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Contracts Widener Law 2L Extended Division Fall 2018
Contracts Widener Law 2L Extended Division
188
Law
Graduate
08/29/2018

Additional Law Flashcards

 


 

Cards

Term
Batsakla vs Demotsis
Definition

500,000 drachmas for $2000 USD in future.  drachmas only worth $25 - is this sufficient consideration

 

yes, even though there is not equal consideration, it is more than just nominal ($1) consideration

Adequacy of consideration means  it is not nominal - courts will review this question. 

 

Sufficiency of consideration ($25 for $2000 in future) will not be reviewed by courts

 

 

Term
In re greene case
Definition

Seals and vague statement (other good and valuable consideration) do not make a gift into a contract - will not be enforced

 

 

Term
Limited role of formalities
Definition

Unique PA rule - written obliglation act - if it says that person is to be legally bound in PA it is enforceable despite consideration

 

Linmited role of seals - UCC is not enforceable but some jurisdictions a seal may create a presumption of consideration in common law. 

 

Some application to option contracts

Language saying that you intend to be legally bound -  

 

 

Term
Socko vs Mid Atlantic CPA - was in PA
Definition
An employment agreement containing a restrictive covenant, entered into after commencement of employment, requires additional consideration to be enforceable, even where the agreement states the parties “intend to be legally bound,” which language implicates the insulating effect of the Uniform Written Obligations Act 
Term
Shnell vs Nell
Definition

A promise to make a gift for nominal consideration or out of moral obligation is unenforceable for lack of consideration.

 

Will wanted to leave $200 to people, widower promised to pay what the will stated even though the estate had no value - 

Term
Feige vs Bohem - look at pg 164 in MBE for example question.
Definition

Is release of an invalid claim still valid consideration?  Yes when claims are 1) reasonably likely & 2) in good faith. 

 

Feige thought he was father of Beohem child, agree to pay support in exchange of not pressing bastardly charge.  After years of payment, gets bloodtype evidence he is not father.  stops payment, gets sued to continue. 

 

Even though she gave up claim that was not ultimately valid, he still bargained at the time for the potential/likely right for her to charge basterly claim. 

Term
Alaska Packers’ Ass'n v. Domenico
Definition

For $50 and $x per fish caught, fishermen agree to fish for alaska packers.  At end of season they demand $100 without $ for fish and no other change/consideration in contract. New contract signed but then not honored.   

 

can parties change existing contract unilateraly?  No because no bargain in consideration on both sides. Second contract not valid even though sailors relied on the contract.  No additional consideration for addiitonal pay.  Also duress issue.   

 

 

 

 

Term
Angel v Murray
Definition

$10K for annual trash pickup in city - city experiences much more growth, renegotiates contract in mid term for more money despite no further premise of consideration - is it OK?

 

yes, terms can be changed if, 1) made before contract is fully performed, 2) unanticipated changes occur and 3) change in terms are fair and equitable. Fair and equitable means not under duress, coercion extortion

 

Change can be orally made as well

 

 

 

Term
Rehm Zeiher vs Walker
Definition

Contract without mutual obligation is not binding. 

 

One party was allowed for "any unforeseen reason" to refuse to buy from provider

 

If there is a clause that eliminates or reduces obligation it must be out of control of both parties (distillery fire)

 

If no specified amount, serves as standing offer

Term
McMichael vs Price
Definition

Mutuality of obligation exists when there is a limit on the ability of both parties to cancel according to discretion

 

Mutuality is present if the promisee is not allowed to make contracts with other parties.

 

Price entered contract to "buy all the sand he could sell" from McMichal as long as sand met quality standard - 60% price of sand that was sold for 10 years. 

 

McMichal failed to perform/provide the sand - got sued. Argues that Price had no real obligation to sell sand (all the sand he could sell)-but Price's history of selling sand provided an expectation and obligation to sell sand.   

 

 

Term

Restatement 89- A promise modifying a duty under a contract not fully performed on either side is binding

 

and UCC 2-209(1)

Definition

 

(a) if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made; or (b) to the extent provided by statute; or (c) to the extent that justice requires enforcement in view of material change of position in reliance on the promise.

 

UCC states must have additional consideration (KEY DIFFERENCE BETWEEN ucc AND COMMON LAW)

 

 

 

 

 

Term
Wood vs Lucy Lady Duff-Gordon
Definition

Lady Duff gave exclusive rights to Wood for endorsement of clothing designs - then she entered into another agreement with another person to endorse designs.  

 

She argued that Wood had no obligation/consideration to sell her designs, but Ct ruled obligation was implied (similar to Price/McMichal) because the acceptance of exclusive rights implies the obligation to sell

 

Also implies Wood will use reasonable efforts due to language (will keep records, share profit) 

Term
Omni Group v Seattle National Bank
Definition

Clark agreed to sell land to Omni conditioned upon Omni's personal satisfaction (kinda like "if we feel ok about it").   

Is a contract with a personal satisfaction clause enforceable when the promisor has no "real" obligation (based on if "personal satisfaction" is met)?

 

 Yes, because the promisor has implied obligation to meet personal satisfaction in good faith, especially in close cases and this case with common real estate practices.  

Term
UCC 2-306(2) - obligations of buyer and seller in exclusive deals
Definition

 

A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use BEST EFFORTS to supply the goods and by the buyer to use best efforts to promote their sale.

Term
FIrst Hawaiian Bank v Zukerkorn
Definition

Zuckerkorn had two unpaid loans to bank, he was approved by the bank for a credit card with the requirement of paying $100 per month to the old accts. 

 

2 years later, bank sued him for the earlier loans and the new $4600 in credit cards (after statute of limits).  Does his expressed or implied agreement to pay $100 renew the statute of limitations?

 

Yes, new credit card agreement CONTINGENT ON PAYING OLD DEBT renewed the "stale" statute of limits on the previous legal obligations/debt.  

Term
Restatement Contracts Section 82 (1)
Definition

 

 

  1) A promise to pay all or part of a previous contractual or quasi-contractual debt is binding even if the statute of limitations expired previous to the new promise. *(Hawaii bank Zuckerkorn)

Term

Restatement of Contracts Section 86 -

Promise For Benefit Received

 

Webb v McGown - 

Definition

 

(1) A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice.

 

(2) A promise is not binding under Subsection (1)

 

(a) if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched; or(b) if value is disproportionate to the benefit

Term
Mills v Wyman
Definition

Adult Son was ill, cared for by Mills and died.  Father Wyman promised to pay expenses for his sons care,then refused to pay.  

 

Is a promise based on moral obligation but without legal consideration enforceable?  No, unless there is previous legal consideration like kids under 18, debts, 

Term
Webb v McGowan
Definition

Two workers at lumbermill, one saves the others life but was seriously injured.  For saving his life, he agrees to pay $15 per week. Payer dies, stops payment, gets sued. 

 

Is this an enforceable contract - is there consideration?

 

Yes, based on moral obligation as the consideration - received substantial services / material benefit (saved life), paid, mutuality (saved life for $15 per week) - even though contracting after services performed (narrow exception).  Similar to improved property law-material benefit to person/property.  

Term
Ricketts v Scothorn
Definition

Grandfather gave $2000 note with interest to granddaughter so that she did not have to work. She leaves bookkeeping profession, He dies, estate stops payment. 

 

Is this enforceable even though it was gratuitous and no requirement/consideration on granddaughter to stop working?

 

Yes, promissory estoppel - must reasonably foresee reliance on promise and detriment from reliance.  

Term
Feinberg v Pfeiffer
Definition

Feinberg received raise and written promise of $200 per month pension for life with no change in her role, ability to be fired, etc.  retired early and received $200 per month until next leader reduced it to $100 per month, saying it was gratuitous.  

 

Is this an enforceable promise? Yes because she retired and reasonably relied upon the promise, which was foreseeable, and relied to her detriment.    

Term
Lord v Souter
Definition

Lord knew her boss (souter) was misappropriating monies, shared with VP of HR, got promise that whistleblowing will not result in reprisals, got fired, sued. 

 

Is promissory estoppel appropriate for an at-will employee? Yes - reasonably relied on promise to her detriment, even though she could be fired at any time. 

Term
Restatement Section 90 - Promissory Estoppel
Definition
A promise which the promisor should reasonably expect to induce action or nonaction on the part of the promisee or a third person and which does induce such action or nonaction is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.
Term
Congregation Kadimah vs DeLeo
Definition

Decedent oral promise to give $25K, died without giving gift. 

 

Is this enforceable - no, no consideration, no detriment (was going use it to build library), 

Term
Promissory Estoppel Elements per Restatement (2) sec.90(1)
Definition

Need to have PROMISE without consideration plus

  1. Action or forbearance by the promisee
  2. That was induced by the promise
  3. That puts promisee in a position worse off
  4. That was reasonably foreseeable to promisor

Remedy can be limited as justice requires

 

WAIF

Term
Process to analyze contracts case?
Definition
  1. Was there appropriate consideration (always the first question)
  2. Is there any way to construe a contract?  If not look at promissory estoppel
  • What is the offer, who is the offeror/master?
  • Was there consideration
  • Was offer Terminated
  • Was offer accepted

OTTA -> AIRBRAc -> RL1T

Term
Embry vs McKittrick
Definition

Emby employed for 2 years, at end of contract, asked to be renewed, McKittrick said "continue your work without worry" but did not renew contract and did not have intent to renew contract. 

 

Parties subjective or actual intent does not matter in regards to if an oral contract is enforceable - what a reasonable person inferrs or understands is relevant.

 

Objective test in action

 

Term
Lucy v Zehmer
Definition

Guys drinking in bar sign bar napkin agreement to buy and sell farmland for $50K.  Seller thinks its a joke, has no intention to sell.  Gets his wife to also sign.  Gave $5 to seal the deal

 

THe objective outward expression of a party's intent to be bound in an agreement is more important than their subjective mental disposition.  

 

Objective test in action

Term
Raffles vs Wichelhous (peerless case)
Definition

One buys cotton from another to be delivered on a ship called peerless.  The cotton arrives, but on a different ship called peerless.  

 

Mutual subjective misunderstanding of key/material contract terms can invalidate the contract.  R(2) more stringent

 

Objective test fails because the subjective thoughts of both parties are perfectly reasonable - not like two dogs for a dollar when it clearly is for hot dogs (which is the objective test - what a reasonable person would think). 

Term
Lonergan vs Scolnick
Definition

Guy puts ad in paper offering property for sale, other guy writes asking questions on propery, was answered by seller with price, description, etc. Next letter said must hurry to buy because someone else is interested.  Responds that he will buy, but was already sold, files suit saying contract was made. 

 

Was not contract because last letter indicated he needed to make quick decision, but was then sold. The seller needed further assent to buy land to create a formal offer.   

Term
Southworth v Oliver
Definition

Oliver engaged Southworth to sell his land.  Southworth confirmed interest in buying land, Oliver gave price, # of acers, closing date, % down, and lending terms.  Soutworth considered this as an official offer and accepted.  Oliver said that Southworth misconstrued the discussion as an offer.  

 

Cts said that there is an offer and looked at 

4 factors -1) reasonable person thinks its an offer, 2) language, 3) to single or small group vs general offer, and 4) definiteness of the proposal and other terms.  

Term
Lefkowitz vs Greater Minneapolis Surplus Store
Definition

Generally advertisements are not offers.  Fur coat (worth $100) and lapin stole (worth $139.50) advertised for $1 each, first come, first served.  

 

Lefkowitz was first to purchase both days, but was denied because intended only for women.  Sued

 

Ct ruled that there was enough specificity in lapin stole (black, worth $139.50, sell for $1, first come, specific date) to consitute an offer.  $100 fur coat not specific enough.  

Term
Leonard vs Pepsi
Definition

Leonard tried to buy Harriet jet using pepsi points (cash and pepsi points). 

 

Advertisements are generally not offers, even when there is a price involved.  Must contain a commitment or invitation for further action - needs to be "clear, definite and explicit and leaves nothing open for negotiation" is an offer. 

 

Reasonable person deem advertisement as an offer - cannot be a joke like the harrier jet offer.   

Term
La Salle Bank v Vega
Definition

LaSalle negotiated with vega to buy land, agreed to rider that required Lasalle trustees to sign sale contract.  Contract to buy was signed by bank, Lasalle, but trustees never signed. 

 

Contract not enforceable because it was not accepted according to the terms of the rider which required trustees to sign.  

 

Contract is formed only according to terms and conditions of the offer.  Offeror is master

Term
Format for answering question
Definition

The first issue is ________

Under common/UCC law which applies because it is a service (or a sale of goods, etc)

 

ISSUE (consideration for example) is defined by XXXX

 

In this case, GIVE BOTH SIDES

 

Therefore, XXXX

 

Term
Elements of Consideration
Definition
  1. Quid pro quo - a bargain
  2. Not nominal - not a gift -adequacy not questioned
  3. Not past consideration
  4. Not a pretense of consideration (seals, special words)
  5. Consideration may be moral obligation in special circumstances

one consideration (thing given) is exchanged for another consideration

 

BNPS

 

Term
What is an offer
Definition
  1. Manifestation of
  2. Intent to enter into a bargain such that there is
  3. Reasonable understanding that the persons assent is
  4. Invited and his 
  5. Assent will close the deal. 

An Act to enter into a bargain with another person who reasonably understands that his assent will create a contractual agreement.  

 Offeror is the MASTER - can be offer to buy or to sell

Term
Acceptance of Offer
Definition

Acceptance of an offer is a manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer. 

 

An act agreeing with the terms of the offer. 

 

Acceptanced can occur by:

  1. A promise or Verbal confirmation (I accept)
  2. By full or partial performance (Uni contract/reward)
  3. Sometimes by inaction/silence or conduct accepting benefits of offer (you can stay for $200/month)
Term

Restatement 85

 

Form Of Acceptance Invited

Definition

 

(1) An offer may invite or require acceptance to be made by an affirmative answer in words, or by performing or refraining from performing a specified act, or may empower the offeree to make a selection of terms in his acceptance.

(2) Unless otherwise indicated by the language or the circumstances, an offer invites acceptance in any manner and by any medium reasonable in the circumstances.

Term
Restatement of Contracts § 32. Invitation Of Promise Or Performance
Definition

 

In case of doubt an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering the performance, as the offeree chooses.

 

I promise (or start to work) will serve as acceptance

Term
§ 58. Necessity of Acceptance Complying with Terms of Offer
Definition

 An acceptance must comply with the requirements of the offer as to the promise to be made or the performance to be rendered. 

 

See case where bank trustees did not approve despite mutual signatures.  

Term
Hendricks v Behee
Definition

Behee offered to buy real estate from Smith, smith signed but not communicated to Behee, Behee contacts real estate agent to withdraw the offer.  $5000 in escrow at stake

 

Offeree must communicate acceptance before a binding contract is formed. Intent to accept is not sufficient, as is private act (signing offer form) also not sufficient. 

 

Offeror can rescind at any time before acceptance - no consideration on part of Smiths/offeree 

Term
Ever Tite Roofing v Green
Definition

Green signed offer from Ever Tite to fix roof, no time frame for acceptance by Ever Tite, required credit approval, and Ever Tite acceptance by starting work was language in contract. Green hires someone else who starts work; ever tite shows up on site with materials.  

 

Ever Tite accepted within a reasonable time (days), Greens revocation is breach of contract. 

Partial performance (loading truck) was acceptance.  

Binding contract occurs when acceptance of offer is done within term of contract or within reasonable time.  

 

Term
§ 2-206. Offer and Acceptance in Formation of Contract.
Definition

(a) acceptance of an offer can be in any manner and by any medium reasonable in the circumstances;

(b) an order or offer to buy goods for prompt shipment shall be construed as inviting acceptance either by a prompt promise or actual shipment of conforming or non-conforming goods, but such a shipment of non-conforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.

(2) Where the start of performance is an acceptance,  an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed. (if ever tite loaded trucks 2 weeks later)

Term
R(2) § 50. Acceptance of Offer Defined; Acceptance by Performance; Acceptance by Promise
Definition

(1) Acceptance of an offer is a manifestation of assent to the terms made by the offeree in a manner invited or required by the offer.

 

(2) Acceptance by performance requires that at least part of what the offer requests be performed and includes acceptance by a performance which operates as a return promise.

 

(3) Acceptance by a promise requires that the offeree complete every act essential to the making of the promise

Term
§ 54. Acceptance by Performance; Necessity of Notification to Offeror
Definition

(1) Where an offer invites acceptance by performance, no notification is needed unless the offer requests notification.

 

(2) When offeror is unlikely to know that performance starts, there is no contract unless 

(a) the offeree exercises reasonable diligence to notify  or

(b) the offeror learns of the performance within a reasonable time, or

(c) the offer indicates that notification of acceptance is not required. 

Term
§ 56. Acceptance by Promise; Necessity of Notification to Offeror
Definition

Except as stated in § 69 or where the offer manifests a contrary intention, it is essential to an acceptance by promise either that the offeree exercise reasonable diligence to notify the offeror of acceptance or that the offeror receive the acceptance seasonably

 

Acceptance by promise requires that the offeree have diligence to notify offeror in a seasonable manner

Term
Glover vs Jewish War Veterans
Definition

Wanted reward money when she did not know about reward.  

 

No, cannot form binding contract when unaware of the offer - cannot accept an offer you dont know about - information was provided voluntarily - must have MUTUAL ASSENT to form binding contract.

 

This is for private part reward offers - this may not apply to governmental reward offers.    

Term

Restatement of contracts § 51.

 

Effect of Part Performance Without Knowledge of Offer 

Definition
Unless the offeror manifests a contrary intention, an offeree who learns of an offer after he has rendered part of the performance requested by the offer may accept by completing the requested performance.
Term
Adams v Lindsell
Definition

Offer to sell wool via mail, wrote back acceptance within timeframe but was received after expected time.  Sold wool to someone else.  

 

Mailed in time is key, not when received as long as there is no fault on offeree (there was fault of offeror sending to wrong address). 

 

Also offeree cannot otherwise muck up rule - cannot send rejection letter then send acceptance letter.  

Term
§ 40. Time When Rejection or Counter-offer Terminates the Power of Acceptance
Definition
Rejection or counter-offer by mail or telegram does not terminate the power of acceptance until received by the offeror, but limits the power so that a letter or telegram of acceptance started after the sending of an otherwise effective rejection or counter-offer is only a counter-offer unless the acceptance is received by the offeror before he receives the rejection or counter-offer.
Term
§ 63. Time When Acceptance Takes Effect
Definition
Unless the offer provides otherwise, (a) an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree's possession, without regard to whether it ever reaches the offeror; but (b) an acceptance under an option contract is not operative until received by the offeror.
Term
§ 66. Acceptance Must be Properly Dispatched
Definition
An acceptance sent by mail or otherwise from a distance is not operative when dispatched, unless it is properly addressed and such other precautions taken as are ordinarily observed to insure safe transmission of similar messages. 
Term
§ 69. Acceptance by Silence or Exercise of Dominion
Definition

 (1) Where an offeree fails to reply to an offer, his silence and inaction is acceptance only when:

(a) Where an offeree takes the benefit of offered services with opportunity to reject and reason to know that they were offered with the expectation of compensation.

(b) Where the offeror has stated that assent may be manifested by silence or inaction, and the offeree in remaining silent intends to accept the offer.

(c) Where because of previous dealings silence is accept.

(2) An offeree who does any act inconsistent with the offeror's ownership of offered property is bound in accordance with the offered terms unless they are manifestly unreasonable. But if the act is wrongful as against the offeror it is an acceptance only if ratified by him

Term
§ 64. Acceptance By Telephone Or Teletype
Definition

 

 

Acceptance given by telephone or other medium of substantially instantaneous two-way communication is governed by the principles applicable to acceptances where the parties are in the presence of each other.

Term

§ 65. Reasonableness Of Medium Of Acceptance

 

 

 

Definition

 

Unless circumstances known to the offeree indicate otherwise, a medium of acceptance is reasonable if it is the one used by the offeror or one customary in similar transactions at the time and place the offer is received.

Term
Restatement Section 68 - When is revocation or acceptance effective
Definition

 

A written revocation, rejection, or acceptance is received when the writing comes into the possession of the person addressed, or of some person authorized to receive it for him, or when it is deposited in some place which he has authorized as the place for this or similar communications to be deposited for him

Term
Russel vs Texas Co
Definition

Texas Co had a lease for land owned by Russell, but was using the land in excess of the lease.  Russel offered a license at $150 per day for the extra use of the land, with caveat that continued use of the land was acceptance of offer. 

 

Texas continued excessive use of land, Russell sued for daily fees.  Court upheld because terms of offer stated continued use of the land comprised acceptance of the offer - regardless of offeree's intent of acceptance.  Especially true in tortious act (tresspass)

Term
Carlill v Carbolic Smoke Ball
Definition

Smoke ball to prevent flu - gave $100 for anyone who buys and gets flu - she gets flu, sues for "reward"

 

Is there consideration (yes, buy and use, get flu, get $) - is it an offer or advertisement (yes offer, specific - use 3x day, get flu, get $100)

 

How was it accepted? Buying and using 3x day- smokeball says no notification or communication - but performance is acceptance in a reward/uni contract is IMPLIED

 

Consideration, Offer, Accepted

Term
Corinthian Pharma v lederle Labs
Definition
Lederle makes vaccine, corinthian buys and distributes vaccines, Lederle send a brochure of price list to Corinthian and others - not an offer because advertising and list said was not offer - price was to increase may 20, corinthian hears about this on 19 may and tried to buy 1000 vials.  THe phone call to buy 1000 vials is the offer. They get tracking number which should be acceptance (was not because automated message) - also acceptance by shipping 50 vials - still not acceptance because did not conform to order (1000 vials) and gave reasonable notice of counter offer as an accommodation to buyer
Term
dickinson vs Dodds
Definition

Dodds drafted a document stating willingness to sell land to Dickinson with expiry on 12 June.  June 11, Dickinson was informed by his agent that Dodd changed his mind and will sell to Allen.  Dickinson then presented document to accept Dodds original offer.  Initial court upheld original agreement. 

 Higher court said offer can be revoked at any time even when there is an expiry date - Dickinson was notified by his agent prior to sale of land to Allen.  

 

Also requires meeting of the minds-both have same understanding and assent to agreement.  

Term
Minneapolis vs Columbus Rolling Mills
Definition

Minneapolis requested quote for 2000 to 5000 tons of iron rails.  Got quote for 2K to 5K tons at $54 per ton.  Minneapolis requested 1200 tons at $54 tons, was rejected, then resubmitted for 2000 tons at $54.  Was ignored.  

 

Ct ruled no contract, acceptance of offer must match terms of the offer.  The initial request for 1200 tons was a rejection of original quote for 2K tons at $54- such rejection of offer does not allow for unilateral acceptance of original offer.  

Term
DTE Energy vs Briggs Electric
Definition

Oct - Briggs send PO to DTE; Nov DTE email intent to accept via email starting work; Dec DTE sends order confirmation with new conditions (Michigan legal forum).  

 

UCC changed from common law in that the terms of acceptance must be identical to those in the offer - for commercial merchants

 

Acceptance with additional terms is OK for UCC - additional terms become proposals to add into contract. 

 

 

Term
UCC 2-207 - Additional Terms in Acceptance or Confirmation
Definition

(1) Expression of acceptance (oral or written) operates as an acceptance even though there are different terms.

(2) MATERIAL additional terms are PROPOSALS for addition to the contract. Between merchants such terms become part of the contract unless they object or materially alter.  

(3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale even if the writings of the parties do not otherwise establish a contract. 

Easier rules than the R2 for services

Term
Restatement 1 - Definition of a Contract
Definition

A contract is a promise (or a set of promises)

 

1) Where the breach of which provides a legal remedy

or

2) the performance of which is recognizes as a duty. 

Term
Restatement 2 - Promise, Promisor, Promisee Beneficiary
Definition

(1) A promise is a manifestation of intention to act (or refrain from acting) such that the promisee understands that a commitment has been made.

(2) The person making the commitment is the promisor.

(3) The person to whom the commitment is addressed is the promisee.

(4) Where performance will benefit a person other than the promisee, that person is a beneficiary. 

Term
Restatement 4 - How a promise is made
Definition
Oral, written, or inferred wholly or partially from conduct
Term
UCC 2-102 Scope of UCC
Definition

Transactions in goods only

 

Does not repeal any statute

 

Not for farmers or specified class of buyers

Term
UCC 2-105 (1) Definition of Goods
Definition

"Goods" means all things movable at the time of the contract (can also be future things)

 

also includes the unborn young of animals and growing crops 

 

Not "things in action" (services) or investment securities

Term
Restatement 17 - Requirement for a Bargain
Definition

 a contract requires a bargain in which there is mutual assent to the exchange and consideration.

 

(2) Whether or not there is a bargain a contract may be formed under special rules applicable to formal contracts or under the rules stated in §§ 82-94

Term
Restatement 71 - Requirement for exchange
Definition

To constitute consideration, there must be a quid pro quo - a "thing" bargain for 

 

The thing can be a promise, an act, forbearance or some legal relationship. 

 

The thing can be be to the promisee, promisor, or another person

Term
Restatement 81 - Consideration as motive or inducing cause
Definition

(1) What is bargained for does not have to induce the making of a promise  - can still be consideration (give me $10 and I will mow lawn, when I would mow lawn for free would still be consideration).  

 

Same thing for a promise - I promise not to smoke can still be consideration (I would never smoke anyway)

 

 

Term
Restatement Section 79- Adequacy of consideration
Definition

If the requirement of consideration/bargain is met, there is no additional requirement of (a) a gain or a loss or (b) equivalence in the values exchanged or (c) "mutuality of obligation.

 

Term
UCC 2-203 - Seals
Definition
A seal does not make it a contract
Term
Restatement Section 87 - Option Contract
Definition
An offer is binding as an option contract if it is in writing and signed by the offeror, provides consideration for the option, and has fair terms for the future exchange in a reasonable time 
Term
Restatement Section 74 - Settlement of Claims
Definition

(1) Forbearance of a claim which is invalid is not consideration unless the claim is uncertain/possible and the forbearing party believes that the claim may be fairly valid.

 

(2) Surrendering a claim is still consideration even though he believes that no valid claim exists (he could be wrong and still give up something that is of value).

Term
Restatement Section 18 - Manifestation of Mutual Assent
Definition

 

 

Manifestation of assent needs to be mutual and can be by promise or initiation of a service.  

Term
Restatement 20 - Effect of Misunderstanding
Definition
No mutual assent if there are materially different meanings to the manifestations (peerless case).
Term
Restatement Section 24 - Offer Defined
Definition
An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.
Term
When are contractual offers effective
Definition

Only acceptance is effective upon delivery -it is the oddball - mailbox rule - sometimes on reciept. 

 

All others are effective upon receipt:

 

Offer

Revocation of offer

Rejection of offer

Counter offer

 Option Contract

Receipt can be authorized person or designated box

Term
When is silence an expression of acceptance of offer
Definition

1) When offeree takes benefit of services with reasonable opportunity to reject them and reason to know they were offered with expectation of compensation (stay on someones land and receive benefit of services)

2) Offer invites silence as means of acceptance and offeree in remaining silent intends to accept

3) based on previous deals where silence as acceptance of offer is the custom or how you have previous worked

Term
Ways to terminate offers
Definition

1) passage of time - either explicitly in contract, or if not specified, a reasonable time elapses

2) Offeror revokes the offer before acceptance

3) Offeree rejects or counteroffers

4) Either party dies before acceptance

5) Indirect revocation -  offeror takes definante action inconsistent with an intent to enter into a contract (sells to someone else)

 

TRRCOAction

Term
Humble Oil v West Side Investment Corp
Definition

April 5 -$50 given for irrevocable option to buy land up to 4 June.  Mid may, option owner negotiates/request new term requirement of extending power lines.  Owner of land said was counteroffer and rejection of offer.  

 

When an irrevocable option contract supported by consideration exists, the offeror must keep the option open for the time period specified in the contract, and a counteroffer or other negotiations made by the offeree within this time frame will not terminate the offeree’s power to accept the option. 

 

Option and offer are different contracts

Term
Marchianod vs Schenk
Definition

When an offer for a unilateral contract is made, and part performance of the offer is completed by the offeree, the offeror may not then revoke the offer.

 

Oral agreement to pay real estate commissions on sale of land within 6 days. Revocation of offer received on morning of day 6, but was sold on day 6 (started work before revoked). Marciando sued for his commissions. 

 

Marchiandos partial performance was acceptance of the unilateral contract - part perform in attempts to sell real estate- preparation is not part performance.  

Term
Baird v Gimbel
Definition

 Gimbel submitted low ball subcontract bid to Baird.  Baird won overall bid based on Gimbel bid.  Gimbel revokes offer/bid, Baird tries to accept original offer under promissory estoppel.  

 

Offers are revocable up until consideration (promise by Baird to use Gimbel)

 

THis is older example, Drennan is majority view but can use this to argue both sides

Term

Drennan vs Star Paving

 

R(2) sec 87 (2) - option contracts with reasonable reliance

Definition

Drennan very similar to Baird/Gimbel

 

Drennan is current law based on Restatement 87(2) An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice.

 

Section 90 too general. 

Term
Varney vs Ditmars
Definition

For a contract to be valid, the agreement made must be definite and explicit enough to permit the full intent of the parties to be ascertained with a reasonable degree of certainty.

 

Ditmars hired Varey for $40 per week plus "fair share"profits at end of year. Got sick, could not finish year,  and Ditmars failed to pay fair share.  

 

Fair share was too vague - therefore no concrete terms for contract.  Parol evidence not allowed. R(2) Terms more definate

Term
Definite details of contracts - what make an agreement enforceable
Definition

Old rule is that everything needs to be firmly defined in contract to make it binding. 

 

Modern approach is that some ambiguity can be present, cannot use Parol evidence to confirm - UCC can provide some defaults, 

 

Parties are free to work out terms of their own contract - consciousability is a key issue - 

 

preparation is not part performance, need something more

Term
UCC 2-204 COntract Formation in General.
Definition

(1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by parties which shows existence of such a contract.

(2) An contract for sale may be found even though the moment of its making is undetermined.

(3)Terms can be left open a contract-does not fail for indefiniteness if the parties have intended to contract and there is a reasonably certain basis for determining what the terms are (defaults or market price).

Term
Restatement of Contracts 33 - Certainty of terms
Definition

(1) Even though a manifestation of intention is intended, the contract terms of the must be reasonably certain.

 

(2) Reasonably certain terms are shown if they can be used to determine a breach and how to calc damages.

 

(3) Open or uncertain terms may show lack of intention to provide an offer or as an acceptance.

 

This is a more stringent standard than UCC

Term

Restatement of contracts 34 - Certainty And Choice Of Terms; Effect Of Performance Or Reliance

 

 

 

Definition

UCC has more Requirements

(1) Terms of a contract may allow either party to select terms and still be "reasonably certain" 

 

(2) Part performance under an agreement may remove uncertainty and establish that a contract enforceable as a bargain has been formed.

 

(3) Action in reliance on an agreement may make a contractual remedy appropriate even though uncertainty is not removed.

Term
Effect of bid shopping of contractors
Definition
If can be shown, will nullify the "relaince" element of the general contractors promissory estoppel claim
Term
Martin Delicatessen vs Schumacher
Definition

To constitute an enforceable contract for the transfer of real property, an agreement must be sufficiently definite and specific regarding all material terms, and may not be merely an agreement to agree on these terms in the future

 

One leased to the other, with option to continue lease after 5 years under mutually agreeable price.  Rent was jacked high, and rentee sued.  Ct ruled that there was no way to determine reasonable price/calc the breach, was not in contract, needs to more more specific than for sale of goods (higher standard than UCC).  

Term
need card for R(2) 45 and R(2) 63
Definition

R(2)45 if performance is the explicit method of acceptance, then option contract is created when perfomance starts

 

 

Term
Summary of option contract / partial performance
Definition
  • performance of acceptance still must be accomplished before offer lapses
  • Offer can override the implied promise by making it sufficiently CLEAR That the offer can be revoked at any time
  • key difference between part perform and preparation
  • Be aware of R(2) 62 vs R(2) XX
Term
Key issue to include in test answer - "contract could have had more definite terms, but it did not."
Definition
Term
Bull Riders vs Autozone
Definition

Autozone sponsors PBR, did not sign agreement, PBR alleges that AZ actions indicate acceptance of terms.  AZ indicated that they would not continue the agreement.  PBR continued to use AZ logo despite notice and wants money; 

 

IF terms of an oral agreement can be fairly interpreted to define alternate methods of performance within one year, this will not violate statue of frauds.  

 

Original agreement could have been completed in 1 year; SOF is violated only when the contract cannot be completed in 1 year.  

Term
Crabtree vs Arden
Definition

Multiple documents taken together may constitute a signed writing sufficient to fulfill the statute of frauds if all documents refer to the same subject matter or transaction and at least one is signed by the party to be charged with the contractual obligations.

 

Letters back and forth re employment offer indicating increaing pay each year, one stating that "2 years to make good" indicated 2 year contract.  Did not increase.  Crabtree sued.  

Term
Sullivan v. Porter
Definition
To rely on the part performance doctrine as an exception to the statute of frauds’ requirement that all transfers of real property must be made in writing, the party seeking to enforce the oral contract must establish by clear and convincing evidence that the parties did enter into a contract, that the party seeking to enforce the contract partially performed the real estate contract, and that the performance was induced by the other party’s misrepresentations, including acquiescence or silence
Term
R (2) Sec 110 Classes of contracts covered by SOF
Definition
  1. Executor
  2. Debt agreements
  3. Marriage
  4. Real estate / land
  5. Contract not able to be completed in 1 year

UCC for sales of goods 

  1. Sale of goods for $500
  2. Securities
  3. $5000 property
  4. Security interest in property
Term
R(2) Section 125 Contract to transfer, buy, or pay for interest in land
Definition

(1) A promise to transfer to any person any interest in land is within the Statute of Frauds.

 

(2) A promise to buy any interest in land is within the Statute of Frauds, irrespective of the person to whom the transfer is to be made.

 

(3) When a transfer of an interest in land has been made, a promise to pay the price, if originally within the Statute of Frauds, ceases to be within it unless the promised price is itself in whole or in part an interest in land.

 

(4) Statutes in most states except from the land contract and one-year provisions of the Statute of Frauds short-term leases and contracts to lease, usually for a term not longer than one year.

Term
R (2) Sec 130 - Contract that cannot be completed in 1 year
Definition

(1) Where any promise in a contract cannot be fully performed within a year from the time the contract is made, all promises in the contract are within the Statute of Frauds until one party to the contract completes his performance.

 

(2) When one party to a contract has completed his performance, the one-year provision of the Statute does not prevent enforcement of the promises of other parties.

 

Will be very narrowly construed SOF - even if unlikely/theoretically that it will be complete within 1 year

Term
  1. R (2) 131  - general requirements of a memorandum 
Definition

Unless additional requirements are prescribed by the particular statute, a contract within the Statute of Frauds is enforceable if it is evidenced by any writing, signed by or on behalf of the party to be charged, which

a) reasonably identifies the subject matter of the contract,

 b) is sufficient to indicate that a contract with respect thereto has been made between the parties or offered by the signer to the other party, and

c) states with reasonable certainty the essential terms of the unperformed promises in the contract.

WSSSmT

Term
R (2) 132 - 137 Memorandum Rules
Definition

The memorandum may consist of several writings if one of the writings is signed and the writings in the circumstances clearly indicate that they relate to the same transaction. 

 

signature may be any symbol intended as such (lettterhead might work)

 

If some but not all sign, it is enforceable against those who did sign

 

loss or destruction of the memo does not deprive the contract

 

signature can be before or after the formation of contract. 

Term
R(2) 133 THird party beneficiaries
Definition

Three different third-party beneficiary classes:

 

1) donee (he gets paid, not you), 2) creditor ( 3) incidental beneficiary.

Third-party beneficiaries must be intended and cannot be incidental. If the contract does not expressly state intent to benefit the third party, other evidence can be used to prove intent. Some factors that may be considered include the following:

 

The third party's identity.

The nature of the contract.

The duty to the third party created by the contract

Term
UCC 2-201 - Formal requirement SOF
Definition

1) contract for the sale of goods above $500 is not enforceable unless in writing - should be signed by person against whom enforcement is sought 

 

Must also have number of units sold, but other terms can be absent or incorrect.

 

2) between merchants if there is a) writing b) within reasonable time c) sufficient and received d) that should be known by receiver and e) not rejected within 10 days

(basically do not need signature of buyer, silence is acceptance)

Term
R (2) Sec 14 - Infants
Definition

Day before 18th birthday is old enough - can enter only into voidable contracts before 18th. 

 

If necessary items, minor must pay fair amount

 

Ratification - Minor can re-affirm agreement after coming of age with any intent to regard the contract as valid (silence is not intent to honor contract)

 

Restoration - does not need to return in same condition - gets money back, but time held can be issue to consider

DisAffirmation by minor will nullify the contract

Term
R(2) 151- mistake defined
Definition

A mistake is a belief that is not in accord with the facts. 

 

Must be material issues/fact

 

And under circumstances in which it is not fair for the adversely affected party to bear the risk of the mistake.  

Term
R(2) 152 - When mutual mistake makes a contract voidable
Definition

Mutual Mistake regarding a basic assumption with material effect on the performance of the contract, it is voidable by the adversely affected party unless he bears the risk of mistake under sec 154 (if they know they lack confirmation, or if the agreement allocates risk (real estate) or courts impose the risk to the adversely affected party). 

 

In determining whether the mistake has a material effect on the agreement, account is take of any relief by way of reformation, restitution or otherwise. 

Term
R(2) 153 - When mistake of one party makes a contract voidable
Definition

Only voidable if the effect of the mistake is such that the enforcement of the contracts would be unconscionable 

 

OR

 

the other party had reason to know of the mistake or his fault cause the mistake.

 

Can assume assumption of risk of mistake - either explicitly or implicity if he understands he has limited knowledge re the facts.  

Term

exceptions where violation of SOF does not nullify the agreement

 

When is an oral contract falling under SOF is still enforceable. 

Definition

When does an oral contract falling under SOF categories still enforceable as a valid contract

  1. Full performance exception - if you did all the work
  2. Partial performance for contracts in realty or goods
  3. Merchant exception to sales of goods (10 days after notification received - see other card)
  4. Admissions in court for sales of goods
  5. Promissory estoppel - one party reasonably relies on promise to her detriment

 

Term
How to analyze SOF
Definition
  1. Is this agreement within 5 categories of SOF?
  2. Is there a writing sufficient to satisfy SOF (number of units, signed by person violating, merchants, etc.)?
  3. Is there an exception where the lack of written agreement still makes contract enforceble?
Term
R(2) Formulation???
Definition
Term

Six categories to give pause to fundamental agreement

 

Defenses to the formation of a contract

Definition
  1. Formal requirements of SOF not met
  2. Minors
  3. Mistake - belief not in accordance with the fact (counterfeit)
  4. Misrepresentation
  5. Duress
Term
Beachcomber coins vs Boskett
Definition

Where contracted parties are under a mistake regarding a fact the contract is voidable by either party if mistake involves material fact.

 

Dime thought to be worth $500 was contracted to be sold and then resold for $700,  Final buyer did inspection, found to be forgery.  Initial buyer for $500 sued to terminate contract due to mutual mistake.  

 

Assumption of risk does not apply because it only applies when there is uncertainty of a material fact.  

 

 

Term
Sherwood vs Walker
Definition

Standard mutual mistake rule - either party can rescind before transaction based on a material fact.  

 

Cow sold thought to be barren, but was pregnant before transaction.  Worth $80 barren, $750 breeder.  

 

Ct said mutual mistake, either party can rescind.  

Term
Lenawee County vs Messery
Definition

If buyer assumes risk of unknown facts and accepts "as is", cannot rescind contract 

 

Messerly bought land with apartment building, septic tank without permit, then sold to Pickles with language saying "purchaser examined property and accepts in same condition".  Neither party new of septic problem - mutual mistake of fact - buyers assumed risk based on writing "as is".   

Term
Laidlaw vs Organ
Definition

Knowing party only needs to disclose any material issues not readily available to other party - but cannot mislead the other party. 

 

Laidlaw buying tobacco from Organ, asked if any reason price would go up, Laidlaw said no, but knew War of 1812 ended and prices will increase due to ending of war. 

 

Sup Ct said laidlaw misled the other party despite the info being readily available to both parties.  

 

 

Term
Marina District Development vs Ivey
Definition

A party’s misrepresentation is not material if the other party would have taken the same course of action if the misrepresenting party had made no representation at all.

 

Ivey requested specific baccarat accomodations at Borgata due to superstition - but really was to count cards.  Borgata sued based on Iveys misrepresentation for superstition.  

 

Sup Ct said no material misrepresentation-if they did not say they needed this for superstition reasons, borgata would still have accommodate request for high roller.  

Term
Vokes vs Arthur Murray
Definition

A statement of opinion may be actionable as a misrepresentation where the party stating his opinion possesses superior knowledge of the truth or falsity of the statement.

 

Owner of Arthur Miller Dance studio induced Vokes to buy $31K of lessons because they said she was "gifted".  

 

Sup Ct ruled that superior knowledge of Arthur Murray owner made the opinion that Vokes was gifted a material fact

 

Term
Hill v Jones
Definition

Where a seller of real property knows of facts that materially affect the value of the property and are not readily observable and known to the buyer, the seller has a duty to disclose these facts to the buyer. 

 

Buy and sell home, certified termite inspection stating no damage.  Afer moving in learned that whole neighborhood had termite issues, including this house. 

 

 Sup court said this was material fact not knowable by buyers, and silence on this topic is material misrepresentation as well.  

Term
Hill v Jones
Definition

Where a seller of real property knows of facts that materially affect the value of the property and are not readily observable and known to the buyer, the seller has a duty to disclose these facts to the buyer. 

 

Buy and sell home, certified termite inspection stating no damage.  Afer moving in learned that whole neighborhood had termite issues, including this house. 

 

 Sup court said this was material fact not knowable by buyers, and if silence on this topic could be material misrepresentation as well.  

Term
Common law alternative misrepresentaion per class
Definition

Misrepresentation by one party that is either a) fraudulent = knowing misrepresent (meaning not innocent or negligent misrepresentation) or (yes, or and not and) b) material  AND 

 

The mis rep induces the other to assent AND

 

The induced party was justified in relying on the mis rep. 

 

1) fraudulent/knowingly misrepresentation OR 2) material AND 3) induces assent AND 4) justified reliance 

Term
R (2) 169 When reliance on opinion is not justified
Definition

To the extent that an assertion is one of opinion only, the recipient is not justified in relying on it unless the recipient

 

(a) stands in such a relation of trust and confidence and reasonably relies 

 

(b) reasonably believes opinion is given by subject matter expert, or

 

(c) is for some other special reason particularly susceptible to a misrepresentation of the type involved

Term
R (2) 159 Misrepresentation Defined
Definition

Assertion that is not in accordance with facts

 

fraudulent or not

 

expressed or silence or by conduct

Term
R (2) 160 - When action is equivalent to an assertion
Definition
Action intended or known to be likely to prevent another from learning a fact is equivalent to an assertion that the fact does not exist. (putting plant to cover water damage in house, etc).
Term
R (2) 162 - When is misrep fraudulent or material
Definition

(1) A misrepresentation is fraudulent if it is used to induce a party to assent and the maker

 

(a) knows or believes that it is false OR

 

(b) does not have the confidence of the truth, OR

 

(c) has no reason to know the truth (never been a water leak, when you don't actually know).

 

(2) A misrepresentation is material if it would be likely to induce the specific recipient OR a reasonable person 

Term
R (2) 163 Fraud in factum OR Inducement (164)
Definition

If a person neither knows nor has reasonable opportunity to know of misrepresentation of essential terms, the contract is not formed.

 

If a party is induced by fraudulent or material misrepresentation that is reasonably relied upon, the contract is voidable.

Term
R (2) 167 - when a misrep is an inducing cause
Definition
A misrepresentation induces a party's manifestation of assent if it substantially contributes to his decision to manifest his assent.
Term
R (2) 168 Reliance on Assertion Of Opinion
Definition

(1) An assertion is one of opinion if it expresses only a belief, without certainty, as to the existence of a fact or  a judgment as to quality, value, authenticity, etc.

 

(2) If it is reasonable to do so, the recipient of an assertion of opinion as to facts not disclosed and not otherwise known is an assertion

 

 

Term
R (2) When reliance on opinion is not justified
Definition

The recipient is not justified in relying on an opinion assertion unless: 

 

(a) there is a relation of trust and confidence to the person whose opinion is asserted, OR

 

(b) has superior knowledge or skill

 

(c) some other special reason particularly susceptible to a misrepresentation

Term
R(2) 174 Duress and formation of contract
Definition
If conduct that appears to be a manifestation of assent by a party who does not intend to engage in that conduct is physically compelled by duress, the conduct is not effective as a manifestation of assent.
Term

R(2) 175 - WHen duress by threat makes a contract voidable

 

How to analyze a case of duress.  

Definition
  1. ID the threat
  2. Did threat induce the assent
  3. Was threat improper 
  4. Leave victim with not reasonable alternative

Contract can be voidable by the victim

 

If threat is induced by one who is not a party to the transaction,  voidable unless the other party is in good faith and without knowledge of threat

Term
R(2) 208 Unconscionable Contract or Term
Definition

If a contract or term thereof is unconscionable at the time the contract is made a court may refuse to enforce the contract, or may enforce the remainder of the contract

without the unconscionable term, or may so limit the application of any unconscionable term as to avoid any unconscionable result.

Term
UCC 2-302 - Unconscionable contract
Definition

(1) If the court as a matter of law finds the contractor or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.

 

(2) When it is claimed or appears to the court that the contractor any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination.

Term
Unconscionability - Ora Lee Williams vs Walker Thomas Furniture
Definition

UCC 2-302 - if there is unconscionability at the time a contract was made, courts may refuse to enforce, or not enforce part or all of the unconscionability clause

 

Unconscionability is the 1) absence of meaningful choice (Procedural uncon -gross inequality in circumstances surrounding of bargaining power) AND 2) contract terms unreasonable favored one party - unreasonably one sided (substantive uncon).  

 

Need both, but if lots of 1) or 2) issues you may get away with only one. 

 

 

Term
Jones vs Star Credit
Definition

Exobanent price alone can be a single element of unconscionability - one sided contract alone (substantive unconscionability rather than procedural unconscionability)

 

$900 freezer plus life insurance, etc.  and many extras total $1200 when fair value is $300. Case by case decision; hard to win - need to be disadvantaged person 

 

Unconscionable AT TIME OF CONTRACT for R(2) - nursing home case where lady died 2 months after entry fee is still OK contract because it was consiouable at the time.  

Term
Parol Evidence
Definition

 

1) parties MUST have intend this to be the integrated agreement-normally easy-signed document-primacy weight

2) That writing serves as Parole Evidence Rule (PER) filter

3) PER only applies BEFORE the written agreement

4) PER only helps to prove content of the agreement-in general parole evidence can show fraud, etc, but this is not invoking the formal PER. 

 

Term
Mitchell vs Lath
Definition

Icehouse removal oral agreement from sale of land.  Oral agreement outside of written agreement must:

 

1) be distinct and independent of written agreement

2)  not contradict expressed on implied conditions of written contract

3) not ordinarily be expected to be in the written agreement

 

Removal of Icehouse oral agreement fails last test - final written agreement was very detailed but did not have remove ice house agreement.  

Term
Masterson vs Sine
Definition

evidence of a separate oral agreement is admissible to prove the terms of a written contract when it is unclear whether the written contract is intended by the parties to be complete.

 

Masterson sold land to sister Sine with 10 year option to buy back minus depreciation.  Masterson declares bankruptcy and courts seize his option for buy back land.  Both sides of the family says that option was only for family members based on oral agreement. 

 

Courts ruled for the families and concluded buyback option only for family.  

Term
Alaska Northern vs Alyeska Pipeline
Definition

Integrated agreement first required (intended to be final expression of terms) and if extrinsic evidence at issue contradicts or is inconsistent with integrated writing  is excluded

 

Inconsistency is defined as the absence of reasonable harmony in terms of the language.  

 

 

Term
Pacific Gas vs Thomas Drayage
Definition

Drayage contracted with PG&E; included work done at own risk and indemnification for loss, damage, liability, injury while performing contract; turbine was damaged for $25K.  Drayage appealed that extrinsic evidence shows liability for 3rd party (PG&E) was not agreed to.  

 

If two reasonable interpretations are there, you should allow extrinsic evidence to shed light on verbal agremnt 

 

 

Term
Katrina Canal Breaches
Definition

Insurance contract terms should be construed according to their plain, ordinary, and generally prevailing meaning, and unambiguous insurance contract terms should be enforced as written.

 

Flood exclusion insurance policies, some saying from natural or external forces - plaintiffs said breach of levees was neither natural or external forces - language ambiguous.  

 

Ambiguity must be resolved by larger agreement, these policies do not cover floods from levee breach.  

Term
Market Street Associates vs Frey
Definition

The duty of good faith prevents a party from taking opportunistic advantage of another party in a way that was not resolved explicitly by the parties at the time of drafting and that undermines cooperation.

 

JCP to sell properties to GE Pension Trust and re-lease back for 25 years; agreement said lessor to reasonably consider financing improvements

 

Good faith requires that parties behave cooperatively and be transparent to reference specific agreement terms/paragraphs that benefit your position

Term
Feld v Levy & Sons
Definition

Agreement to buy bread crumbs for 1 year; stopped producing crumbs because was losing money.  Sued for specific performance. Crummy company required to provide crumbs - not substantial losses and asked for 7c vs original 6 cents - speaks to negotiation not preservation - plus no notice of stopping crumbs. 

 

In output contract must act in good faith until losses are "more than trivial" if production continues.  Need to sustain substantial losses.

 

Good faith also requires maximize both parties gains.  

Term
Dove v Rose Acre Farm
Definition

When a contract contains an express condition, nonperformance of the condition by one party relieves the other party of his own contractual obligations.

 

Dove was employed by Rose ;Rose got bonus of $5K if job done in 10 weeks but cannot be absent or tardy ever, got sick on wk 10, missed 2 days but Rose finished in wk 10; no bonus, sued saying substantial performance. 

 

Dove did not perform complete expressed terms and is not due the bonus, he clearly knew the terms and no bad faith on Rose's part - offered the option of working sick

Term
Carters Claim
Definition

When a condition precedent is clearly and unambiguously stated as such in a contract, it will not be treated as a warranty instead.

 

COndition precedent would invalidate contract if buyer elected, warranty would remain after execution of contract and subject to the escrow reimbursement.  

 

Agreement to sell company, money in escrow, buyer discovers financial condition of company was worse than thought - sues for damages. 

 

Term
UCC 2-306 Output requirements and exclusive dealing
Definition

(1) A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded.

 

Best efforts also required for supplier to supply the goods and buyer uses best efforts to promote the sale of the goods

Term
fDifference between express conditions vs court imposed conditions
Definition

Expressed condition must be perfectly met whereas court imposed conditions must be substantially met. COntructive condition

 

If condition not met, the buyer still has option to waive the condition and still proceed with contracdt

 

The condition can be excused by courts if it would cause disproportionate forfeiture unless it is a MATERIAL PART OF THE EXCHANGE

 

make sure language indicates a clear condition and not just a promise (which would be breach of contract and not a specific condition). 

Term
Clark v West
Definition

A “waiver” is the voluntary and intentional relinquishment of a known right, and implies an election to dispense with something of value or forego some advantage which the party waiving it might at its option have demanded or insisted upon.

 West contracted with Clark to write textbook for $2 per page if does drink and $6 per page if he does not drink. Clark thought condition was waived because West knew he was drinking.    

Cannot waive conditions that have consideration (additional pay for not drinking) - need more information but can waive condition precedent

Term
Ferguson vs Assurance Company
Definition

Insurance policies cannot use narrow "evidence" rules to deny recovery when wider evidence shows valid claim.  

 

Insurance policy for safe burglary when violence used (visible marks by tools, explosives)- got $ stolen from safe,evidence of violence on inner but not outer door Insurance did not pay -   

 

Cts ruled that the force marks was evidence and not a condition precedent - if they wanted as condition, should have put it in exclusion or condition precedent section.  Policies construed and interpreted in favor of insured

Term
Palmer vs FOx
Definition

Palmer sells plot in development to Fox upon condition that palmer will provide cement walkways, roads and water mains.  Did not provide roads, Fox stopped monthly payments.  

 

You cannot breach your dependent/concurrent covenants if the other party breaches their dep/concur covenants-if so, you are also in breach and cannot sue

 

  Crts prefer dependent conditions or covenants, not independent. 

 

 

Term
Jacob and YOung v Kent
Definition

If a party substantially performs its obligations, will not need to pay replacement cost to fully comply with constructive condition, will need to pay diff. in value 

 

Jacob was gen contractor that built house for Kent under condition that all pipes from Reading, not all were from Reading, asked for replacement cost of $3500.  Pipe was same quality but was result of subcontractor mistake.

 

GC substantially performed contract, does not need to pay to replace non reading pipes - was a constructive condition not expressed condition - does not need to be met perfectly - not a material breach.  

Term
Grun V Cope
Definition

Roofing contract for brown varied color shingles, some had yellow streaks and were replaced but were slightly diff color.  Only way to make uniform color is to replace all shingles again.  

 

Based on factors 1) Extent of non-performance, if substantially performed but frustrates purpose/denies benefit of contract, 2) good faith in trying to do full performance, 3) ratio of money to correct, 4) unfairness of making comply with full performance.  Purpose of re roofing was to get uniform color.  No quantum meruit.  

 

Term
UCC 2-601 Buyer's Rights on Improper Delivery.
Definition

Unless otherwise agreed, if the delivery of tender of goods fail in any respect to conform to the contract, the buyer may

 

(a) reject the whole; or

(b) accept the whole; or

(c) accept any commercial unit or units and reject the rest.

 

Perfect tender rule for UCC

Term
UCC 2-602 Manner and Effect of Rightful Rejection.
Definition

(1) Rejection of goods must be within a reasonable time and must seasonably notifies the seller.

 

 

Term
UCC 2-711 (1) Buyer's Remedies in General; Buyer's Security Interest in Rejected Goods
Definition

Where the seller fails to make delivery or repudiates - or the buyer rightfully rejects or justifiably revokes acceptance the buyer may cancel and recover monies paid AND

 

(a) "cover" (substitute from another provider) and recover damages; or

(b) recover damages for non-delivery 

 

Damages are difference in price to get goods and consequential damages minus mitigation

Term
UCC 2-606 Acceptance of Goods
Definition

(1) Acceptance of goods occurs when the buyer

 

(a) after a reasonable opportunity to inspect the goods signifies to the seller that the goods are conforming OR in spite of their non-conformity; or

(b) fails to make an effective rejection in seasonable time; or

(c) does any act inconsistent with the seller's ownership; 

 

(2) Acceptance of a part of any commercial unit is acceptance of that entire unit.

Term
US vs Wegematic
Definition

Engineering difficulties resulting in delay in delivery does not constitute impracticability that excuses performance

 

Fed reserve board needed computer, Wegematic said can do in 9 months, delayed twice and then cancelled due to engineering difficulties; sued for damages of 1mm+ compared to contract worth 250K not "impracticable".  

 

Wegematic presented tech advances not yet developed, suit and damages against Wegematic are valid.  Liquidated damages (tough to prove so predefined) of $100/day are enforceable

Term
Taylor vs Caldwell
Definition

In contracts in which the performance depends (CONDITION) on the continued existence of a given person or thing, a condition is implied that the impossibility of performance arising from the perishing or destruction of the person or thing shall excuse the performance.  Diff between painting house vs famous person painting a portrait.  

 

Contract for performances at music hall that is then destroyed by fire.  The destruction of the music hall was critical to completion of contract, both sides are excused of performance.  IF THERE IS NO FAULT - if its an act of god

Term
Canadian Alcohol co vs Dunbar Molasses
Definition

DId not supply enough molasses because subcontractor reduced the output of molasses.  

 

Crts ruled that Molasses company still needs to supply molasses regardless of its supplier issues -impossibility of underlying assumption only excuses obligation under extreme events AND when there is no fault.  

Term
Paradine vs Jane
Definition

A party to a contract is required to perform under the contract despite that he may experience a frustration of purpose.

 

3 year lease of land, Prince of Germany seized land and lessee could not possess the land.  Lessee stops payments, sued by land owner. 

 

Frustration of purpose risk is borne by the one who profits from contract and must also bear risk of loss. Landowner not excused from performance and lesee allowed not to pay

Term
Krell vs Henry
Definition

When a foreseeable implied condition is the reason for the contract, the nonoccurrence of the condition may excuse performance 

 

Guy rents room for coronation of king, king gets ill and delays coronation.  Renter paid deposit then did not pay rest.  Coronation was understood by both parties to be the reason for renting room; the cancellation of coronation excuses the performance -foreseeable implied condition

Term
Washington Hops vs Goschie Farms
Definition

Where, after a contract is made, a party’s principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, the party’s remaining duties to perform under the contract are discharged, unless the contract language or factual circumstances indicate the contrary

 

Hop allotments given by Fed, can transfer to other growers, hop allotment market develops.  Gov then cancelled hop allotment program, price of hops crashed and made hop growers unable to perform at price.   

Term
Hochster vs De La Tour
Definition

When one party to an agreement is informed by another party to the agreement that the second party intends to breach the agreement, the first party has an option to file suit for damages immediately in anticipation of the breach, or to wait until the act was supposed to be done.  

 

COntract for a travel guide to accompany during travel - then the traveller said they dont need guide before start of travels. Tour guide sued immediately and then obtained replacement employment.  Still sued for damages in anticipation to MITIGATE damages - in fact he is obligated to mitigate damages.  

Term
Taylor v Johnson
Definition

Anticipatory breach occurs when a promisor repudiates (states he will not perform contract) a contract before the specified time for performance has arrived.(can be expressed/unequivocal or implied)

 

Breeding thoroughbred horses, contract to breed two mares, mares become pregnant before the contract and now cannot be bred during original contract timing.  

 

Repudiation must be positive and unconditional to be anticipatory breach under R(2) (UCC allows for conditional anticipatory breach (if drought continues...); can request assurance, 

Term
Ways to get around non occurrence of a condition
Definition

1) Waiver

3) Disproportionate forfeiture

3) Hinderance/prevention

4) Insurance public policy

5) Quantum Meruit

 

WFHIQM

Term
Rules / approach on how to analyze conditional issues
Definition
  1. follow dates in the agreement
  2. Can performance be done simultaneously; if so, concurrent conditions
  3. If one performance takes time (painting a house for money), that performance  (painting)normally goes first - but can change, especially when large amount sof money for a large project, likel will have installment paymetns. 
Term
Dills vs City of Enfield 1989
Definition

When an unforeseen supervening event occurs, performance is excused by showing 1) the event made the performance impracticable, 2) the nonoccurrence of the event was a basic assumption on which the contract was made,3) the "event" resulted without fault of the party seeking to be excused, and 4) the party has not assumed a greater written obligation.

 

Dills pays $100K deposit to City to buy land, clause allows Dills to keep deposit if no financing, another clause says city keeps deposit if no plans submitted.  No financing and no plans occur, Cts ruled that no financing was not unforseen,city keeps $100K deposit b/c greater obligation to submit plans.   

Term
Centrex v Dalton
Definition

A supervening impossibility may result from change in law - even when change in law is foreseeable  

 

Dalton helps Centrex acquire defaulted banks for $750K; state board and Fed congress prohibits Daltons fee. 

 

Centrex is excused from $750K obligation to pay Dalton due to illegality.  Can be done even when change of law was foreseeable.  Quantum merit can be raised, but must be raised early in pleadings (was not done). 

Term
Bolin Farms vs Cotton Shippers Association
Definition

A significant change in pricing circumstances following entrance into a forward sales contract does not make the contract unenforceable.

 

Bolin Farms does forward sales contracts to sell cotton in the future from 29 to 41 cents per pound; environmental  factors result in actual price of 80 cents.  Bolin alleges extreme change in prices makes contract unenforceable.  

 

Bolin loses must sell at 41 cents and not 80 cents - many risks for EXPERIENCED buyer and sellers, no inside information, fluctuation in price foreseeable

Term
Kaiser Oil vs Producers Gas co 1989
Definition

Neither a decline in demand, nor an inability to sell a product at or above the contract price, constitutes a force majeure event sufficient to exclude liability for the parties to perform the contract.

 

kaiser has agreements to sell gas to producers gas co with force majeure clause.  Gas price decrease, PGC does not buy min contract of gas from Kaiser b/c contract price higher than resell price. 

 

Courts said decline in demand and decline in resell price is not force majeure or unforeseeable unless total failure of gas market or catastrophe

Term
Sullivan vs O'Connor 1973
Definition

Pain and suffering and emotional distress damages that flow naturally from a breach are allowed

 

Either an expectancy (damages related to being in position if the contract was performed correctly) or reliance (same position as if no contract at all) measure.

 

Sullivan was an entertainer, Dr. Oconnor made nose worse, sues for negligence and breach, wins on breach 

 

emotional distress and P&S not normal for contract breach, but can be awarded when damages flow directly from breach of contract.  

Term
Hadley v Baxendale
Definition

Breaching contract can recover reasonably foreseeable damages to both parties at the time of making the contract, as well as damages stemming from any special circumstances, if those circumstances were known by all parties at contract start.

 

Corn mill crank breaks, was supposed to be shipped immediately, was not.  Sued for extra damages coming from delay in re opening mill but hadley never said that the mill was closed while crank was broken, therefore not liable for extra days closed - was not a common expectation to reasonably forsee additional losse.  

Term
Hydraform vs American Steel
Definition

To recover for consequential damages, the damages must be reasonably foreseeable (natural course of events or reasobn to forsee injury), ascertainable (able to be calculated - new business startup may be hard to calc), and unavoidable (certainty).

 

Hydraform orders steel to make stoves with liability clause for consequential damages.  American steel delivers steel late and defective resulting in only 250 of 400 stoves planned.  Loses profit and selling price of the hydraform company is lower. 

 

Hyrdaform not liable for losses associated with sale of business, just associated with the profit from 150 less stoves sold.    

Term
Angelo Acquista vs NYLife
Definition

Acquista is internal med doc; has 3 disability policies under NYL, gets sick with fatigue, headaches and muscle joint pain.  NYL denies disability claims because he can still do some duties and is not totally disabled. 

 

Breach of contract by NYL in bad faith can also be liable for emotional damages that are greater than policy limits.   

 

 

Term
Walgreen v Sara Creek Property
Definition

An injunction may be more appropriate than monetary damages if the plaintiff shows that damages are inadequate based on balancing the costs and benefits of the alternatives

 

Walgreens lease space from Sara Creek in a mall and agreed to not have other pharmacies in mall.  Sara creek then adds a pharmacy store. 

 

Crts gave injunction to Sara prohibiting new pharmacy, stating damages too hard to prove - proprietary financial data from walgreens, likelihood that money not be paid

Term

R(2) 261, 262 and 263

 

Diff between impracticability (inability to deliver) and frustration (no reason for contract - wedding where husband dies)

Definition

261 - contract performance is impractical (supervening impracticability but not impracticality - needs to be 1) extreme and unreasonable circumstances , 2) without fault (can be purposeful or negligence), 3) occurrence was a basic assumption of contract, 4) unless language indicate otherwise then obligation is excused.  

 

Exact same elements as impracticability, except that contract performance is frustrated such that obligation is worthless to other party or contract makes no sense anymore.  (pretty rare)

Term

MUST READ CAREFULLY THE TEST QUESTION AND THE SPECIFIC QUESTION ASKED IN ESSAY QUESTIONS.  MAKE SURE YOU KNOW THE DETAILS AND FACTS AND USE THEM IN THE ANSWER. 

 

MISSED THIS TWICE IN CONTRACTS, BUT ALSO APPLIES TO OTHER CLASSES.

Definition
Term
R(2) 250 - Repudiation
Definition

Repudiation can be expressed, implied or anticipatory and is treated like actual breach

 

and R(2) 251 - demand of assurances of performance - when can you demand (when reasonable grounds for non performance), what can the other party do when waiting (request assurance, suspend your performance), what if the other party does not give assurance (treat it as repudiation), what is adequate assurance (concrete language that puts you at ease - in writing is good start)

Term
Notes from No 29 class
Definition

give non breaching party the amount of $ that will place her in as good of a monetary position as she would have been if the contract was performed

 

4 Ps - put plaintiff in performance position (expectation interest, benefit of the bargain). Position if full performance combined with actual situation

 

Make sure you can calc expectation full performance damages for exam.  $100k builder problem expec damages are +10K (expected profit) -15K deposit+60K expended= 55K

 

Damages must be reasonably  foreseeable in ordinary course of event ascertainable/calculable, and unavoidable, with opportunity to be mitigated, 

 

emotional distress only when 1) physical harm OR 2) ser emot distress would be expected from the breach such as a prob with wedding or funeral.  

Term
Rockingham County vs Luten Bridge
Definition

When a non-breaching party in a contract for services receives notice of another party’s breach, the non-breaching party must cease performance and mitigate damages.  

 

Luten agreement to build bridge, new county board members join and county informed Luten they would not honor contract.  Luten had already started and then completed bridge despite notice.  

 

Ct said Luten cannot get additional damages for continued work when notice was recieved.  

Term
Spang Industries vs Aetna
Definition

When potential damages from a breach of contract may be foreseen by the parties at the time of contract formation and a breach actually does occur, the breaching party must provide recovery for these damages to the injured party.

 

Spang says it will deliver steel late, and does actually delivers steel late, causing road company to incur extra cost to finish road in 1 day.  Extra damages sought by road builder were foreseeable given the circumstances (roads to be poured before freeze in vermont fall) - rush to finish road before freeze was mitigation of damages (delay until next spring would be even more damages)

Term
Curtice Bros v Catts
Definition

Under special circumstances, specific performance may be an appropriate remedy for breach of contract involving the sale of goods.

 

Catts is tomato farmer, curtice is tomato packing plant.  Catts refused to sell tomatoes to curtice despite agreement.  Specific performance was demanded and provided.  

Term
Lumley v Wagner
Definition

Even where there is no adequate remedy at law, a court of equity will generally not specifically enforce a personal services contract.

 

Wagner was a singer contracted to perform at Lumley theater.  Wager gets better offer from another theater, breaches, and does not perform for Lumley. 

 

Ct may put injunction saying Wagner cannot perform for another theater, but not likely to force her to sing for original theater.  

Term
Curb Records vs Sam T McGraw
Definition

Injunctive relief is not appropriate in a case involving a contract for unique and extraordinary /personal services if the contract does not provide a definite term length. 

 

Mcgraw's agreement contained several optional extension periods; curb rejected 5th option period saying songs were previously recorded (christmas album?) and tries an injunction to prevent mcgraw going to another record studio. 

 

Courts said the indefinite terms of contract did not warrant injunctive relief preventing mcgraw going elsewhere

Term
Mitigation of avoiding damages 3 ways
Definition

1) cease performance

2) actively move to limit your loss

3)without undue risk, burden or humiliation

 

Damages from sev emotional distress only when physical harm or when breach is likely to result in serious emotional damages. 

Term
Key acronyms
Definition

Offer and Acceptance - OTermTA

Offer Definition - AIRBRAC

Offer Elements - RL1T-ReasonLang1personTerms

Terms - Reasonably certain, show breach and calc

SOF Analysis-5WE(Writ,xcept)->PAM (PerformAdmitMerch)

Ways to terminate offer - TRRCOAction

Elements of COnsideration - BNPS Obligation

Promissory Estoppel - WAIF-Worse,Action,Induced,Forsee

Option Contract-WSFRtT-WSigFairTermTime

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