Common Law -

1) Intent to be bound?

2) Are material terms reasonably certain?

UCC -

1) Intend to contract?

2) Is there a reasonably certain basis for giving an appropriate remedy?

Traditional - K Fails for Indefiniteness (CT will not supply gapfiller)

Modern - Allow K in certain cases (also UCC view)

Manner of Acceptance (Indifferent Offer - Bi-K) - 2 Views

*uni-k can only be accepted by full performance*

Common Law (traditional) -

- Offeror is master of offer. Offer must be accepted in manner requested. (Default to bi-k otherwise)

UCC (Modern)

- Acceptance can be done in reasonable manner (CT - strong presumption of indifference)

- If O'or wants specific manner, must state clearly in offer

Common Law - non-conforming goods are counter-offer, if by takes them he is accepting the C/O

Modern (UCC) - C/L view is "abusive to seller"

- Non-conforming looked at as seller's acceptance of buyer's OG offer.

- Goods are looked at as breach (remedy damages), but buyer can accept

- EXCEPTION---if seller gives "seasonable notice" that goods are "accomodation", no breach by seller

Rest 1 - knowledge must arrive before beginning of performance

Rest 2d - knowledge must arrive before performance is complete

Intent to Accept Offer (Uni-K) - 2 Views

-aka-when performance is ambiguous w/ respect to intent, what test to use

Classic - Subjective Test, look to performer's testimony

Rest 2d - Objective Test, presumption of intent unless evidence to contrary

Intent to Accept Offer (Uni-K) - 2 Views

-when does intend need to be present (w/ regard to performance)

Rest 1 - present before performance commenced

Rest 2d - present before performance complete

Classic - no notice required

Rest 2d - notice required if O'ee has reason to know O'or will not get notice with reasonable certitude/time

Traditional - silent is not a promise, no K

Rest 2d - O'ee can enforce acceptance by silence (look to course of dealing)

Acceptance by Conduct - Seller sends unsolicited merch to buyer

2 views

C/L - if buyer exercises "dominion and control"

US Code39 - treated as gift b/c of "abusive situation" created by seller. (look to prior dealings to see if acceptance by silence is implied)

Revocation of offer to Uni-K - Partial Performance

2 views

Rest 2d (MAJ) - irrevocable option-K formed for O'ee. O'or is only bound not to revoke

NY Law (MIN) - Even O'or isnt bound until full performance

Keep in Mind - mere preparation is not "partial performance", so cant bind O'or

Medium of Acceptance (think mail-box rule)

2 views

C/L - medium must be authorized

- if not expressly stated, look at medium offer was transmitted through initially

- if no reasonable diligence - effective on recepit

UCC/Rest 2d - must be "reasonable".

- if no reasonable diligence, but still would get there in same time, then effective when sent

* If "unreasonable" medium, effective on receipt, not delivery

Offer - Mistake in Transmission to detriment of O'or(seller)

2 Views

Majority - Objective Thoery of K - there is a K UNLESS O'ee has reason to believe there was a mistake

Minority - only apply "objective theory of K" when O'or is at fault for mistake (since no intent to be bound, no K unless O'or at fault)

Offer - Mistake in Transmission to benefit of O'or(seller)

2 Views

Majority - objective theory

Minority - probably would allow mistake b/c we can assume O'or 'intended' to be bound if it is to his benefit

Power of Acceptance - Lapse of Time - How to measure time?

2 Views

If time stated:

Majority (prevailing) - date received

Minority - date sent

If time not stated: Reasonable time

Effect of Late Acceptance (when O'or doesn't tell O'ee the acceptance was late)

3 views

2 Scenarios

1) if time stated in offer (1 view)

2) if used "reasonable time" (3 views)

Time stated: late acceptance is counter-offer

Reasonable time:

Rest 2d - silence usually means O'or accepted it b/c if O'or thought it was unreasonable late, he woulda said something

Most auth - silence means nothing

Some auth - silence is acceptance

Identical Cross-Offers

2 views

i.e. A offers to sell car to B, and B offers to buy car from A

Traditional - does not create K, O'ee must know the O'or in order to accept it

Modern (Rest 2d) - Yes K. Two O'ors could assent in advance and suggests that such assent may be inferred when both parties think a K has been formed

Effect of Beginning Performance - Uni-K

3 Views

Traditional - Offer to uni-K can be revoked any time before full performance

Modern (Rest) - partial performance converts offer into offer for option K

Untenable View - partial perf creates a bi-K

Mistake in Transmission (offer) - when message modified through fault of 3rd party (ie phone co.)

2 views

Majority - operative as received by O'ee, unless O'ee has reason to believe offer was altered by 3rd party

Minority - no K formed. (objective theory of intent to form Ks does not even apply)

Notice of Performance to Uni-K (when is it required)

3 views

Traditional (MIN) - not required unless requested by O'or

Rest 2d (MAJ) - required only when O'ee has reason to know O'or has no adequate means of learning of performance

- O'ee discharged if uses reasonable diligent to notify,or

- O'or learns of perf w/in reasonable time, or

- offer indicicates notification not required

Other Minority - same as Rest 2d, but if notice required, no K until notice sent (i.e. notice is condition precedent to formation)

Power of Acceptance - lapse of time, effect of late acceptance

Waiver of lateness - 1 view

UNTENABLE VIEW - K formed b/c lateness waived w/o communicating this to O'ee

-untenable b/c waiver is for performance, not formation

Offer - Death of O/or

2 views

Traditional - terminates offer, even if O'ee is not notified

Modern - terminates offer, only if O'ee is aware of it

Offer - lack of capacity of O'or

If Adjudicated - 2 views

No Adjudication - 1 view

If adj:

Traditional - all outstanding offers terminated, even if O'ee not notified

Modern - terminated only if O'ee is aware

No adj: terminated only if O'ee is aware

Rejection/Counter-offer - C/L

3 rules

1) rejection/C-O terminates power of acceptance unless O'or or O'ee manifests a contrary intention

2) Miror image rule - if anything is changed (even if trivial), c/o acts as rejection

3) Last shot rule - last documents that purports to be an offer or acceptance governs the terms of the K

Mirror image/Last shot relationship - C/L

-aka timing of acceptance

- Before buyer accepts, use mirror image rule

-After buyer accepts, use last shot (almost always the sellers forms are the last ones sent)

1 - Look here to see if Communication of parties warrants a K (doesnt have to be in writing)

2 - If yes to (1), look here for terms of K

3 - If no to (1), look here to see if Conduct formed a K

UCC 2-207 (1) - Tests for "definite and seasonable expression of acceptance"

2 tests

1 - no definite expression of acceptnace if "significant divergence as to dickered term"

2 (better test) - reasonable person in position of B would conclude it is definite expression of acceptance 

*when two tests conflict, use reasonable person

Non-Merchant -

- Add'l terms are proposals to be added

- B's silence does not act as acceptance

- B needs to "actively accept" to new terms

Merchant - 

-B's failure to object w/in reasonable time is deemed as acceptance

UNLESS

- (a) offer expressly lmiits acceptance to terms of offer, or

- (b) added term "materially alters" K

- (c) B has already given notice of objection to proposed term

2-207 v. Rolling K Theory

(for terms in box)

Rolling K:

- S is O'or

- if B doesn't return w/in specified time, the K is formed on S's terms

2-207:

- B is O'or (usually the case in sale of goods)

- Shipment and Terms are S's acceptance (provided that terms do not explicitly condition acceptance on B's acceptance of terms)

- Look to (2) to decide whether add'l terms will be part of K

Different Terms (battle of forms)

3 views

Majority - Knock out rule

UCC comment - treat as add'l term under 2-207(2)

Min - treat as propoasal to change K (different terms only become part of K if "or assents to their inclusion and subsequent modification of K)

When can Irrevocable offer be made w/o consideration?

3 "views"

C/L - never

UCC 2-205 - "Firm Offer"

-O'or is merchant (O'ee need not be merchant)

-Signed writing

-Terms give "assurance" that offer will be held open

-irrevocable for a) time stated, b) if no time stated, "reasonable time", c) neither can exceed 90 days!

NYGOL

-when O'or is not merchant

-signed writing that states offer is irrevocable

-(no time constraints on this one)

Termination of Irrevocable Offer

Terminated by.... (3 ways)

- lapse of time

- death/destruction of person/thing essential to performance

- supervening illegality

Termination of Irrevocable Offer

NOT Terminated by.... (3 ways)

1) revocation (duh)

2) death/supervening incapacity of O'or/O'ee

3) Rejection (i.e. if you paid for 30 days, you get 30 days)

Consideration - Legal Detriment - Is an invalid claim legal detriment?

4 views

Abandoned - does not constitute detriment

Rest 1 (MAJ) - detriment if claimant asserted in good faith, and reasonable person culd believe the claim is well founded

NY (MIN) - detriment if claimant asserted in good faith

Rest 2d - either good fiath or objective uncertainty as to the validity of a claim is sufficient

Purported Consideration - Sham Conisderation (not actually given, but said to be given)

2 views

Classic (MAJ) - recital of consideration is sham, and K is not enforceable unless consideration actually given

Rest 2d - sufficent, provided

-signed writing

-limited to "guarantees and option Ks"

-the "option" is for a "reasonable time"

Purported Consideration - Nominal Conisderation (consideration is paid, but clearly not "bargained for [minimal payment])

2 views

Classic (MAJ) - detriment is clearly not bargained for, so not enforceable

Rest 2d - still sufficient, provided that

- signed writing

- limited to guarantees and option ks

- option is for "reasonable time"

Pre-Existing Duty Rule - Modifications (2-party case)

6 views

Minority - PEDR does not apply to any K "modifications" (no consideration needed to modify)

Majority - PEDR applies

Minority w/in Majority - Suspend PEDR for modifications when modification is made due to "unforeseen difficulties"

Rest 2d - Suspend PEDR when modification...

-is made due to "unanticipated circumstances" (ie better job offer) AND

-both parties have "some performance remaining" from OG K AND

-modification has fair and equitable terms

UCC 2-209 - modification does not require consideration, but NOM requires signed writing

NYGOL - written agreement for modification or discharge (consideration excused if in writing)

Model Written Obligations Act - need signed writing and express language for the intent to be bound

Pre-Existing Duty Rule - 3 party case

-where new K b/w A and C

-not a modification of the K b/w A and B

3 views

Majority - No detriment by A to C, so agreement lack consideration, unenforceable

Rest 1 - Although no "detriment" to A, there is "benefit to" promisor (C), which is same thing as "detriment to" promisee (A). So there is consideration, enforceable

Rest 2d - in 3 party case, coercion is less likely, so PEDR not applied. So there is detriment>consideration>enforceable

-PED applies where PED is owed to "promisor" (C)

-here, PED is to a 3rd party (B), so no PEDR

*Rest 1/2d produce same result basicallly

C/L - Oral modification effective even if K specifies that oral modification is not permitted

UCC - NOM valid

-EXCEPTION- b/w merchants, the NOM clause must be signed by other party

-WAIVER- for waiver to be effective, Δ must prove reliance (i.e. would have delivered on time if there were no modifications)

Accord and Satisfaction: Old Tradional Law

(before "6 cases")

2 views

Majority - part payment by debtor of amt here/now undisputably due is not detriment to support a promise by the creditor to discharge the entire agreement.

Minority - rejects this ^ rule

Accord and Satisfaction - Case 1

There’s a ‘liquidated claim’ of $100. Debtor (D) sends partial payment ($50) which says ‘paid in full’ to creditor (C). C cashes the check. 

Accord and Satisfaction - Case 2

C claims $100, D claims $50 (Unliquidated Claim) - D sends $75 which says ‘paid in full’. C cashes the check.

This is Accord and Satisfaction

$25 (disputed portion) is consideration

Accord and Satisfaction - Case 3 (GF Dispute) - 2 Views

C claims $100, D claims $50. D sends $50 -- D is only sending the ‘undisputed’ portion of the C’s claim. C cashes the check

Majority - Is A&S, b/c CT wants to limit the floodgate of cases involving GF Disputes

MIN (very small amt) - D only sent liquidated portion, so no consideration, no A&S

Accord and Satisfaction - Case 4 - A&S split

C and D come up with an agreement to for partial payment to satisfy an ‘unliquidated debt’ -- then later the check is sent.

-Split makes no difference.

-If pmt was more than undisputed portion, then A&S

-If pmt was same as undisputed portion, then (Maj-A&S) (Small MIN - no A&S)

A&S - Good Faith Exception 1

C claims $100, D claims $50. C hires D (lawyer), to collect 'debt' for him. D claims they agreed on 10% comish, C claims D offered svcs for free. D sends 'collected debt' munus 10% to C "paid in full". C cashes the check.

No A&S

-D is sending C his "own $", so D can not make conditions on the money that is not his

A&S - Good Faith Exception 2 - Separate and Distinct

C claims $100, D claims $50. D sends the agreed part of debt "paid in full". If debt is from numerous K's that are separate and distinct and D only sends pmt for K's which are undisputed hoping to discharge K the disputed Ks as well...

No A&S b/c pmt of 1 K is not "consideration" for the discharge of anothers "entirely separate and distinct" K

*UCC says installment K is a single K, not separate and distinct Ks

A&S - Check cashed by mistake

2 views

-if big business, where handler has no power to form K for creditor, creditor can send $ back

-if person w/ direct responsibility to form K and knew it was tendered as "pmt in full", creditor can't send $ back

A&S - Creditor Protest

CL v UCC

C/L:

- if C protests and cashes check, protest means nothing

- *most say same if instead of cashing, C retains teh check

UCC 1-207

- a C who gives "explicit reservation of rights" is not bound by teh proposed changes, even if he performs

- *crossing out "pmt in full" is not enough, need explicit language of reservation

Uni - need consideration for promise (legal detriment from promisee)

Bi - need consideration on both sides or K is void

- *promise is consideration IF the "promised performance" is consideration (i.e. just saying "i promise" is not enough)

void - not consideration

voidable - is consideration

Reservation of Right to Terminate - Terminate at any time - Notice requirement?

2 views

Traditional - no notice requirement > promise becomes illusory b/c no restriction on freedom

UCC - notice requirement is filled in with "reasonable notice"

Reservation of Right to Terminate - Terminate w/o notice

C/L v. UCC v. Perillo

C/L - promise is illusory ("void Bi-K")

UCC -

- If unconscionable, strike provision and insert "reasonable time"

- If not unconscionable, keep it

Perillo - termination clause does not make promises illusory

Successive Performance K's w/ no stated duration

C/L v. UCC

C/L - void biK, b/c of indefiniteness

UCC - gap filler, valid for reasonable time and can be terminated by either party

Output K's - How much is a requirements buyer entitled to demand?

C/L v. UCC

C/L - normal requirements or actual requirements provdied buyer acted in good faith

UCC - good faith requirements.

- Buyer not entited to any Qnty "unreasonably disproportionate to estimate"

Output K's - Buyer diminish or terminate its requirements under requirements K

C/L v. UCC

C/L - buyer free to go out of business or change method of doing business at will

- *good faith requirement

- *if OOB or changed way of doing business, have to respond in damages

UCC - OK if in good faith

Requirements and Output Ks

Qnty is at discretion of _____

Requirement v. Output

Requirement - discretion of B (as he requires the goods)

Output - discretion of S

Requirements and Ouput Ks

Qnty - No Maximum v. No Minimum qnty set

(ALL UCC)

Max - 'non discretionary' party is only bound to comply w/ request that is in GF and Not Unreasonably Disproportionate to stated estimate

Min - only a test of GF (no "unreasonably disproportionate" standard)

UCC - Exclusive Dealings v. Requirements/Output K's

Best Efforts differences

ED - higher "best efforts" standard

When Consideration not Required

Rest2 v. UCC v. NYGOL

Rest 2 - 1) unforeseen circumstances, 2) fair and equitable modification, 3) during performance of existing K

UCC - e.g. modifications > consideration replaced with GF

NYGOL - e.g. modifications > replaces consideration with signed writing

Modification - Consideration Required?

C/L v. Res 2d v. UCC v. NYGOL

C/L (MAJ) - follows PreExDty Rule - requires consideration

Rest 2d (MIN) - mitigate rule when unforeseen difficulties arise in performance of K

UCC - no consideration needed to be binding

NYGOL - modification permitted if in writing and signed

Parol Evidence Rule

Contemporaneous Add'l Terms

CL/UCC/Williston v. Corbin

CL.... - PER applies to Oral agreements only

Corbin (intent is key) - PER does not apply (not even to oral)

Parol Evidence Rule - Total or Partial?

4 corners

- if looks complete on its face, then total

- ommitted terms are not enough to indicatie partial integration (blanks are required for partial integration)

(losing favor b/c difficult to identify intent of parties this way)

Parol Evidence Rule - Total or Partial?

Merger/Integration Clauses

2 views

Williston, C/L (MAJ) - if writing contains merger claus, this conclusively establishes total integration, unless..

- document is obvy incomplete

- merger cluase included as fraud or mistake

Corbin (MIN) - strong presumption of total integration, but only one of the factors to consider (also look at sophistication of parties)

Parol Evidence Rule - Total or Partial?

Absence of merger clause

Williston v. Corbin

Williston (MAJ) - Natural to omit test

-partial if > writing is obvy incomplete or only expresses understanding of 1 party

-total if > appears complete, both parties, total unless the allged add'l terms are natural to omit

Corbin - Coherent belief of parties

- looks at actual intent of parties (admits all types of evidence to show actual intent)

1 - writing is not a K (sham)

2 - existence of oral condition precedent to formation of K

3 - K is voidable (fraud, duress etc.)

Exception - if reliance on oral promise, courts may allow extrinsic evidence b/c of Promissory Estoppel

Parol Evidence - Total or Partial?

Collateral Agreement Rule

If it's collateral, then partial

-if add'l term is supported by its own separate consideration, then it's collateral (trumps all other tests)

-if add'l term depends on written K for consideration, then there is debate (therefore go to williston's natural to omit test)

Integration Defaults

UCC v. CL

UCC - Partial is default, must prove total

C/L - Total is default, must prove partial

CoP - These parties performing This K

CoD - These parties performing w/ each other

TU - Performance of parties in the trade generally

True Condition v. Promise v. Constructive CP

*CP to the performance of the K*

Types, Perf Req, Remedy for non-performance

True - 

a - Express Condition, Implied in Fact Condition

b - Requires Literal Performance

c - K is extinguished and can w/hold performance on K

  - Cannot sue for breach b/c there's no K

Promise - (type no applicable)

c - sue for breach and collect damages

  - Cannot without performance b/c there's a K

Constructive CP

a - CT constructs this from Promise

b - Substantial performance requirement (of agrmt as whole)

c - If breach material, (no Subs Perf) K is extinghuished (can w/hold perf)

  - If not material, (Subs Perf has/can be perf) only remedy is to sue for breach

True Condition v. Time

*CP to the performance of the K*

-for construction clause where O doesn't pay Gen K'or

-Gen claims Explicit CP, and his duty to pay doesn't exist yet

-Sub claims it's just a Time Clause, and makes no diff whether GenK'or paid or not

*courts usually put burden on O not paying on Gen K'or UNLESS the K shows SubK'or agreed to take such responsibility

**In NY, even an explicit CP is rendered void as matter of public policy

Breach of Conditions - Can NBP deduct partial breach damages from payment to BP?

*usually in continuous installment payments (progress payments)

CL v. UCC

C/L - Split, some held you can, even w/o notice. Others hold otherwise

UCC - If NBP notifies BP of 'deduction', then it's ok

Restitution - Can defaulting party (material breacher) collect restitution?

3 Views + UCC

C/L (NY) - No

- that would be changing terms of K. Dont want to reward defaulting party

Rest 1 - Yes, UNLESS breach is willful

Rest 2 - Yes - reasonable value of services (to prevent unust enrichment)

UCC (similar to Rest 2) - but Statutory Deduction

- If S cant prove "exact damages" were suffered, S gets 20% of value of Total performance or $500 (whichever is smaller)

Majority - Subjective GF satisfaction of 3rd person is presumed

- prty has right to cancel but cant sue other party for beach due to their dissatisfaction

Minority (NY) - Architect's certificate can/t be unreasonably withheld (ie if building subst. perf. arch can withhold)

-If case would result in forfeiture, Obj. Std. aapplied

*for dmgs, reasonable std. applies (i.e. would a "resonable person" be satisfied?")

Repudiation by Positive Statement - Ambiguous Statement

2 views

Traditional (outdated) - statement must be so unequivocal that 'intent not to be bound' is beyond question

Rest 2d - Stmt must be sufficiently positive to be reasonably interpreted that prty will/can not perform

Repudiation by Positive Statement - Conditional Statement

2 views

Traditional (outdated) - any conditional statement is insufficient

Rest 2d - Language that ,under fair reading, amounts to Condition outside the Scope of the K (i.e. if hell freezes over) is a repudiation

Repudiation - If there is repudiation by ∆, can π Urge Retraction?

2 views

Traditional - No. Mitigation of dmgs problem

UCC (modern) - Yes, for a commercially reasonable time

*urging retration is not binding

Perspective non performance that is not a breach - What can ∏ do?

2 views

Rest 1 - can cancel K or Change position

- if ∏ does one of these, D cant retract the PNP and P can sue on "law date"

Rest 2 (NY)(UCC) - Demand for assurance if reasonable grounds to believe ∆ will commit breach of non perf.

-until assurance given, ∏ can suspend perf for what he is yet to receive the agreed return

-UCC: adds that the demand MUST BE IN WRITING and "reas. time. cant exceed 30 days"

- failure to return assurance w/in reas. time= ∏ can sue for breach immediately

Expectation Damges - Loss in Value (how to determine)

2 views

Value Rule - what is the value of the promised improvement

-if cant prove with "sufficient certainty", then go to...

Cost Rule - Cost to remedy or complete performance (i.e. how much $ to substitute to finish the expected perf.?)

-if cost is clearly disproportionate to the probable Loss in Value, then use Diff in MKT value of expected v. actual perf.

Split Maj - Reasonable value of svcs

Split Maj - Reas val of svcs, BUT K price is upper limit

Xtrme Min - K price is the reaonable value

Statute of Frauds - K of Alternative Promises

If one promise can be completed w/in a year....

2 views

Majority - entire K is outside of SOF

NYonly - If ∆ does not have right to choose the performance (stuck in K), K is w/in SoF

Statute of Frauds - Termination Provisions

2 Views + NYonly

Maj - No effect on SoF (just like defeasance)

Min - not w/in SoF if K could be performied with the etrmination w/in 1 year

NYonly - same as (Min) but, UNLESS 'right to terminate' is given only to ∏ or 3rd Party and not ∆

Statute of Frauds - Does Full Performance take the K out of the SoF?

2 views

Maj - takes K out of SoF

Min - doesnt take out of SoF, but may recover under 

1) Restitutionary remedy for prty who has performed (quantum meruit)

2) doctrine of divisibility

Statute of Frauds - Effect of non-compliance with SoF?

2 views

Maj - K is unenforceable (not void)

Min - K is void, may recover on quasi-K if performance has occured

Statute of Frauds - Uni-K - Full performance on one side effect on Sof?

2 views

Maj - takes it out of SoF

Min - does not take out of SoF, that where ∏ has fully performed, there is even greater opportunity for fraud

3rd Party Beneficiary - 2 Categories

Rest 1 v. Rest 2d

+right to sue?

Rest 1:

-Donee beneficiary-P'ee purpose in getting promise from P'or is to Confer a Benefit upon 3pb (P)

-generally no right for (P) to sue P'ee

-Creditor Beneficiary-P'ees purpose in getting promise from P'or is to Discharge a Debt P'ee has to 3pb (P)

-P has rught to sue P'ee (and P'or)

Rest 2d - (Focus on intent)

-Creditor Type - Actual obligation(only an obligation to pay $)

-Donee Type - Purpose it to confer a benefit on P

Statute of Frauds - When do 3pb (P) rights vest?

Rest 1 (2 elements) v. Rest 2d (3 ways)

Rest 1:

Donee - Vests Immediately

Creditor - When 3pb relies on promise

Rest 2d: Same for both

1 - Material Change in position b/c of reliance b4 learning of subseq. agrmt

2 - Bringing lawsuit for initial b4 learning of subseq. argmts

3 - Assent of 3pb to initial as per request of P'ee or P'or

Substituted Agreement - Effect of C promising to discharge debt/claim immediately - + can they sue?

2 views

Maj - OG claim is merged into and substituted for new agreement

- can only sue for breach of SA, UNLESS SA itself is void or unenforceable

Min - if there a materil breach of SA, then can sue on the OG claim

Executory Accord - C promises to discharge when D Actually Performs

Validity - 2 Views +NY

C/L - Nullity (as if nothing happened)

Modern - Valid

NY - valid w/ writing signed by party to be held, otherwise nullity