I.

FORMATION OF CONTRACTS
A.
Mutual Assent
1. Objective Theory of Contracts
2. Offer and Acceptance
a. Offer
1) Intent
2) Knowledge by the offeree
3) Terms
a) Essential terms
b) Duration term
i) Employment contracts
c) Missing terms
d) Vague terms
4) Language
5) Invitation to deal
b. Termination of offers
1) Lapse of time in offer
2) Death or mental incapacity
3) Destruction or illegality
4) Revocation
a) Option (promise not to revoke)
b) UCC firm offer rule
i) Time period
ii) Merchant defined
c) Promissory estoppel (detrimental reliance)
d) Partial performance
5) Revocation of general offers
6) Rejection by offeree
7) Revival of offer
c. Acceptance
1) Bilateral versus unilateral offer
2) Means of acceptance
a) Silence
b) Shipment of goods
3) Mailbox rule
a) Rejection following acceptance
b) Acceptance following rejection
c) Revocations effective upon receipt
d) Irrevocable offer
e) Medium
4) Notice
a) Unilateral contract
b) Bilateral contract
d. Effect of additional or different termsmirror-image rule versus battle of the forms
1) Common-law mirror-image rule
2) UCC ruleacceptance contains additional or different terms
a) Both parties are not merchants
b) Both parties are merchantsbattle of the forms
i) Acceptance includes additional terms
ii) Acceptance includes different terms
c) UCC ruleacceptance based on conduct
e. Auction contracts

1) Goods auctioned in lots

2) Completion of a sale
3) Reserve and no-reserve auctions
4) When the seller bids
B.

C.

D.

E.

Consideration
1. Bargain and Exchange
a. Legal detriment and bargained-for exchange
b. Gift distinguished
2. Adequacy of Consideration
a. Subjective value
b. Preexisting-duty rule
1) Common law
2) Exception for a third party
c. Past consideration
d. Modification
1) Common law
2) UCC
a) Installment contracts
e. Accord and satisfaction
f. Illusory promises
g. Voidable and unenforceable promises
h. Requirements and output contracts
i. Settlement of a legal claim
Promises Binding Without Consideration
1. Promise to Pay a Debt Barred by the Statute of Limitations
2. Promise to Perform a Voidable Duty
3. Promise to Pay Benefits ReceivedMaterial Benefit Rule
4. Promissory Estoppel
a. Requirements
b. Exception to the reliance requirement for charitable subscriptions
c. Construction contracts and promissory estoppel
Enforceability
1. Void Contracts
2. Voidable Contracts
3. Unenforceable Contracts
Defenses to Formation
1. Mistake
a. Unilateral mistake
b. Mutual mistake
1) Conscious ignorance
2) Mistaken partys negligence
c. Reformation for mistake
2. Misunderstanding
a. Neither party knows or should know of the misunderstanding
b. One party knows or should know of the misunderstanding
c. Both parties know of the misunderstanding
d. Waiver of the misunderstanding
3. Misrepresentation, Nondisclosure, and Fraud
a. Fraudulent misrepresentation requires proof of the following:
i) The misrepresentation is fraudulent;
a) A false assertion of fact made knowingly, or recklessly without knowledge of
its truth; and

II.

b) With intent to mislead the other party;

ii) The misrepresentation induced assent to the contract; and
iii) The adversely affected party justifiably relied on the misrepresentation.
b. Nondisclosure
c. Effect
1) Fraud in the factum
2) Fraud in the inducement
d. Non-fraudulent misrepresentation
e. Cure of a misrepresentation
f. Avoidance or reformation for misrepresentation
4. Undue Influence
a. Unfair persuasion
b. Confidential relationshipfairness and disclosure
c. Third-party undue influence
d. Damages
5. Duress
a. Improper threat
1) Threat of criminal prosecution
2) Threat of civil action
b. Deprivation of meaningful choice
c. Effect on the contract
6. Capacity to Contract
a. Infancy
1) Liability for necessities
2) Statutory exceptions
b. Mental illness
c. Guardianship
d. Intoxication
F.
Defenses to Enforcement
1. Illegality
a. Effect of illegality
b. Exceptions
1) Ignorance of illegality
2) Lack of illegal purpose
3) Divisible contracts
4) Licensing violation
5) Availability of restitution
a) Not in pari delicto
b) Withdrawal
2. Unconscionability
3. Public Policy
G.
Implied-in-Fact Contracts and Quasi-Contracts
1. Implied-in-Fact Contracts
2. Implied-in-Law (Quasi) Contracts
H.
Warranties in Sale-of-Goods Contracts
1. Express Warranty
2. Implied Warranty of Merchantability
3. Implied Warranty of Fitness for a Particular Purpose
DISCHARGE
A.
Impracticability
1. Elements of Impracticability
i) An unforeseeable event has occurred;

III.

IV.

V.

ii) Nonoccurrence of the event was a basic assumption on which the contract was made; and
iii) The party seeking discharge is not at fault.
2. Assumption of the Risk
3. Partial Impracticability
4. Failure of a Particular Source of Supply
5. Failure of Agreed-Upon Method of Transportation
B.
Frustration of Purpose
C.
Rescission
D.
Release
E.
Destruction or Injury to Identified Goods
THIRD-PARTY BENEFICIARY CONTRACTS
A.
Creditor and Donee Beneficiaries
B.
Intended and Incidental Beneficiaries
C.
Vesting of Beneficiary's Rights
1. When Rights Vest
D.
Defenses
ASSIGNMENT OF RIGHTS AND DELEGATION OF DUTIES
A.
Assignment of Rights
1. When Disallowed
2. Requirements
3. Revocability
4. Rights of the Assignee
5. Subsequent Assignment
B.
Delegation of Duties
1. When Disallowed
2. Effect on Delegator
a. Novation
3. Effect on Delegate
4. Effect on Other Party to the Contract
5. Effect of Assignment of Contract
STATUTE OF FRAUDS
A.
Writing Required
B.
Types of Contracts Within the Statute of Frauds
1. Marriage Provision
2. Suretyship Provision
a. Rule
b. Exceptions
1) Indemnity contracts
2) Main-purpose exception
3. Real Property Contracts
a. Types
b. Part performance
4. One-Year Provision
5. Sale of Goods for $500 or More
a. Sufficiency of the writing
1) Type of writing required
2) Mistake in writing
b. Exceptionswriting not required
1) Specially manufactured goods
2) Part payment
3) Receipt and acceptance
4) Judicial admission

VI.

VII.

5) Failure to respond to a memorandum (when both parties are merchants)

c. Modifications
PAROL EVIDENCE RULE
A.
Integration
1. Total versus Partial Integration
a. Total integration
b. Partial integration
2. Intent of the Parties
a. Common-law four-corners rule
b. Second Restatement rule
c. UCC rule
B.
When the Parol Evidence Rule Is Inapplicable
1. Raising a Defense to the Formation of a Contract
2. Establishing a Defense to the Enforcement of the Contract
3. Separate Deal
4. Condition Precedent
5. Ambiguity and Interpretation
a. Plain-meaning rule
b. Context rule
6. Subsequent Agreements
7. UCC RuleTrade Usage and Course of Dealing or Performance
a. Course of performance
b. Course of dealing
c. Trade usage
CONDITIONS AND PERFORMANCE
A.
Types of Conditions
1. Express Conditions
2. Implied Conditions
B.
Timing of Conditions
1. Burden of Proof
C.
Satisfaction of Conditions
D.
Performance
1. Order of Performance
2. Substantial Performance
a. Effect on damages
b. Willful breach
c. Delay in performance
1) Time-is-of-the-essence clause
3. Perfect Tender Under the UCC
a. Transferring ownership
b. Sellers obligation to tender goods
1) Time of tender
2) Manner of tender
3) Place of tender
4) Method of tender
a) Sellers place of business
b) Shipment contract
c) Destination contract
d) Goods in the hands of a bailee
5) C.I.F. (cost, insurance, and freight) and C & F (cost and freight)
6) F.A.S. contracts
c. Buyers obligations

VIII.

1) Non-carrier cases versus carrier cases

2) Shipment under reservation
3) Tender of payment
a) Delivery and tender concurrent conditions of exchange
b) Sufficiency of tender of payment
c) Payment by check
d. Buyers right to inspect
1) Prior to payment
2) When not entitled to inspect
3) Expenses of inspection
4. Divisible or Installment Contracts
a. Common law
b. UCC
1) Multiple shipments
2) Nonconforming segment
3) Remaining segments
E.
Suspension or Excuse of Conditions
1. Waiver
2. Wrongful Interference
3. Election
4. Estoppel
BREACH OF CONTRACT AND REMEDIES
A.
Breach of Contract
1. Common Law
2. UCC
B.
Anticipatory Repudiation
1. Anticipatory Repudiation Under the Common Law
a. Repudiation of promise
b. Non-breaching partys options
c. Retraction of repudiation
d. Unilateral contracts
2. Anticipatory Repudiation Under the UCC
3. Prospective Inability to Perform
a. Commercial standards for merchants
b. Effect of acceptance
C.
Remedies: Damages for Breach of Contract
1. Expectation Damages
a. In general
1) Construction contracts
2) Sale-of-goods contracts
3) Real-estate contracts
4) Contract to lend money
5) Formula
b. Partial performance
c. Defective performance
1) Construction contracts
2) Sale-of-goods contracts
d. Diminution in value (economic waste)
2. Consequential Damages and Foreseeability
a. Consequential damages
b. Foreseeability
c. Causation

D.

E.

F.

d. Reasonable certainty
e. UCCBreach of warranty
3. Liquidated Damages and Penalties
a. Enforceability
b. Uncertainty of actual damages
4. Incidental Damages
5. Punitive Damages
6. Nominal Damages
7. Mitigating Damages
Restitution and Reliance Recoveries
1. Restitutionary Recovery
a. Benefit conferred pursuant to a contract (quasi-contract)
1) Recovery by nonbreaching party
2) Recovery by breaching party
a) Exceptions
i) Willful breach
ii) Liquidated-damages clause
iii) Sale of goodspayment by the defaulting buyer
3) Unenforceable contract
b. Benefit conferred independent of a contract
2. Reliance Damages
Specific Performance and Declaratory Judgment
1. Specific Performance
a. Factors considered
b. Real property
c. UCC
d. Limitations
e. Defenses
2. Declaratory Judgment
Remedies Under the UCC
1. Buyers Remedies
a. Failure to tender
1) Damages
2) Cover
3) Specific performance
4) Replevin
a) Payment by the buyer
b) Buyers inability to cover
b. Nonconforming tender
1) Rejection
a) Valid rejection
b) Retain possession
c) Perishable and nonperishable goods
d) Remedies
i) Conversion
2) Acceptance
3) Right to cure
2. Sellers Remedies
a. Right to price upon acceptance
b. Right to reclaim goods
1) Insolvent buyer
2) Delivered Goods to a Buyer Who Pays With a Check

c. Stoppage of goods in transit

1) Buyers breach
2) Buyers insolvency
d. Wrongful rejection
1) Collect damages
2) Resell the goods
3) Recover the price
4) Incidental damages
5) Lost profits
3. Risk of Loss
a. General rulesnon-identified goods, no breach
1) Goods to be shipped by a third-party carrier
a) Shipment contract
b) Destination contract
2) Goods held by a bailee
3) All other cases
b. Identified goods, no breach
c. Effect of a breach of contract
1) Sellers Breach
2) Buyers Breach
4. Insurable Interest in Goods
a. Sellers insurable interest
b. Buyers insurable interest
5. Title and Good-Faith Purchasers
a. Entrusting provisions
b. Voidable title
6. Statute of Limitations on a Breach of a Sales Contract
a. Period of limitations
b. When a cause of action accrues
c. Modification of limitations period