CONTRACTS OUTLINE

@ core, contract= risk allocation device

I.

Governing bodies of Contract Law

a. The Uniform Commercial Code (UCC)- uniform law that governs commercial
transactions, including sales of goods. ** N/A TO LAND TRANSACTIONS!
i. Good- anything tangible and moveable @ time of contract
ii. Divided into 9 Articles
1. Article 1- General concepts, definitions
2. *Article 2- sales of goods
iii. Not law unless adopted by legislature
iv. ***1-103= allows us to bring in common law if UCC cant solve
problem*****
v. 1-102(1)- UCC shall be liberally construed!
vi. 1-203- UCC imposed obligation of good faith in perf. and enforcement
b. Restatement (2nd) of Contracts- common law, tries to assert what majority rule is
i. Not law unless adopted by legislature
ii. XXX
iii. Advice to courts as to what common laws should be, goal: uniformity

II.

Types of Contracts
a. Express- assent to contract terms is actually expressed in formal offer and
acceptance (oral or in writing)
b. Implied-in-fact- surrounding circumstances make it inferable that the contract
exists as a matter of tacit understanding UCC 2-207
c. Implied-in-law- *not true/enforceable contracts; legal function 4 equitable result,
doesnt depend on offer/acceptance; TOOL OF EQUITY

III.

How to form a Contract

contract- formed when one party makes offer, other party accepts, each
providing consideration for the other (Restatement 1)
1. Need mutual assent
ii. Lucy v. Zehmer (1954)- only manifested intent counts!
1. and make deal to sell s land to
2. Deal made over drinking one night on scrap paper
3. tries to enforce deal as legit contract
4. claims it was joke and he had no intention of selling
5. CT- entitled to carry out contract; s words/actions= intent to
sell
6. RULE- the law imputes into a person the intent that corresponds
with his words/actions
iii. Stepp v. Freeman- implied in fact contract =suff. for compensation!
1. Lottery case
2. didnt tell he was collecting $ for lottery; ticket won
3. alleged s breach of implied contract
i.

4. lottery club didnt have rules, but conduct inferred contract

5. CT- proved cause of action for breach of implied in fact
contract; sufficient alone for compensation
b. Offer must propose bargain!!!!! Legal detriment for legal detriment!
i. Manifestation of willingness to enter into bargain, so made as to justify
other REASONABLE person in understanding his assent is invited and
will close bargain
1. ~ Restatement 24
2. Manifestation- outward showing; what X appears to want/intend;
speech, writing, behavior
3. Specifies what each party is to do; must specify exchange!!
4. Must lead reasonable person to realize X wants assent and assent
will bind
ii. PFT Robertson Inc. v. Volvo Trucks (2005)- contracts dont bind in steps!
1. After terms of contract are agreed upon, dont become own
contracts
iii. Lefkowitz v. Greater Minneapolis Surplus Store-1957-Ads offer!
1. Fur items ads ($1 for first in line)
2. is first in line on both occasions, denied fur items
a.
claims house rule-for women only
3. sues for breach of contract (ad=offer, his actions=accept)
4. CT- advertisement and s subsequent actions=contract
5. RULE- where offer is clear, definite, explicit, leaves nothing for
negot. = offer and acceptance/performance of ad= contract binding
6. RULE- offeror can only modify terms BEFORE acceptance
7. RULE- if an ad promises some performance in return for
something requested, its an OFFER, not an invitation to make one
iv. Continental Labs v. Scott Paper-intent to be bound b4 written contract?
1. tried to hold to a contract that was never formally made
2. only intended to be bound by writing- communicated such!
3. claimed writing was just formalityNOPE.
4. CT- expressed intent to only be bound by written contract only
c. Acceptance
1. Writing, statement or action that would lead a reasonable person in
offerors position to believe offeree accepted unconditionally
2. Manifestation of assent to the terms made by offeree
a.
~Restatement 50(1)
3. Cant accept if:
a.
No true offer was made! (no exchange specified)
b.
Youre not the intended offeree!!
4. Fixes terms of contract to those agreed upon
5. After acceptance, no unilateral changes can be made!
ii. Kortum-Managhan v. Herbergers NGBL-effective notice of agreements!
1. opens credit card with

2. Continued use of card= acceptance of terms and conditions

a.
didnt even recall ever seeing contract she was bound
to
3. Contract of Adhesion- take it or leave it contract; no negotiation
of terms
4. Contract had arbitration clause- removes right to jury trial
5. never agreed to such
6. CT- not bound by arbitration clause
a.
Waiving a constitutional right must be done knowingly,
voluntarily and intelligently
7. RULE- Adequate notice must be given for agreements that take
away a constitutional right! Cant be conspicuous! Both parties
must agree
8. RULE- cannot hold party to agreement they did not know they
made!
iii. ProCD v. Zeidenberg-1996-shrinkwrap licenses=enforceable!
1. Foolish to expect entire license/agreement on box
2. Contract=active upon USE of software, not opening of box
3. Buyer had chance to read all terms before accepting
a.
UCC permits
4. *Anomaly here: seller= offeror
d. Manifestation of Assent
i. Restatement 50
1. Acceptance-manifestation of assent to terms, made in manner
invited
2. Acceptance by Performance- requires @ least part of what offer
requires and includes acceptance by a perf. which = return promise
3. Acceptance by Promise-requires that offeree complete every act
essential to making of promise
4. **Effective as soon as out of offerees possession
a.
w/o regard to its reaching the offeror
b.
*Exception: w/ option ctrcts, accptc must reach offeror
w/in option time!!
ii. Beard Implement v. Krusa- acceptance must mirror offer!
1. Acceptance must be in form requested by offer
2. ALWAYS LOOK TO PARTIES INTENT!!
a.
intended to be bound only by signature
3. RULE- offeror is Master of the Offer (common law concept)
4. RULE- contract must be unambiguous! UCC 2-206
5. 2-204: agreement can = contract even if moment of making=u/kn
a.
If parties intended to make contract, leaving one+ terms
open still = contract
iii. Fujimoto v. Rio Grand Pickle- if accept. Reqs special means, MUST state
in offer
1. s accepted contract by continuing to work
a.
Acceptance by performance

i. Clear expression of intent to accept

iv.

v.

vi.

vii.

2. Contract/ offer did not specify means of acceptance

3. got what it wanted from agreement
a.
Should have inferred offer was accepted!
Silence as Acceptance-Restatement 69
1. If reasonable offeror should interpret offerees silence as assent
a.
If offeror would expect offeree to come forward if she
didnt accept
2. One cannot be FORCED into silence as acceptance
3. Must KNOW he is accepting by silence
Acceptance by Dominion- Restatement 69
1. If offeree exercises dominion over product= acceptance
a.
exercises dominion- uses it, sells it, treats as own
property
2. *Any unordered merchandise MAILED= gift, no obligation to
sender
Day v. Canton- if silence=acceptance, must speak up if dont accept!
1. Wall erected between yards
2. sued to make him pay for his portion of wall
3. Implied-in-law contract
a.
Not legit, but forced by ct to avoid unjust enrich
4. CT- had to speak up if he objected to wall b/c silence=accept.
Mode of Acceptance
1. Bilateral Contract- when 2 promises are exchanged for each other
a.
I promise xxx and I promise yyy
b.
Promise for a promise
c.
Executory on both sides @ time of formation
i. excutory duty= unfulfilled contractual obligats.
d.
* anything but full performance as acceptance=BILAT.
2. Unilateral Contract- promise is exchanged for
performance/forbearance
a.
Not binding until performance is delivered
b.
Ill pay you $30 if you walk over the bridge
c.
Acceptance MUST BE via FULL performance
d.
From moment of formation= contract only executory on
offerors part!
e.
Not formed until offeree fully performs!
f.
Offerors action/payment contingent on offerrees
g.
45- PART PERFORMANCE CREATES OPTION
CONTRACTPROMISOR CANT REVOKE!
3. Davis v. Jacoby-Offers are assumed to be bilateral if ambig!
a.
Uncle asked niece() to come take care of him and wife $
i. Promised her inheritance or her help
b.
2 weeks after agreed, Uncle died
c.
still went and took care of aunt until she died
d.
Found out inheritance was left to uncles nephews ()

e.
f.

g.

Claimed she had contract!

CT- contract bilateral (promise $ for reassurance/reliance);
uncle would have had to rely on promise if wife survived
him- EXHANGE OF COMMITMENTS!!!!!
RULE- offers assumed bilateral if cant tell if its uni or bilat.
i. Immediately/fully protects both parties
ii. If offeror means only full perf to =accept, must say
so!!!

e. How Offers Die

i. Restatement 36-Methods of Termination of Power of Acceptance
1. Revocation by Offeror
2. Lapse of time (reasonable time if not specified in offer)
3. Death/Incapacity of Offeror or Offeree
4. Rejection/counteroffer by Offeree
ii. Revocation
a.
Offeror can revoke offer ANY TIME BEFORE
ACCEPTANCE
b.
NOT VALID until received by offeree!!
i. **Does not have to be read/heard by offeree to be
accepted
c.
Even if he promises he wont!
d.
Offer can be indirectly revoked- if knew or should have
known offer was off table
2. Dickinson v. Dodds-offers can be indirectly revoked!
a.
agrees to sell land to
b.
takes too long to respond
c.
sells land to someone else in meantime
d.
heard he had, but tried to buy land anyway
e.
CT- was free to revoke offer before formal acceptance;
knew that had sold to someone else-w/drew offer!
f.
RULE-offer can be revoked any time b4 acceptance;
g.
RULE- offer can be indirectly revoked (heard thro grapev.)
3. Petterson v. Pattberg-unilat. offer can be revokd b4 complete
performa. (unjust!!)
4. Marchiondo v. Scheck-partial perf. of unilat cont= contract!
a.
Seller contracted broker to find buyer 4 comission
b.
Broker found buyer, seller retracted offer to sell
c.
Broker partially perfd (got buyer, just didnt sign)
d.
CT- Brokers action deprived seller of right to revoke
e.
RULE- partial perf of unilat contract deprives offeror of
right to revoke, despite absence of COMPLETE perform.
iii. Ireevocable Offers
1. Under Common Law= option. $/ perf. needed!
2. Under UCC= 2-205-firm Offer merchants only!
a.
Merchant-Merchant= IRREVOCABLE offers!

i. Merchant- person engaged in buying/selling of

goods being dealt w/ in offer, w/ special knowledge

of business practices- 2-104
ii. If in writing!
1. Printing, typewriting, intentional reduction
to tangible form- 1-201
iii. If writing= signed!
1. Any symbol executed/adopted by party
w/intention of authenticating writing 1-201
iv. For time stated-or 3 month max (3+ months doesnt
automatically revoke offer, just makes it revocable
v. No consideration needed
vi. (If want more than 3 months, must pay!)
b.
ONLY APPLIES if: merchants, signed writing, no
consideration given
iv. The Option Contract
1. Option Contract- when offeree purchases an irrevocable offer
a.
Pay offeror money (or partial perf, etc) to keep offer on
table for certain amount of time
b.
Option= ones contractual right to accept an offer held
irrevocable for a specified period of time
c.
Needs standard offer/acceptance. CONTRACT!
d.
optionee= original offeree; optionor=original offeror
e.
exercise his option= accept original contract offer
v. Lapse of Time
1. Restatement 41-Lapse of Time
a.
Power of acceptance terminated @ time stated
i. If not stated, reasonable time after offer
ii. reasonable- what ordinary reasonable person
would do/perceive UTC
2. Loring v. City of Boston- offers are limited to reasonable time
a.
Ad in paper for reward if arsonists were caught
b.
tried to collect reward 4 years after ad published
c.
CT- 4 years reasonable time!
d.
RULE- if offer doesnt mention time available, its
reasonable
3. Phillips v. Moor-Offeror must tell oferee if offer expires!
a.
Hay burned in sellers barn after buyer bought it
b.
Common law- owner bears risk of loss
i. About titles, not physical possession
4. Nowadays UCC 2-509, title isnt important
i. Possession, agreements determine ownership
b.
owning physical possession
c.
if offer expires, offeror MUST inform offeree
d.
Restatement 70- offerors silence = acceptance!!
vi. Death/Incapacity of Offeror or Offeree

1. Offer dies with offeror; obligations dont die if contract made!

2. Incapacity: Inability to Contract= 2 tests
i. Cognitive Test- understanding of contract
ii. Volitional Test- motivation behindcontracting
3. Restatement 48-Incapacity/death of offeror or offeree
a.
Offerees power of acceptance terminates when he or
offeror dies or is deprived of legal capacity to enter contract
vii. Rejection/Counteroffer by Offeree
a.
If offeree says NO, offer is dead. Cant say YES later
i. No= death of offer
b.
Considering offer (Ill think about it) death of offer!
c.
Restatement 38- manifestation of assent not to
accept=death
i. UNLESS manifestation of intent to further consider
2. Mailbox Rule
a.
Offer=accepted upon offerees mailing/posting
b.
*W/ option contracts, acceptance must be RECD in option
period to be effective!!!!!!
c.
Morrison v. Thoelke-acceptance valid upon posting!
i. tried to claim offer wasnt accepted until he recd
acceptance in mail
ii. Always going to be a time when contract is
considered incomplete w/ mailing
1. One side will always be unaware
2. Should be offeror b/c they extended offer
iii. RULE- acceptance effective upon dispatch;
revocation/rejection effective upon receipt
3. Counteroffer = rejection of offer (common law puts I reject)
i. Reply to offer which purports to accept but is
CONDITIONL on the offerors assent to addl
terms or terms diff than offered =cntroffer
b.
Livingstone v. Evans-counteroffer=rejection- com law
i. After counteroffer/rejection, offeror can revive offer
c.
OLD- com. Law.-Mirror Image rule- aceptce. must
mirror offer in every aspect; agree to every term as is
i. Adding new terms=counteroffer, rejection
ii. Cant accept offer that wasnt made!!!!!!!!
iii. ***STILL APPLIES IN COMMON LW
d.
New- UCC 2-207-aceptc. Doesnt have to mirror offer
i. Just has to clearly communicate acceptance
e.
When counter ISNT a rejection:
i. When counter ordinary
1. It comes with clear wish to keep first offer
available
2. Ill think about it. In meantime

ii. When offeror communicates that he wont take a

counteroffer as a rejection
iii. Mere Inquiry Rstmt 39
f.
g.

h.

i.

j.

1. can you do it by Friday instead?

Acceptance w/ conditions, addl terms/limitations=counter
Commerce & Industry Insurance Co v. Bayer Corp-UCC
i. Battle of forms
1. businesses attempting to make contracts
using pre-printed forms w/ conflicting terms
2. Proviso clause= self-insulation clause
a. accept, provided you accept my
terms
b. NOT ACCEPTANCE!!
3. 2-207- Addl terms in accept/confirm.
a. expression of acceptance=accept
b. even when terms conflict
c. likely just an oversight
d. not com law accpetc, but UCC holds
it as such
e. offeree accepts all offerors terms
i. stike unlike terms!
4. Applies to merch, non merch, written, non
written, signed or unsigned!
3 ways contracts can be formed w/ different addl term:
i. Diff terms, but neither side makes acceptance
conditional to others acceptance of their terms
ii. Seller makes acceptance conditional on acceptance
of different terms and buyer accepts (as counteroff.)
iii. Even if counter isnt formally accepted, implied in
fact contract can be found
Klocek v. Gateway-UCC 2-207
i. Did contract of sale include terms and agreemt?
ii. tries to argue agreed to arbitrate
UCC2-207- Diff/Addl terms in acceptance (still acceptance!)
i. (1)IS THERE A CONTRACT?(@ least 1 side in
writing)

2-207(3)
2-207(2)

OR

YES

NO (proviso clause)

Are both merchants?

Yes
AutoInclusion Rule

NO

Auto-Exclusion
Rule

If no one acts,
HAVE NOTHING

Parties act as if they

do have contract

Implied in fact contract

consists of terms parties
agree on

New term
automatically
included! UNLESS
a,b,c, of subsect (2)

IV.

Both parties must accept

new term-proposal

4. Contracts void for Vagueness, Indefiniteness, Uncertaint.

a.
Restatement 33
i. Even if manifestation of intent is intended to be
understood as offer, cant be accepted as contract
unless terms are reasonably certain
b.
NO CONTRACT AT ALL
i. Not just voided
5. Gap Fillers
a.
Contract law doesnt require specificity as to every term
i. Assumes unmentioned matter will adopt some
reasonable term/meaning between parties
ii. Court supplies one
1. UCC 2-204 fills gap by attributing to the
parties an intention, based on:
a. Usage of Trade-industry custom
b. Course of Dealing-parties past
conduct in contracts w/ each other
c. Course of Perf-what parties do
while performing this particular
contract
6. Walker v. Keith-lease agreements must specify $$
a.
Rental agreements w/o price=too uncertain
b.
Rent is core of agreement; no price, no agreement
c.
UCC will fill in gaps, so long as intent to agree is present
7. Rego v. Decker- ct cant fill gaps if too much uncertainty
a.
Ct cant order specific performance when unclear as to
what that would have been
b.
Cts cant impose performance that party didnt agree to
8. Agreement to agree contract! Agreement to Agree Doctrine:
a.
when 2 parties purport to reach a final binding
arrangement, but leave material terms for later negotiation,
only form agreement to agree, NOT CONTRACT
b.
If court can rationally fill gap w/ circumstances, it can
c.
***btwn merchants, price material term!! Can leave out!
i. UCC 2-305
d.
Dont confuse invites to deal w/ offers
i. NEED definite bargain presented

Consideration
i.

Contract= bargain to which 2 parties commit themselves

1. bargain= trade, swap, this-for-that, quid pro quo

*In every contract, each party must (a) provide something to other
and (b)receive something from the other
1. the something= CONSIDERATION!
2. When party suffers legal detriment (gives promise or
performance that law doesnt force him to give/do)
iii. No promise=enforceable without consideration from promisee
1. Consideration= promise or performance of his own
iv. Naked promise- promise outside of a contract, ordinary promises, mere
gratuitous promise, gift promise
1. ANY promise WITHOUT consideration!
v. Hamer v. Sidway-forebearance can = consideration!
1. Uncle promises nephew $5k if he doesnt smoke, drink etc. until
21
2. Nephew obeys until 21; uncle dies b4 he can pay; estate wont pay
3. CT- nephews forbearance from drinking/smoking/gambling etc
was his consideration for uncles promise.made it binding!
4. RULE- consideration= benefit to promisor OR forebearance by
promisee!!
5. RULE- not doing something youre legally allowed to do=
consideration!
b. Adequacy of Consideration
i. Sufficient- offered consideration must be something of legal value
1. NOT love/affection/emotional stuff
ii. Adequate- refers to the quantity of the amounts exchange exchanged
1. Law doesnt care about adequacy of consideration!!!
iii. If parties manifest legit intention to form bargain, law doesnt care about
value of what each conveys to other
iv. Valuation= private action; subjective to parties
v. Batsakis v. Demotsis- adequacy of exchange doesnt matter!
1. in US asked by in Greece for money
2. Agreement said $2,000 to
3. Only got about $25, but wrote in letter to she got $2,000
a.
s mistake s problem!
4. Courts job= enforce agreement, not rewrite
5. Consideration was there, should have watched what she wrote
vi. Sham Consideration- not legitimate consideration, fake consideration,
no benefit to promisor/forbearance by promisee
1. Just meant to create the pretense of consideration
2. To make gifting appear to be a bargain; promisor would give
regardless
3. Tries to make gift giving a binding agreement
4. SHAM CONSIDERATION= NO CONSIDERATION
5. When promisor doesnt genuinely want the consideration at all
vii. Schnell v. Nell- love/affection consideration!
1. Wife dies w/o property, up to husband to execute will
ii.

2. (husband) agreed to give beneficiaries in will $200 in exchange

for 1 cent consideration from beneficiaries
a.
1 cent= sham consideration!!!!!
3. s argued that wifes love and affection=consideration for s
promise to pay beneficiaries
4. True intention of giving $200 was GIFT, s tried to make it a
binding contract by paying 1 cent
5. PAST CONSIDERATION = NO CONSIDERATION
6. Mere unequal exchange of money(1 cent/$200)consideration!
viii. Liquidated Value- when disparate value DOES matter
1. Liquidate- to transform into monetary value
2. value is fully liquidated= all reasonable persons agree on value
a.
Value of penny is fully liquidated= 1 cent
3. Wholly Liquidated- of undisputed exact value
4. RULE: if 2 parties purport to contract for an exchange of items
which, as a matter of indisputable reality, are of different liquidated
values, one party fails to give consideration and NO CONTRACT
EXISTS
5. When values of items exchanged are, by law, indisputably
unequal-wholly liquidated- no contract!!!!!
a.
Ex) Exchange $100 for 80 $1 bills.
ix. Bargained for
1. A promise is only enforceable if bargained for (belong to contrct)
a.
Parties sell their promises to each other, and buy each
others promises with their own
b.
Promise= bargained for if it belongs to an offer that
undergoes acceptance
2. EXCHANGE!
a.
Ill ____ if you____
3. In appreciation of in exchange for!
x. Past Consideration
a.
Past consideration = no consideration
b.
Promise that doesnt belong to a contract=NAKED!
c.
Love and affection=past consideration=NO consideration
2. Hayes v. Plantations Steel Co- past consider=no consider
a.
promised $ for his commitment to company at retiremt.
b.
s consideration for promise= work history
c.
CT- Past consideration= NOT CONSIDERATION
d.
Consideration must come AFTER promise is executed
e.
Promise didnt induce retirement. Happening anyway
3. Mills v. Wyman- moral consideration sufficient consideration!
a.
takes care of s sick son until he dies
b.
wrote to promising to repay him; didnt
i. no consideration! Except parent-son liability
c.
CT- no consideration; didnt request care, no bargain!
d.
CT- violated moral duty, but no LEGAL duty

i. No actual contract existed

ii. Care was given before agreement made!

4. *Webb v. McGowan- Moral Obligations Rule trigger

a.
fell with block off building to protect
b.
promised to pay for rest of life
c.
died, estate refused to keep paying
d.
CT- gave MATERIAL BENEFIT of life!
i. In receiving benefit, became morally bound
e.
RULE: promisee cares for/improves/preserves prop of
promisor==CONSIDERATION for promise to pay!
f.
Even though consideration technically in past, morally,
acknowledge it as consideration NOW
g.
RULE: moral obligation =sufficient consideration when
promisor recs material benefit @ expense of promisee
Moral Obligation- EXCEPTION to Consideration Doctrine
1. If statue of limitations runs out on a debt owed, but the debtor
thereafter promises to repay, his promise is enforceable, despite
lack of new consideration for new promise to repay
a.
Enforceable on the theory of moral obligation/consid.
b.
* some jdxns require new promise be in writing
c. Forbearance as Consideration/ Legal Detriment/Loss of Freedom
1. Legal detriment-Giving promise/perf that the law doesnt force
you to
a.
Law of contracts= law
b.
If theres a binding contract, action legal detriment
2. Refraining from doing what he has the legal right to do or not do
3. One partys legal detriment= other partys legal benefit
ii. Fiege v. Boehm- forbearance = detriment to promisor= consideration!
1. believed impregnated her
2. promised not to bring legal action if promised to pay child
support
3. @ time, bastardy = crime, punishable by law
4. By promising not to press charges, suffered detriment
a.
Sufficient consideration!
d. Preexisting Legal Duty
i. Promise to perform preexisting legal duty consideration!
1. Ex) cop promising to key eye out for ____
2. Ex) already contracted to do something, try to use performance
youre already legally bound to do as consideration for more $ or
another contract! (COMMON LAW legal duty)
ii. Harris v. Watson- full effort from sailors is expected of them!
1. Agreement to pay sailors more to exert themselves to save ship
2. CT- no, sailors had legal duty to do that anyway as part of job!
Hired by contract,
iii. Stilk v. Myrick-Dont get extra pay for doing job hired for!
xi.

then required to
perform and be
compensated as
contract says!

e.

f.

g.

h.

1. 2 sailors deserted, captain offered to split their wages w/ remaing.

2. NO consideration- sailors would have had to do that work anyway
a.
More money = new bargain; needed new consideration
iv. Lingenfelderv. Wainwight Brewery-dont get more $ for same job!
1. Dont get to exort more money to fulfill original job!
2. More money=modification=new bargain, need new consideration
3. RULE-When party just does what already obligated to do, cant
demand addl compensation!
4. More money promise w/ change in job= naked promise
Conditional Promise as Consideration
i. Conditional consideration is still consideration
1. Offerors duty to perform=conditional on occurrence of some
event
a.
Ex) A promises to sell and B promises to buy if As
employees dont strike before delivery
b.
Entire transaction depends on As employees, but
consideration still exists on both sides- still contract
2. BINDS!
3. If offeror has any control over conditional event, must use
reasonable effort to make it happen
Modifications
i. Accord- agreement to accept a substituted or different performance
1. Executory Accord-original claim not terminated until new
performance rendered
2. Executed Accord- substitute contract
3. **Still requires offer, acceptance and consideration!!
ii. Satisfaction- the execution of a new agreement
iii. Substitute Agreement- both parties intend new agreement to substitute
old one; IMMEDIATELY terminates original contract/claim
1. aka- Executed Accord
iv. Clark v. Elza-Agreement to X preexisting duty will be assumed executory
accd
1. Rule: In absence of evidence to contrary, agreement to discharge
pre-existing claim =executory accord and claim dismissed on perf.
2. RULE: If debtor neither breaches the accord nor provides
reasonable basis for concluding he wont perform, creditor cant
enforce underlying claim/cause of action
3. RULE: Accord=performed as mandated, underlying claim=dead
UCC 2-209(1)
i. Agreement modifying Article II contract NO CONSIDE. NEEDED!
1. Departure from common law- usually need new consid. 2 modify
ii. Bonafide good faith dispute= consideration for new agreement
The Illusory Promise- Restatement 77
i. Looks like a promise, sounds like promise, but is NOT promise!
ii. When one appears to make promise, but attaches some term that reserves
his right to dishonor it unconditionally, when ever and for whatever reason

Wood v. Lucy Lady Duff Gordon-consideration can be implied!-CORDOZO

1. = fashion designer, endorsement was very valuable
2. = hired by to be exclusive agency
a.
had exclusive right to place her endorsements
3. In return, would get of profits from contracts he made
4. started also endorsing on her own and not sharing profits
a.
alleged breach of contract
b.
argued never had contract b/c agreement didnt
enumerate s duties and didnt bind/require to place
endorsements/market for ; promise=illusory
5. claimed that although agreement looked like promise, it was
illusory because it never actually bound/required to do anything!
6. CT- Cordozo finds consideration in apparently illusory contract
a.
Implied reasonable effort obligation
b.
s expected efforts=implied
c.
Consideration= s implied promise to use his business to
help promote s
d.
If he didnt, no money would be made!!
7. RULE- laws arent stringent to letter anymore!
a.
When appropriate, all thats needed are facts that reflect
obligation
8. RULE- when party A conveys to party B exclusive right to
sell/mkt/distribute party As property, B implicitly promises to use
reasonable effor to promote As property/objectives
iv. Slyvan Crest Sand Co. v. U.S.-promiseillusory just bc promisor has
choice btwn 2+ possible considerations
1. Reserving power of cancellation= acceptance and promise to
deliver in reasonable time UNLESS notice of cancellation given
2. promised to either accept or notify of cancellation
a.
Did neither broke promise!
3. Requirements contract- buy all I require from you
a.
Exclusivity=giving up right to buy elsewhere
b.
^^^Forbearance! Legal Detriment! Consideration!
c.
RULE- any case under UCC implies reasonable notice be
given
4. McMichael v. Price-Requirements contract!
a.
agreed to buy all requirements from
b.
Mutual obligation: obliged to sell, obliged to buy!
c.
Consideration for s promise to sell= exclusivity
d.
RULE- Bilateral contracts need mutuality of obligation
i. Both parties bound or neither bound
e.
RULE- No mutual commitment= illusory promise!!
v. Illusory v. Conditional
1. Illusory- gives promisor freedom to honor or dishonor promise
whenever and for whatever reason, no consideration

iii.

2. Conditional-gives consideration, promises that if condition is

within his control, hell attempt to bring it about. If condition
happens, promisor MUST perform
vi. Illusory v. Naked promise
1. Illusory- NO PROMISE AT ALL
2. Naked- true promise, but lacks consideration
3. If one side makes illusory promise, other sides promise is naked
b/c it receives no consideration
i. PROMISSORY ESTOPPEL-no consideration, but reliance. Help!
i. Promissory Estoppel- if one makes promise w/o receiving consideration,
but promisee reasonable and foreseeably relies on promise to detriment,
promise IS enforceable to extent necessary to rectify resulting unfairness
1. Enforcement of promises based on reliance
2. EQUITABLE RELIEF!!!!!!!!! (no remedy @ law bc no conside)
Allegheny College v. Natl Chautaqua Bank- charitable subscriptions
1. (acting 4 dead) gave $$ to in her will upon her death
a.
Condition of gift: put $$ in namesake memorial fund
b.
Paid interest amount annually to during life
2. Promisor repudiates her promise
3. Upon death, sues for money originally promised
4. CT- when accepted annual interest, implied intent to comply with
wishes for namesake fund
5. RULE- even though donations=gifts, if theyre relied on, promise
is enforceable
a.
Even w/o consideration b/c is a charitable donation
iii. 5 core requirements for promissory estoppel
1. Promise made between and
2. Promisee reasonably relied on promise
3. Relied to her detriment
4. Reliance= foreseeable to promisor
5. Reliance resulted in injustice
iv. **To Invoke Promissory Estoppel, PROMISOR MUST: 90 Resttmt.
1. Reasonably expect to induce action or forbearance with his words
2. In fact induce action or forbearance
3. Injustice can only be avoided by enforcing promise
v. Universal Comp. Systems v. Medial Services Assoc of PA
1. relied to his detriment on promise made by
2. Million Dollar Question- was reliance reasonable?!
3. CT-yes; reliance here= consideration, made agree. Binding
4. Branco Ent. v. Delta Roofing-reliance on bid=prmsy estp!
a.
s foreseeable reliance on s bid = 90 applies
b.
RULE: contract affected btwn genl contractor and
subcontractor based on genls reliance on subs bid for
component of project being bid on
5. Hoffman v. Red Owl Stores-limits of Prom. Estopp.
ii.

a.
b.
c.

V.

Preparation costs are not covered by prom. Estp

Induced actions are recoverable via prm esp
i. But not those wouldve taken anyway
Promise can lack certain specifics and still use prm est.
i. 90 doesnt impose reqmt that promise be
comprehesive enough to be a contract

Remedies (Damages, Restitution, Equity)

1. Prayer- part of complaint that specifies relief sought
2. Damages- money
3. Restitution- could be $, might not be
ii. UCC 1-106- remedies shall be liberally administered
a.
Put aggrieved party in as good of position as full perf
iii. Damages must be FORESEEABLE & CERTAIN to be recoverable
b. Types and Goals of Awarded Contract Damages
i. had relied on promise by to his detriment
1. Objective: Prevent unjust enrichment of
2. Interest Protected: Restitution Interest
ii. has, in reliance on s promise, changed his position
1. Objective: Put in as good a position as he was before promise
2. Interest Protected: Reliance Interest
iii. W/o insisting on reliance or enrichmt, give benefit of promise perfd
1. Objective: Put in as good a position as if had fully performed
2. Interest Protected: Expectation Interest
3. **General objective of award of damages in contract case
iv. Restitution
1. If Party A is unjustly enriched at Party Bs expense, A is entitled to
remedy that will correct injustice
2. *Carries implicit cancellation of contract!
a.
MUST be total breach, not just partial (Restatmt 373)
3. Always and ONLY remedy for unjust enrichment
4. NOT REMEDY FOR BREACH OF CONTRACT
a.
Doesnt enforce contract
b.
Makes it go away, so legally, never existed
c.
Recovery off of the contract, not on the contract
5. s amount of enrichment= s restitution interest
a.
benefit conferred- amount of $ benefit unjustly recd
b.
doesnt have to have material benefit
i. Law considers benefit=time, effort, labor too

ii. Only IN PERFORMANCE, not in prep of

6. *Most restitution cases involved no contract or quasi-contracts

a.
Quasi-Contract = implied-in-law contract
7. Quantum Meruit- amount deserved; value of services
rendered
8. Quantum Valebant-amount of worth; value of propert/$
delievered
9. Maglica v. Maglica-value of services, not value of services benefit
a.
and owned company together
b.
Broke up, wanted quantum meruit restitution interest
c.
CT- q.m. allows for recovery of value of SERVICES, not
value of s benefit from services
d.
RULE- Quantum Meruit- value of services rendered, not
the value of the benefit from those services
e.
***Benefit MUST BE ACCEPTED
10. Feingold v. Pucello-quan.mer. reqs unjust enrichment!
a.
decided not to use attorney after attny did research
b.
was in no way enriched by attorneys work
c.
CT- quantum meruit & resitution N/A here!!!
11. U.S. v. Algernon Blair, Inc.- qm recvy unaffected by losing ctrt!
a.
Even if full performance would = loss for , still entitled to
restitution via quantum meruit
b.
DOESNT matter if contract=losing contract
i. still entitled to restitution interest for benefit
conveyed
12. Rosenberg v. Levin-fired attny recvy limited by contract fee!
a.
Attny can be fired w/o cause, but entitled to restitution
b.
Can recover reasonable amount of services pre-discharge
i. LIMITED by contract fee!!
c.
*in contingency fee cases, QM claim only if client wins!
13. Britton v. Turner-even breaching party can seek restitution!
a.
Even if party breaches, still entitled to $ for services
rendered to that point
b.
BUT, benefit of services MUST be accepted!!!
c.
Restitution awarded cant exceed contract price
v. Reliance
a.
Money/property parts in reliance on contract
i. Amount spent by after formation of contract
b.
When $ amount of expectation interest=uncertain
c.
ONLY interest where preparation costs can be covered
2. Sullivan v. OConnor-put patient in pre-contract position
a.
Patients entitled to recover only that which resulted from
breach, not what wouldve be incurred anyway
b.
Benefit of the bargain (expectation) couldnt be proved
i. Fallback: Reliance interest

3. Anglia TV v. Reed-wasted $ can be recoved when wasted b/c of s

breach
a.
made many arrgnmts for movie b4 they had actor
b.
Hired actor; actor quit day after contract signed
c.
knew of $ already spent and knew breach =waste
d.
b/c of , all expenses WASTED
e.
RULE- wasted expend recoverable when wasted b/c of s
breach
f.
RULE: allowed to recover foreseeable reliance/prep.
Costs
g.
*if can prove losing contract, NO recy of any damages.
4. W/ losing contract- max can recover is contract amount

vi.

Expectation (ALWAYS #1 CHOICE IF POSSIBLE!)

i. Amount necessary to fulfill s expectation of fully
performed bargain
ii. must prove results would have been achieve
absent breach
iii. Calculated: diff. btwn promised outcome and actual
otcm.
iv. Allows non-breaching party the benefit of bargain
v. ONLY when loss was foreseeable to as probable
result of breach
2. Hawkins v. McGee-hairy hand case
a.
entitled to diff btwn promised hand and actual
b.
RULE-give $ to put in good position as if promise kept
3. Peevyhouse v. Garland-Economic waste theory!
a.
Contract was for 5 years mining then restore land
b.
Mined and paid lease, but didnt restore land
c.
CT- breach was incidental to terms of contract
i. wouldve had greater benefit under cost of
performance than under actual
ii. Restoration hardly affected land value
1. Just asthetics
d.
Economic Waste Theory-if full perf=econ waste, not
entitled to it
e.
Ct cant award greater benefit than full performance
would have
f.
RULE: when breach=incidental to terms, apply econ waste
theory
4. Thurmond & Assocs. v. Kennedy-Damages should be reasonable!

a.

b.

Damages for defective construction=determined by

measuring cost of repair
i. UNLESS, cost of restoration disproportionate to
propertys loss of value
Damages should be calculated to reasonably compensate,
but be fair to all litigant

5. Limits on the Recovery

a.
Consequential damages-expenses/other losses beyond genl
damages that wouldnt have incurred w/o s breach
i. Ex) loss of profits, medical expenses
b.
Incidental damages- type of consequential damage;
incurred from having to take care of breach
c.
SUBJECT TO 3 LIMITATIONS:
i. Certainty
ii. Forseeability
iii. Avoidability
d.
Certainty
i. Relief denied if too much uncertainty re:
1. Causation; or
2. Extent of s suffering from breach; or
3. Both causation (1) and damages (2)
ii. Freund v. Washington Square Press
1. Cant prove it, cant recover it!
a. If you cant prove result absent
breach, cant recovery that amount!
2. tried to recover for book sales that hadnt
happened speculative
3. CT-acknowledges expectancy interest, but
too speculative to make really pay
4. CT-awards nomial expectancy interest (6)
a. b/c no reliance, restit. Fulfilled
already
5. Can only recover amounts that are certain
6. RULE: Speculation = cant recover
iii. Nominal damages- awarded for breach when has
valid claim but actual damages not proven
iv. Humetrix, Inc. v Gemplus
1. Common law rule- new business cant claim
lost future profits-now only as practical mttr.
2. RULE- jury can award for lost profits so
long as supported by substantial evidence
e.
Foreseeability
i. Damagesrecoverable for loss that breaching party
didnt have reason to foresee as probable result of
breach when contract was made

ii. Under UCC- can recover:

f.

1. Genl damages 2-714(2)

2. Consequential damages 2-714(3)
iii. Hadley v. Baxendale- 2 prong Hadley Test!
1. only liable for losses if:
a. Generally foreseeable or
b. tells of special circumstances in
advance
iv. AM/PM Franchise v. Atlantic Richfield Co.
1. Consequential Damages break down
a. Loss of primary profits
b. Loss of secondary profits
c. Good will damages
i. Loss of future profits,
business reputation
2. RUE-if can prove damages were
foreseeable and w/ certainty=recvy!
Avoidability (duty to mitigate)
i. Aggrieved party had duty to mitigate
1. Lessen harm suffered as best it could
ii. Rockingham County v. Luten Bridge Co
1. hired to build bridge for county
2. b4 bridge finished, decided it didnt want
bridge
3. Told to stop building; finished anyway
4. CT- could only recover amount spent up
until notified of breach
5. RULE: Once contract= breached, nonbreaching party has duty not to ^ resulting
damages
6. RULE: breaching party not liable for
damages could have mitigated post breach
iii. Duty to Mitigate UUC 2-712 cover
1. Doesnt always mean terminating work
2. About minimizing costs to breaching party
AND mitigating future costs/liability that
could result from failure to complete perf.
3. Ex) if not finishing bridge=more dangerous
than finishing bridge
4. If actions against mitigation=reasonable,
breaching party can be liable
iv. Parker v. 20TH Century Fox
1. Recovery for wrongly discharged employee
2. Amt of salary agreed upon minus amount
employer can prove employee earned/w/

reasonable effort might have earned from

other employment
3. Replacement job must discharged job in
order for to recover
4. Money earned post-termination is usually
deducted from damages awarded
v. Aggrieve party is owed:
a. Loss in Value
+ other losses
Answer
- costs avoided
-saving
:
WHAT PARTY IS OWED
g.
Punitive Damages
1. Awarded by ct against when s acts are
particularly heinous and malicious
2. special damages
3. Restatement 355-not recoverable for
breach of contract
4. *Need independent tort/tort-like conduct for
punitive damages
ii. Hibschman Pontiac v. Batchelor
1. s conduct= tortuous act
2. RULE: punitive damages can be awarded
where elements of fraud, malice, gross negli.
Or oppression mingle in controversy
3. Generally, contract law does NOT allow
punitive damage recovery
iii. SCotUS- punitive damges >compensatory =unconst
6. Damages Under UCC
a.
Buyers Damages
i. Buyer has right to reject unsatis. Goods 2-601
1. MUST give notice
2. If buyer holds goods for too long=acceptan.
a. Gives up right to sue for breach!
b. 2-606
3. Buyer can revoke acceptance depending on
time and defect of pdt 2-608
4. If buyer rightfully revokes accpt/rejects
a. 2-712 price of cover
b. Doesnt matter if cover= more $
c. So long as made in good-faith
5. If seller never delivers
a. 2-713
b.
Sellers Damages

i. If buyer breaches b4 acceptance or wrongfully

revokes
1. Damages determined by 2-706
2. Resale; MUST alert buyer of resale
3. Resale= sellers version of cover
ii. Teradyne v. Teledyne Industries
1. Lost volume seller= one who, w/o breach of
buyer, would have had benefits of both
original sale and resale
2. RULE- only buyers get consequential dmgs.
3. RULE-w/ lost vol. sellers resale proceeds
arent credited to breaching buyer
vii. Equitable Remedies
a.
Awarded when LAW FAILS to bring just result
b.
must establish WHY law failed
2. PHH Mortgage v. Barker-foreclosure
a.
Foreclosure=equitable relief for bank
i. 2 steps:
1. Legal & factual basis for foreclosure?
2. Ct must consider equities to see if its appro.
b.
CT- s tried hard to reinstate mortage;
c.
CT- Equity prevents foreclosure despite factual basis
3. Specific Performance
i. Court orders full performance accdg to contract
ii. UCC only allows buyer specific perf, not seller
iii. 2-716: allows spec. perf. when goods=unique
b.
Centex Homes v. Boag
i. couldnt buy condo per agreemnent b/c transd
ii. Paid deposit, but wanted full performance
iii. Condo unique or un-resellable
1. Remedy @ law=adequate
iv. RULE-specific perf no longer automatic 4 real
estate vendors
1. Only when vendor will suffer injury for
which law remed=inadequate
c.
Laclede Gas v. Amoco Oili. Restatement 370- specific perf can be granted if
terms of ctrt so expressed so ct can determine each
ptys duty & conditions under which is to perform
ii. CT- contract clearly outlines each partys duty
iii. *RULE-public interest involved!! People need gas!
1. $ damages to company=insuff for people!
iv. RULE: specific perf=ok when contract terms are
express, ctrt has definite end, law remedy=inadequ
d.
Lumley v. Wagner-negative injunct instead of spec perf
i. Ct couldnt force into servitude

ii. Solution: negative injunction- prevent her from

singing elsewhere, w/o forcing her to sing

iii. Neg injncts- used when commodity in

contract=rare/special talent
iv. Used when legal remedy=inadq.

1. Here: $ damages to wont lessen s loss of

s unique talent

VI.

The Statute of Frauds

Original intent: Britishs parliament wanted to eliminate
fraudulent claims
b.
Solution: Certain agreements HAD to be in writing
c.
Party to be charged- party trying to evade contract
UCC 2-201(1)-Formal Requirements; Statue of Frauds
1. Requires agreements for goods sales over $500 be in writing
2. Contracts for sale of land be in writing
3. Contracts for which parties cant complete performed within a
year
4. Suretyship contracts
in writing- to satisfy statute, writing must be:
1. Signed by party to be charged
2. Evidence contract for sale of goods
3. Specify quantity (*unless requirements conract)
3 QUESTIONS TO ALWAYS ASK
1. Is this the kind of that needs to be in writing?
2. If yes, what satisfies writing?
3. If its supposed to be in writing but isnt, are there exceptions?
Exceptions:
1. Merchant Rule
2. Specialty Manufacturing (made-to-order)
3. Admission of existence of contract in ct-related proceeding
4. Partial Performance
Yarbro v. McGinnis Equpiment Co-suretyship
1. Leading Purpose Exception
a.
if offer to pay someone elses debt=self-serving purpose,
ENFORCEABLE oral promise!
Professional Bull Riders v. Autozone- 1 year provision
1. Statute of Frauds required contract be in writing!
a.
It was oral, but couldnt be performed w/in a year!
2. BUT, had option to terminate contract w/in one year
a.
Option=perf in 1 year IS possible
3. RULE- Performance w/in 1 year must be IMPOSSIBLE in order
for S.O.F. to apply
Eastern Dental Corp v. Isac Masel Co.- Sale of goods $500+
1. Article 2 of UCC says contracts for sale $500+=in writing!
2. RULE- quantity terms in writing of requirements contract dont
have to be specifically numerically stated
a.

ii.

iii.

iv.

v.

vi.

vii.

viii.

Crabtree v. Elizabeth Arden-memorandum & S.O.F.

1. 131 Restatement
a.
Contract w/in statute of frauds=enforceable if evidenced by
any writing signed by/on behalf of party charged which:
i. Reasonably identifies subject matter of contract
ii. Sufficient to indicate contract made
iii. States w/ reasonable certainty essential terms of
unperformed promises
2. 132 Restatement
a.
Evidentiary memoranda can be MULTIPLE DOCS.
i. So long as all reference same subj matter
x. Partial Performance Exception
1. Partial Performance and Land Sale
a.
Normally land sales must be in writing, BUT
b.
Still enforceable without writing if:
i. If buyer has already paid full purchase price
2. Wagers v. Associated Mortgage Investors
a.
Determining Partial Perf. w/ real estate
i. Delivery and assumption of actual/exclusive
possession of land
ii. Payment or tender of consideration
iii. Making of perm, sustant, valuble improvements to
land
3. Partial Perf and 1 year Provision
a.
If one party fully performs= contract typically be enforced
4. Partial Perf and Sale of Goods
5. Partial Performance and Sale of Goods
a.
Statue doesnt require writing for sale $500 IF
i. Contract called for specialty goods
1. Not suitable for sale except 2 buyer
2. Seller started production/acquisition
3. * seller relied on contract to detriment!
xi. Merchants Exception (confirmations)
1. Oral Contract btwn merchants= enforceable IF
a.
w/in reasonable time
b.
Writing of confirmation is recd
i. *writing must satisfy S.O.F.writing reqmts
c.
Pty receiving has reason to know its contents
2. *UNLESS receving merchant gives notice of objection w/in 10dys.
a.
Thomson Printing Machinery Co v. B.F. Goodrich
i. Parties made oral contract
ii. sent purchase order confirmation
iii. Got lost in mailroom; refused to perform
iv. CT- doesnt matter. Confirmation was sent and
objection wasnt made. ENFORCEABLE.
xii. Waiver and Estoppel
ix.

1. Restatment 139: Enforcement by virtue of act in reliance

a.
If promisor can reasonable expect to induce action
b.
Does induce action
c.
Only enforcement of promise can avoid injustice
d.
*ENFORCEABLE w/o a writing!!
2. McIntosh v. Murphy
a.
moved to HI in anticipation of job
i. Oral contract; cant be perfd w/in 1 year
b.
CT- promise enforceable via equitable estoppel
c.
spent $ and made sacrifices for job
d.
Employing equit estop
i. Estops from using stat. of frauds defense

VII. Parol Evidence Rule-an exclusionary rule!

i.
ii.
iii.
iv.

v.

vi.

vii.

viii.

ix.

****ONLY WHEN AN AGREEMENT IS IN WRITING!!!

N/A TO CONTRACT AVOIDANCE MECHANISMS!
Parol Evidence- evidence of oral/written agreements that happened prior
to or contemporaneous to the written agreement in question
Parol Evidence Rule: bans introduction of all negotiations or
agreements occurring prior to signing of writing, that presents
evidences to contrary/contradicting written agreement
Exception: UCC 2-202
1. If writing isnt fully integrated, explanatory evidence=ok
a.
Usage of trade
b.
Course of dealing
c.
Evidence of consistent additional terms
Exception: Collateral Matter exception
a.
Allows evidence of side agreements so long as reasonable
explanation for leaving them out of written agreement
3 QUESTIONS TO ALWAYS ASK:
1. Is there a writing? (must be yes to use PER)
2. Did parties intend writing to be integrated?
a.
Entire and complete agreement?
3. Is agreement partially or wholly integrated?
a.
Partially=only certain terms intended to be final; can admit
addl consistent terms
b.
Wholly=all terms are final; no additional terms
Mitchell v. Lath-fully intergraed = no parol evidence allowed
1. Oral agreement to remove icehouse should have been included in
written agreement
a.
*Something one would expect to be included in writing!!!
Courts approaches to examining integration of agreements
1. Classical View-4 corners
a.
Look just @ plain language of agreement
b.
See if language infers parties intended full integration
c.
**REJCTED by UCC!!!

2. Modern View- doesnt require ambiguity. Looks outside rgdls.

a.
Considers surrounding circumstances as well as words
i. Usage of trade, course of dealing, course of perf
Aka* Provisional
b.
Considers all that might be relevant to finding if parties
Admission Approach
intended full integration
c.
Best way to tell parties intent is by performance!
i. Words can be misleading
3. Luria Bros. v. Pielet Bros Scrap Iron-inconsis terms=excl.
a.
s delivery of metal to was conditional on his getting
metal from another yard
b.
CT-oral discussion of condition excluded from evidence
c.
If sale of goods is conditional on something not mentioned
i. Inconsistent w/ term! EXCLUDED!!
d.
RULE: if agreement intended to be integrated, parol
evidence that sellers obligtns are conditional=EXCLUDE!
4. Lee v. Seagrams- oral collateral agreements not excluded
a.
If oral collateral agreements=separate, independent and
complete contracts, NOT banned by Parol Ev. Rule
b.
RULE- so long as oral agreement doesnt contradict
writing, its admissible parol evidence
c.
MUST convince ct that agreements were intended to be
separtate from beginning
5. Trying to admit additional terms
a.
UCC- certainly would have been included test
b.
Common law- naturally would have been left out test
6. Pym v. Campbell-evidence to NO CONTRACT AT ALL
a.
Parties may admit evidence to show that no contract existed
AT ALL
b.
Not trying to alter/admit new terms
c.
Trying to prove no contract existed at ALL
7. Restatement 214
a.
Evidence=admissible if showing:
i. Writing integrated
ii. Writing only partially integrated
iii. Meaning of writing
iv. Evidence of fraud, wrongdoing
x. Interpretation: evidence of intent and surrounding circumstances
1. Eichengreen v. Rollins, Inc
a.
Extrinsic Evidence- broader than parol evidence
i. includes parol evidence and ALSO statements about
intending meanings MADE AT ANY TIME
2. *Pacific Gas & Elec v. G.W. Thomas Drayage & Rigging Co
a.
claims indemnity provision just covered 3rd parties
i. not
b.
CT- REJECTS 4 CORNERS approach!! (wouldve = vic.)
i. Surface reading doesnt nec. = intentions

ii. Judges interp does always= parties intentions

c.
d.
e.

Extrinsic evidence allows ct into parties shoes

Here, words in contract could=s interp. Need more info!
RULE: if ct decides that contract = susceptible to either
s OR s interp, extrinsic
evidence=relevant/admissible

3. Restatement 202- Rules in aid of Interpretation

a.
Words/other conduct= interp in light of circum.
b.
Writing(s) interpreted as whole
c.
Give contract generally prevailing meaning
i. *UNLESS diff. intent is manifested
d.
Performance w/o objection= important!
Admissibility of usage of trade/course of dealing/course of perf
1. *Shines light on parties intentions!!!
2. Course of performance- how parties have acted in THIS contract
3. Course of dealing- how parties have acted in prior/separate cntrts.
a.
Shows how parties typically interpret contracts
b.
Express terms>course of perform.>course of dealing
4. Nanakuli Paving v. Shell Oil
a.
Usage of trade- binding if so commonly practiced in
locality that party SHOULD be aware of it
i. If can be evidenced=binding
ii. Dont want it considrd? Contract must say so
b.
2-204= One time course of performance
i. BUT, 2+ can, doesnt delineate further
ii. waiver = only once or rarely
xii. Ambiguity?
1. If term=ambiguous, interpret in light most favorable to party who
did NOT draft agreement
a.
And in light most favorable to public interest
xi.

VIII. Avoidance of the Contract

a. *ALWAYS JUDGED BY PRE-CONTRACT ACTIONS/BEHAVIOR
b. A contract must EXIST first!!
1. Mistake
2. Fraud
3. Duress
4. Undue Influence
5. Illegality
6. Incapacity
7. Unconscionability
8. Impossibility/Impracticability
c. Mistake- a belief not in accordance with the facts

ASK: 1)mistake? 2)reasonable?

Misunderstanding- confusion in bargaining process
1. Raffles v. Wichelhaus-Ship Peerless
a.
Misunderstanding as to which ship Peerless
b.
Terms=ambiguous
i. meeting of the minds never actually required to
make K actually means that NO K b/c parties
attached different BUT REASONABLE meanings
to terms of K
ii. (unless one party KNOWS of others meaning
then not both are reasonable)
2. Look at meanings attached-REASONABLE?
3. Restatement 20-Effects of misunderstanding
4. No manifestation of assent
5. Parties attach materially different meanings
6. If party A = responsible for the misunderstanding, her attached
meaning is not reasonable
a.
Paint bookshelf with dictionary on it, son accidentally
placed dictionary on wrong shelf months before
b.
No way for painter to know it was a mistake, mother could
have/was responsible for it!
iii. Mutual Mistake
1. Doctrine: Must show:
a.
When forming cnt, parties manifest mutual belief to pt of
fact that some set of circumstances existed
b.
Party B understands that BUT FOR belief, A would be
unwilling to enter contract
c.
Belief=mistaken!
2. Shepard v. Walker- barren cow!
a.
Parties contracted for sale of barren cow
b.
Each party believed cow=barren!
i. Belief not in accordance w/ facts!
ii. risk that cow wasnt barren!
iii. Mutual mistake cow =barren
3. Wood v. Boynton- $1 diamond
a.
Neither buyer/seller knew exactly what stone was
b.
Not clear exactly what bargain was over
c.
Seller willing sold for $1
d.
BOTH GOT WHAT BARGAINED FOR!
i. Info found out later= irrelev.
ii. Risk was part of bargain!
4. Law of Warranty
a.
Warranty- ones contractual promise that commodity he
purveys will be of some specific quality
b.
Warranties of title- guarantees seller will convey good title
i. UCC 2-312
i.
ii.

Warranties of Quality-descriptor, promise, affirmation

i. Express- created when seller makes affirm. of fact,
describes item, makes promise relating to goods,
displays model ****BINDING!!!!!
1. No writing necessary; actions speak!
2. Leads buyer to purchase!!
3. Opinions actionable
ii. Implied- created by legislature to fulfill buyers
typical expectations
1. implied warranty of merchantability
a. goods will fulfill usual functions
Can exclude from contracts,
b. *only if seller is MERCHANT!
but exclusion MUST be in
c. Applies automatically
writing!
2. Fitness for particular purpose
a. seller knows buyer has special use
b. buyer relies on sellers
expertise/words
c.

iv.