Contracts Law BarBri Outline

7 major contracts questions

Is there a deal? Was a deal or agreement made?
If there is a deal, how do courts enforce deals?
Assuming there is a deal, is there any reason for the court not to enforce that deal?
What is the deal exactly? What was agreed to?(ea. side has their own version of the
deal)
Once we know what deal is, did anyone not do what he agreed to do?
If someone didnt do what he agreed to do, did he have an excuse?
!oes anyone other than the two guys who made the deal, have legal rights "#c of the
deal?
Definitions
$. %ontract & legally enforcea"le agreement
'. ex(ress contract & ver"al)"ased solely on words
*. im(lied contract & "ased at least in (art on conduct, (arties acting as though they have a
deal
+nilateral contracts are usually ($) rewards or contests (such as ,-.. for finding my
lost dog /luffy) or (') offer ex(ressly re0uires (erformance
1. 2uasi contract & e0uita"le remedy (tells you that it is not contract law and rules of contract
law have no a((lication at all)
3ince it is e0uita"le remedy, and e0uity is a"out doing what is fair
If it seems unfair to a((ly contract law on a 0uestion, add a (aragra(h discussing
0uasi 4
-. +nilateral contract & contract results from offer that re0uires (erformance to acce(t
5. 6ilateral contract & contract results from an offer that is o(en as to how it can "e acce(ted
Offeror doesnt re0uire s(ecific way to "e acce(ted
It is "ilateral world
7. executory & means that it has not yet "een (erformed
what is contract law?
case law)what courts say the law is
8estatement of %ontracts9 secondary source (treatise))the view of "unch of smart
(eo(le a"out what law is or should "e
%ourts are not o"ligated to follow this)it is not "inding on courts
8estates what common law rules are
Article 2 of UCC9 some contracts are governed "y this)' "asic 0uestions
o When do I do article '?
It will never say use article '
:ust "e sale of goods to use this article (never services)
1
;oods<something that is movea"le (ersonal (ro(erty (ex. can of coke)
/act (attern9 mixed deal)lots of deals are like this
When (ay for (aint and la"or of (ainter
=ow do you deal with this? ' (art test
o All or nothing)a((ly it to whole deal or not at all
o What is more im(ortant (art of deal?
Is it a sale of goods or (utting (aint on wall more
im(ortant? >ainter)so use common law for whole deal
o 8elationshi( of article ' and common law contract
?here are * (ieces to relationshi( only concerned a"out one (iece
?hey overla(
%ommon law deals with a lot of stuff article ' doesnt deal with
=ow do you determine whether it is a unilateral or "ilateral agreement?
@ou look to the nature of the offer
If it re0uires a (erformance for acce(tance, then it is a unilateral agreement
If it is o(en as to how it can "e acce(ted then it is a "ilateral agreement.
QUES!O" #$ !s t%ere a deal&
Issues to consider in formation 0uestions9
Was there ever even a deal (ro(osed? !id we even have an offer?
!id the (ro(osal die out? Was the offer terminated?
Was the deal for the offer acce(ted?
A''lica(le Law
Aooking to the a((lica"le law is always the first ste( in answering a 0uestion. What law you look
to de(ends on the su"Bect matter of the contract. If the contract concerns the sale of goods
the contract is su"Bect to article ' of the +%%. /or anything other than the sale of goods, the
contract is su"Bect to common law.
Which law governs contract de(ends on su"Bect matter of contract
$. +.%.%. Article ' & 3ale of ;oods
'. %ommon Aaw & anything other than the sale of goods (land, services, etc)

)ormation of Contracts
/irst find the agreement then look to whether it is legally enforcea"le.
O))E* A"D ACCE+A"CE
Offer)commitment)has it "een terminated)words to offeree)indirect reBection)who
acce(ted and how did they acce(t it
2
Offer & need manifestation of a commitment through words or conduct.
Cxam key9 they will give information a"out what offeror intended "ut this is a red herring "#c
not looking at intentions "ut manifestations.
%ommitment can "e manifested through an individuals words and actions indicating a
willingness to "e "ound
always include (hrase Dmanifestation of mutual assentE on 0uestions a"out formation.
Offeror9 (erson who makes offer
Offeree9 (erson to whom offer is made
offeror revokes offer
offeree reBects offer
?hings to watch for
Aook for content to see if is an offer
o ?erms Dfor immediate acce(tanceEF language suggest commitment
o /act (attern will give you what communication says
Aook for missing terms)see if communication seems incom(lete
?here is no longer re0uirement that communication contain all of the
material terms)there can "e ga(s and still "e manifestation of commitment
Aook for missing (rice (ro"lem)will see this in context of communication
relating to (ro(osed sale
+nder common law (rice term and descri(tion of real estate are essential or
there is no manifestation of commitment
Article ')communication can "e an offer even though there is a missing
(rice term
o Also look for an am"iguous term DfairE Dreasona"leE Da((ro(riateEF indicate no
commitment
:issing v. am"iguous rule
:issing terms9 (erson was willing to make commitment and leave it to
court to fill inF >erson wasnt insisting on that term
Am"iguousF courts will conclude it was not a commitment and no deal
$. Ad,ertisements & Advertisements are not offers)they are invitations to the sho((er to
make an offer. A store sign that says D3hirts ,$.E is not an advertisement. ?he sign invites
the sho((er to take the shirt to the counter, offer ,$., an offer that is acce(ted "y the
cashier ringing u( the sale. ;ives the store the right to refuse to sell to a customer.
exce(tions focus on whether ad is s(ecific a"out how many ads are availa"le and
a"out who can acce(t the ad
'. -issing +rice erm & Whether a contract that is missing a (rice term is an offer de(ends on
whether the +%% or common law governs the interchange
%ommon law & not offer, must include the material term
+%% & can "e offer if the (arties intended it to "e so
3
*. Am(iguous -aterial erms & In this case the term is there, "ut it is am"iguous, or vague.
Geither the +%% nor %A considers this an offer. ?he material terms cannot "e vague and
still "e considered an offer.
Am(iguit.
%ontracts must "e sufficiently clear to "e legally enforcea"le. 8affles v. Wifflehaus is
the (rime exam(le of am"iguous terms. ?he contract is for cotton to "e shi((ed on the "oat
>eerless. ?he (ro"lem was that there were ' sailings of the shi( >eerless. Cach of the (arties
had different sailings in mind, and the court could not esta"lish an agreement for the (arties.
It was fatal am"iguity.
$. am"iguous term in contract
'. each (arty must have different meaning in mind
*. neither (arty knows or has reason to know of meaning attached "y the other
If 6 knew that there were ' sailings, it takes the case out of the 8affles realm. ?he situation is
then legally enforcea"le under the terms as understood "y the other (arty.
1. *equirements Contracts & =ere the measure of the 0uantity of goods to "e (urchased "y
the "uyer is determined "y the "uyers needs. /or exam(le, you make a deal with a local
su((lier saying that Ill "uy all of my wine from you)exclusivity agreement. In this case the
0uantity is not vague or am"iguous and the offer is therefore ,alid.
If you increase your re0uirements under this ty(e of agreement, it cannot "e
unreasona"ly dis(ro(ortionate. If you "uy $. "ottles for the first $. months, you
cant increase your demand to $.. "ottles for the last two. ?hat is considered to "e
unreasona"ly dis(ro(ortionate you have to match what he asked for (reviously to
what he asked for today.
o Is there a ceiling? @C3, unreasona"ly dis(ro(ortionate
o Increase must "e (ro(ortionate to other demands
Conte/t)what is the setting?
o Watch for the "argaining history)history of negotiationsF that adds to
argument that it is a manifestation of commitment
o Watch for advertisementsF generally ads are not offers "ut invitations to
make an offer.
Once the offer is found, check to see if it has "een terminated
ermination & once an offer is terminated, its gone forever.
-E0ODS O) E*-!"A!O"
$. Aa(se of ?ime & the offer is o(en only so long as is s(ecified "y its terms, if not time is not
included the offer is o(en for a reasona"le (eriod of time
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Aook at when offer was made
=ow long a ga( was there "efore offer was res(onded to?
'. !eath of either (arty & offer is terminated if not com(leted "efore either (arty dies
Offer dies with (erson a ga( was there "efore offer was res(onded to
*. 8evocation of offer
$) Offeror (uts offer on ta"le and changes his mind and takes it "ack
') =ow does contract terminate? & if the offeror later changes her mind and decides not to
enter into deal, whether the offer can "e revoked de(ends on the offeree. ?he offer
must "e revoked "efore the offeree acce(ts it. ?he offeree must also "e aware of the
revocation. 3haron 3tone in the shower exam(le.
Aooking for words or conduct of offeror that was communicated to the offeree
8evocation is two (layer game
Cssential offeree "e aware of it
*) When does a revocation "ecome effective? Its all a"out the timing
i. must com(lete revocation "efore acce(tance occurs
ii. if revocation is sent through the mail, its not effective until its received
1) When it is im(ossi"le to revoke? 3ome offers cannot "e revoked, and offeror is held to
the offer
i. O'tion contract & If I offer to sell my caddy to you for ,1.. and you (ay me ,'-
to hold the deal o(en, I cannot revoke that offer. If there is consideration (aid
for a (romise to kee( an o(tion o(en it cannot "e revoked.
ii. Offer reasona(l. and foreseea(l. relied u'on & offer cannot "e taken "ack. If H
uses @s "id to "id on a contract and wins that contract, H has relied on @s "id and
can "e held to the offer.
6id<offer
!rennan 3tar >aving)it is irrevoca"le "#c reliance
Iaimes 6aird)reliance does not make offer irrevoca"le
iii. +art 'erformance of an offer to enter into unilateral contract & unilateral
contracts re0uire (erformance for acce(tance of a contract. Once a unilaterally
contracted (arty "egins starts (erformance, the offeror can no longer revoke the
offer. =owever if all the (arty has done is "uy (aint in (re(aration to (erform,
there has "een no (artial (erformance and the offeror can revoke the offer. +se
0uasiFcontract law to recover for money s(ent on reliance of the contract.
3tart of (erformance (ursuant to offer to enter into unilateral contract
/act (attern9 this offer can only "e acce(ted "y (erformance<unilateral
Will never get direct reBection as a 0uestion
iv. )irm offer rule & s(ecial +%% rule only a((lica"le if its for the sale of goods. If a
merchant (uts (romise to kee( offer o(en in a signed writing, then the (romise
cannot "e revoked. ?his is only a((lica"le in the sale of goods. ?here is no
consideration re0uired "ecause we assume that a "usiness woman knows what she
(uts into writing and its im(lications.
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3ale of goods and writing signed "y a merchant that not only (romises to
"uy or sell, this writing must ex(ressly (romise that offer will not "e
revoked):+3? =AJC AAA O/ ?=C3C CHA%?A@
* month ceiling to it)only im(t. when writing says it will kee( it o(en for
5 months
o even if writing says it is irrevoca"le for $ year, still only o(en for
* months
1. 8eBection & if the offeree turns offer down, the offer is terminated.
%ere are t%ree forms of indirect rejections$
$) %ounteroffer & offer is killed. Offer for ,1.. with the re(ly DIll only give you ,'...E
?his is a reBection and takes the offer com(letely off of the ta"le. ?here is a fuKKy fact
line "etween a counter offer and "argaining. A "argain would consist of the following
re(ly to the ,1.. offer DWill you take ,'..?E 6y asking you are clearly "argaining and
the offer is still there. It shows that you understand the difference "etween
counteroffers and "argaining.
') %onditional acce(tance & DI acce(t, if ...E is a reBection.
Go mutual assent
?his is changing the deal so you are killing the deal
Cxce(tion)im(lied contracts
/act (attern where words dont connect u(
*) I acce(t, and... & whether an offer is acce(ted with the addition of additional terms
de(ends on whether you are dealing with the +%% or %A
Additional terms rule)common law rule only
I acce(t and is a reBection
3omething new is added
I acce(t if#(rovidedLno ex(ress contract common law or +%%
!ifferent from I acce(t andLnot insisting on this term "ut throwing it out as
(ro(osal
o In common law, still no ex(ress contract
o Acce(tance cant add anything to offer)mirror image rule
i. %A & :irror image rule re0uires that the acce(tance look Bust like the offer
ii. UCC 122237 & ?he 6attle of the /orms allows additional terms so long as they are
merely added and not insisted u(on. ?o insist makes it a conditional acce(tance,
which is actually a reBection.
:ost often +%% code tested
3ale of goods where communications dont match u(
iii. =y(o & if offer falls under +%% M'F'.7 and the acce(tance attaches additional
terms. ?here is an offer and an acce(tance, "ut which one governs the deal? ?he
offer says H and the acce(tance says HN@. Which one is "inding? ?hat
determination de(ends on whether "oth (eo(le are "usiness (eo(le, whether new
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terms materially alter the deal, whether the new terms were o"Bected. If the new
terms were o"Bected to and they did create a material difference, there is still an
acce(tance and the terms that govern the deal are those in the original offer.
!id other guy agree to deal? *
rd
(art to 0uestion $
Aook at fact (attern and it will go in terms of two (ossi"le issues of acce(tance
Aook at who is acce(ting
=ow they are acce(ting
Acce'tance & once the offer has "een made and theres no (ro"lem with reBection, you must
then look to the acce(tance.
1 /act (atterns regarding acce(tance to watch for
:ail"ox rule)where (arties are contracting from distance
o Adams v. Aindsell
What has ha((ened is the offer is made, and then in res(onse to offer, (erson to whom
offer was made, starts (erformance
o 3tart of (erformance is acce(tance is viewed as im(lied (romise to (erform so it is
enough to make deal
o ;ives us manifestation of mutual assent
Where offer re0uires (erformance to acce(t)this does not create a
"ilateral contract
Gotice of acce(tance)' rules to a((ly
o Acce(tance "y (romise has to "e communicated to offeror
o Acce(tance "y (erformance)whether facts are such that the (erson would
reasona"ly know you have (erformed
:ust give notice when other (arty wouldnt know that you have started
(erforming
3ale of goods 0uestion)where facts are that "uyer offers to "uy goods and seller sends
the wrong stuff)' conse0uences
o ?hat creates a deal)sending wrong stuff is acce(tance
o %an now sue for "reach
o Accommodation exce(tion)sends wrong stuff with ex(lanation
!oesnt create contract, sim(ly a counteroffer
$. Who acce(ted the offer
$) :ust "e (erson to whom offer is made. ?he offer is (erson s(ecific.
') Offers are not assigna"le
*) Geed manifestation of (ersonal assent)only assented to sell to s(ecific (erson
1) In rewards and contests, the offeree must know of the offer at the time he acce(ts. =e
must know of the award when he catches the dog
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'. =ow acce(tance occurs)offeror can control how acce(tance ha((ens
$) 8eturn (romise & most offers can "e acce(ted "y merely a (romise
') 3tart of (erformance only & if you start (erformance, have you acce(ted the offer? @ou
have to look at the nature of the offer. If the offer is a unilateral one acce(ted only "y
(erformance, (artial (erformance does not constitute an acce(tance. If the offeror
revokes the offer after (artial (erformance, you are under no o"ligation to finish the
(erformance. In the case of unilateral contracts, full (erformance is re0uired for
acce(tance. =owever, once you "egin (erformance the offer "ecomes irrevoca"le. If
the offer doesnt say anything a"out the method of acce(tance, a "ilateral contract, then
starting (erformance is an acce(tance and creates the contract. If the offer is made,
the work is started, "ut is not com(leted, look to the nature of the offer to determine
whether offer had "een acce(ted.
i. +ni & start, irrevoca"le, can walk away, not actual acce(tance, can only "e acce(ted
"y (erformance
ii. 6i & start is acce(tance, duty to com(lete, can "e acce(ted in any way
>resum(tion is it is "ilateral
+nless ex(ressly re0uired (erformance, it is "ilateral
+nilateral#"ilateral not used today
*. :ail"ox rule & only a((lies to acce(tance. Where reasona"le to res(ond to offer "y mail,
fax, or /edCx and res(onse is so done, the acce(tance dates from the time the acce(tance
is sent, the time (laced in mail"ox. ?his conce(t is usually tested with a revocation of the
offer.
Cxam(le & I offer to sell you my %addy for ,1.. via mail. On ?uesday I change my mind and
mail you another letter revoking the offer. ?he letter of revocation doesnt arrive until
/riday. (?he revocation is only good once it is received, unlike the acce(tance that is good
once it enters the mail"ox.) If you mail a letter of acce(tance on Wednesday, when
acce(tance is good when (osted, what ha((ens when you receive the revocation? ?he offer
was not terminated so long as the right (erson acce(ted it. @ou dont have a contract, "ut it
is legally enforcea"le.
QUES!O" 24%ow do courts enforce deals&
3(ecific (erformance)court will order (erson to do what (erson agreed to do
?his is e0uita"le remedy)must say this
Only a((lied where money damages are inade0uate
8eal estate deals fall under this category
3ale of goods only when dealing with uni0ue goods (art, anti0ue or custom made)
Gever do it in services or em(loyment contracts
Gegative s(ecific (erformance)where someone has agreed to work with you and
"reached the contract
8
o %ant force them to work for you
o %an get negative s(ecific (erformance "y (reventing them from working for
com(etitors
:oney damages)most exam 0uestions
>unitive damages)never for "reach of contract
Ai0uidated damages)this is (hrase that descri"es contract (rovision that tries to fix or
set the way of fixing damages
o ;eneral rule is that li0uidated damages are recogniKed)valid way of fixing
damages
o Cxce(tion)(arties cannot "y agreement set out an amount of damages that would
"e (enalty
o Issue will always "e is this li0uidated damages clause some kind of disguise for
(enalty
E/'ectation damages)general standard for damages
o ?rying to make the world same as it would have "een had contract "een (erformed
o Iudicial effort
o * ste(s
ask yourself, what would O now have if the contract had "een (erformed?
What does O actually have?
What does it take to get her from ' to $ (from what actually have to what
su((osed to have)?
o =awkins v. :cgee)doctor (romised (erfect hand
What is value of (erfect hand? What is value of gross hand received?
o 5 limitations on e/'ectation damages
rule with res(ect to avoida"le damages)they are not recovera"le
' different fact (atterns that raise avoida"le damages
o fact (attern $9 an agreement followed "y a "reach, followed "y
continuing (erformance "y non "reaching (arty
must mitigate damages
watch for following two things
was there clear "reach? or was it am"iguous?
Is this a situation in which it can "e fairly argued
that continuing to (erform decreases the damages
rather than increases them?
o fact (attern '9 em(loyment contract
argument that O couldve gotten com(ara"le Bo"
Budgment call whether com(ara"le or not
3hirley :ac%laine case
Got taking com(ara"le Bo" to reduce damages
8ule of conse0uential damages
9
8ule is that they are recovera"le only if foreseea"le (in
contem(lation) "y "oth (arties at time of contract
=adley v. 6axendale9 mill in small village where mill "reaks
o %ontract to trans(ort milling machinery
o ?rans(orting com(any took far too long and they agree they
"reached the deal
o :ill had to "e closed "#c of them taking so long
o Got reasona"ly foreseea"le "y "oth (arties here
%onse0uential damages are where O is saying "#c you "reached
contract with me, something else "ad ha((ened)s(ecial damages
which dont arise in every situation
Cconomic waste
>eevinghouse and ;roves v. Iohn Wunder
o contracts involving work done on land
o unrestored land has same market value as restored land
o assume that deal was that land will "e com(letely restored and
a((raisers say that if it was com(letely restored it will "e
worth ,$..,...FFif not restored, only worth ,P.,...
o contract is "reached and land is not restored
o O will argue that it will cost ,7-,... to restore my land now
QUES!O" 54an. reason not to enforce t%e deal&
W=O :A!C !CAA?
did Q have ca(acity? !oes he have legal right to disaffirm
Ca'acit.
Agreement is not enforcea"le if (arty lacks ca(acity
o >erson under age of maBority
o Intoxication
o :ental incom(etence
:ust mention DdisaffirmE in this ty(e of 0uestion
o A"ility to get out of agreements that he has made
o With infancy, only re0uirement is age
' exam exce(tions to ca(acity rule
im(lied affirmation)enter into agreement when $7 years old
o that (erson continues to retain "enefits of agreement
o "y continuing to retain "enefits of contract after gaining
ca(acity, Bust like you made a new deal
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necessaries
o most common test 0uestion
o food, clothing, shelter, health care
o situation where $7 year old rents a(artment
o even though lacks ca(acity, if necessary, legally o"ligated to (ay
o not contract o"ligation though)0uasi 4 o"ligation
o not agreed to (ay agreed u(on amount "ut fair and a((ro(riate
amount
'.' 6 Ca'acit.
Cach of the agreeing (arties must have ca(acity. ?he following grou( of (ersons are not held
ca(a"le of "eing held to contracts9
#7 Infants (under $P) one fact rule
27 :ental incom(etents one fact rule
57 Intoxicated two fact rule
$. intoxication
'. significance of (ersons need to know of it
?here is a s(ecific rule for necessaries. We want everyone to "e a"le to get what they
need to survive, so we do re0uire those (ersons lacking com(etence to (ay for
necessaries. ?he agreement to (rovide an infant, mental incom(etent, drunk with a
necessary is not a contract (they do not have the ca(acity to contract) "ut a 0uasiF
contract. ?he only thing that can "e recovered from this grou( of individuals is the value
of the (erformance to that (erson and not necessarily the contract (rice. Which
(erson? ?he contractor or the incom(etent?
=OW WA3 !CAA :A!C? look for following
Duress)not Bust (hysical duress "ut economic duress too
o Aooking for ' things in economic duress
Im(ro(er threat "y O)did (erson who is trying to enforce deal do
something im(ro(er
Q)is he left with any reasona"le alternative?
Im(ro(er threat standard
o Watch for ' fact (atterns
/act (attern R$9 involving changing the deal)modification in contracts
Aook at litigation settlement where O settled for less than she had
(reviously acknowledged that she would
Undue influence
o +nfair threat not im(ro(er)milder standard for O
o Aook at Q)tougher standard)must "e under domination of O
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o :ust talk a"out duress and undue influence
o Aooking for (ro" with how deal was done
o Aook at Q and see if he was under the domination of O
o Aooking at a weaker Q
o %ul(a"ility is harder on O in duress
-isre'resentation
o When only reason deal was made was "#c of misre(resentation
o Aooking that I understand contract law conce(t of misre( and tort law conce(t
?ort)looking for negligence or intent
%ontract)dont need to show intentional or careless
:ust show misre(, that it was material and that it was relied on
-ista8e
o ;uys who made deal didnt understand surrounding facts
o Got language of deal "ut surrounding facts
o 3herwood v. Walker
8ose the cow who "oth owner and "uyer thought was "arren
Where there is mutual mistake, a"out a D"asic material factE then deal is not
enforcea"le
?o trigger this rule, need mistake that is "asic and material
If mistake a"out what something is (the nature of what it is) then
this 0ualifies
If mistake a"out what it is worth, that is never materialSS
Gever ground for not enforcing deal
-ista8es of )act

3herwood v. Walker is a (rime exam(le of a mutual mistake of fact. ?he case involved the sale
of a cow "elieved to "e "arren, "ut wound u( "eing fertile and with calf. ?he court determined
that there was no contract, "ecause the contract was for a "arren cow that did not exist.
When the (arties make a mistake a"out a material fact, there is no contract.
Its not enough Bust to have a mutual mistake. ?here must "e a mutual mistake of
material fact. Jalue is not considered a material fact.
Cxam(le & Im selling you a (ainting that we "oth "elieve to "e an authentic Warhol. If it turns
out that it is not, that is a material fact that would invalidate the contract. If I am selling you
a Warhol that we "elieve is worth ,$.4 "ut winds u( only "eing worth ,$4, that is a 0uestion of
value and is not considered a material fact.
:utual :istake & the contract can "e rescinded
+nilateral :istake & is not a "asis or defense for contract formation
Cxce(tion & if it is an o"vious mistake where the other side knows or has reason to
know of the others mistake, they cannot take advantage of them.
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?hings to Aook for
Offer, manifestation of commitment
8evocation & know how offers are revoked
999Unconsciona(ilit.
always decided "y Budge "ut fact driven
Geed to know where it comes from
o +%% 'F*.'9 Williams v. Walker ?homas)since that case it is common law too
o Gow ucc and common#case law
What the ' issues are that we need to discuss
o =ow the deal was made?
(rocedural unconsciona"ility
whether terms were hidden or clearly ex(ressed
get into "argaining laws
flaws in "argaining (rocess)dis(arity of "argaining (ower or sur(rise
in terms
su"stantive unconsciona"ility
Do((ressive termsE
(ro"lems with the terms themselves
Unconsciona(ilit.
?his conce(t was introduced with the +%%, "ut now it is generally included in all
contracts, including those covered "y common law.
-ajor +oints
#7 %ourt can refuse all or (art of agreement "ecause the terms are o((ressive or (resented in
a way that they unfairly sur(rised the other (arty
27 Whether terms are o((ressive is tested as of the time the contract was entered into. ?his
is im(ortant in longFterm contracts. What was reasona"le '. years ago may not "e
reasona"le today (o(tion to "uy)
57 Issues of unconsciona"ility always go to the Budge. ?hey are 0uestions of law.
CO"S!DE*A!O"
In order for a contract to "e valid, there must "e consideration or consideration
su"stitute.
Legal Detriment & the (romisee must show that he suffered some "argained for legal
detriment. !etriment entails doing something, (romising something, (romising to for"ear or
refraining from doing something there is a legal right to do.
13
DIf you come "y my house I will give you my %addy.E If I am trying to get you to come over to
my house as my o"Bective, and nothing else worked (such as listen to music, come over for
dinner, drinks), then my giving you my %addy is a "argained for detriment. If I Bust want to give
the car away, and you Bust ha((ened to "e walking "y at the time I wanted to do so, thats a
"enevolent gift that is not enforcea"le.
DIf you sto( listening to 6arry :anilow Ill (ay you ,$...E ?hat is a "argained for detriment
"ecause you have a legal right to listen to 6arry :anilow, and if you give u( that right then
there is legal detriment. =amer v. 3idway
: ste' a''roac% to consideration
$. what is (romise in 0uestion?
o >romise that is in dis(ute is one to focus on
'. Identify (romisor and (romisee
o >romisor Q who made the (romise
o >romisee O
*. What was the (romisor asking for in exchange for the (romise? What "argaining for in
exchange?
o %once(t of consideration is a conce(t of exchange
o Will "e asking for $ of 1 things in exchange
>erformance)to wash car for exam(le
>romise to (erform
/or"earance)Willy my "oy

o >erson who made (romise must "e asking for something in return
o Willie my "oy)if "argaining for return (romise and (erson does not (erform then
no consideration
1. Is there some new "enefit or detriment?
o ?hing she was "argaining for, was it "enefit to (romisor and detriment to
(romisee?
o Geed "enefit to (romisor and detriment to (romisee
o * situations where issue of detriment needs to "e discussed in answering 0uestion
'ast consideration
cant "argain for anything already done
must have "argain for new "enefit and detriment
?here is no such thing as (ast consideration. >ast consideration is no
consideration at all. (;enerally) If you are grateful for someone
saving your life and you (romise to (ay them ,$.., this is not a legally
enforcea"le (romise. ?here is no consideration for the (romise. @ou
cannot "argain for something that you have already done. An
agreement is not the same thing as a contract. ?hings must ha((en
"efore an agreement
14
+re2e/isting legal dut.
!oing something you are already legally o"ligated to do is not
consideration for (romise to (ay you more money to do it
?here is no legal detriment in doing something that you are already
o"ligated to do. ?here is no >CA!8 in the +%%.
E/am'le & When s(orts stars renegotiate their contracts, there is
usually a different term of years in the new contract. If there were
* years left in the original contract, the renegotiated contract would
"e for 1 years. Otherwise, the contract would "e su"Bect to the (reF
existing legal duty rule.
Amount of consideration is not discussed)(e((ercorns will suffice
+art 'a.ment on de(t
2uestion is usually o"tuse as to what the (ro"lem is
>romise in 0uestion will often "e the creditor (romising to release the
rest of the claim
>art (ayment of a de"t that is due and undis(uted, is not
consideration for a release
3ince you have legal o"ligation already for the whole amount, it is no
new detriment to me to (ay smaller amount
CO"S!DE*A!O" SUBS!UES45 of t%em
+romissor. Esto''el (R$)
5 ste( a((roach
$. what is the (romise in 0uestion
'. la"el (romisor and (romisee
*. what did (romisee do after (romise was made? what was reliance?
1. was this thing, action or inaction, that (romisee did, was it induced or caused "y, did it
ha((en "#c of (romise?
?ells you whether you are doing consideration or (romissory esto((el
Go one has asked (romisee to do what she is doing)she is doing "#c of the (romise
Cx. I hold the mortgage on your house. I (romise I will not foreclose your
mortgage for - years. ((romise in 0uestion)
a. I try to foreclose anyway. 6ut after you have (ainted house. ?here is no
consideration for my (romise, "ut under (romissory esto((el it may "e.
". Is it legally enforcea"le?
i. I wasnt asking for anything, sim(ly making (romise not to foreclose
c. In Willy, if uncle Bust (romised money for "eing a good (erson and Willy
chose to refrain from smoking)that wasnt asked for
After (romise, (romisee does something that was caused "y the (romise "ut not
asked for (like refraining from smoke
-. 3hould guy who made (romise antici(ated this action? was it reasona"ly foreseea"le?
15
3hould mortgage holder have antici(ated that mortgagee would (aint house?
5. Would it "e unBust not to enforce this (romise?
>romissory esto((el
#; /our elements of >C
$. (romise
'. reasona"ly relied on to the actors detriment
*. only way to avoid inBustice
-O*AL OBL!<A!O" (R')
may make a (romise legally enforcea"le
situation in which worker inBures himself saving his em(loyers life and em(loyer
(romises to (ay em(loyee
no consideration for modifications
:odification of %ontract & does a modification of a contract have to "e in writing? @ou have to
look to the contract as modified. If after you made the contract, it still falls within the 3O/
the modification must "e in writing. If the contract no longer falls within the 3O/, the
modification does not have to "e in writing.
Cxam(le & Cnter into lease for ' years, it has to "e in writing. If the amount (aid in rent
changes, the modification must "e reflected in the writing. If you change the length of
the lease to Bust $ year, then the modification does not have to "e reflected in the lease.
Why would you not (ut it in writing, when you really trust the (erson?
+%% MPT)enforcea"le modification contracts made in good faith even if no consideration
Statute of )rauds (R*)
certain agreements have im(ortant su"Bect matter or susce(ti"le to fraudulent claims
Dwithin the statute of fraudsE
o need to use this (hrase
o a"ove (hrase only means statute of frauds a((lies
#7 Which contracts fall within the 3O/?
?he 3O/ is concerned with contracts that are so im(ortant or so susce(ti"le to fraud
that we need s(ecial (roof of their existence.
#; >ersonal services contracts not ca(a"le of "eing (erformed in $ year
a. %ontract to cut down all trees on your land. It is ca(a"le of "eing done in one year
regardless of siKe with enough men and saws.
". If I hire you to work for me for the rest of your life, this too could only last for
one year. @ou could die within the year.
c. If I hire you to work for me for ' years & 3O/ a((lies. ;ranted, you could still die
tomorrow, "ut then you would not have com(leted (erformance.
16
d. If I hire you to (erform at my wedding on Iuly $, '..', the contract cannot "e
(erformed within one year and is su"Bect to 3O/.
$. full (erformance "y either (arty satisfies the 3O/, it (rovides needed (roof that
this was what the agreement was
'. (art (erformance does not satisfy 3O/, "ut you can "e 0uick to add 0uasiFcontract
claims
2; ?ransfers of interest in real estate &If the interest in real estate is for one year or
less, the contract does not fall within the 3O/. /or exam(le a $'Fmonth lease would
not fall under the 3O/, "ut a lease for $*Fmonths would.
8egardless of dollar amount
4ey is that it has to "e real estate interest that has a term of duration of more
than a year
6 orally agrees to "uy 6lackacre from 3. >art (erformance can satisfy the 3O/ in
real estate dealings if two or more of the following occur9
a. (artial (ayment "y the "uyer
". (ossession "y the "uyer
c. im(rovements made "y the "uyer
5; 3ale of goods of ,-.. or more (+%% M'F'.$)
Article ' a((lies regardless of if you are a merchant and dollar amount does not
a((ly
3(ecially manufactured goods & for goods that are custom made the start of
(erformance satisfies the 3O/
Ordinary goods & (artial (erformance of a contract for the sale of goods
satisfies the 3O/, "ut only to the extent of (artial (erformance. Cxam(le &
you contract to sell me $... widgets for ,$.... @ou deliver 1.. widgets. @ou
can recover for the 1.. widgets "ecause you (artially (erformed. 6ut the deal
was for $... widgets, what a"out the other 5..? I cannot recover those, "ut I
must (ay for the 1.. delivered. (what if there was reliance on the entire $...
"eing delivered? If you dont have them all its not worth having any, is there
anything that can "e done in that instance?)
27 =ow do you satisfy the 3O/?
/ull (erformance is a way of satisfying that there was an agreement and you followed
through with its terms
Aook at what 0uestion tells you a"out what writing says
Got enough that there is a writing)there are re0uirements for writing
In order for writing to satisfy statute of frauds, all material terms must "e in writing
(not for sale of goods "#c that is +%%)
o /rom the writing alone you can tell
Who the contracting (arties are
What did each agree to do
17
If sale of goods, all the writing must say is 0uantity
!oesnt have to name (arties
o Aook at who signed the writing unless it is sale of goods 0uestion which would "e +%%
In order to satisfy statute of frauds it mustve "een signed "y Q)if common law
+%% s(ecial rule for sale of goods of ,-.. or more there is situation under 'F'.$ in
which all that is needed is signing "y O
?his would ha((en when "oth are merchants and Q received notice of the
contract and never answered the letter
If dont answer the letter, assumed that you are on "oard with deal
o 3ituations where (erformance can satisfy statute of frauds
Ignore for exam
=%at t.'e of writing does it need to (e&
What ty(e of writing de(ends on the ty(e of contract in consideration.
#7 Common Law
$. material terms
'. signed "y (erson against whom you are trying to enforce agreement
All material terms must "e included in the writing. D@our offer on Govem"er T, $TTT is
acce(tedE is not an ade0uate writing. ?here is no indication of who they are and what they are
intending to do. It is im(ortant to look at who signed the writing, "ecause only those who
signed their name to the document can "e held to what it says. Cxam(le & A contract for 4U3
and :arsha %lark for a *Fyear term at ,1..,... a year exists. ?his contract was signed "y
4U3, "ut not "y :arsha %lark. :arsha can sue 4U3 (who did sign the contract) on the contract
even though she did not sign her name to it. 4U3, on the other hand, cannot sue :arsha on the
contract "ecause she did not sign her name to the terms. 3he may have agreed to the terms,
"ut its not "inding and she has an 3O/ claim.
27 UCC
$. 2uantity term
'. 3igned
+nlike the common law re0uirement for all material terms, under the +%% a valid writing
only needs 0uantity term to com(lete, the +%% will fill in the rest.
?here is a s(ecial rule that a((lies if "oth (arties are merchants. If one of the (arties
sends a letter to the other claiming that the other has entered into a contract, the notified
(arty has $. days to res(ond or else the contract "ecomes legally "inding.
+A*OL E>!DE"CE *ULE
Im(act of a written agreement)su(eriority of written agreement
Im(act a writing has on earlier agreements
18
o Cven if earlier agreements are in writing
>arol evidence9 evidence of some agreement made (rior to this writing
o !oes not have to "e oral
Integrated agreement9 it is written, intended "y (arties to "e their last word
o Written and final word
%om(lete integration9 it is a writing that is final and com(lete
>artial integration9 it is written, final as to what it covers "ut it may not "e the whole
deal
:erger clause9 shorthand way of descri"ing a contract (rovision that says this is the
com(lete deal
o ?o determine if com(lete or (artial
+arol E,idence *ule
?here is a contract, "ut what are the terms? 8ule of contract law a"out what the terms of the
contract are. /our issues to know9 what the rule is, what facts trigger the rule, (ossi"le issues,
how the rules are different from statute of frauds. Often the two are confused and tested
together.
$. >arol evidence rule & when there is a W8I??CG contract that is intended "y the (arties to
"e their final agreement, then you %AGGO? use earlier agreements to change the terms of
that written contract.
'. What triggers the rule?
a. ?here :+3? "e a W8I??CG %OG?8A%? (if there is nothing in writing you never get to
the (arol evidence rule). Cffect the written contract has, the im(ortance of the terms
included.
". It :+3? "e the contract that the (arties intended to "e the final agreement.
(Integrated agreement & writing intended to "e the final agreement)
c. ?here :+3? have "een some earlier agreement, oral or written. Cffect of agreement
has on earlier agreements, the effect is that you cannot use the (revious agreements to
change the terms.
*. >ossi"le issues
a. !oes the (arol evidence rule a((ly (Was it an integrated agreement? ?his is a 0uestion
of law for the Budge.)
". Was there a merger clause? & a contract (rovision stating that this is our final
agreement.
c. Is there an a((lica"le exce(tion to the (arol evidence rule?
$) @ou can always introduce evidence to esta"lish a defense to the existence of the
contract. (i.e. argue fraud, duress)
') @ou can introduce the earlier agreement to show a mistake in reducing the agreement
to this final writing. (i.e. evidence through (artial writings, oral conversations)
19
*) ?he earlier agreement doesnt change the terms of the written agreement, "ut it adds
terms to the written agreement. Was the writing intended "y the (arties to "e their
com(lete and final agreement? (was it (artial integration?) A8C GO? ?8@IG; ?O
%=AG;C ?=C W8I?IG;. It is at the Budges discretion as to whether the contract
is integrated or (artially integrated. !id the (arties mean for the writing to "e their
final and com(lete agreement?
1. =ow different from the 3tatute of /raud?
?he 3O/ is "rought u( when you are deciding whether you have a legally enforcea"le agreement.
?riggered "y the (hrase there was an O8AA agreement. /or >arol Cvidence, you are (ast that
stage and you are considering the terms of the contract. ?here must "e a W8I??CG contract.
* "asic (oints
$) where you have an integrated agreement, (arol evidence can never contradict it
2; What if (arol evidence doesnt contradict the integrated agreement "ut sim(ly adds terms
to it?
o When will the court consider (arol evidence here?
o 2ues. for courtFFGeed to find out if this is a com(lete integration?
5; even if it is a com(lete integration, (arol evidence can "e used to ex(lain am"iguous terms
(arol evidence rule9 cant contradict, can su((lement and can ex(lain
CO"*AC !"E*+*EA!O"
what does the deal mean?
course of 'erformance
all a"out what these (eo(le have (reviously done under this very duty
(ersuasive form of extrinsic evidence as to what the deal means
same (eo(le, same deal
course of dealings
not as (ersuasive
what these very (eo(le have done under earlier similar deals
same (eo(le, similar deal
custom and usage
what different (eo(le have done under different "ut similar deals
relevant and some evidence "ut not as (ersuasive as first two
<A+ )!LLE*S
what if deal is more than what (arty has said?
/act (attern governed "y common law
Im(lied duty of good faith
Wood v. Aucy Aady !uff ;ordon
+%% it is sale of goods 0uestion you are encountering
20
+%% is great to fill ga(
o !m'lied o(ligation of good fait%)good faith is made (art of (erformance of any
sale of goods contract
3ale of goods)always do article '
/irm offer rule
o !m'lied warrant. of merc%anta(ilit.
3ituation in which a (erson who regularly sells goods of that kind, sells
something and it turns out to "e defective
Cx. anytime Bewelry store sells Bewelry, even though no discussion of 0uality,
you have to assume it is ok
3eller must "e in "usiness of selling goods of that kind, then law im(oses
o"ligation on that seller
Adds a term to the contract)the goods must "e okay)must "e fit for
ordinary (ur(oses
QUES!O" ?4D!D SO-EO"E "O DO =0A 0E A<*EED O DO&
@es o"viously
QUES!O" @4DOES 0E +A*A 0A>E A" EBCUSE )O* "O DO!"< =0A 0EA
A<*EED O DO&
E/cuses for not doing w%at .ou agreed to do
$) situation in which there is an unmet condition of (erformance
>erformance was conditional and one condition was unmet
Cx. 6 contracts to "uild "uilding for O)there are (rogress (ayments
o >ayment of (rogress (ayments is conditioned on an architects certificate
o If an architect doesnt a((rove a month of work, dont have to make the (ayment
"#c you are excused
o Ok not to (erform "#c condition not met
Cx. will "uy house if a((raised at $..,... "ut it was only a((raised at T.,...)no need to
"uy
:ust look for ex(ress condition in fact (atterns
o Aook for words DifE D(rovided thatE Dso long asE
o Anything short of the (hrase Don condition thatE you are going to add statement to
answer, Dif there is any dou"t a"out whether the contract language creates an
ex(ress condition, that the (referred inter(retation is no conditionE
If you determine that there is language of condition, the general test for conditions is
conditions must "e strictly com(lied with
o If the house is a((raised at only ,T.,...
o Iaco"s U @oung v. 4ent
Owner wanted 8eading (i(e "ut "uilder used a different kind of (i(e
%ourt said this was not language of ex(ress condition
21
=omeowner did not say I will only (ay you if you use reading (i(e
!ifferent result if language was an ex(ress condition
o %ourts try to conclude that there isnt a condition
If there is any way to conclude that there is not an ex(ress condition, that is way court
will go
') 6reach "y the other (arty as an excuse for non (erformance
I dont have to (erform "#c other guy didnt do what he was su((osed to do
8emem"er to look to see what law to a((ly
Article ' differs most from common law here
o Article ' has (erfect tender standard
Anytime the seller of goods is less than (erfect, not exactly what "uyer
wants, "uyer is excused from (erforming "#c seller did not do (erfect
tender
;eneral standard for sale of goods is (erfect tender
?hat standard is su"Bect to ' "ig exce(tions
o $. cure9 in certain limited situations, "#c (erfect tender standard is so high and
demanding, give seller second chance
watch for situation in which the seller sends the wrong stuff earlySS
:ust give delivery deadline in this fact situation
If seller can still get right stuff there "y deadline, then no (ro"lem
o 27 installment sale contract9 where (arties in their agreement have agreed that
there will "e deliveries in several se(arate installments
if agreement (rovides for these installments, a (ro"lem with one installment,
so long as not su"stantial (ro"lem, will not excuse (ayment
it can "e adBusted in future installments
if common law contract, not a sale of goods and one guy is arguing that one guy "reached so
dont have to (erform, must do a material (reac% rule Cmajor screw u' rule;
when will one (arties non (erformance excuse the other?
o Cx. = hires > to (aint his house)deal is that house must "e (ainted in two coats
with 3herwin Williams (aint
?his is common law contract
?urns out that (ainter you hire is "ig fan of >rice
3o he (aints your house (ur(le
!ont have to (ay "#c material "reach
What if (ainter "uys different "rand of (aint instead "y accident?
It is a "reach "ut still have to (ay "#c not a maBor screw u( or
material "reach
' exce(tions to material "reach rule
o language of condition exce(tion)if contract said I will (ay you $... for (ainting
my house white on the condition that you use 3herwin Williams (aint
22
this re0uires strict com(liance "#c condition
o divisi"le contract exce(tion)
ex. = has huge house '. rooms)= hires > (ainter to (aint whole house for
1...)> only (aints * of the '. rooms
is this material "reach? @C3
is = excused from (aying? @C3
if unfair, go to 0uasi 4 (e0uity)
ex. = hires > to (aint '. different a(artments for '.. each
this is divisi"le
if (ainter (aints * of the a(artments, law would say this is divisi"le so
you did (erform with res(ect to the * a(artments
5;antici'ator. re'udiation
o I tell you "efore you finish that Im not going to (ay you
o Cxcuse for sto((ing work
o Cxcuse of non (erformance)gives right to sto( (erformance and sue immediately if
told youre not going to "e (aid
1) later agreement)' forms
no,ation9
o "oth of the guys who made first deal agree that another (erson can (erform
o other (erson is a no show
o initial guys (erformance is excused "y later agreement of ally mc"eal doing
it
accord and satisfaction9
o change in what is going to get done
o agreement to clean house instead of (aying money (that is the accord)
agreement to do something different than first agreed to do)
o "y actually cleaning house, that is satisfaction
o DandE in order to have this excuse, must have "oth accord AG! satisfaction
so that if I dont actually clean house, can still sue me on original (romise to
(ay money
!-+OSS!B!L!AD )*US*A!O" O) +U*+OSED !-+*AC!CAB!L!A
Another excuse for non (erformance
easy facts to watch for are time se0uence
deal was made and later, after the deal something ha((ened
what ha((ened was unex(ected (unless it is totally unex(ected there is no excuse)
harder facts to watch for
whether either (arty had assumed the risk in some way
23
did it make the (erformance im(ossi"le?
o Casy case9 ?aylor v. %aldwell9 concert hall "urning down
o ?his is (ost contract occurrence, unforeseea"le, and so it was im(ossi"le
o ?his is destruction of su"Bect matter of the contract
o Jariations are often on exams
=omeowner contracts to "uild house)when house is T.V com(lete it "urns
down
Geither (arty assumed risk
8elationshi( "etween unforeseen occurrence and (erformance
Got im(ossi"le to re"uild house
Is guy excused from (erforming? GO
:ay "e excused from "eing late "ut still must "uild house
Got im(ossi"le nor im(ractical
8ule of thum")if all that ha((ens is that there is a later unforeseen occurrence, that makes
(erformance more ex(ensive, the tough luck rule, it is not im(ossi"ility or im(ractica"ility
3ome situations in which even if it is not im(ossi"le that the "urden may "e so great that it will
"e excused)usually Budgment call
Im(ractica"ility
)rustration of 'ur'ose is similar and different from im(ossi"ility
4rell v. =enry9 guy who rented a flat to watch the coronation (arade
o >arade gets canceled and he wants out of the deal "#c his whole reason for renting
the flat was to see the (arade so his (ur(ose has "een frustrated
o =e can still use flat though
o Where "oth guys know of the (ur(ose of the deal at the time the deal is made and
there is something that ha((ens after the deal, it doesnt affect a"ility to
(erform, it affects reason of (erformance
o Gon (erformance will "e excused
Im(ossi"ility is in +%%
Go +%% (rovision for frustration of (ur(ose
o :ay a((ly to sale of goods
Sometimes 'eo'le w%o were not 'arties to contract %a,e rig%ts under t%e
contract
5
rd
'art. (eneficiaries
24
%ontract "etween two (eo(le and "oth intend for a third (arty to "enefit from the
contract
Aife Insurance contract)insured "ought the contract, insuror is com(any and someone
else will "enefit
Where contract was made with intent to "enefit you, you can sue to enforce it
Got (urely insurance law
Intended third (arty "eneficiary
*
rd
(arty "eneficiary9 didnt make contract "ut intended to "e "enefited
(romisor9 guy whose (romise goes to *
rd
(arty "eneficiary
;uy whos (romise goes to the *
rd
(arty "ene
Insurance com(any
(romisee9 guy who takes out insurance (olicy
creditor "eneficiary or donee "eneficiary
rule of thum")if in dou"t, call it donee
only time creditor "eneficiary is when third (arty was (revious a creditor of (romisee
o ex. I owe =eidi $...)I say Ill name her in life insurance (olicy instead)she is
creditor "eneficiary
o donee "eneficiary is if I felt sorry for =eidi and said I would name her in (olicy
*
rd
(arty "ene can always sue the (romisorSS
8ights of third (arty do not de(end on (rovision of consideration or not)they are sim(ly the
intended "eneficiary
>romisor lia"le to *
rd
(arty "eneficiary
If *
rd
(arty "ene was a creditor "ene, he can also sue (romisee on original de"t
DELE<A!O"
@ou start with contract "etween ' (eo(le)later one of them gets someone else to do the work
what are conse0uences of a delegation?
o what if third (erson doesnt do work, can still sue (erson who initially shouldve
done the work "#c not mutually agreed u(on su"stitution)only delegation
o delegations do not excuse)delegating (arty remains lia"le
limitations on delegation)some duties are not delga"le
if contract says you cant delegate
or, su"Bect matter of contract)some duties re0uire s(ecial skills
25
o cant delegate s(ecial skills)3alvador !ali cannot delegate to me to (aint (icture
he was su((osed to
most duties are delega"le
ex. = hires > to (aint his house
contract says nothing a"out delgation
> gets H to do work instead
If H doesnt do work, = can still sue >
H does the work)what result?
Issue of the 0uestion is is the duty delega"le? @C3
ASS!<"-E"S
Cx. 6atman makes contract with ;otham to (rovide security services
o Aater, 6atman comes to 8o"in, and tells 8o"in he can collect the money from the
contract
?o make that a third (arty "eneficiary
=ow do you tell when he wants you to talk a"out ?> "ene or assignment
*
rd
(arty, all * (eo(le are involved in contract from "eginning)intent to "enefit from the
"eginning
if 8o"in was "rought in from the "eginning and told ;otham to (ay 8o"in, then *
rd
(arty
"ene
assignor would "e 6atman)makes contract and later assigns his rights to someone else
assignee is 8o"in)didnt make contract "ut can enforce it
o"ligor);otham
effect of assignment)assignee can sue o"ligor)if 6atman does work, 8o"in can come in and sue
;otham for (ayment
common law limitation on making of assignments
cannot make an assignment that su"stantially changes the duties of the o"ligor
ex. assume 6atman makes contract with ;otham to (rovide security services and assigns
right of (ayment to 8o"in
o no (ro" "#c havent changed duties of ;otham (the o"ligor)
o Bust as easy to (ay 8o"in
o assignment of a right to (ayment is never a (ro"lem)never su"stantially changes
duties
ex. 6atman makes contract with ;otham to (rovide security services, :etro(olis wants
6atman to defend their city so ;otham gives 6atman to them
o 6atman<o"ligor
26
o ;otham<assignor
o :etro(olis<assignee
=ere we have changed 6atmans duties)he was su((osed to (rotect ;otham, not
:etro(olis
Assignments get com"ined with delegation on exams. In real life, assignments and
delegations get com"ined, es(ecially in the sale of a "usiness. Often referred to in total
as assignment.
+*!O* OUL!"E "OES
Sale of <oods & can effect the terms of the contract
1'F'.7 &6attle of the forms. :ismatching offer and acce(tance. Cach "usiness has its own
form and they arent all identical. Which sheet of (a(er controls?

$. !oesnt have to "e the mirror image, it can "e a seasona"le ex(ression of acce(tance
'. Cverything in the offer is in the contract
*. In the acce(tance form different forms that contradict the original terms are kicked out.
?hey are o"Bected to.
1. In the acce(tance form (only if "oth (arties are merchants), the new terms are acce(ted
+GAC33 they are o"Bected to or if it is a material change. ?he additional terms do make it
into the contract.
-. In an acce(tance form and "oth (arties A8C GO? "oth merchants, the new terms are
(ro(osals, it is added only if it is se(arately agreed to "y the other (arty. If the new terms
are insisted u(on, its a conditional acce(tance and there is no acce(tance.
5. Article ' is a source of terms.
=arranties 122
$. Cx(ress warranty & words of the (arty that descri"e the goods, state facts, or make
(romises with res(ect to the goods "eing sold. (distinguish from D(uffingE (sales call)
general, o(inion i.e. un"elieva"le (rice, high 0uality structure, as o((osed to a re(resentation
of fact F warranty s(ecific, all steel structure)
'. Im(lied warranty of merchanta"ility
a. when you "uy something from someone in the "usiness world, (art of the deal is that it is
merchanta"le for ordinary (ur(oses. ;o to Bewelry store for gold chain, (ut it on and
head falls off, you can sue for "reach. Add a term to the contract, nothing "ad will
ha((en to you "ecause you wear it.
". If you "uy something from someone that is in the "usiness and nothing is said a"out the
0uality, you can sue for "reach of contract if it is defective.
*. Im(lied warranty for fitness for a (articular (ur(ose
27
a. A "uyer that has a (articular (ur(ose and is relying on the seller to (rovide that good and
the seller knows of the "uyers need and reliance on the sellers ex(ertise. ?est will have
to tell you why the "uyer is "uying the good and that the seller is AWA8C. ;o to the
shoe store "ecause you need mountain clim"ing "oots, "ut shoe sales man sells you
%onverse tennis shoes. Adds term, DI know what you want, I know what you need, here it
is.E
!7 +erformance O(ligation
A. :akes certain that the terms have "een com(lied with. It turns on the terms of the
contract.
6. %onditions
$. :odifies the o"ligation to (erform (i.e. I will "uy your house if it a((raised at
,$..,...). ?hat is "eyond the (arties control
'. An ex(ress condition must "e strictly com(lied with. (i.e. if ,T-,... you are not
legally o"ligated to "uy)
*. DI will (ay if I am satisfiedE (re0uires the a((roval of one of the contracting
(arties
a. It is not illusory, it is legally enforcea"le
". If the su"Bect matter of the contract is such that it involves (ersonal taste
and individual Budgment, then it is read literally. (if the (erson is not satisfied,
they dont have to (ay). /or exam(le, if I contract a (erson to (aint my
(ortrait, satisfaction is "ased on my su"Bective satisfaction.
c. If it a more ordinary contract (i.e. (aint house), then even though the contract
language says DIE it is read as if a reasona"le (erson would "e satisfied.
O"Bective standard.
%. 3eller of ;oods >erformance O"ligations F +%%
$. ?here must "e a (erfect tender. ?he seller is o"ligated to deliver exactly what
the terms call for. (%ontract for $.. widgets, TT is a "reach. ?his only a((lies in
article ')
'. 8eBection of the goods & if the seller does not make a (erfect tender, the "uyer
has the o(tion to reBect the goods.
a. there is a difference "etween a reBection of an offer (no contract & cant sue)
and a reBection of the goods (still contract & can sue)
*. 8evocation of acce(tance of the goods & tested with reBection
a. ?he "uyer is acting immediately and the "uyer can reBect the goods if they are
anything less than (erfect.
". If there was a su"stantial (ro"lem with the goods that was difficult to discover
early on, they can still revoke the contract
28
!!7 E/cuse of "on'erformance
A. Gon(erformance is sometimes excused, - grounds for excuse
6. If there was a conditional o"ligation and the condition wasnt met (6uy house if
a((raised at ,$'.4, "ut turns out ,$$P & excused)
%. ?he other (arties "reach (+%% (erfect tender & the items are not (erfect). A
material "reach excuses the other (arty from (erforming. >ainting house for ,$4,
get (aint on the windows, can get away without (aying ,$4? >ro"a"ly, "ut will have to
(ay something. If I (aint if (ur(le rather than white, then (ayment would "e excused
"ecause that is a material "reach.
!. Antici(atory re(udiation & early revocation. ?he other (arty is excused.
C. Aater agreement that excuses non(erformance
$. Govation & two (eo(le make a contract and later "oth agree that a new (arty can
(erform the contract. If that third (arty "reaches, you cant sue "ecause it
excuses the other (arty (%ant sue the originally contracted (arty? & yes, the
original (arty is excused, agreement to su"stitution is critical)
'. Accord and 3atisfaction & the excuse re0uires "oth the accord and the
satisfaction. It changes the deal with the same two (arties. (i.e. Owe ,$.... >aint
house instead)
a. Accord < new agreement, does not affect the original agreement. 6reach
results in suing on either condition & money or (aint house.
". 3atisfaction < actual act
c. !oes agreement as modified fall within the 3O/?
d. When do we need consideration for changes in contract? Got +%% "ecause
there is no >CA!8, "ut it is re0uired in common law cases.
/. Aater unforeseen occurrence
$. Im(ossi"ility F Where there is a later unforeseen occurrence that is no ones fault,
the nonF(erformance is excused. ?aylor v. %aldwell & concert hall lease, after
agreement made the hall "urned down. ?aylor sued for "reach of contract, cant
use concert hall.
'. /rustration of >ur(ose & (erformance isnt im(ossi"le, "ut it takes away the
(ur(ose of the contract. ?he agreement is unenforcea"le. 4rell v. =enry & guy
wants to see the coronation (arade. /lu e(idemic and (arade called off. Its not
im(ossi"le, "ut the (ur(ose for agreement is frustrated "y later occurence.
!!!7 Breac% *emedies
A. Ai0uidated damages & the (arties have agreed what the damages are to "e. ?hey are
valid if
$. ?he contract is uncertain as to what the (ossi"le damages might "e
'. ?hey are a reasona"le measure of what these uncertain damages might "e.
29
?hese are tested as to the time that the agreement is made, when no one knows
what the damages are. If you are told what damages actually made it is irrelevant,
that info was not availa"le at the time of the agreement. Was this a reasona"le
way to deal with it?
6. ?here are GO >+GI?IJC !A:A;C3 IG %OG?8A%? AAW or +%%. %ontract law is
not interested in (unishing "reaching (arties. ?orts allow (unitive.
%. %onse0uential damages & recovera"le only if reasona"ly foreseea"le "y "oth of the
(arties at the time of the contract. =adley v. 6acksendale(?) Cnglish mill in small
village. Go one knew how to fix the %rank 3haft. Inexcusa"le delay. 6ecause you
"reached, something else "ad ha((ened to me. ?hese are indirect damages and only
recovera"le if reasona"ly foreseea"le "y "oth of the (arties at the time of the
contract. (Aose money "ecause delay in (ainting caused owner to miss the season to
sell the house, costing ,-.... /or recovery, this must have "een foreseea"le "y "oth
(arties.)
!. 8eformation & need to conform the written contract to what it is that the (arty
actually agreed to. We agree its the $T south acres, "ut the written agreement
comes out $T southeast acres. %onform to meet the (arties agreement.
C. 3(ecific (erformance & court order directing the (arties to do what they contracted
to do. C0uita"le remedy that is only used when the legal remedies are not sufficient.
All e0uita"le remedies are only availa"le when money damages are not enough.
$. land sales & land is uni0ue, transfer of ownershi(
'. sales of uni0ue goods (anti0ues, works of art, made to order)
*. (ersonal services contracts & GO 3>C%I/I% >C8/O8:AG%C
1. Gegative s(ecific (erformance or inBunctive relief & sto(s you from doing
something. >at 8iley under contract to coach the 4nicks, "ut he doesnt want to.
?hey cant sue him to force him to coach, "ut they can get an inBunction disallowing
him from coaching another team.
/. :oney damages
$. ?he goal is to (ut the nonF"reaching (arty in the same (osition that she would have
"een in had the contract "een (erformed. Cx(ectation damages.
a. Identify the nonF"reaching (arty
". What would the (erson receive if the contract had "een (ro(erly (erformed
c. What would it take to award damages that would have "een due?
'. Cxam(les
a. "reach contract for ,$... for (ainting house. Gew (ainter charges ,$-... If
"reaching (arty (ays ,-.., thats where the (erson would "e had the contract
"een (erformed
". Ive "ought the (aint in (re(aration and you "reach. =ow measure the
damages? ;ive costs and (rova"le lost (rofits. What a"out unilateral contract
acce(tance "y (erformance?
30
c. 3ale of goods & sell %addy thats in mint condition, "ut its not in mint condition.
@ou want to kee( the car, "ut you want some of the money "ack "ecause its not
in mint condition. !elivered in ,$-.. condition, had it "een in mint condition it
would "e worth ,-.... ?rying to (ut the innocent in the same condition as if
the contract had "een (erformed & would have had car worth ,-..., "ut you
have car worth ,$-... %onse0uential damages recovera"le only if reasona"ly
foreseea"le "y "oth (arties
!>7 %ird +art. +ro(lems
A. ?hird (arty "eneficiaries & two (eo(le contract with each other with the intent of
"enefiting a third (arty. ?he third (arty has legal rights and can enforce it (i.e. "uy
life insurance (olicy, you agree to (ay (ayments, they agree to (ay son at your death.
3on can enforce the contract.)
$. ?hird (erson "ene & (erson not a (arty to the contract "ut can still enforce it
"ecause the other (arties made the contract with the intent of "enefiting them.
a. creditor "ene
". donee "ene & most *
rd
(arty "enes. It is a donee "ene +GAC33 the *
rd
(arty
was already a creditor of the (romisee
c. canceling or modifying
i. contract language controls
ii. the contract cant "e canceled or modified until the *
rd
(arty knows and
assents
d. the *
rd
(arty can sue the (romisor and the (romisee can sue the (romisor
e. the *
rd
(arty can sue the (romisee if the *
rd
(arty is a creditor "ene.
f. >romisor < the (erson who is (romising to do something for the *
rd
(arty
(insurance com(any)
g. >romisee < other (arty to the contract
'. Assignments & an agreement "etween two (eo(le and one of the (arties to the
original contract transfers away (assigns) his rights to a *
rd
(arty
a. ?he assignee can sue the o"ligor. ?he assignee ste(s in the shoes of the
assignor.
". =a((ens in ste(s & two (arties make a contract, ?=CG one of the (arties
assigns his rights to a third (arty
c. 3im(ly su"stitutes one (arty for another (arty
*. !elegations & two (eo(le make an agreement and then later one of them gets
some"ody else to do the work
a. When (ossi"le
$) contract (rovisions always control
') if no (rovisions, you can generally delegate duties unless you are talking
a"out a situation that involves s(ecial skills or a (erson involving a s(ecial
re(utation
31
". %onse0uences
$) the delegating (arty remains lia"le
') delegatee & he is only legally o"ligated if he received consideration
c. %om(are delegation and novation
$) When you delegate, if you ask the other (arty and they agree, it "ecomes a
novation
') +nder delegation, you remain lia"le.
*) +nder novation, you can sue the delegatee.
d. %onnection "etween *
rd
(arty "ene and delegation
$) if the delegatee receives consideration from the delegating (arty, it is a
delegation for consideration AG! a third (arty "ene.
What ha((ens if the 3O/ is not satisfied?
?he 3O/ is a defense to contract formation. When you have a situation that falls within
the 3O/, and the 3O/ is not com(lied with its a defense that needs to "e (resented and (roved
to (revent enforcement. If you cant sue on the contract, always look for a 0uasiFcontract
remedy.
Equal Dignit. *ule & this concerns when it is necessary to have written authority for a third
(arty to act on "ehalf of someone else in a contract. AuthoriKation must have the same degree
as the contract the (erson is entering the other into. An agent needs written authority to
enter into a contract for another when the contract is re0uired "y the 3O/ to "e in writing.
?his issue turns on whether the 3O/ re0uires the contract to "e in writing and usually occurs in
real estate dealings. In order to enter into a lease for another (erson, do I need written
authority to do so? If the contract is over $ year I do need written authority.
!llegalit.
If there is a 0uestion of illegality, the issue turns on knowing the difference "etween a
contract with illegal su"Bect matter and an illegal (ur(ose.
$. If H contracts with @ to kill W for ,-..., neither H nor @ can enforce the agreement. ?he
contract deals with illegal su"Bect matter and is therefore void.
'. If @ contracts with a ca" driver to take him to the s(ot to kill W, the ca" driver can recover
from @ "ecause their contract dealt with illegal (ur(ose, and the ca" driver is more than
likely unaware of @s (ur(ose in going to the s(ot.
8eBection F %ounter offer, conditional acce(tance, adds terms under common law
erms of Contract
32
?he terms of a contract are found in what is written and what is said. @ou can also find
them in the terms of (revious dealings, if there has "een a course of dealings "etween the two
(arties. ?he custom of the industry is relevant and can dictate the terms and what they mean.
>rior dealings & how these (eo(le did their deals together, (erson s(ecific
%ustom and usage & info a"out how deals with other (eo(le in the industry were done
33