frauds provides an important exclusion to the general rule in contract that...
a contract need not be in writing
6 types of agreements fall under the statute of frauds
2)contract that won't be completed within a year
3)sale or interest in land
4)executor to answer for duty of decedent
5)guarantee of suretyship
6)sale of goods more than $500
for one year completion in statute of frauds, if contract begins within one year...
doesnt matter, must be COMPLETED within one year
a lifetime or permanent contract is an exception to..
one year provision in stattue of frauds, because death could occur at any time
most courts treat brokerage agreements as...
not within SOF
if the main purpose of a guarantor's promise is to protect or promote his interests rather than debtor's interest, then....
SOF doesn't apply
if the sale of goods is for greater than $500, a writing must contain
and the writing only need be confirmed without objection within 10 days
if payment is made for goods and the goods are accepted, but the agreement doesn't satisfy the statute of frauds, then...
doesn't matter...contract is enforceable without writing once accepted
if goods are specially manufactured for the buyer, then...
not subject to SOF
only if can't sell to others in ordinary course of business
only the following terms are needed in a memo to satisfy SOF
1)identity of parties
2)nature and subject matter of contract
3)essential terms of unperformed promises such as price and date
can a writing be inferred from several documents for SOF?
for oral land contracts, SOF may be satisfied without writing by...
taking possession of land and paying at least part of price
for an oral contract for sale of goods, if goods are actually delievered but no writing...
UCC's SOF still satisfied
if a party relies on an oral contract and suffers lossess, but the contract is void for failing SOF...
party may still be able to apply promissory estoppel
the default rule for a missing price term under the ucc is....
reasonable price at the time established by the contract for delivery
extrinsic evidence of trade usage or of a course of dealing is available as a means of...
filling contractual gaps or resoliving ambiguities
when parties have adopted a writing as their agreement, and intent that writing to represent full agreement, then evdience that contradicts or adds obligations will...
not be admitted, unless one of 6 exceptions
Fraud, Mistake, Illegality, Duress, Partial integration, conditions precedent
if an agreement is entered after the execution of a written contract, the evidence of agreements is...
admissible, not under parol evidence rule
under the UCC, clauses prohibiting subsequent oral modifications are...
oral modification may be enforceable even if in violation of that term if the disadvantaged party relies on the modification or parties performed in accordance with it
may evidence be admitted to explain or interpret terms of contract?
yes, its only banned as parol evidence if it adds or contradicts terms
if both parties agreed to a condition prcedent to make the contract effective, and the condition failed...
evidence would be allowed in spite of the parol evidence rule to show obligations were discharged
in carrier cases, the default presumption under the UCC is that the contract is a shipment contract, mwhich means...
the seller generally need only put the goods in the possession of the carrier and make appropirate arrangements to send to buyer
in non-carrier cases under the UCC the seller must...
tender delivery to buyer
in a destination contract, the seller has agreed to...
tender goods at particular destination
in contracts that specify delivery is free on board, the free on board point is the....
FOB [the location of a seller] means it is this type of contract
FOB [location other than seller's] means it is this type of contract
if a buyer pays before inspection of delivered goods...
it is not an acceptance - the buyer has a right to inspect goods
for carrier cases, the risk of loss shifts to the buyer when the seller has...
completed its delivery obligations
for non-carrier cases, if the seller is a merchant, then ____ bears risk of loss until buyer takes possession
for non-carrier cases, if the seller is a non-merchant, the seller bears the risk of loss until...
the seller "tenders" the goods, i.e. makes them available
if a seller breaches the contract by making a nonconforming tender or delivery, the risk of loss...
remains on the seller until cure or acceptance
if a buyer revokes acceptance rightfully, then the risk of loss is...
treated as on the seller from the beginning
if the buyer breaches before the risk of loss passes to the buyer, the seller may...
treat the risk of loss as resting on the buyer for a commercially reasonable time
if a promisor is already obligated to perform a duty...
that duty cannot be used as consideration for another promise (pre-existing duty rule)
a promise to increase compensation under an existing contract is enforceable as a mutual modification if:
both parties agree to a performance that is different from the one required by the original contract
--can't be mere pretense to accomplish, must be real
under the UCC, the pre-existing duty rule...
is abolished and an agreement modifying existing contract must only meet "good faith" test
if a party or party has a faulty assumption about the present circumstances when making a contract...
this is "mistake"
does not excuse duty to perform, unless other party knew or has reason to know of mistake
if both parties have mistake, contract is voidable
if performance under a contract has been rendered impossible by events occurring after formation of contract then...
doctrine of impossibility excuses both parties from obligations
to apply doctrine of impossibility, the occurrence of the event must...
be a contingency that was not known at the time of contracting
--must be objectively impossible
if unforeseen difficulties have made performance very expensive or burdensome...
promisor may be excused under doctrine of impracticability
under UCC, if made illegal, goods destroyed, or nonforeseeable event
the frustration of purpose doctrine will discharge a contractual obligation if 3 conditions are met:
1)primary purpose of contract is frustrated 2)frustration is substantial 3)nonoccurrence of the event precipitating frustration must have been a basic assumption of the contract
if both parties agree to discharge each other's remaining contractual duties,...
this is recission, and ends contract
a contract made that where obligee promises to accept a different performance in sanctification of obligor's duty...
is an accord, and is allowed
difference between a promissory condition and a pure condition
promissory is what parties will do
pure condition is occurrence of events beyond control of either party
at common law, if a party's performance is subject to an express condition, the failure of that condition...
discharged obligation to perform
can be waived
if possibility of breach is not addressed by an express condition in contract, courts will...
treat breach as either material or substantial performance
--if serious, material, party can walk away from obligations and sue for damages
--if less serious, close enough, still has to perform
doctrine of substantial performance applies most often to...
contracts for services and construction contracts
i.e., one little condition isn't usually enough to ruin entire contract, still get paid
a material breach can be treated as either a partial breach or total breach, the differences are:
partial = damages based on part of remaining rights to performance
total = damages are on all rights to performance
under the perfect tender rule, the terms of a contract for the sale of goods...
are enforced exactly
--every contract term is treated as an express condition and there is no need to distinguish between express and implied conditions
if a seller fails to make perfect tender for sale of goods, buyer has three available courses of action:
1)reject goods 2)accept goods 3)reject part and accept part
--buyer must pay for goods he accepts and may seek damages for imperfect tender
if a seller makes a nonconforming delivery and had reasonable grounds to believe that the delivery would be acceptable to the buyer then he may...
substitute a conforming delivery if the seller gives buyer a reasonable notice of his intention to substitute and seller makes conforming delivery within reasonable time
under a UCC installment contract, if there is a breach of one installment...
its only a breach of the entire contract if the one installment nonconformity substantially impairs the value of the entire contract
otherwise, can reject the single installment but not entire contract
may a minor enter into a contract?
modern rule says yes, but the contract is voidable at the option of the minor
if someone makes untrue statements about material facts...
this will be fraudulent misrepresentation, and can be basis for affirmative relief for defense to enforcement
in conisdering covenants not to compete for employment, courts will ttypically determine whether...
it is reasonable for period of time and geographic area
--will not be enforced if contrary to public policy, or showing of irreparable harm to party
the default rule for proper measurement of damages in breach of contract cases is the...
--calculate money damages to put patty where he would have been had the other party fully fulfilled contract terms
if expectation damages cannot be calculated with reasonable certainty, the aggrieved party may...
seek reliance damages - the amount expended by him to perform
a breaching party will be liable for general damages which are..
damages that would foreseeably follow from the breach, but not for consequential damages that result from particular circumstances unforeseeable to breaching party
a party aggrieved by a breach of contract is entitled to restitutionary damages, which are...
the value of benefits conferred on breaching party during course of contract
aggrieved party cannot get both of these 2 kinds of damages:
expectation and restitution, may only have one
most commonly, negative injunctions...
are used to prevent employees from working for a competitor
courts can make this order to prevent breaching party from doing something
a liquidated damages provision is unenforceable if the court finds that
it constitutes a penalty
the test for determining whether a liquidated damages clause is valid has three prongs:
1)did parties intend to operate as liquidated damages clause?
2)reasonable at time in relation to anticipated harm?
3)reasonable in relation to harm and losses actually occurred
if a party repudiates contract before performance, other party is given the option to treat the repudication as...
a breach of contract immediately without having to wait for time of performance
a repudiation is established by...
a party's definitive statement indicating he will breach contract
--or by voluntary act that renders party unable to perofrm
if a party has reasonable grounds to believe the other party is unwilling or unable to perform, he may
demand adequate assurance
--UCC requires demand for goods assurance be made in writing
a party may retract a repudiation unlesss...
the other party acts in reliance on the repudiation and acccepts it by signifying this to other party, or brings suit
if buyer breaches, seller may resell in good faith and in responsable manner and...
recover difference between contract price and resale price
if seller is volume seller and there is a breach by buyer, he may recover...
the profit he would have made on the lost sale rather than relegating to contract-market or contract-resale differential
if goods are unique, the remedy is...
the buyer may cover by buying replacement goods if seller breaches, and then...
seek damages for difference between what he paid and what he would have paid
--if he doesn't cover, entitled to market-contract price differential
if seller had reason to know or knew buyer's specific requirements at time of contracting and he doesn't have a way to mitigate the loss, then...
buyer may recover equivalent of lost profits
if original contracting parties explicitly or implicitly intend to benefit someone else, that person is an...
third party beneficiary
has a right to sue
a 3rd party who will practically benefit from a promisor's performance but who may not meet test for intended beneficiary legally can....
not do anything to enforce the contract, only an "incidental" beneficiary
parties to a contract are free to modify or rescind it by mutual consent, even if it has a 3rd party beneficiary, except...
until 3rd parties rights have vested
but they don't need beneficiary's consent to do it before
a 3rd party beneficiary to a contract has his rights vest when...
1)beneficiary brings suit
2)benficiary changes positon to rely on promise
3)beneficiary manifests assent to contract at request of promisor
4)rights have vested due to express term in contract
a transfer of a right to receive a performance is called
to assign a right to another, the assignor must manifest an intention to make a present transfer of the right without...
further action by the owner or the obligor
a right is not assignable if the assignment would...
materially alter the risks of contract
the basic rule is that an assignee gets the rights and defenses that...
assignor would have had
if a right is assigned to multiple assignees, then who gets?
the first, unless second paid value and takes in good faith
or 1)obtains payment from obligor 2)recovers judgment on debt 3)renters into new contract with obligor
a delegation occurs when a third party agrees to satisfy a...
performance obligation owed by one of the parties to a contract
when a delegation is made, the delegator's obligations are...
NOT relieved unless there is a clear promise by the obligee to release the delegator in return for liability of delegatee (novation)
when the delegatee has agreed to perform the delegat'rs contract obligations, can he be liable?
yes, liable to both delegator and obligee, delegator because he agreed to do it, and obligee because the obligee was a 3rd party beneficiary
what obligations cannot be delegated?
generally all can, except 1)performance is personal or 2)contract prohibits it
provisions barring delegation are fully enforceable
may a contract prohibit assignments?
except leases without approval