Table of Contents

OBJECTIVE THEORY

REASONABLE PERSON STANDARD

OFFER

CASES
FACTORS
HAS THE OFFER BEEN ACCEPTED?
UNILATERAL CONTRACTS

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3
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4

HAS THE OFFER TERMINATED?

OPTION CONTRACTS 37, 39, 45, 63

UCC 2-207

CONSIDERATION 71

HAMER V. SIDWAY FOREBEARANCE

R2D71
STONESTREET P. 162
BATSAKIS V. DEMOTSIS (P.164)
R2D LOOKS SOLELY AT THE BARGAIN REQUIREMENT
R2D 71 NOMINAL CONSIDERATION
R2D 87(1) - EXCEPTIONS FOR OPTION CONTRACTS.
PROMISES
ILLUSORY PROMISE
CONDITIONAL PROMISES
ALTERNATIVE PROMISES
IMPLIED IN - FACT
PALMER V. DEHN

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QUASI-CONTRACTS

COTNAM V. WISDOM (P. 194) (UNCONSCIOUS MAN RECEIVING MEDICAL ATTENTION.)

TOM GROWNEY EQUIPMENT V. ANSLEY. (P.198)
PRE-EXISTING DUTY (CONTRACT MODIFICATION)
ALASKA PACKERS ASSN V. DOMENICO 73, COMMENT A
ANGEL V. MURRAY 89(A)
PAST CONSIDERATION
MILLS V. WYMAN P. 219
WEBB V. MCGOWIN P. 221 MATERIAL BENEFIT 86 (MINORITY RULE)
PROMISSORY ESTOPPEL
RICKETTS V. SCOTHORN P. 228
FEINBERG V. PFEIFFER CO. P. 213
SALSBURY V. NORTHWESTERN BELL TELEPHONE P. 238
W.R. GRACE & CO. V. TACO TICO ACQUISITION CO. P. 242

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LOGHRY V. UNICOVER CORP. P. 246

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Objective Theory
Reasonable Person Standard
How would a reasonable person understand the manifestation
Requires mutualbut not mentalassent. The secret thoughts and desires of
the parties are immaterial.
Lucy v. Zimmer - The law imputes to a person an intention
corresponding to the reasonable meaning of his words and acts.
The joke was kept a secret.
Embry - Intention must always be determined by the conduct,
acts, and expressed declarations.
Pepsi Co. To determine if an offer has genuinely been made,
would a reasonable person believe that the advertisement or
solicitation was an offer.

Offer
o
o
o
o

Manifestation
Of a willingness to enter into a bargain
So as to make another conclude that his assent is invited
And will conclude it (leaving nothing else to be determined)
* Ads arent usually offers. Too vague. Not enough specificity. Not
targeted at a single entity.

Cases
o Lonergan (Joshua Tree for sale in newspaper) No.
Too many details not spelled out.
Form letter--plaintiff knew others were also making offers.
o Lefkowitz (mink fur for $1) yes.
Specific (1st person).
Cant add conditions once someone accepts.

o Courteen Seed not an offer

Communication was part of a bargaining and there was
indication that another party was involved.
They were soliciting an offer.
Price was not decided.
o Southworth v. Oliver an offer b
There was back and forth on the details, and then a
statement with all the details awaiting a response.
There was a definiteness to the proposal.
o Continental Labs not an offer.
1) not signed
2) negotiations continued after purported verbal contract
3) written contract specified no verbal agreement
4) typically an agreement of this magnitude would be
written, not verbal.
Metro et al v. Scheider

Factors

Language used
Specificity and detail
Customs and practices in the business
Context of communication
Multiplicity of acceptance problem

Has the offer been accepted?

Unilateral accepted only by performance

o Ex. A Reward
Bilateral accepted only by a promise
o Most contracts. Courts prefer and this is the default
interpretation
Either (offerees choice)
o Becomes a bilateral contract once performance begins

Evertite (p. 65) Contract

Contract by performancestarting work. They showed up to begin the
job, which constituted starting the work.
Client was the offeror even though Evertite drafter the contract. Offeror
is master of the offer, so since they said it could be formed when
Evertite began work, it was.
Beard v. Krusa p69. No Contract
P.O. read: accepted when dealer signed

Dealer never signed it before the customer called to cancel. Rescind

the offer
Contracts are generally construed against the party who drafted the
document. In this case the offeree drafted it, and didnt follow what
they had written.

Davis v. Jacoby p.76 sued to be in the dead mans will.

Closeness of the relationship suggests Whitehead would accept
promise.
Default is to read as bilateral contract (R2d 31)
Communication indicated acceptance
Carbolic Smoke Ball p. 85
Unilateral contract (basically a reward)
Acceptance was when performance was completed
Depositing money to indicate earnestness meant that under objective
theory, what they said is what they meant.

Unilateral Contracts Cannot revoke an offer once performance has begun,

even if the contract is contingent on performance being completed.
62, 37, 45, 87(2)
45 Option Contract - once performance begins, an option contract is formed,
whereby the offeror is prohibited from terminating the offer, but the offeree
is free to finish the performance or not. Only the offeror is bound in an option
contract scenario.
(2)(e) - offeree has a right, but not an obligation.
87(2) - generally preparation for performance does not establish an option
contract unless the "expenses" are so high that justice requires it. (If I cancel
after you bought your plane ticket, I'm likely liable for the cost you incurred).
62 the court prefers bilateral contracts, so if the offeror leaves room for
acceptance via promise or performance, once performance has begun, it will
be treated as a bilateral contract. The beginning of performance signifies the
promise of completion. Only if the offer specifies promise as a valid mode of
acceptance.
Rewards are (almost?) always unilateral contracts
63 - mailbox rule. Once an acceptance is in the mail, the acceptance is
completed. Not when it arrives.

Has the offer Terminated?

Linseed oil
Kempner v. Cohn
o If the offeree accepts before being notified the offeror withdrew
the offer, there is a contract. Mailbox rule only applies to
acceptance.
o An offer made by letter, which is to be answered in the same
way, cannot be withdrawn unless the withdraw reaches the party
to whom it is addressed before he has accepted. An
uncommunicated revocation is no revocation at all.
Dickinson v. Dodd p. 108; 43
o Promise for the sale of land -- Promise to leave the offer open
o If the offeree knows the offer has been retracted, or knows of
actions taken by the offeror that indicated he no longer intends
to be bound by the offer, he cannot accept.
o The court isnt interested in how he knewjust that he knew
before he accepted
o What is the test? 43 Indirect revocation
Definite action inconsistent with offer
Offeree acquires reliable information (actual or
constructive) reasonable person standard
o Promise to leave the offer open? 25
Another contract that requires consideration to be effective
(e.x ernest money)
Naked promise/gift promise is not enforceable
Hypo 4-2 37; 48
o Death of offeror does not discharge offeror of contractual duty
under option contract. Offerees death does close option. Offeror
has bound himself, offeree has not.

Option Contracts 37, 39, 45, 63

Hypo 4-3 (p. 113) UCC 2-205 Option contracts ~ firm offers
o Definitions
Merchant [offeror] 2 - 104
Goods 2 - 105
< 3 months 2 - 205
Signed 1 201
Offeror cant refuse performance (e.x. the promised payment) 45

o Beginning of performance serves as consideration for a 45

option contract (created by a unilateral contract).
Minneapolis Railway
o Mirror Image Rule & Offeror is the master of the offer
o Changing the quantity is a rejection & counter offer
o 39(2) offerees power of acceptance is terminated by counter
offer
o Option contract cant be closed or permanently rejected
o Option contract must be supported by consideration
o 37 Acceptance under option contract is not terminated by
rejection
o 63(b) Acceptance under option contract must be received by
offeror (contrary to mailbox rule
Livingstone v. Evans Send lowest offer ; cant go lower than states.
o 39 counter offer is not a rejection unless explicitly stated by
offeree.
59; 61
ITOH
o UCC 2-207 changes mirror image rule
If contract acceptance is conditional on acceptance of
extra terms, and they are not accepted, there is no
contract. Per 2-207(3) if they ship and accept goods
anyway, there is a presumed contract based upon agreed
upon terms and UCC gap fillers.

UCC 2-207
(2) (c) objection has already been given
(2) (b) material surprise or hardship
(1) is there a contract? (definite and seasonable)
(2) what are the terms? * Do merchant analysis - They are
accepted
Merchant analysis 2 - 104(1 & 3)
(a)
(b) material changes resulting in surprise or hardship
(c)
o (3) When there is no contract, performance -> contract
o
o
o
o

What to do with differing or additional terms?

Minority Rule perform 2-207(2) analysis
Leading minority rule (TN) first shot (offeror is master of the offer)
NO 2-207(2)
Majority Rule 2-207(3) analysis. Differing terms knocked out and
replaced with gap fillers. Where no gap fillers, look to past dealings
and industry customs.

* U.C.C. Gap Fillers

Payment terms due upon delivery
Arbitration not a part. Courts are split whether arbitration is a material
alteration

Consideration 71
Performance or return promise, bargained for, must be mutual inducement
Hamer v. Sidway Forebearance
A waiver of any legal right at the request of another party of a
sufficient consideration of a promise.
R2d71
1. Promisor must want it
2. Getting the performance/return promise must be condition of
performance
Stonestreet p. 162
Naked promise. Plaintiff promised nothing and gave nothing in return
Gave promise after well dug. Not because of. Not motivated/induced by
BATSAKIS v. DEMOTSIS (p.164)
R2d Section 71 applies here:

Promise must be bargained for

Each of them is induced by the other's promise

R2d looks solely at the bargain requirement

o The peppercorn is considered only if it is actually bargain for, that is only if

the person making the promise actually wants it and only if the prospect of
receiving it is part of the motivation for entering into the contract.

R2d 71 Nominal consideration

Only if party receiving it wants it
Only if the prospect of receiving it is part of the motivation for entering
into the contract
R2d 87(1) - exceptions for option contracts.

SCHNELL v. NELL (p.169) (promise to distribute money per wifes wishes, in

exchange for 1 cent)
Why does this case seem to contradict the previous one?

Court doesn't buy that husband promises to pay $200 because he is

induced to get 1 cent (this doesnt seem reasonable).
o This approach doesn't seem sufficient
o Court says this is a gift promise that is dressed as a promise (and
the court doesn't get involved in gifts)
Moral obligations do not count in court
Previous case the court believes that the lender promised to pay
$2,000 to get the $25 (this seems reasonable under the
circumstances). Batsakis.
Where a disputed claim is legally groundless, a promise upon a
compromise of it, or a suit upon it, is not legally binding.

Promises
Illusory Promise
Ex: "Promise to pay me $5,000 and I MAY give up smoking"
To be consideration, it has to be a real promise.
Illusory promise is when the person is not bound to do anything (they
are NOT considerations).
Conditional Promises
Ex: "I promise to pay you $10,000 if X happens"
A conditional promise is consideration if the condition is outside the
control of the promisor.
Such as some Aleatory contracts aka gambling contracts (such as
insurance policy)
The insurance co. promises to pay to repair your car if it is damages (a
condition over which the insurance co has no control)
Alternative Promises
Ex: "If you promise to pay me $10,000, I'll promise to do either A or B,
my choice"
If the 2 promises, taken separately, would be consideration, then the
promise is consideration.
Kirksey v. Kirksey p. 189
Moving wasnt a requirement by design, but rather implicit in accepting
the promise. He didnt want her to move, just offered this if she did.
Not a bargained for exchange.
Frishman

Implied in - fact
Palmer v. Dehn
implied a promise that Dehn would forbear to bring his tort claim.

Quasi-Contracts contract implied by the law

Implied-in-fact: An implied-in-fact contract is a contract agreed by non-verbal
conduct, rather than by explicit words. Inferred by conduct.
Implied-in-law legal fiction. No facts that make a contract. Essential,
necessary services.
Cotnam v. Wisdom (P. 194) (unconscious man receiving medical attention.)
No need to prove benefit (man died). Not how medicine works.
Quasi contractual relationships: services by doctors and nurses to
infants, insane persons, drunkards, unconscious or helpless by
reason of injury or sickness.
Value of estate (or means of the recipient) has no bearing on the
amount owed, as this is not a real contract, but rather a legal fiction
to afford a remedy.
Sued the estate. Same as suing the man.
Its a contract! Of course this is not good logic, for the obvious and
sufficient reason that it is not true.
Tom Growney Equipment v. Ansley. (P.198) (backhoe repair)
Quasi-contract based on unjust enrichment v. Owners right of free
choice.
where a defendant has a right to choose for himself whether to
receive a benefit, and where restitution might deprive him of that
choice by requiring payment for a benefit the defendant may not
want, restitution is often denied.

Pre-existing Duty (Contract modification)

Things done in the past generally cannot serve as consideration. Is there
consideration for the modification? Does there need to be?
Alaska Packers Assn V. Domenico 73, comment A
Coercing addition compensation for what you are already contractually
obligated to do is not enforceable, due to lack of consideration for the
new contract.

Under the new promise, he was not to do anything more or different.

What benefit was to accrue to [defendant].
To permit a plaintiff to recover under such circumstances would be to
offer a premium upon bad faith, and invite men to violate their most
sacred contracts that they may profit by their own wrong.

Angel v. Murray 89(a)

The courts have been reluctant to apply the preexisting duty rule when
a party to a contract encounters unanticipated difficulties and the
other party, not influenced by coercion or duress, voluntarily agrees to
pay additional compensation for work already required to be performed
under the contract.
UCC 2-209: an agreement modifying a contract (for the sale of goods)
needs no consideration to be binding. Providing it was done in good
faith. *Does not necessarily require unforeseen circumstances.
R2D 89(a) a promise modifying a duty under a contract not fully
performed on either side is binding (a) if the modification is fair and
equitable in view of circumstances not anticipated by the parties when
the contract was made

Past Consideration
Past promise/performance becomes basis for subsequent promise. Is it
bargained for?
Mills v. Wyman p. 219
Plaintiff charitably took in someone who was sick while father was out.
Father promised to pay for cost of care. Reneges. Plaintiff sued.
Consideration (care of son) took place before father promised to pay.
=>was not provided to induce father to pay.
Son was not a minor, so Father wasnt legally obligated to provide for
his care.
Webb v. McGowin p. 221 Material Benefit 86 (Minority Rule)

Injury to plaintiff in saving promisor's life was sufficient legal

consideration to enforce the subsequently deceased promisor's
promise to pay an amount periodically from defendants for the
remainder of plaintiff's life.
Moral obligation was sufficient consideration that arises because of the
material benefit that received.
Moral obligation is sufficient consideration to support subsequent
promise to pay where promisor has received material benefit, although
there was no original duty or liability resting on promisor.

The fact that he paid the money originally lends credence that he
would have requested it beforehand if he could have.

Promissory Estoppel

Promissory Estoppel you cant go back on your promise when another

has reasonably relied on it.

Equitable Estoppel when a person makes a representation of fact that

is reasonably relied on by another, the representing party will not be
permitted to deny the truth of the prior representation.

Ricketts v. Scothorn p. 228

Promise was a giftnot supported by consideration.
The expenditure of money or assumption of liability by the donee
(recipient) on the faith of the promise constitutes a valuable and
sufficient consideration.
unless it should appear that the donee has, prior to any revocation,
entered into engagements, or made expenditures based on such
promise, so that he must suffer loss or injury if the note is not
paid...the donor would be estopped from pleading want of
consideration.
When the payee changes his position to his disadvantage in reliance
on the promise, a right of action does arise.
intentionally influenced the plaintiff to alter her position for the
worse on the faith of the note being paid when due
Feinberg v. Pfeiffer Co. p. 231
Past considerationpromise was because of past performance.
Was her retirement motivated by the promise? Was the promise
motivated by her retirement? No. They wanted her to keep working.
Not an inducement.
Was there such an act on the part of the plaintiff, in reliance on the
promise contained in the resolution, as well estop, the , and will =>
create an enforceable contract under the doctrine of promissory
estoppel?

Promissory R2d90 v. Equitable Estopel

Equitable E. factual statement

Promissory E. Promise reasonably inducing action or Forbearance (
actions based on promise )
o Promise

o Promissor reasonably forsee that promise would induce promisee

would act
o relies on the promise
o Results in injustice if not enforced
Salsbury v. Northwestern Bell Telephone p. 238 {Charitable Contribution}
Estoppel can never arise unless there has been reliance.
R2d90(2) a charitable subscription is binding without proof that the
promise induced action or forbearance. {Minority Rule}
Del taco v. Taco Tico Acquisition Co. p. 242
Written agreement precluded binding oral agreements so oral was
not binding.
Loghry v. Unicover Corp. p. 246
Promissory estoppel could not be available to where the disclaimers
effectively defeated the promissory estoppel claim.
Since she was still an at-will employee, she could be fired for any
reason, or no reason, at any time. => no damage claim.

Mistake R2d20; R2d 152

Wichelahaus (Peerless ship) p. 253 Mistake
o Thought it was a different ship, that being so, there was no
consensus, and therefore no binding contract.
Sherwood v. Walker (Replevin for a cow) p. 255 Mistake.
o Law protects factual Mistakes.
o Different between mistake of fact v. Mistake of quality
Wood v. Boynton (uncut diamond) p. 261 No Mistake
In the absence of fraud or warranty, the value of a property sold, as
compared with the price paid, is no ground for a rescission of a sale.
Not certain as to what it was.
Jaynes v. Louisville Railroad (waiving right to sue over injury) p. 268 Mistake
Mutual mistake relates to facts in the present, not expectations for the
future. Future involves risk allocation, and the nature of risk is
uncertain.

Both thought the injury was minimal; wasnt.

Fact v. Prediction

Anderson Brothers Corp. v. OMeara (didnt inspect the trencher) p. 271 No

Mistake