Contracts I Outline I. Governing Law A.

Primary- The common law governs agreements for services, and the UCC governs agreements for the sale of goods. 1. Coakley FactorsPrincess Cruises B. Secondary- Restatements

II. Value Systems

A. ClassicalWilliston 1. Objective/Freedom B. ModernCorbin 1. Subjective/Fairness CONTRACT III. Formation- 17-Mutual Assent and Consideration needed to form k A. Mutual Assent 1. Objective Reasonable Person Standard o Ray 2. Meeting of the Minds a. Subjective standard b. Applies when parties are not on the same page 3. Offer- 24- a parties express willingness to enter into a bargain and inviting acceptance without the further need for assent. o 26- Offeree believes no further assent needed from offeror o Lonergan- express assent needed a. Certainty ii. Clear and certain terms (relevant particulars) o Izadi ad was offer because certain o Walker-certainty needed o 33 ii. Identifiable offeree c. UCC 2-205 Firm Offer i. An offer by a merchant to buy or sell goods in a signed writing (present intent to authenticate) which states that it will be held open is not revocable for

lack of consideration during the time stated or for a reasonable time not to exceed three months; ii. but if supplied by the offeree must be separately signed by the offeror. 4. Acceptance If the offer specifies a form of acceptance, then the offer must be accepted in that manner, because the offeror is the master of the offer. i. Implied assent o Princess Cruise- assent can be made by acts or failure to act o 69 acceptance by silence ii. Mailbox Ruleacceptance becomes effective as soon as dispatched iii. Mirror Image Ruleacceptance must mirror all terms in offer exactly iv. Last Shot Rulelast form governs 8. UCC 2-207 i. A definite and seasonable expression of acceptance acts as an acceptance even though it includes additional or differing terms, unless acceptance is expressly made conditional. o If expressly conditional and not assent terms knocked out. iii. 2-207(2)(b) IF Merchants: o Additional terms part of K, unless: Different terms materially alter a. Surprised to incur b. Risk profile changes Objection is given in a timely manner. 5. Bilateral Contracts a. A bilateral contract is an agreement in which acceptance is made by return promise. b. Both parties are promisor and promisee 6. Unilateral Contracts a. A unilateral contract is an agreement in which acceptance can be made only by completion of the requested performance. b. One party is promisor

c. Where an offer invites acceptance by performance, an option contract is created when the offeree begins the invited performance, limiting the offerors power to revoke. o Cook 7. Revocation a. An offer may be revoked by the offeror at any time prior to acceptance b. Termination of Acceptance 36 i. Rejection ii. Counteroffer o Normile iii. lapse of time iv. revocation, v. death or incapacity 8. Option Contracts a. Limits power to revoke b. Open for reasonable time frame c. Separate consideration required for the option i. 45 ii. 87- in writing, signed, consideration, fair terms, reasonable time frame A. Consideration Consideration consists of two elements: 1) a bargained-for exchange, and 2) that exchanged must be of legal value. The promise induces the detriment and the detriment induces the promise. i. Legal Value- legal value exists if there is either a benefit to the promisor or a detriment to the promisee a. Detriment -giving up a legal right o Pennsy- detriment is bargained for o Hamer- benefit or detriment a. Adequacy doesnt matter unless sham or token ($1) or gross inadequacy. o Batsakis b. Not legal consideration i. Past o Plowman ii. Moral Obligation/Gift o Dougherty iii. Condition o Benevolent man

IV. Promissory Estoppel

A. 90 A promisee may enforce a promise under promissory estoppel if: 1. A promise in which; 2. The promisor should have reasonably expected that the promisee would detrimentally rely; 3. Which the promisee does rely on, and 4. Injustice can be avoided only by enforcement of the promise. a. Drennan- k binding w/o consideration with PE b. Wright- PE doesnt require exhausting all other possible means of obtaining the benefit before bringing the suit

V. Restitution
A. Unjust EnrichmentNo express promise but unjust enrichment. 1. Unjust enrichment consists of 3 elements: a. A benefit conferred on D by P b. Appreciation or knowledge by D of the benefit c. Acceptance or retention of the benefit by D under circumstances making it inequitable for D to retain benefit 2. Implied in Fact k that the parties presumably intended, by: a. Unspoken understanding b. Assumption of existence 3. Implied in Law obligation that is imposed by the court because of parties conduct or behavior usually because: a. A special relationship exists b. One party is unjustly enriched 4. Two ways to measure unjust enrichment a. Reasonable value of services (Quantum Meruit) b. Net increase in wealth of D o Watts B. Promissory Restitution-- 86-A promise in recognition of a previous benefit is binding to the extent necessary to prevent injustice (material benefit). Except: a. If promisor conferred the benefit as a gift or promisor has not been unjustly enriched. 1. Not enforceable right without promise. 2. Return promise signifies the value of the material benefit. o Webb

VI. Statute of Frauds

A. For certain agreements the SOF requires a signed writing to evidence the contracts and prevent the creation of improvident agreements and fraud

B. SOF 3 Questions 1. Is the contract within the statute- 110 a. Cannot be performed within 1 year i. Courts are lenient ii. May not include lifetime k b. Transfers of interest in real estate c. To answer for debt of another (surety or guaranty) d. Executor or administrator to pay for debts of estate e. Marriage (there must be consideration other than return promise to marry) (abolished by many jurisdictions) 2. If yes, is there sufficient memorandum 131 A k within the SOF is enforceable if it is evidenced in writing, signed by or on behalf of the party to be charged, which. i. Reasonably identifies the subject matter of the contract. ii. Indicates that a k has been offered or made by the signer. iii. States with reasonable certainty the essential terms. a. 132 Several Writings Memorandum may consist of several writings if one is signed and the writings clearly indicate they relate to the same transaction iv. Parol evidence through oral testimony can connect the documents (link to PER?) v. No internal reference or physical connection required. o Crabtree b. 133 Statute may be satisfied by a signed writing not made as a memorandum of a k. i. Any reference to agreement in writing is sufficient ii. Neither writing nor signature need be formal c. Response to a writing outside UCC can be dangerous 3. If not sufficient, but K is within statute, is the K enforceable because of an exception to the SOF. a. 129 Part Performance transfer of property only! i. If party seeking enforcement relied on the K; and injustice can only be avoided by specific performance. Performance must be unequivocally referable to the oral agreement. Winternitz

o Transfer of possession coupled with valuable improvements to property, not just money. b. 139 Promissory Estoppel generally available as an exception to SOF if injustice can be avoided only by enforcement of the promise, limited as justice requires. i. Availability of adequacy of other remedies o Restitution or cancellation ii. Definite and substantial character of the forebearance iii. Extent to which forebearance corroborates iv. Forbearance was reasonable and foreseeable v. Minority - Only where D has promised to create sufficient writing. vi. Minority -refuse to recognize as exception o Alaska Democratic Party C. UCC 2-201 -The SOF is an exclusionary rule to prevent parties from entering into improvident agreements and to prevent fraud by requiring contracts for the sale of goods in excess of $500 to be: 1. Evidenced in writing and signed by the party to be charged. a. not sufficient against party who has not signed it. 2. Writing must evidence a contract for the sale of goods 3. Must include quantity of goods term. D. If no, but K is within the UCC statute, is there an applicable exception. 1. 2-201 (2) -Merchant Conformation Exception a. Merchant- deals in good, holds out as having knowledge b. Recipient bound if: Confirmation of the k sent in writing in reasonable time and received by party who has reason to know its contents, c. unless written objection within 10 days after receipt i. Effect - Only takes away defense of SOF 2. 2-201(3) a. Specifically manufactured goods for buyer not suitable for sale to others b. Admissions of K in court o Buffaloe c. Partial performance exception i. goods received or payment made and accepted o Buffaloe 3. Promissory Estoppel 1-103

i. Minority doesnt accept PE as an excuse?? o Buffaloe E. Recovery is limited to the quantity stated in writing (even if incorrect)

INTERPRETATION
Process by which courts give meaning to contractual language when the parties attach materially different meanings I. Rules in aid of interpretation 201-208 A. 201- Whos meaning prevails 1. Parties meaning if the same will hold 2. If different a. Party did not know, and other knew meaning attached by first party. b. Party had no reason to know of different meaning and other had reason to know of meaning. 3. Neither meaning attaches and no mutual assent B. Purpose of parties, as a whole.

C. D. E. F. G. H. I. J. K. L.

Technical or trade terms Reasonable, lawful, effective interpretation. Specific over general Hand written over standard language Reasonable term?? Good faith and fair dealing Public Interest Missing terms Against draftsman Any unconscionable term 1. Throw out k 2. Remove term 3. Limit application of the term

II. Parol Evidence Rule- An exclusionary rule limiting the admissibility of extrinsic evidence to supplement or contradict a written agreement. A. Procedural 1. Judges decide- if evidence is admissible 2. Juries decide- how persuasive is evidence. B. Systems

1. Classical- Four Corners/Plain Meaning a. Only ambiguity on the face will allow extrinsic evidence 2. Modern (Corbin)- The Court: a. Considers the evidence that is alleged and eliminates evidence that has no probative value in determining the parties intent b. Finalizing court understands the k and rule precludes admission evidence to vary or contradict the writing. C. Parol Evidence Analytical Framework 1. To what level is the writing integrated a. Completefull and final agreement, all necessary terms i. Merger clause not dispositive ii. 211 Form contract- assent to all terms if reasonable b. Partialpart of agreement is final and complete, part is still being finalized c. Nonewhole agreement has yet to be finalized d. Things Judge can look at: i. K language ii. Detail iii. Formalities iv. Type of parties v. Relationship of parties vi. Context 2. Given the type of integration what extrinsic evidence can be admitted and for what purpose? Contradict the K Complete Partial None NO NO YES Supplement the K through consistent additional terms NO YES YES Interpret the ambiguity in K (explanatory exception) YES YES YES

3. Are there any exceptions: a. 214 (c) Explanatory EvidenceEvidence to interpret ambiguity is always admitted. b. Agreement subsequent to the writing (oral or written) c. 217 Oral precedent to the formation of a K

d. 214 (d) Evidence showing fraud, duress, mistake, undue influence, incapacity mistake, illegality and other defenses to void the K. e. 214 (e) Equitable remedy of K reformation (if something is missing from the K, and you want to reform the K) f. 216 (2) Evidence introduced to establish a collateral agreement i. Without separate consideration 1. if the parties with the written agreement have terms that would naturally be a part of that agreement consistent additional terms. ii. That do have separate consideration 1. Not be considered part of the integrated writing, so you can bring in evidence because it is a separate agreement altogether

III. Good Faith A. Definition

a. Good faith and Fair Dealing. Neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract. i. UCC 1. Honesty in fact in the conduct or transaction concerned. 2. Merchants--honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade ii. 205 imposes duty of good faith and fair dealing B. Important implied term in K a. 1-203 Every K or duty within UCC imposes obligation of good faith. i. Objective StandardPerformance must be sufficient for objective third party 1. Utility ii. Subjective Standard- must satisfy obligee even if unreasonable as long as its honest 1. Third party prefers 2. Aestheticshowever still must be honest IV. WarrantyImplied would only come up under UCC

A. Express 2-313
1. Requires seller make a become basis of the bargain. a. promise b. statement of the quality of goods c. description of goods d. model representation e. sample; 2. Burden is shifted to seller to show that buyer did not rely. Note difference of affirmation and puffery (sales talk) a. Advertisements i. relied on this as a basis for the bargain ii. buyer must have seen it b. Affirmation of factbest v. fastest (you can prove fast, not best) c. Objective statement can be verified. B. Implied Implied term can always be limited by an express term 1. Merchantability 2-314 a. Threshold requirement that seller is a merchant with respect to goods sold. 2. Was the good merchantable, does the evidence show this? a. Plaintiff must prove this! b. Would the buying public object to this? c. Were the goods fit for their ordinary use? 3. Fitness 2-315 a. not limited to merchant b. Whether the buyer relied on sellers skill and judgment to choose goods suited for buyers specific purpose i. Buyer make it known to seller why they are buying the good. C. Disclaimer 2-316 1. If express warranty and info. that limits or negates it. The court will try to interpret or construe to be consistent with disclaimer if they can. Disclaimer inoperative to the extent that it is unreasonable a. Disclaimer will be weighed more heavily if express is unclear b. If both are unclear, express warranty is used. 2. Implied a. Merchantability

i. Must be conspicuous use the term merchantability b. Fitness c. Must be conspicuous 3. Often buyer wishes to prove an oral warranty made before executing a written contract that disclaims written warrantyin such example Parol Evidence Rule comes into play.

DEFENSES BREACH REMEDIES