Contracts Final

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Definition of a contract: 1. Written or oral agreement
2. Exchange relationship
3. Atleast one promise
4. Atleast 2 people
5. Legally enforceable
Types of contracts: 1. Goods
2. Services
3. Intellectual property
4. Real estate
5. Personal Ks
6. Financial transactions
Sources of contract law: 1. Treatises
2. Statutes/ Laws/ Regulations
3. Commentary
4. Legal Opinion
Mutual Assent: 1. Both parties
2. Intent to contract
3. Meeting of the minds
4. Agreement on main terms of the terms
Nature of Assent: 1. Subjective- Based on actual intent "heart of hearts"
2. Objective- Reasonable third person interpretation of outward manifest
3. Modern- A reasonable third person believes an offer had been made, and the acceptor did so believe
- Subjective truth trumps objective manifestation if the acceptor knows it
Definition of an offer: A 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.
Exceptions, not offers: 1. Negotiations
2. Price quotes- invitations for offers
3. Advertisements- requests for offers
Advertisements as offers: 1. Clear
2. Definite
3. Explicit
4. Account for the over acceptance problem
5. Leave no room for negotiations
Types of offers: Nudum pactum- a naked pact or voluntary promise b/c it has no consideration
Destruction of the offer: 1. Death/ Incapacity of the offeror- An offeree's power of acceptance is terminated when the offeree or offeror dies
2. Lapse due to time- an offer lapses when it says it does or after a reasonable time
3. Revocation by the offeror- even if you say you won't revoke you can; can revoke any time before the offer is accepted
4. Rejection by offeree- saying no kills the offer; a counter-offer counts as a rejection
Two types of revocation: 1. Direct- Told no; offeror tells you the offer has been revoked
2. Indirect- You hear the offer has been revoked by a reasonable third person; run the risk of having two contracts; if the indirect revocation is wrong you can still accept and a contract is made
MFOR- how to make an offer irrevocable: 1. Offer
2. By a merchant
3. Language of firmness
4. Signed by the promissor
5. For the sale of a good
6. For the time stated or a reasonable time, but NEVER for more than 3 months
- revised accounts for electronic
- no consideration required
Acceptance: - The point at which it becomes too late to revoke the offer
- Acceptance is not a rejection or a counteroffer or part of a negotiation, or in response to a joke
- Acceptance is not possible after lapses or revocation
Types of acceptance contracts: 1. Bilateral K- nature is that one party makes a promise in exchange for another party's promise or performance; must have a duty
2. Unilateral K- K forms only upon complete perfomance
- acceptance can take place by performance or promise, and when in doubt the offeree may choose
Two big exceptions to the objective standard: 1. Death- a reasonable person would assume they could accept before they learn of the death of the offeror
2. Mailbox rule- A. both parties run the risk of loss, Offeror has opportunity to protect himself by specifying another means of acceptance or that acceptance is not valid until receipt. B. Acceptance must be by the same or faster and reliable medium. C. Must be properly addressed to and take other precautions to insure safe transmission. D. If received within the time in which a properly dispatched acceptance would have normally arrived it is fine, even if by the wrong means. E. As long as it arrives in a place that was authorized in the specified time, it is accepted.
Acceptance that deviates: 1. Rejection and counter-offer- not an acceptance; I accept provided I can pay by check
2. Acceptance that adds terms that are implied- acceptance; I accept, provided all four tires are included
3. Acceptance and a request for additional terms- acceptance; I accept, will you take a check
- If the offeree pays for an option period, acceptance is not affected should the offeree make a counter-offer
Silence or inaction alone: Not enough to constitute acceptance. Does not comport with the objective theory. Exceptions 1. Enjoyment of the services rendered 2. Reliance on the terms of the offer 3. prior course of dealing
Battle of the forms: Charts; acceptance must not diverge from the offer as to dickered terms (Price, quantity, and delivery); NEW (additional) terms become part of the contract between marchants unless 1. the offer expressly limits acceptance to the terms of the offer 2. they materially alter it (suprise or hardship) 3. notification of objections to them has already been given within a reasonable time after notice of them is received.; if either party is not a merchant for additional terms the terms are not in unless accepted by the offeror (same is true for different or contradictory terms but this applies to merchants as well).
Mutual Misunderstandings: Cannot be mutual assent if they mutually assented to other things.; Vagueness- sloppy syntax; Ambiguity- poor word choice; the existence of ambiguity is a question of law, what the ambiguity is is a question of fact; to deal with ambiguity 1. Identify the questionable language 2. Reiterate the 2 possible interpretations 3. Redraft twice to clearly accomodate each side
Consideration: Reciprocal exchange; bargained for benefit or detriment; the court does not inquire into the adequacy of consideration "even a peppercorn will do"
Exceptions that court will not inquire into the adequacy of consideration: 1. Like for a like
2. Release of a totally invalid claim
3. Illusory promises- notice provisions are often used to make promises non-illusory; when a promise itself is consideration 1. the promise must be unequivocal 2. must not retain power to change your mind or it is illusory
PELDR (Pre-Existing Legal duty rule): Need consideration to modify and consideration must be more than just a pretense; PELDR doesn't apply if there is something new or different on one side (bad nets); Valid modication without consideration allowed when all of these are met 1. Voluntary agreement 2. K not fully performed 3. Unaticipated circumstances 4. Modification is fair and equitable
Past consideration: Past events are not consideration for current Ks; payment for things done in the past are nudum pactum or considered a gift; past benefit received is insufficient consideration to support a promise(moral obligation is unenforceable b/c consideration was absent)
Promissory Estoppel (PE): Equitable estoppel is when you are trying to deny something that you confirmed earlier; significant whether there is a K or PE; w/ K entitiled to expectation damages; with PE entitled to reliance damages; only 5% PE's succeed; Requires: 1. Promise 2. Which promisor reasonably expects will induce reliance 3. The promisee does in fact rely on 4. in which injustice can only be avoided by enforcing 5. At least a limited remedy; Court should only give remedy required to prevent injustice; Don't have to compensate P for the full extent of the promise
Undue Influence: 1. Discussion at unusual or inappropriate times
2. Consummation of transaction in unusual place
3. Insistence that deal be finished at once
4. Extreme emphasis on consequences of delay
5. Use of multiple players against single party
6. No advisors to weak party
7. Statements saying no time to consult others, expecially professionals
Mutual Mistake: Both share a common misunderstancing; a belief that is not in accord with the facts; rescission- to void contract (take your marbles and go home); 1. mistake has a material effect; 2. mistake as to a basic assumption on which K was made; 3. no risk of loss allocated to party seeking relief; 4. court may fashion appropriate relief (not necessarily expectation damage)
Unilateral mistake: Again 1. mistake as to a basic assumption on which K was made 2. mistake has a material effect 3. no risk of loss allocated to party seeking relief 4. court may fashion relief 5. (different parts) enforcement of the K would be unconscionable 6. the other party had reason to know of the mistake or his fault caused the mistake
Who bears the risk of a mistake: party bears risk when
1. allocated by agreement of the parties
2. party is aware, at the time of the K, that she has only limited knowledge but treats her limited knowledge as sufficient
3. the risk is allocated by the court on the ground that it is reasonable under the circumstances to do so (the court decides, this most often occurs)
Parol Evidence Rule (PER): Chart; Forms of extrinsic evidence 1. Former drafts- parties changed it for a reason 2. Former Ks between parties- who says they want to do it the same way again? 3. Spoken words- may have changed minds while writing it or parties may remember things differently 4. Recollection of parties- faulty memories, self-serving in hindsight, parties may remeber it differently; extrinsic evidence must occur before the K; integrated ,means it is a final document that is signed and an agreement to atleast one term; evidence that we admit under UCC 1. Usage of trade 2. course of dealing- how they have dealt in the past 3. course of performance- how they have dealt in this instance; 1. Strict approach- merger clause (says this is a full and final expression of the intent of the parties) is only presumtive evidence of completeness, not dispositive, only look at writing itself. 2. RST approach ("natural") would they have naturally left them out, most liberal in admitting, would not consider a merger clause. 3. UCC approach ("certainly") Evidence would have certainly been included; always admit evidence to explain an ambiguity; never admit evidence that contradicts the written word; parol evidence will never be reversed on appeal
Duty of good faith and fair dealing: 1. good faith and fair dealing implied in every term of the contract. 2. question of whether you violate it is fact specific and contextual; obligation of good faith is not a separate or indepent cause of action, it is a standard for determining whether a K is breached; do not sue for a violation of good faith and fair dealing, sue for the specific term

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