Contracts Outline – Attack Sheet


Essential Supplements for Success in 1L Contracts:

1L Law School Contracts outline based on the following books:

1L Law School Contracts outline based on the following books:

UCC or
Restatement?
UCC:
Address was this person a merchant, was
the offer a firm offer, Applies
in the sale of moveable goods, (Probably not for leases or
Definitely not services provided)
Restatement:
Applies in some jurisdictions when not a sale of goods, (UCC only
persuasive when changing the law under the restatement
RARE Caseci v. Canio Constr. Group new
default house warranty
).

WAS THERE A K?

OFFER
The
WAS[N’T] an offer because. I subjectively
thought the counter-party was offering, and an ORP would
objectively
believe an offer was being made. Embry
v McKittrick
Were
the terms specific, and did the parties intend to be bound? (Look
a Who wants to enforce)
REST §24. OFFER
DEFINED
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.
§24 GIFT not an Offer
(b) A proposal of a gift is not an offer, it cannot be enforced
as a K because there was no element of exchange or bargaining
YOU CAN
ALSO Look at Preliminary Negotiations
(Determined Under Parole Evidence) 1. Was there partial
performance by one party that the other party (claiming no K)
accepted? 2. Were all the essential terms agreed, no loose ends?
3. Did either party expressly agree to be bound ONLY on final
written K? 4. Was the complexity of the K so great that it obvi
requires a written K?
Options
K → 1
Can A acting alone make a K if he
wants? 2 Can B take away A’s power to accept?
Yes on 1, No on 2 =
Options K | Yes on 1, Yes on 2 = NO option K
Dickenson
v. Dodds → NOT an Options K,
P
knew the property was sold BEFORE acceptance
UCC
2-104
→ Who is Merchant?
Firm
Offer
UCC 2-205
= Options K
1. Deals
in goods of that kind 2. By occupation claims to have expert
knowledge or skill 3. An agent hired by third party to be an
expert defined in 1 or 2
1.
An offer AND 2. by a merchant AND 3. to buy and sell goods AND 4.
in a signed writhing AND 5. By its terms it cannot
be revoked
for a period of time
Preliminary
Negotiations
can also show evidence of an
offer look at (1) was there partial performance by one party that
was accepted by the counter-party claiming no K (2) Were all the
essential terms agreed upon RESTATEMENT ###
(3) did either party expressly agree to be
bound only by final written K (4) was the K a Statute of Frauds
issue? (Leonard v Pepsi Co advert
not offer, Empro v. Ball Co no
intent to be bound,
Kills
an offer: 1
Revocation (MAILBOX
revoke valid when received),
2 Rejection (counter-offer), 3 passage of reasonable time, 4
offeror dies
OFFER
Certain on the Terms? Rest. §33 (1)
even
though manifestation of intent of the offer is understood, it
cannot be accepted unless terms are reasonably certain (2) the
terms must provide the basis for determining a breach and
appropriate remedy (3) the fact that one or more terms of bargain
are left open show that intent cannot be understood as offer or
acceptance.
Was the K certain on
its terms? (1) Quantity (2) Time for performance (3) Identity of
Parties (4) Price (5) Subject matter
A K can
still be valid if not all terms are addressed as long as the
parties
intended to
be bound by a K
ACCEPTANCE
I offer, i
thought steve accepted (Look at seller Who wants to enforce)
  • Did
    i think steve accepted subjective
    – would an ORP think steve had accepted objective
  • I
    thought that I accepted an offer subjective,
    an ORP would think I accepted an offer Lucy
    v. Zhemer
    (Drunk
    farm Sale)
Mirror
Image Acceptance
The
acceptance must be exactly the same as the offer
It
cannot include any changes to the original offer, (BUT you can
unequivocally accept and SUGGEST
changes
)
Was
acceptance made in time? Mailbox
Rule (
acceptance
made when mailed NOT when received)
Acceptance
by Promise vs Performance
Default
Rule
Restatement
§ 30
is
Promise OR Performance (K can specify)
Restatement
§ 54
offer
for acceptance by performance, NO promise notification needed
Carlill v
Carbolic Smoke Co.
Restatement
§ 45
if
accepted ONLY by perf, once perf begins offeror cant revoke (it
is now an Options K, perf has option to complete)
Restatement
§ 62
if by
perf OR promise → once Perf start K is
BINDING on BOTH

parties
Bilateral
K →
Regular
K offer to sell, accept, consideration (“Upon [promise]
you may begin” → White
v. Corlies
contractor
just started project
R§30
Unilateral
K →
Acceptance
by performance, CANT accept by PROMISE you MUST PERFORM to accept
Previous
Dealings
R §
69(1)(a)
previous dealings indicate an
offeree should notify offeror of rejection Hobbs
v Massasoi Whip Co
CONSIDERATION
Was there a
bargain made, an exchange of promises? (Courts WILL enforce bad
bargains)
REST §
71
To be enforceable performances
or promise
must be exchanged, CAN be in
the form of →
(1) An act other
than a promise OR (2) A forbearance (giving up a legal right) OR
(3) The creation, modification, or destruction of a legal
relationship.

GIFT
R§24(b) =
not
consideration (1) no intent to be bound (2) cavalier (3) no
evidence Kerksy
v Kerksy
sister-in-law
tends farm

SHAM
consideration R§79(d)
gift
structured to look like a bargain ($1 for car) SOME courts WILL
enforce, Because the parties structured it like a bargain because
they INTENDED it to be enforced

Conditioned
Gift
Not enforced usually negative
language, (ill give G Lucas new camera if he promise not to make
a crappy Star Wars with it)
You
give up a right you never had
Dyer v.
national By-Products
workers comp
→ →
MODIFICATIONS
Pre-Existing
Duty
(1) Will not be consideration after
renegotiation if one parties obligations don’t change (2)
prevents extortion (3) because parties can be more vulnerable
during performance (pilot demands more money mid-flight) Alaska
Packers Assn. v. Domenico
Bad nets BUT
Cannery wins, no new consideration.
Unanticipated
Circumstances (
Brian Construction
v. Brighenti
rubble under house
unanticipated AND fair increase)
Restatement
§ 89(a)
Must be unanticipated AND a Fair
increase (Unanticipated event = new consideration)
UCC §
2-209
Modification Does NOT require new
consideration, ONLY requires Good Faith

Statute of Frauds

Must be
confined to writing →
R§110
(1) K of an executor of estate to answer for decedent (2) K to
answer for the duty of another (3) K made upon consideration for
marriage (4) K for sale/lease of land interest (Schwedes
v. Romain
no written K)
(5) K not to be performed within one year
UCC
§2-201 Adds
K for sale of goods $500 or
more, if between merchants you
must reject within 10 of receiving the goods. (Exceptions
: 1
Specially manufactured goods, 2 other
party agrees to an extent, 3 goods that have been accepted or
paid for cannot use Statute of Frauds to “UN-enforce” the K.
Water methanol Riley v. Capital
Airlines
Specially manufactured
recovers for equipment purchased, but not
unmade goods
R§131
A signed OFFER
satisfies the Statute of Frauds IF (1)
signed by the party charged (2) identifies subject matter of K
(3) Indicates a K was made OR offer made by signatory (4) states
all essential terms with reasonable certainty
R§129
Actions in reliance, can sometimes offer
specific performance for a land sale WITHOUT WRITTEN K when
justice can only be had
R§130
1yr+ K must be in writing UNTIL one party
completes, when one party fully completes within a year then
Statute of Frauds wont require written K to enforce.
R§139
Reliance is an exception to Statute of
Frauds requirement IF justice can only be served by enforcement
R§133
Written document DOES NOT have to be
ACTUAL K or memo of K

Warranties

UCC
Warranty
→ Implied OR Express? implied
Warranties can be disclaimed
(Cannot
disclaim defectiveness OR malpractice for Tort ONLY).
Express
warranties
, Defines the expectations of
the parties, explicitly state the terms of the warranty (On the
midterm “realistic faces in two (2) hours” is express
warranty) → (1) Ex the K says what the warranty is (2) Not
everything said is an express warranty, some can be mere puffery!
(3) An express warranty is an affirmation
of fact that becomes part of the bargain
.
(4) Reliance is NOT necessary
to create an express warranty (5) Generally
something is a warranty if the seller asserts a fact of which the
buyer would be otherwise ignorant
(6)
PUFFERY is an expression of opinion when it is a general
statement that includes no special knowledge, buyer should
exerciser judgement (These items are the hottest! = Puffery →
NOT WARRANTY) (#6 Royal Bus Machines v
Lorraine Corp.
COPY Machines)
Showing
doubt
doesnt release seller (CBS
v. Ziff Davis
accounting docs)
UCC
Implied Warranty of Merchantability
→ (1) Only applies if the SELLER is a Merchant (2) iWofM means
the goods have to be everything a buyer would NORMALLY EXPECT out
of the goods
NO IMPLIED
WARRANTIES UNDER RESTATEMENT
UCC
Implied Warranty of Fitness for a
Particular Purpose
(1) Implies that the
buyer is RELYING on the sellers ability to furnish suitable goods
for a specific purpose (2) The seller must know of this
particular purpose AND (3) know that buyer is relying on this
purpose
(4) DOES NOT
REQUIRE anyone to be a MERCHANT
UCC § 2-316
Warranty Disclaimers & Modifications
[Disclaimer
valid if reasonable §2-316(1)
] [Disclaim must be clear/conspicuous
§2-316(2)
] [Clear “as is” enforced
§2-316(3)(a) ]
[Buyer could/should inspect AND COULD HAVE FOUND THE DEFECT= no
IMPLIED warranty, shoulda hired expert
§2-316(3)(b)
Schnieder
v Miller
IMPALA “as is”]
[ Course of Past Dealings/Current Perf can modify implied
warranties §2-316(3)(c) ]

Was it a Form K?

Form
K Restatement §211(1)
Where a party to an agreement…manifests assent to a [form K],
the terms of the form K are enforceable.
Carnival Cruise
v. Shute
§
211(3)
Form K are generally enforceable.
UNLESS the drafter had reason to know that the counter party would
not have assented if they knew of the provision; then the K is NOT
Valid [§ 206 says
form K construed against the drafter] [§
205
from K subject to good faith and fair
dealing] [§ 208
form K subject to unconscionability/fairness] [§
207, § 178-96
Public policy prevents
validity of certain types of form K]
Online
forms
Use Embry Test → Specht
v Netscape
Invalid fails Embry.
Register.com v Verio Inc.
VALID after first time, meets Embry
(Reg.com thought they had K subjective,
ORP obvi saw the K objective.
Battle
of the forms
(traditional last chance
rule not valid)
Acceptance
under UCC §
2-207
When
there is an acceptance that includes different terms from the
offer it IS NOT treated as a counter offer UNLESS:
(1) It is explicitly
stated that acceptance is conditional on the acceptance of the
new terms
§2-207(2)
UCC
– By
default such an acceptance with new terms is treated as an
acceptance of the original offer → new terms are proposals to
modify K
If
the K is between Merchants
the new terms are automatically
incorporated

into the K UNLESS
(1) The offer expressly
forbids modifications (2) If the new terms materially alter the K
(3) If the new terms were objected to within a reasonable time
§
2-207(3)

When the parties writings do NOT create a K BUT the actions of
the parties indicates a K then the terms ARE:
Any terms the parties
had in writing (if payment due on delivery then thats a term)
If there are any GAPS
then they are filled with the UCC GAP FILLING PROVISIONS (Default
Rules) – GAP Filler = “A reasonable X”
Step-Saver
v. Wyse
Box
top disclaimer materially altered

WAS THERE A BREACH?

Good
Faith
the parties are required to act in
“good faith” and not do anything that would purposely deprive
the counter party of what they have K’d for
Look
at → WHAT you did and WHY you did it AND how it fits with
parties intent Every K is subject to Good
Faith Fair Dealing NON-disclaimable
Goldberg
v Levy
Bad faith → Intentionally
hurt bus to lower sales
Mutual
Life v Tailored Woman
Good Fait →
Didn’t move furs intentionally to avoid lease
MATERIAL
BREACH? Restatement
§ 241 → (
B&B
Equip v. Bowen

breach for
bad performance of job)
Performance”
Factors
(1)
Did the breach go to the heart of the contract, frustrate the
purpose? (2) Did the non-breacher get most of the benefit that
they
contracted to receive? (3) Is the breaching party likely
to cure his non-performance?
“Justice”
or “Equity” Factors
(1)
Would finding (or not finding) a material breach create an
unfair forfeiture? (2) Were there actual damages AND Are damage
awards sufficient to compensate the non-breacher? (3) Was the
breacher acting innocently and in good faith, or was their breach
intentional, reckless, or negligent
Material
breach
by
the counter party allows
you to pursue rescission
restitution OFF the K
Material
breach by counter party also allows you to suspend performance
On
contract:
There
was a K, this was supposed to happen, they breached, MAKE IT
BETTER….expectation, reliance, spec perf, neg injunction
Off
Contract:

There was a material breach (you can now stop performing), I
spent money for this…K failed I want restitution. Restitution
is always off K. Not
available for a partial breach.
Anticipatory
Repudiation
– If the other party
unequivocally refuses to perform then you can suspend performance
and sue immediately (Hochester v. De La
Tour –
courier)
a
MERE REQUEST IS NOT A BREACH. The must be undisputed intent that
repudiator absolutely will not perform. Harrel
v. Sea Colony
boat/sick
UCC §
2-206
When reasonable insecurities arise
either party may, IN WRITING, request adequate assurances. If
assurance isnt given THEN you can suspend perf. If you suspend
before written request then YOU breached (Scott
v Crown
heard they were shady)

Conditions
may avoid Breach Liability

Was
there a condition
Precedent OR
Subsequent
Conditions can be →
(1) Express (2)
Implied by wording in the K (3) Constructive, court believes
parties would have set condition if they thought of it
Precedent
must be met BEFORE performance is due
(Internaco-Rotterdam v River Brand Rice
didnt get notice letter = no perf
due)
~~~~~~~~~~~Blurry
Line :O ~~~~~~~~~~~~~~
Subsequent
Must be met after the condition
precedent, ie you must file a claim with
insurance
after your house burns Howard
v. Fed Crop Ins.
tobaco
GENERALLY
courts will find a Promise NOT a
Condition, because conditions can be very detrimental.
R §
227(1)
interpretation of condition
is
preferred that will reduce the
obligee’s risk of forfeiture, unless the event is under the
obligee’s control OR he assumed the risk.
3 Doctrines
that Make Condition Less harsh
Waiver
Giving up a right you posses OR the party receiving the benefit
of condition moving forward with out the condition being met.
(Waiver and Estoppel Clark v West
drunk treatise writer)
Estoppel
When the benefactor makes the other party
believe they will continue without (“don’t worry about xyz”)
because party will RELY
Excuse
court excuses for fairness,
justice, or public policy
R § 84
Promise to perform without condition met
is BINDING, unless material and counter-party and promisee was
not supposed to make it occur. §84(2)(a)
you can renege on the waiver as long as there is still time for
the counter-party to meet the condition.

Ambiguity
vs Vagueness

Ambiguity
:: think they a contracting for two different things IF neither
party knew or had a reason to know the other party had a different
understanding then there is no K → IF person A knows/has reason
to know that B had a different meaning, BUT B doesnt know A had a
different meaning → We Enforce B’s interpr → If the parties
have different meanings of term K void CAN’T
ENFORCE BOTH
Raffles
v. Wichelhaus
Peerless
Vagueness
:: When the parties disagree about the scope. There is a
different interpretation of the same word Fragiliment
v. BNS
chicken case
1 Terms of the K – does
it define the term? This is weightier then 2-5
2 Look at course of
negotiations – what were the parties thinking OBJ/SUBJ when
they made the K?
3 Course of Current
Performance – in the course of THIS K how have the parties been
performing/acting?
4 Course of Past
Dealings – in PAST K between the parties, how did they treat
those K’s?
5 Trade Usage – ie in
the Horseshoe biz, what does the term usually mean in the
Horseshoe biz?
Restatement
§ 201
Whose Meaning Prevails
If both parties agree
on definition of term eg bananas = machine guns, well then that
is what it means
Exception the the
general rule of 3 (Course of Perf). When can the party still
enforce?
If one party knows the
other party understands a different meaning (eg Party A knew that
party B expected Peerless shipment in Oct, NOT Dec!!) Unfair to
sandbag the other party. This will meet the Obj/Subj test because
the buyer and an ORP would think they are making a K and Subj the
buyer believes he is making a K

Parol
Evidence → available to interpret vagueness/ambiguity?

Fully
Integrated Contract
: A final written
agreement on ALL TERMS of the K. (You should add a “Merger
Clause” to indicate that it IS a fully Integrated K)
Partially
Integrated
: Final written agreement on
SOME TERMS of the K
Modern
Version → Assumes K not fully integrated
Trident
Center v. Conn. Gen. Life Ins.
(Very
liberally allows PE, if fact Justice Kosinski believes in CA it’s
impossible to draft a K immune to the PE rule)
Allows PE to show if
the K should be Fully VS. Partially integrated
Allows PE
any time it is needed to ESTABLISH vagueness/ambiguity (Even if
not vag/amb on its face) Brown v.
Oliver
hotel furniture not mentioned
You CAN use PE to show
vag/amb (goes to JUDGE first then jury if he doesnt throw it out)
More EXPANSIVE view.
MUST BE →
Contemporaneous or Predates K (MUST
PREDATE
because after K is a
modification!)
CANNOT BE
→ used to contradict the written agreement BUT only
to interpret
terms ie:: amb/vag OR
non-mentioned terms
Traditional
Version → Assumes K is Fully Integrated
UNLESS
there is an ambiguity on the face of the K
Thompson
v. Libby
(assumes full integration, PE
not allowed to show warranty for logs)
Scribner’s
error:
Parol Evidence allowed but the
party wanting change must show evidence beyond
a reasonable doubt
that they are entitled
to a change due to the actual intent of BOTH PARTIES at the time
of drafting

Promissory
Estoppel

Promissory
Estoppel
can make Reliance on a Promise
an enforceable K even without a traditional K (offer, acceptance,
consideration)
R§90(1)
(1) a promise (2) acts on the
promise (3) act was reasonable, definite and substantial (4) AND
done in reliance on the promise → Damages
limited at courts discretion
SWORD
separate cause of action (in addition to
breach) enforces a promise when there is not a K
Spooner
v Reserve Life Ins.
Failed
element
s for bonus → Illusory Promise
Goodman
v. Dicker
Met Elements Radio
franchise estopped from
claiming no K
Cohen
v. Cowles Media Group
Met Elements
promise expected
to be held by journalist

Implied
Excuses & Defenses → K about VOLUNTARILY ASSUMED OBLIGATIONS 🙂

IMPLIED
EXCUSES→
Mistake
an erroneous belief when K was made,
allows rescission. (HAPPENS BEFORE
K)
Bilateral
both parties mistaken, no one at fault.
(1) Must go to basic underlying K assumption (2) Must materially
affect K (3) party bearing brunt must not bear risk Party
BEARs risk when →
K assigns “as is.”
Conscious Ignorance “know but rely anyways.” AND Ct
determines assign is fair.
Unilateral
one party is mistaken (1) Mistake as time
of K (2) basic assumption (3) did not assume risk Tyra
v. Cheney
Impracticability
is “Impossibility” something
unexpected occurs that makes performance very difficult (HAPPENS
AFTER K)
To
rescind must be (1) impracticable for anyone
to perform those obligations (2) violates basic assumption
(3)party not at fault for the impracticability
Death
CNA v Phoenix
Frustration
of Purpose
Something unexpected makes
fulfilling pointless (HAPPENS
AFTER K)
PROCEDURAL
DEFENSES→
Problems with how the K was
formed misrepresentation, , non-disclosure, duress, incompetence.
Parol Evidence always
allowed to prove procedural defenses.
Misrepresentation
(1) False representation (2) of a
material fact (3) that affects assent (Misrepresentation does not
need to be intentional ie Bilateral Mistake Halpert
v. Rosenthal
no-one knew about
termites
)
Non-disclosure
R§161
non-disclosure would prevent a
misrepresentation, basic inaccurate assumption, violation of good
faith, or a reliance based on relationship or trust. (Baseball
Card Dealer v. Kid
NO
non-disclosure
seller should have known)
Lack of
meaningful choice: Duress
Make this K or
else!!!
“or
else” must be illegal (1) Violence (2) Tort (ie defamation) (3)
Violation of prior K (4) Bad faith behavior
Incompetence
(1) Infancy R§14 under 18 (2) Mental
illness or defect R§§13, 15 (3) Intoxication R§16 (4) Undue
influence = Unusual time, place. Insistent demand. Multi
persuaders vs one party (no lawyer/acctnt)
SUBSTANTIVE
DEFENSES: Illegality & Public Policy
Began with
doctrine of illegality → K to commit a
crime is invalid
.
Now can be
unenforceable “as against public policy” → Restraint of
trade, bribery, selling votes
Unenforceable when
legislation says so OR interest is clearly outweighed by
countervailing public policy
UNCONSCIONABILITY
Complicated and fuzzy, conceptually
important, rare in practice
Has both
procedural & substantive aspects.
Remedies → Void
K, Strike term, Reform term.

Damages
Most important to show reasoning behind
calculation

Expectation
Damages (On K
Expectation
Your current situation compared to what
you expected to have if the K were fulfilled.
+ add up all the things
you would have if K fulfilled THEN + add up what you have now
(probably negative -)
Hawkins
v. McGee
difference between
expected “100% hand” and what he got
Sullivan
v, O’Connor
expectation cost for
unexpected third surgery
Measurement –
Cost of Completion vs Diminution in Market Value
If CoC is less than
diminution court will award.
If CoC is more than
diminution look at: Objective/Subjective intent of parties?
Intentional? Minor/Material? Grossly disproportionate value? Will
breacher benefit?
Jacobs
& Young v. Kent
piping, Court
awards diminution in value
Reliance
(on OR off K)
Reliance
Places NON-Breacher
where you are now vs
where you would be if no contract had been formed. Awards
detrimental loss, places non-breacher back in the position that
it would have been in if no K was made. You should not be harmed
because of the other parties breach.
More certain because it
is a known factor where you were before the K
ON K → Must subtract
any loss the breacher can prove they incurred.
Rescission
Restitution (Off K, must be material breach)
Restitution
Places BREACHER
back into the position as
if no K was made, to prevent unjust enrichment. Smallest amount D
would want this.
R§373
damages for total breach” OR
“repudiation”
R§373(2)
non-breacher has no right to rescission
IF he has performed all his duties and only needs to be paid
(cash payment is easy to enforce)
Specific
Performance (On K)
Default
for land sales OR
unique goods = (1)
No adequate remedy at Law$$$ (2) Peculiar, sentimental, unique,
heirlooms (3) hard to cover/replace
Loveless
v. Diehl
land sale. Cumbest
v. Harris
unique stereo equipment
NEVER AVAILABLE for
Personal Services → Slavery
Negative
Injunctions
Not
meant to hurt the breacher, ONLY to help the non-breacher (ie
Theater owner)
MAY be available for
personal services IF performance is unique ie Actor, Athlete,
Ballerina

Limitations
on Damages

Foreseeability
R§351
Damages available only when
reasonably foreseeable OR expressly stated
Hadley
v. Baxendale
crunkshaft
Certainty
Chicago Coliseum v. Dempsy
Boxer profits not certain
Mitigation
varies by K type, duty to limit damages
once they become apparent Luten Bridge
Co. v. Rockingham County
Employee
must accept new employment unless inferior or different in kind
Shirley Maclaine v. 20th
Century Fox
Lost
Volume Seller
duty to mitigate is
different, but breacher still liable for lost sales because of
volume Jetz v. Salinas Property
Liquidated
Damages Clause
is enforceable if the
court finds it reasonable penalty clauses
NOT enforceable
Benefit
Ease of litigation, parties determine
remedies and are aware of damages, shows parties intent at the
time of K
Kemball
v. Farren
entertainer → Penalty
Clause not enforced
Wassenar
v. Towne Hotel
bellhop → LDC
because it was a sliding scale amount
(Different than a CAP
on Damages → Midterm)

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