1.

Contract a legally enforceable promise between two private parties;

[contract] = promise + consideration
Express contracts written or oral; no contract unless parties intend to have one
Implied-in-fact no express agreement, but looking at the facts there must have been
an agreement: (1) the parties intend to contract, and (2) their agreement has all of
the elements of a contract, but (3) they made no written or verbal expression of their
agreement; have to look at parties behavior to discover agreement and terms of
agreement
Quasi-contract (1) the parties do not intend to contract (2) one of them provides a
benefit, (3) which the other knowingly accepts; (4) it would be unjust to deny
compensation to the party providing the benefit, and (5) the benefit provider: (a) was
not a volunteer, but rather, (b) had a legitimate reason for his actions; [quasicontract] = liability - promise
**A change in the profitability of a contract is no excuse for breach; courts will usually
(but not always) enforce a bargain even if the circumstances have changed.
2. Consideration legal detriment that is bargained for; to enforce a promise, you need
consideration from the other party incurred at the instance of promisor
Consideration under common law (1) a right, interest, profit or benefit accruing to
one party, or (2) a forbearance, detriment, loss or responsibility undertaken by the
other
Promisees performance can still be consideration even if he benefits from that
performance
RS 79 value of consideration does not have to equal value of thing promised;
courts ordinarily do not ask about relative values, BUT inadequate consideration
might indicate (1) fraud or (2) mere pretense of bargain
RS 74 agreement not to assent an invalid legal claim is not consideration unless:
(1) validity of the claim is uncertain under law at time of agreement, or (2) forbearing
party believes the claim may be valid
Pre-existing duty rule if a party (1) does or promises to do what hes already legally
obligated to do OR if he (2) forbears from doing something he is not legally entitled
to do, he has not incurred a [legal detriment] for purposes of consideration
Modifications if parties of an existing contract agree to modify the contract for the
sole benefit of one of them, the modification is usually unenforceable for lack of
consideration.
Accord and Satisfaction (1) there is a dispute about performance due under a
contract, and (2) the party to whom performance is owed accepts something other
than what she has claimed is owed, (3) lesser amount is now the contract amount.
Accord one party to a contract promises to render a substitute performance, and
the other party promises to accept that substitute performance in discharge of the
pre-existing duty
Satisfaction completion of the substitute performance
(1) substituted performance (2) discharge of existing duty
RS 89 (D) a promise modifying a duty under a contract is binding if: (1) the
contract is not fully performed on either side, (2) the modification is fair and equitable
(3) in view of circumstances not anticipated by the parties when the contract was
made
Mutuality both parties must be obligated to render performance on the contract; if
one is not bound, neither is the other
Manifestation of mutual assent to an exchange requires that each party either: (1)
make or promise or (2) begin or (3) render a performance

3. Promissory Estoppel promisor should reasonably expect promise to induce action

or forbearance of definite and substantial character; reliance (action or forbearance
induce by the promisee) on promise must be actual and foreseeable; (1) on the part of
the promise; (2) promise does induce action/forbearance; (3) failure to enforce promise
= injustice
[promissory estoppel] = promise + unbargained-for reliance
RS 90 a promise when the promise should reasonably expect to induce action
or forbearance (1) on the part of the promise or a third person and (2) which does
induce such action or forbearance (planning to act or forbear is not enough), is
binding if injustice can be avoided only by the enforcement of the promise; remedy
may be limited as justice requires
4. Moral Obligation not sufficient to make a promise binding unless: (1) resurrection
of previously-binding legal obligation, such as a debt or (2) affirmation of contract to
which there is a defense (w/ minor child, induced by mistake or fraud)
[moral obligation] = promise + recognition of antecedent benefit
RS 86 a promise made in recognition of a benefit previously received by the
promisor from the promise from the promisee is binding to the extent necessary to
prevent injustice; a promise is not binding: (1) if the promise conferred the benefit as
a gift or for other reasons the promisor has not been unjustly enriched or (2) to the
extent that its value is disproportionate to the benefit
Material benefit rule Bs promise to pay is enforceable if A provided B with a material
benefit under circumstances that gave B a moral obligation to compensate A; no
expectation of repayment or lapsed legal obligation required
5. Bargaining negotiations occur and will further the interests of both parties and if
there is (1) adequate information and (2) sufficient choice in the marketplace
both parties will benefit from the exchange
RS 17 the formation of a contract requires a bargain in which there is (1)
manifestation of mutual assent to the exchange and (2) consideration; exceptions in
82-94
General rule there is no contract unless the parties have a meeting of the minds,
they intend to contract
Intent determined by parties words & acts interpreted from the perspective of the
reasonable man; unexpressed intentions are irrelevant mutual assent is required
but mental assent is not; BUT if one party knows of the other partys true intent or
unreasonable meaning, that meaning governs
6. Offer an act on the part of one person giving another person the legal power of
creating the obligation called a contract; must have language of commitment or some
invitation to take action w/o further communication
RS 24 manifestation of willingness to enter into a bargain; so made as to justify
another person understanding that (1) his assent is invited and (2) it will conclude
the bargain
[Contract] = offer + acceptance
All that is left is acceptance; offeror has complete control over an offer and may
specific how it will be accepted; Default Rule offeree must notify offeror of
acceptance BUT offeror may waive the default rule waive can be implied from the
facts and circumstances

An ad is an offer if it: (1) promises a particular performance, (2) is clear, definite and
explicit; and (3) offeror intended to enter into a binding relationship w/o further
negotiation
7. Acceptance a manifestation of assent to the terms thereof made by the offeree in a
manner invited or required by the offer
RS 63 (a) if the offeree does not specify otherwise, and (1) the offeree accepts
using the invited manner and medium, then (2) acceptance is effective as soon as it
is put out of the offerees possession, regardless of whether the offeror receives it
Acceptance by performance requires at least part of what the offer requests be
performed or tendered; includes acceptance by performance which operates as return
promise acceptance by a promise requires that the offeree complete every act
essential to the making of the promise and exercise reasonable diligence to notify the
offeror of acceptance
Specific-act performance if an offeror specifies an act as acceptances, the act itself
is an overt manifestation of intent; act must be done willfully: (1) done on purpose,
not (2) done in order to accept the contract; the fact that the offer was only a slight
influence, or that the offer was only a slight influence, is not relevant
Power to accept terminates at the time specified in the offer, or if no time is
specified, at the end of a reasonable time; reasonable is a question of fact: (1) nature of
contract, (2) customs of business, and (3) other circumstances of which the offeree has
reason to know
Acceptance by silence silence may sometimes manifest an intent to accept; parties
indicated by their silence (or non-verbal conduct) their understanding that a contract is
being formed
RS 69 (1) silence or inaction can operate as acceptance if:
(a)(1) offeree takes the benefit of offered services, (2) offeree had a reasonable
opportunity to reject them, (3) offeree had no reason to know that offeror expected
compensation; (b)(1) the offeror has given the offeree reason to know that assent
may be manifested by silence or inaction, and (2) the offeree, in remaining silent,
intends to accept; (c)(1) the parties have had previous dealings, and (2) because
of those dealings, it is reasonable that the offeree should notify the offeror if he
does not intent to accept
RS 69 (2) silence or inaction can operate as acceptance if: (1) there are offered
terms, and (2) the offeree does any act inconsistent with the offerors ownership
BUT no contract (1) if the terms are manifestly unreasonable AND (2) if the
offerees act is wrongful unless offeror still wants it and ratifies it
8. Termination of an Offer when the offerees power of acceptance may be
terminated
RS 36 (1) offerees power of acceptance may be terminated by: (1) rejection of
counter-offer by the offeree, (2) lapse of time, (3) revocation by the offeror (direct or
indirect), (4) death or incapacity of the offeror or offeree, (5) non-occurrence of any
condition of acceptance under the terms of the offer
RS 41 (Lapse of Time) an offerees power of acceptance is terminated at the
time specified in the offer; (1) if no time is specified, the offer terminates at the end of
a reasonable period, (2) reasonableness is a question of fact and circumstances
RS 42 (Direct Revocation) offeror notifies offeree of intent not to enter contract
RS 43 (Indirect Revocation) (1) offeror takes definite action inconsistent with an
intention to enter the contract, and (2) the offeree acquires reliable information to
that affect

Option contract a promise which (1) meets the requirements for the formation of a
contract and (2) limits the promisors power to revoked the offer; once option is
executed, it becomes an enforceable contract
RS 87(1) an option is binding as an option contract if it: (a) (1) is in writing and
signed by the offeror, (2) recites consideration for the making of the offer and (3)
proposes an exchange on fair terms within a reasonable time or (b) is made
irrevocable by statute
RS 87(2) - an offer which (1) the offeror should reasonably expect to induce action
of forbearance on the part of the offeree prior to acceptance, and (2) which does
induce such action of forbearance binding as an option contract to the extent
necessary to avoid injustice
9. Counter-offer a reply to an offer which purports to accept it but is conditional on
the offerors assent to terms additional to or different from those offered
RS 39 (2) an offeree who makes a counter-offer loses her ability to accept the
terms, but either (1) the offer or (2) the counter-offer can specify that the counteroffer will not terminate the original offer
RS 61 acceptance that requests a change in terms is valid unless it depends
on offerors assent to the changed terms
Mirror Image Rule an offer has to be accepted on its own terms an acceptance that
varies from the terms of the offer is rejection rejection closes the offer
Inquiry (Constructive) Notice if (1) a reasonable person would have learned of the
existence of the terms and (2) offeree accepts product or service offeree is deemed to
have accepted the terms
10. Statute of Frauds forbids enforcement unless there is a written instrument or an
applicable exception; only applies to contracts listed in statute and contracts that cannot
possibly be completed within one year
Written instrument usually includes (1) identity of parties, (2) subject matter of
contract, (3) essential terms of contract, (4) who made which promises to whom, (5)
signature of person against whom contract is enforced; serves as proof of the
agreement
**Agreement can only be enforced against a person who has signed it**
RS 131 writing, signed be the party it is enforced against must (1) reasonably
identify the subject matter of the contract, (2) indicate that a contract with respect
thereto has been made between the parties or offered by the signer to the other
party, and (3) states with reasonable certainty the essential terms of the unperformed
promises in the contract
RS 132 separate documents are okay if (1) they relate to one another and (2)
one of them is signed by person against whom enforcement is sought
Partial Performance Exception person seeking enforcement proves (1) she partially
performed on the contract and (2) her performance was induced by the other partys
misrepresentation (acquiescence or silence)
11. Incapacity a person who lacks capacity has a limited power to contract; any
contract they enter into is voidable at their option (they can enforce the contract or
escape from it)
RS 12 a person cannot be bound by a contract unless she has the capacity to incur at
least voidable contractual duties; is there something going on in that persons mind that
makes their consent questionable; a person has capacity unless: (1) under guardianship

[contract is void], (2) a minor [voidable], (3) mentally ill [voidable], (4) intoxicated
[voidable]
Voidable contract still a contract, even though it is voidable; can be enforced by the
statutorily protected person, cannot be enforced by the non-protected person
RS 14 (Infancy) anyone who is not yet 18 can create only voidable contract duties;
minor not required to return the counter-party to its original position, minor merely has
to return whatever remains
Exception required to honor contracts for necessaries used for support and
ordinary comfort (food, clothing, shelter, education, etc.); minor must pay reasonable
price, not necessarily contracted price
Ratification when a contract made prior, is reaffirmed after the minors 18th birthday;
can be (1) express, (2) by conduct or (3) by inaction [failure to disaffirm]
RS 15 (1) (Mental Incapacity) contractual duty is voidable if: (1) confusion the
person is unable to understand the nature and consequences of the transaction or (2)
compulsion the person is unable to act reasonably with regard to the transaction and
the other party has reason to know of his condition
RS 15 (2) (Mental Illness) if the contract is fair and the other person does not
know of the mental illness, avoidance does not apply if: (1) to the extent the contract
has been performed in whole or in part or (2) where the circumstances have changed so
that avoidance would be unjust
RS 16 (Intoxication) a person incurs only voidable duties if the other party has
reason to know that due to intoxication: (1) the person is unable to understand the
nature and consequences of the transaction or (2) the person is unable to act in a
reasonable manner in relation to the transaction
12. Mistake at the time of the negotiation were they mistaken about one of the facts
that is the basis of the contract; erroneous belief must relate to the facts at the time of
the creation of the contract
RS 153 (Unilateral) IF: (1) one party makes a mistake at the time the contract is
made, (2) the mistake is a basic assumption underlying the contract, (3) it has a
materially adverse effect on the mistaken party
When is contract voidable (1) enforcement of contract would be unconscionable or
(2) the non-mistaken party either had reason to know of the mistake or caused the
mistake
Contract is NOT voidable if the mistaken party bears the risk of mistake
Mistaken party knows he has insufficient info but contracts anyways:
Risk can be: (1) Allocated by agreement, purchase as is or (2) Allocated by court,
usually based on fairness; there is a better person to bear the risk
RS 152 (Mutual Mistake) if (1) both parties are mistaken as a basic assumption of
the contract and (2) the mistake has a material effect on the parties performance (3)
contract is voidable by the adversely affected party unless he bears the risk of loss
Material Fact subject matter of sale, price, or other collateral fact materially inducing
the agreement affects the bargaining power of the parties
RS 159 (Misrepresentation) an assertion that is not in accord with the facts; s
RS 162 (Fraudulent or Material) if the maker intends his assertion to induce a
party to manifest his assent and the maker (1) knows or believes that he assertion is
not in accord with the facts or (2) does not have the confidence that he states or
implies in the truth of the assertion or (3) knows that he does not have the basis that
he states or implies for the assertion then contract is voidable by party who relied
on misrepresentation

 Misrepresentation is material if (1) it would be likely to induce a reasonable person

to manifest his assent or (2) if the maker knows that it would be likely to induce the
recipient to do so; misrepresentation justifies recission (1) it is fraudulent or (2) it
relates to a material fact **still need justified reliance**
Non-Disclosure an assertion if (1) disclosure is necessary to prevent a prior assertion
from being a misrepresentation or (2) other party is mistaken, and non-disclosure =
failure to act in good faith and in accordance with reasonable standards (3) disclosure
corrects other partys mistake about the contents or effect of a writing or (4) other
person is entitled to know because of a relationship of trust between the two parties
13. Duress a threat sufficient to overcome the will of the threatened party; threat must
have induced consent, doesnt have to be unlawful
Subjective Test state of mind is more important than the mind by which the state of
mind was induce; regardless of whether a normal person would have been scared; all
attendant circumstances must be considered
Party would have preferred not to agree but was faced with (1) physical force [void] or
(2) threat of adverse action [voidable]
Economic Duress exists when: (1) possession of needed good or service is threatened,
(2) threatened party cannot obtain the goods from another source and (3) remedy for
breach is not adequate
RS 175 if (1) assent is induced by an improper threat and (2) threat leaves the victim
no reasonable alternative to assent contract is voidable by threatened party;
Threat must be: wrongful, oppressive or unconscionable; may include an unreasonable
use or superior economic power in a commercial context
14. Unconscionability safeguards against contracts that are manifestly unfair
contracts, usually a product of unequal bargaining power; procedural and substantive
unconscionability
[unconscionability] = absence of reasonable choice + contract terms that
unreasonably favor the other party (1) no meaningful choice where there is gross
inequality of bargaining power, (2) one-sidedness of terms judged in light of commercial
context and business customs of the time and place
Procedural unfairness in the negotiation, (1) oppression due to unequal bargaining
power or (2) surprise because hidden terms
Substantive so one-sided that it shocks the conscience
U.C.C. 2-302 allows a court to: (1) refuse to enforce contract, (2) sever unconscionable
clause or (3) limit the unconscionable clause
15. Parol Evidence Rule applies only when there is an integrated writing;
Courts may admit outside evidence to determine whether document is integrated a
writing is integrated if some or all of it is a final expression of the terms [no signature
requirement]
Integration depends on parties intent; get to bring in facts to judge to support
additional terms; look to (1) document itself and (2) circumstances at the time of the
writing
Total integration evidence from outside of the four corners of the document cannot
be admitted to prove: (1) additional consistent terms or (2) contradictory terms
Partial integration evidence from outside of the four corners of the document cannot
be admitted to prove: contradictory terms; can be admitted to prove: additional
consistent terms

Merger Clause creates a presumption that writing supercedes all prior related oral
agreements; creates the presumption that writing is complete; courts consider any
relevant evidence to determine scope of merger clause
Parol Evidence Rule does not apply to: (1) subsequent agreements/modifications (2)
separate agreements (3) evidence used to interpret terms within the writing itself (4)
evidence of the validity of the contract itself mistake, fraud, etc.
U.C.C. evidence of collateral agreement is excluded from trial only if it would certainly
have been included in the integrated writing
Interpretation introducing evidence to interpret a term is allowed under the parol
evidence rule; extrinsic evidence admissible if offered to prove a meaning to which the
document is reasonable susceptible
(1) Have to determine what the terms are, then admit evidence and determine if the
document is susceptible to the alternative meaning
(2) Judge will determine, based on evidence considering the circumstances
surrounding the making of the contract, what the term meant and if it aligns w/ the
meaning provided by party wishing to keep extrinsic evidence out
(3) if it is susceptible to the alternative meaning, extrinsic evidence can be presented
to jury to prove the meaning
RS 212(1) courts must interpret writing in light of circumstances; applicable when
contract is ambiguous; acceptable evidence includes: (1) situation and relationship of the
parties, (2) preliminary negotiations, (3) customs of trade, and (4) prior dealings between
the parties; course of dealings is usually weighed heavier than societal norms
RS 202 (1) words and other conduct are interpreted in the light of all of the
circumstances and parties principle purpose given great weight (2) all writings related
to the same transaction are interpreted together (3) general prevailing meaning used
and technical terms meaning used when in a transaction within the same tech field
unless a different intention is manifested (4) course of performance accepted w/o
objection is given great weight and (5) intention of the parties to contract is interpreted
consistent with each other and any relevant course of performance, course of dealings,
or trade usage
16. Remedies purpose is to compensate the injured party, not to punish the breaching
party
Breach (1) unjustified failure to perform a contractual promise at the agreed upon time,
(2) repudiation of the promise or bargain (say in advanced you are going to breach), (3)
hindering the other partys performance or failing to cooperate in bad faith
Calculating Monetary Damages (1) plaintiff must prove that breach caused the loss, (2)
loss must be determinable w/ reasonable certainty, (3) plaintiff has a duty after the
breach to make a reasonable effort to limit the loss must try to remedy position that
breach has placed her in
Expectation Damages = [loss of what injured party would have received if defendant
had performed] + [incidental and consequential losses caused by the breach] [ costs
and other losses that plaintiff avoided by not having to perform]; damages should put
plaintiff in same financial position as if the contract was performed
Reliance Damages = [expenditures made in preparation for performance] +
[expenditures made in performance] [any loss that defendant can prove plaintiff
would have suffered if contract had been performed]
Restitution disgorgement of benefit conferred on defendant; reasonable value to
defendant of what he received; determined by what it would have cost to obtain the
benefit from someone like the plaintiff

Consequential Damages damages arising from lost work or lost product resulting
from breach of contract must be foreseeable
Incidental Damages costs associated with the actual damage done by breach; can
include any additional transaction costs
Damages in Sales of Real Estate [contract price] [fair market value of property at date
of breach] Plaintiff can recover damages in excess of this amount if change in market
value was reasonably foreseeable to defendant at the time of contract
Divisible Contracts contain sets of reciprocal promises that are severable from one
another, determined by looking at parties intent; if a contract is divisible plaintiff
entitled to damages only on promises that are breached
Lease Rule if real property is leased to someone else after Ds breach, damages are
limited to contract price minus subsequent lease price
only applies where second lease could not have happened but for Ds breach
Lost Volume Seller if plaintiff could have performed on both leases, damages are
[contract price] [cost of performance]