I. RST 1. CONTRACT DEFINED A.

. A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty. II. IS THERE A DEAL? DETERMINING MUTUAL ASSENT A. Objective Theory of Mutual Assent: A partys intention will be held to be what a reasonable person (obj) in the position of the other party (sub) would conclude the outward communication to mean. B. Lucy v. Zehmer (p. 40) 2 men drinking at a bar make a deal for land, one was joking 1. Lucy understood it to be a deal. B/c a reasonable man could not determine that it was a joke by the other partys actions, it was a deal. 2. Objective v. Subjective i. The reasonable objective observer knowing all of the facts ii. Subjective intent to be bound is not required 3. If both persons thought it was a joke, there would be no contract 4. RST 17. Requirement of a Bargain i. [F]ormation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration. C. Leonard v. Pepsico (p. 51) Harrier jet for Pepsi points 1. A reasonable person (not ) would find that Pepsi was outwardly communicating that the commercial was a joke. 2. Commercials are generally not offers. D. Smith v. Boyd (p. 59) Sale of house. and other partys offers received at same time. accepted other partys offer. 1. In determining whether a partys objective intent was to be bound before or upon execution of the written contract, one must consider the following factors: i. The practice of the trade or profession ii. The prior practice between parties iii. Whether the written contract was to be drawn up by persons other than the parties iv. Statements made during negotiations v. Whether a party states that he or she does not intend to be bound contractually 2. Should be able to negotiate w/o fear they will be bound by mere discussions 3. Where parties understand an agreement will be in writing, parties need to determine when they are bound 4. In this case, the totality of the circumstances showed that the agreements were preliminary negotiations. 5. RST 27. Existence of Contract Where Written Memorial Is Contemplated i. Manifestations of assent that are in themselves sufficient to conclude a contract will not be prevented from so operating by the fact that the parties also manifest an intention to prepare and adopt a written memorial thereof; but the circumstances may show that the agreements are preliminary negotiations. III. THE OFFER A. RST 22. Mode of Assent: Offer and Acceptance

1. The manifestation of mutual assent to an exchange ordinarily takes the form of an offer or proposal by one party followed by an acceptance by the other party or parties. 2. A manifestation of mutual assent may be made even though neither offer nor acceptance can be identified and even though the moment of formation cannot be determined. B. RST 24. Offer Defined 1. 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 2. An offer is distinguishable from: C. RST 26. Preliminary Negotiations 1. A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent. D. Lonergan v. Scolnick (p. 67) placed ad in paper to sell land; and corresponded by mail; sold to a 3rd party, then accepted. 1. s letters indicated that needed to hurry and make an offer 2. A reasonable person would know that it is just an invitation to make an offer 3. Must look at what seller actually says and what he meant i. Context is important E. Fairmount Glass Works v. Grunden-Martin Woodenware Co. (p. 71) requested quote, replied stating for immediate acceptance. accepts and enters order; could not fill. 1. It is an offer because it includes the term immediate acceptance (words of commitment) 2. Price quotes are usually not an offer in the absence of additional compelling offers. 3. The quote came in a direct response to an inquiry F. Leonard v. Pepsico (p. 76) Revisited 1. tried to claim a jet based on a commercial that suggested he could get it for 7 million Pepsi points. 2. A reasonable person would know that an ad is not an offer. 3. Ads are usually notices and solicitations for offers which create no power of acceptance. 4. There is no enforceable contract until accepted order form 5. had power of acceptance, not G. Lefkowitz v. Great Minneapolis Surplus Store (p. 79) placed ads offering fur coats First Come, First Served 1. Held ads were offers because they were clear, definite, and left nothing open for negotiation IV. DESTROYING THE OFFER A. RST 36. Methods of Termination of the Power of Acceptance 1. An offerees power of acceptance may be terminated by i. rejection or counter offer by the offeree, or

B.

C.

D.

E.

F.

G.

ii. lapse of time, or iii. revocation by the offeror, or iv. death or incapacity of the offeror or offeree. 2. In addition, an offerees power of acceptance is terminated by the nonoccurrence of any condition of acceptance under the terms of the offer. RST 38. Rejection 1. An offerees power of acceptance is terminated by his rejection of the offer, unless the offeror has manifested a contrary intention. 2. A manifestation of intention not to accept an offer is a rejection unless the offeree manifests an intention to take it under further advisement. RST 39. Counter-Offers 1. A counter-offer is an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substitutes bargain differing from that proposed by the original offer. 2. An offerees power of acceptance is terminated by his making of a counteroffer, unless the offeror has manifested a contrary intention of the offeree. RST 41. Lapse of Time 1. An offerees power of acceptance is terminated at the time specified in the offer, or, if no time is specified, at the end of a reasonable time. 2. What is a reasonable time is a question of fact, depending on all the circumstances existing when the offer and attempted acceptance are made. 3. Unless otherwise indicated by the language or the circumstances, and subject to the rule stated in 49, an offer sent by mail is seasonably accepted if an acceptance is mailed at any time before midnight on the day in which the offer is received. 4. Minnesota Linseed Oil Co. v. Collier White Lead Co. (p. 82) agreed to sell oil; there was a time lapse between offer and acceptance. i. Offers have expiration dates. After a certain time, there will no longer be an offer. ii. In this case, 1 day was too long to have waited because of the industry and fluctuations in commodity prices. RST 48. Death or Incapacity of Offeror or Offeree 1. An offerees power of acceptance is terminated when the offeree or offeror dies or is deprived of legal capacity to enter into the proposed contract. 2. New Headley Tobacco Warehouse Co. v. Gentrys Exr (p. 86) Lease extension i. Contracts are not terminated by death, but offers are ii. If offeror dies before acceptance, no deal iii. No notice required (exception to objective theory of mutual assent [reasonable person would not know of death without notice]) RST 42. Revocation by Communication From Offeror Received by Offeree (Direct Revocation) 1. An offerees power of acceptance is terminated when the offeree receives from the offeror a manifestation of an intention not to enter into the proposed contract. RST 43. Indirect Communication of Revocation

1. An offerees power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect. 2. Dickinson v. Dodds (p. 93) offered to leave open contract to sell land until Friday; heard that had sold; tried to purchase; indirect revocation i. Without consideration, offeror may revoke offer any time before deadline. ii. Once the offeree knows or hears from a reliable messenger that the property has been sold to someone else, it is too late for him to accept the offer. V. PRESERVING THE OFFER / MAKING OFFERS IRREVOCABLE A. RST 25. Option Contracts 1. An option contract is a promise which meets the requirements for the formation of a contract and limits the promisors power to revoke an offer. 2. Beall v. Beall (p. 99) 2nd option contract not supported by consideration. i. When the consideration allegedly supporting an option fails or is nonexistent, the option is no longer irrevocable but rather it becomes a mere offer to sell, which can be withdrawn by the optionor at any time before acceptance ii. Remanded to determine if offer was revoked prior to acceptance. 3. Board of Control of Eastern Michigan University v. Burgess (p. 103) option to purchase s home. i. A written acknowledgement of receipt of consideration creates a rebuttable presumption that consideration has passed. ii. Remanded to determine if offer was revoked prior to acceptance. B. RST 87. Option Contract 1. An offer is binding as an option contract if it i. is in writing and signed by the offeror, recites a purported consideration for the making of the offer, and proposes an exchange on fair terms within a reasonable time; or ii. is made irrevocable by statute. 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. C. UCC 2-205. Firm Offers 1. An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror. 2. So, for merchants, no need for consideration to preserve offer. VI. MANNER OF ACCEPTANCE A. RST 30 (2). Form of Acceptance Invited 1. Unless otherwise indicated by the language or the circumstances, an offer invites acceptance in any manner and by any medium reasonable in the circumstances.

B. RST 50. Acceptance of Offer Defined; Acceptance by Performance; Acceptance by Promise 1. 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. 2. Acceptance by performance requires that at least part of what the offer requests be performed or tendered 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. C. RST 51. Effect of Part Performance Without Knowledge of Offer 1. 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. D. RST 52. Who May Accept an Offer 1. An offer can be accepted only by a person whom it invites to furnish the consideration E. La Salle National Bank v. Vega (p. 110) Execution by banks trustee 1. An offeror has complete control over an offer and may condition acceptance to the terms of the offer. 2. Where an offer specifies time, place, or manner of acceptance, the acceptance has to comply exactly with what the offer requires. F. Ever-Tite Roofing Corp. v. Green (p. 112) contracted with to work on s roof. arrived to commence work where another crew was already doing the work. 1. never attempted to notify of their intention to terminate the offer 2. The contract was accepted by by the commencement of the performance of the work contracted to be done. i. Here, when the trucks were loaded 3. Therefore, acceptance before revocation i. Therefore, breached contract. G. RST 32. Invitation of Promise of Performance 1. 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. 2. Davis v. Jacoby (p. 118) Sick family in CA; Elderly man wanted to come from Canada; then would leave inheritance to for coming to take care. i. Unilateral offer: offeror bargains for a specific act by the offeree ii. Bilateral offer: offeror bargains for a return promise iii. Here, offer to enter into a bilateral contract iv. Case decided before RST(2d) 32, thus presumption that offer invites bilateral contract. VII. PROMISSORY ACCEPTANCE AND THE MAILBOX RULE A. Hendricks v. Behee (p. 126) Before Behee was notified that Smiths accepted offer, Behee revoked offer. 1. An uncommunicated intention to accept an offer is not an acceptance. 2. When an offer calls for a promise (bilateral), notice of acceptance is always essential.

3. Communication of acceptance of a contract to an agent of the offeree is not sufficient and does not bind the offeror. 4. RST 50 (3), supra B. Mailbox Rule 1. Adams v. Lindsell (p. 129) An acceptance of an offer to buy wool was sent through the mail, but was lost. i. Acceptance is effective when received by the offeror. ii. Exception: RST 63. Time When Acceptance Takes Effect i. Unless the offer provides otherwise, 1) an acceptance made in a manner and by a medium invited by an offer (here, by mail) is operative and completes the manifestation of mutual assent as soon as put out of the offerees possession, without regard to whether it ever reaches the offeror; but 2) an acceptance under an option contract is not operative until received by the offeror. 2. Mailbox Rule is 2nd exception to Objective Theory of Mutual Assent 3. Revocation is not effective until received VIII. ACCEPTANCE BY PERFORMANCE OR SILENCE A. Full Performance 1. RST 54. Acceptance by Performance; Necessity of Notification to Offeror i. Where an offer invites an offeree to accept by rendering a performance, no notification is necessary to make such an acceptance effective unless the offer requests such a notification. ii. If an offeree who accepts by rendering a performance has reason to know that the offeror has no adequate means of learning of the performance with reasonable promptness and certainty, the contractual duty of the offeror is discharged unless i. the offeree exercises reasonable diligence to notify the offeror of acceptance, or ii. the offeror learns of the performance within a reasonable time, or iii. the offer indicates that notification of acceptance is not required. 2. Carlill v. Carbolic Smoke Ball Co. (p. 135) Ad was express promise to pay for performance. i. Not mere puffery ii. Performance is acceptance iii. Offeror shows by his language/actions that he doesnt expect notice of performance iv. Reward offered to anyone who contracts epidemic within a reasonable time after having used the smoke ball. v. Offerees purchase and use of smoke ball was sufficient consideration. B. Partial Performance 1. RST 45. Option Contract Created by Part Performance or Tender i. Where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance, an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it.

ii. The offerors duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer. 2. Marchiondo v. Scheck (p. 142) Revoked offer for performance on sixth day i. Broker had already partially performed sale; i.e., acquired buyer ii. Part performance by offeree of an offer of a unilateral contract = option contract iii. Conditional on offerees full performance C. Silence 1. RST 69. Acceptance by Silence i. Where an offeree fails to reply to an offer, his silence and inaction operate as an acceptance in the following cases only: i. Where an offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation. ii. Where the offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive intends to accept the offer. iii. Where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept. 2. Laredo National Bank v. Gordon (p. 147) Attorney informed client his fees would be $12,500; settlement 3 months later in TX; attorney directed to drop suit in NY; client stated $12,500 was beyond reason. i. Generally, silence is not to be construed as acceptance. ii. If relation between parties is such that offeror is justified in expecting a reply, or the offeree is under a duty to reply, the offerees silence will be regarded as acceptance. iii. Banks silence amounted to conduct which misled attorney to his detriment. iv. RST 69(1)(a) IX. CONTRACT FORMATION UNDER THE UCC A. UCC 2-204. Formation in General 1. A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract. 2. An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined. 3. Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy. B. UCC 2-206. Offer and Acceptance in Formation of Contract 1. Unless otherwise unambiguously indicated by the language or circumstances i. an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances;

ii. an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or nonconforming 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. C. UCC 2-207. Additional Terms in Acceptance or Confirmation; Battle of the Forms 1. A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms. 2. The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless: i. the offer expressly limits acceptance to the terms of the offer; ii. they materially alter it; or iii. notification of objection to them has already been given or is given within a reasonable time after notice of them is received. 3. Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act. D. Dorton v. Collins & Aikman Corp. (p. 160) Arbitration clause in acceptance form 1. In order to fall within the 2-207(1) proviso, it is not enough that an acceptance is expressly conditional on additional or different terms; rather, an acceptance must be expressly conditional on the offerors assent to those terms. 2. Must be clear that offeree is unwilling to proceed with the transaction without offerors consent to additional or different terms. 3. How to use UCC 2-207 i. Section 1 You can accept an offer without accepting all the terms. Unless acceptance is conditional on assent to different terms (counter-offer) ii. Section 2 (Only with acceptance) Additional terms are to be construed as proposals for addition to the contract. Between merchants, such terms become part of contract unless: (opposite of last shot rule) i. Offer limits acceptance to terms of offer; ii. Materially alters it, OR iii. Notice of objection iii. Section 3 Terms of contract consist of these terms, which parties actually agree (price, date, etc.). (Knockout clause) i. **Dont automatically jump to section 3. iv. **Figure out if writing is a contract**: i. If yes, section 2

ii. If no, section 3 E. Klocek v. Gateway, Inc. (p. 169) Arbitration clause in Standard Terms in computer box stated terms would be accepted after 5 days. 1. Nothing in UCC 2-207 precludes its application in a case involving only one form. 2. Here, as in typical consumer transactions, the purchaser is the offeror. (rejects reasoning in Hill v. Gateway 3. If either party is not a merchant, additional terms are proposals for addition to the contract that do not become part of the contract unless the original offeror expressly agrees 4. Silence or mere failure to object is not express agreement to additional terms X. MISUNDERSTOOD, INCOMPLETE, AND INDEFINITE TERMS A. RST 20. Effect of Misunderstanding 1. There is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations and i. neither party knows or has reason to know the meaning attached by the other; or ii. each party knows or each party has reason to know the meaning attached by the other. 2. The manifestations of the parties are operative in accordance with the meaning attached to them by one of the parties if i. that party does not know of any different meaning attached by the other, and the other knows the meaning attached by the first party; or ii. that party has no reason to know of any different meaning attached by the other, and the other has reason to know the meaning attached by the first party. B. Raffles v. Wichelhaus (p. 184) Two ships named Peerless 1. When both parties misunderstand the terms of the contract, there is no mutual assent and therefore no contract is fomed C. RST 33. Certainty 1. Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain. 2. The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy. 3. The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance. D. Varney v. Ditmars (p. 188) promised (architect) that if he continued to work, would cut him a fair share of the profits; fired . 1. Even if all the elements are present to form a contract, the terms may be so indefinite that it cannot be enforced. 2. Impossible to determine what a fair share of the profits is. 3. Quantum meruit the reasonable value of services XI. POSTPONED AGREEMENT (AGREEMENT TO AGREE)

A. Walker v. Keith (p. 203) Lease renewal option stated rent would be determined on date of renewal. Parties could not agree on rent. 1. The provision is ambiguous and indefinite 2. Provision for renewal must be certain in order to render it binding and enforceable 3. Terms of a renewal may be left open for future determination by a prescribed method. 4. Without some sort of prescribed method for determining terms, the agreement is unenforceable XII. CONSIDERATION AS AN ELEMENT OF CONTRACTUAL OBLIGATION A. RST 71. Requirement of Exchange; Types of Exchange 1. To constitute consideration, a performance or a return promise must be bargained for. 2. A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise. 3. The performance may consist of i. an act other than a promise, or ii. a forbearance, or iii. the creation, modification, or destruction of a legal relation. 4. The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person. 5. Comment b. The consideration induces the making of the promise and the promise induces the furnishing of the consideration. B. Reed v. Univ. of North Dakota and The North Dakota Assoc. For The Disabled, Inc. (p. 239) Consideration present; signed s release form; died; wants to sue. 1. asserts release is not supported by consideration 2. s surrender of a legal right in exchange for NDAD allowing him to run the race constitutes sufficient consideration for the release. C. Kirksey v. Kirksey (p. 241) No consideration; told (sister-in-law) to quit her house and come live on his land since her husband had died. Gratuitous promise 1. was not bargaining for her presence; just a gratuitous gift 2. Her travelling was just a condition to receive the gift. D. Willistons tramp hypo (p. 244) Go around corner and Ill buy you a coat. 1. The walk around the corner was not bargained for by the benevolent man. 2. The walk is a mere condition to receive a gift. 3. Condition of a gratuitous promise E. Hamer v. Sidway (p. 246) Consideration present; Uncle promised $5000 to nephew for abstaining from drinking, smoking, and gambling until he reached 21. 1. Unilateral contract 2. It is enough that something is promised, done, forborne, or suffered by the party to whom the promise is made as consideration for the promise made to him. 3. Uncles promise induced nephew to forbear his legal right to drink, etc. 4. Benefit to promisor is indicative of consideration but not required

F.

XIII. A.

B.

C.

5. Consideration was nephews forbearance of his legal right Schnell v. Nell (p. 251) No consideration; Dead wife(Schnell) promised $200 each to 3 people(Nell was 1). Instrument specified 3 distinct considerations for the promise to pay $600. 1. One cent i. One cent for $600 is, on its face, an unconscionable contract. ii. Consideration of one cent is merely nominal iii. Not consideration 2. Wifes love and affection i. Past consideration ii. The fact that Schnell loved his wife, and that she had been industrious, constituted no consideration for his promise to pay Nell. 3. Industry of wife i. Past consideration CONTRACT MODIFICATION AND CONSIDERATION RST 73. Performance of Legal Duty 1. Performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest dispute is not consideration; but a similar performance is consideration if it differs from what was required by the duty in a way which reflects more than a pretense of bargain. Alaska Packers Assn v. Domenico (p. 265) Classic Hold-Up Game fishermen refused to perform work under contract without pay raise; need consideration for modification; fishermen were already legally bound by original contract. 1. Pre-existing duty rule. Lingenfelder v. Brewing Co. (architect) i. A promise to pay a man for doing what he is already legally bound to do is without consideration. 2. No consideration because pay raise was given based on fishermens agreement to render the exact services, and none other, that they were already under contract to render. 3. Nudum Pactum Naked Promise 4. Ways around pre-existing duty rule i. Something new or different ii. Settlement of dispute/breach iii. Unanticipated circumstances iv. No pre-existing legal duty rule for sale of goods/UCC; no consideration needed for modification. 5. If one party tries to hold up the others and refuses to perform the contract unless otherwise renegotiated, then there is no consideration. 6. Boss had no choice but to comply with fishermens demands for pay raise, therefore duress or coercion. RST 89. Modification of Executory Contract 1. A promise modifying a duty under a contract not fully performed on either side is binding i. if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made; or ii. to the extent provided by statute; or

D.

E. XIV. A.

B.

C.

iii. to the extent that justice requires enforcement in view of material change of position in reliance on the promise. Angel v. Murray (p. 269) trash collector modified contract after unanticipated increase in workload. 1. Modern pre-existing duty rule i. Contract modification due to unexpected circumstances will be enforceable without consideration 2. Contract modifications must have 4 elements: i. Parties voluntarily agree ii. Original contract must not be fully performed (executory not executed) iii. Circumstances must not be anticipated iv. New contract must be fair and equitable UCC 2-209(1). Modification 1. An agreement modifying a contract within this Article needs no consideration to be binding. CONSIDERATION SUBSTITUTES/ALTERNATIVES PAST CONSIDERATION AND THE ROLE OF MORAL OBLIGATION Harrington v. Taylor (p. 278) saved s life and her hand was chopped by an axe in the process; orally promised to pay s damages then failed to pay 1. Subsequent promise did not induce the act 2. Whatever is viewed as consideration must be induced by the promise 3. You cannot bargain for something which has already occurred 4. Moral consideration = no consideration 5. Traditional common law rule RST 86. Promise for Benefit Received 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) i. if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched; or ii. to the extent that its value is disproportionate to the benefit. Mills v. Wyman (p. 279) took care of s son until he died; promised to pay s expenses then failed to do so. 1. Mixture of Schnell and Harrington 2. Past consideration = no consideration i. Exceptions Promise (moral obligation) + pre-existing (now unenforceable) debt i. A promise reviving a previously legally enforceable obligation now barred by an applicable limitation period 1) Creditor, because of Statute of Limitations, cannot through courts enforce payment of debt. Debtor has moral obligation to pay and promises to pay creditor, then that promise to repay is enforceable. ii. A promise to pay an obligation rendered discharged by insolvency iii. A promise to pay an obligation incurred by an infant 3. RST 86(2)(i) Promisee conferred benefit as a gift

i. Here, element of deliberation as opposed to Webbs split second decision ii. Here, there is element of donative intent by caregiver D. Webb v. McGowin (p. 284) saved his boss s life by falling with and steering a falling block out s way; promised to pay him $15 every 2 weeks; died and now his executor will not pay. 1. Material benefit 2. Boothe v. Fitzpatrick: If it is clear there is material benefit to promisor and a subsequent promise (ratification of services rendered) is equivalent to a previous request (presumption of request) 3. Life and preservation of the body have material, pecuniary values, measurable in dollars and cents 4. State ex rel. Bayer v. Funk: Moral obligation is a sufficient consideration to support an actual pecuniary or material benefit for which he subsequently expressly promised to pay. 5. Material benefit must be to promisor who made subsequent promise (not his son, i.e., Mills v. Wyman) 6. Ratification of Services Rendered v. Gratuitous Promise 7. McGowins express promise to pay appellant for the services rendered was an affirmance or ratification of what appellant had done raising the presumption that the services had been rendered at McGowins request XV. PROMISSORY ESTOPPEL A. RST 90. Promise Reasonably Inducing Action or Forbearance 1. A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires. 2. A charitable subscription or a marriage settlement is binding under Subsection (1) without proof that the promise induced action or forbearance. B. Ricketts v. Scothorn (p. 293) Grandfather () told granddaughter () he didnt want her to work. He promised her $2000 and she quit her job in reliance on the promise. 1. Consideration is not necessary where the facts indicate that the promisor should be estopped from not performing 2. Promisor is estopped from pleading lack of consideration 3. Here, court held note was a mere gratuity, no consideration; she voluntarily left job. 4. Court still found equitable estoppel 5. Unlike in Hamer, no consideration here; quitting her job was not part of the promise. Hamer was required to forbear in order to receive. 6. Prob. 3.2. (p. 298) i. RST 4. How a Promise May Be Made i. A promise may be stated in words either oral or written or may be inferred wholly or partly from conduct. ii. Promise inferred from conduct that payments would be accepted late.

C. Katz v. Danny Dare, Inc. (p. 299) Employer revoked employee (brother-in-law) pension when he began working again. 1. Katz elected to retire to his detriment as a result of Dares promise 2. Katz gets his money D. Midwest Energy, Inc. v. Orion Food Systems, Inc. (p. 306) Franchisee applicant relied on franchisors conduct to his detriment in outfitting his new store to comply with franchisors specifications. 1. Prior written warning that its promises mean nothing does not allow Orion to encourage reliance after warning is sent. 2. Promissory Estoppel i. Promise ii. Foreseeable Reliance iii. Reliance in Fact (reasonable) iv. Injustice Absent Enforcement (damages are measured by the degree of reliance; not full expectation damages as in breach of contract claim)

XVI. STATUTE OF FRAUDS A. RST 110. Classes of Contracts Covered by Statute of Frauds 1. The following classes of contracts are subject to a statute, commonly called the Statute of Frauds, forbidding enforcement unless there is a written memorandum or an applicable exception; i. a contract of an executor or administrator to answer for a duty of his decedent (the executor-administrator provision); ii. a contract to answer for the duty of another (the suretyship provision); iii. a contract made upon consideration of marriage (the marriage provision); iv. a contract for the sale of an interest in land (the land contract provision); v. a contract that is not to be performed within one year from the making thereof (the one-year provision). B. UCC 2-201. Formal Requirements; Statute of Frauds 1. Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing. 2. Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against such party unless written notice of objection to its contents is given within ten days after it is received. (Confirmation sent by ; not objected to by ; cannot raise statute of frauds defense; notice of objection is valid when sent; [confirmatory objection exception]) 3. A contract which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable i. if the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the sellers business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement; or ii. if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted; or iii. with respect to goods for which payment has been made and accepted or which have been received and accepted (Sec. 2-606). 4. Some jurisdictions apply UCC 1-103 in order to apply RST 139 (promissory estoppel), some use only the exceptions in UCC 2-201.

C. RST 131. General Requisites of a Memorandum 1. 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 i. reasonably identifies the subject matter of the contract, ii. 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 iii. states with reasonable certainty the essential terms of the unperformed promises in the contract. D. RST 134. Signature 1. The signature to a memorandum may be any symbol made or adopted with an intention, actual or apparent, to authenticate the writing as that of the signer. E. Radke v. Brenon (p. 341) Brenons sale of pieces of land to connect to lake 1. admitted that accepted offer orally; would be contract but Statute of Frauds would make it unenforceable if not in writing 2. Issue: Whether letter written by offering the land to is a memorandum sufficient to satisfy the requirements of the statute 3. Variation of dollar amount does not render the letters expression of the consideration insufficient, especially since paid more under admitted agreement than he would have paid according to the letter. 4. Testimony made clear that Brenons typewritten name was typed with the intent that it be tantamount to a written signature = sufficient subscription 5. Contract is enforceable and Brenon must sell land to Radke 6. Court added requirements to the Staute of Frauds: parties, lands involved, general terms and conditions. 7. We will overlook technical requirements only if proof of the oral contract is clear and uncontradicted as in this case where admitted that a contract had been made. 8. Common Law: not barred from asserting SoF if an oral contract is admitted; but that admission can be used against the party asserting SoF. F. UETA and Federal E-Sign Act: both indicate that electronic signatures are sufficient signatures G. DF Activities Corp. v. Brown (p. 347) Dominos owner wanted to buy F.L.Wright chair 1. Motion to dismiss granted for Brown based on Statute of Frauds 2. DF Activities wanted to assert exception in UCC 2-201(3)(b) i. Brown denied the existence of a contract, but DF asserts that Brown may admit if deposed in the future. ii. DF wants an opportunity to make Brown perjure herself 3. Once has denied the contract under oath (affidavit), the safety valve of section 2-201(3)(b) is closed 4. If Brown was merchant, UCC 2-201(2) would have been in effect i. She did not send notice of objection

H. McIntosh v. Murphy (p. 352) Car salesman() in Hawaii offered job to CA man() who moved to Hawaii to fulfill one-year employment contract; he was fired two months later. 1. Functions of Statute of Frauds i. evidentiary function; lessening the danger of perjured testimony (the original rationale) ii. the requirement of writing has a cautionary effect which causes reflection by the parties on the importance of the agreement iii. the writing is an easy way to distinguish enforceable contracts from those which are not, thus channeling certain transactions into written form. 2. Contract still enforceable due to s reliance even though it fell within Statute of Frauds one-year provision 3. Court applied RST 139 (promissory estoppel despite SoF) I. RST 139. Enforcement by Virtue of Action in Reliance 1. A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce the action or forbearance is enforceable notwithstanding the Statute of Frauds if injustice can be avoided only by enforcement of the promise. The remedy granted for breach is to be limited as justice requires. 2. In determining whether injustice can be avoided only by enforcement of the promise, the following circumstances are significant: i. the availability and adequacy of other remedies, particularly cancellation and restitution; ii. the definite and substantial character of the action or forbearance in relation to the remedy sought; iii. the extent to which the action or forbearance corroborates evidence of the making and terms of the promise, or the making and terms are otherwise established by clear and convincing evidence; iv. the reasonableness of the action or forbearance; v. the extent to which the action or forbearance was foreseeable by the promisor. XVII. MISREPRESENTATION A. Halpert v. Rosenthal (p. 363) Termites 1. Buyer asked on three different occasions if there were termites; Seller said no every time 2. Innocent misrepresentation of a material fact that induces another to act is actionable 3. A misrepresentation becomes material when it becomes likely to affect the conduct of a reasonable man with reference to a transaction with another person EXAM RST 45 Predominance test on whether deal concerns goods or services RST 91, generally accepted, apply both though