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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

uncommunicated revocation

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)

offer medium

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

donee benef.

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

creditor benef.

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

consequential damages

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

specific performance

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

non-conforming goods

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

contract modification

under UCC: good faith, no consideration required
common law: pre-existing duty rule, new consideration required

statute of frauds -"my legs"

year (1)
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

option contract

when a subcontractor agrees with a contractor
subcontractor bound by promissory estoppel

way to overcome statute of frauds defect

part perofrmance

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

anti-assignment provisions

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

requirements contract

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:

1)outward manifestation
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:

1)time lapse
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..

unilateral contract

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
3)previous dealings

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:

2)foreseeable reliance
3)actual reliance
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

only quantity
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...

presumptively valid
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....

delivery point

FOB [the location of a seller] means it is this type of contract

shipment contract

FOB [location other than seller's] means it is this type of contract

destination 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...

expectation interest
--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

See more

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