When Approaching a Contracts Question, first ask what is the applicable law?

o Sale of Goods? UCC

o Otherwise look at common law (case law, the Restatement)
Look at Formation of the Contract
o Offer
o Acceptance
o Consideration
o Intent to be Bound
o Promise
Terms of the K
Look at Performance
 
Promise
1. The Restatement on Promise, Agreement, and Contract
o §1---A contract is a promise for the breach of which the law gives a remedy, or the
performance law recognizes as a duty.
o § 2 A promise is a manifestation of intent to act or forbear, made so promisee
understands a commitment has been made.
o §3 An agreement is a manifestation of mutual assent. A bargain is an agreement to
exchange promises or performance.
2. UCC Definitions
a. §1-201 (3) Agreement---the bargain of the parties as found in their language or by other
implications from custom or conduct.
b. §2-102---UCC article 2 applies to the sale of goods
c. §2-105---Definitions
i. Goods---are all movable things, other than money, investment securites, and
things in action
d. §2-104 Merchant---A person who deals in goods of the kind, or by his occupation holds
himself as having knowledge or skill particular to the practices or goods involved
i. Or to whom the knowledge or skill may be attributed to his employment of an
agent or broker who by his occupation holds himself of the knowledge or skill.
3. Contract is an Enforceable Promise
a. Bailey v. West---No implied in fact K b/c didn’t know who he was dealing with.
i. Implied in fact K formed by manifestation of assent, intention can be proved by
words or conduct
ii. No quasi-K, not real K, created by courts to avoid unjust enrichment, although
the parties did not intend to be bound, Requires:
1. A benefit conferred upon D by P
2. Appreciation by D of such benefit, and
3. Retention by D of such benefit under circumstances that it would be
inequitable to retain benefit without payment of value.
iii. Generally there is no legal duty to pay compensation for performance rendered
without request.
b. Bolin Farms
i. Contracts are binding legal agreements, regardless of unforeseen events, unless
some exception occurs:
 1. Performance becomes illegal, K language sufficiently vague,
performance becomes impossible, induced to enter by fraud then parties
released.
4. Consideration
a. Elements of Consideration
i. Detriment induces the promise( promisor bargains for detriment in exchange
for promise)
ii. Promise induces the Detriment (promisee act or forbears b/c of the promise,
there must be knowledge of the promise)
iii. Legal Detriment to the promisee or benefit to the promisor.
b. Restatement
i. §17---formation of a K requires a bargain, where there is a manifestation of
mutual assent to the exchange and consideration
ii. §71---To constitute consideration a performance or return promise must be
bargained for. Only done if it is sought by the promisor in exchange for his promise
and is given in exchange by the promisee in exchange for that promise.
1. Can be act other than a promise, forbearance, or creation modification
or destruction of legal relation.
iii. §75---A promise is consideration, but only if the performance promised would
be consideration.
c. Kirksey v. Kirksey
i. Court found no consideration so no K, merely gratuitous---therefore not
bargained for so no consideration.
d. Bargaining in an Implied in Fact K is based off of the parties actions, gives evidence of
parties intentions to enter a K, bargaining just is not written or spoken.
e. Hamer v. Sidway
i. Legal detriment bargained for constitutes consideration.
f. Langer v. Superior Steel Corp.
i. Consideration exists promise induced the debt(forbears from legal right to work
for another competitor in exchange for cash)
1. Detriment to promisee and benefit to promisor.
5. Mixed Motives and Nominal Consideration
a. Mixed Motives and Nominal Consideration
i. Mixed Motives, Nominal Consideration, and the Relevance of For ms
a. 2nd Restatement---the fact that what is bargained for does not
of itself induce the making of a promise does not prevent it from being
consideration.
b. Nominal consideration
i. A gift promise, even though written, signed, and
containing language that the promisor intends to assume a legal
obligation is not enforceable.
ii. False recitals of consideration, such as a recitation in the
writing that the consideration for a promise to deliver 1000 shares
of IBM stock is $1, the receipt of which is hereby acknowledged
are likely to be dismissed as pretense of bargain.
ii. Should Gift Promises be Enforced?
 a. Nominal consideration---parties who falsely cast a non-bargain
promise to do so for the express purpose of making the promise legally
enforceable.
6. Adequacy of the Values Exchanged
a. General rule is that most detriments, no matter how economically inadequate
will support a promise provided the detriment is actually bargained for.
i. Court very rarely will look at the adequacy of consideration unless it is so
disparate it appears to be constructively fraudulent.
ii. Concern is whether both parties were freely able to judge the value of
the exchange when it was made?
iii. Restatement standards seems to be 10-1 is okay but a disparity of 1000-1
is usually not ok.
iv. FORK---Subjective value and fair market value, difficult for adequacy
assessment.
 
b. BROWNING V. JOHNSON $40,000 to cancel contract to buy practice.
Consideration was giving up first contract, differences in worth not important.
 
a. Exception---Unconscionability
i. Jones v. Star Credit (freezer)
a. Rule: Unconscionable when the contract shocks the conscience (grossly
inadequate). Inadequacy in bargaining power.
i. Court may refuse to enforce K, enforce remainder and just not
unconscionable clause, or limit unconscionable clause to what is
fair.
b. UCC 2-302: If K is unconscionable at time it was made, court may refuse
to enforce it, part of it, or limit application so as to avoid unconscionable
result, purpose to prevent oppression and unfair surprise.
b. Release of Legal Detriment
i. In Re Greene
a. Merely reciting consideration isn't good enough.
i. Ct. doesn’t have to believe written assertion of consideration.
b. $1 is nominal, not adequate for what she would receive.
i. Some courts say this is good enough.
c. Release of legal claims does not work when they are no legal claims that
exist.
c. Fiege v. Boehm
i. Rule: An agreement to compromise an untried legal claim may be sufficient if:
a. The parties believe there is a claim and
b. There is an objectively reasonable basis for believing that there is a claim.
ii. R2nd § 74 An agreement not to assert an invalid legal claim is not consideration
unless:
a. Validity of the claim is uncertain at the time of the bargain; or
 b. Forbearing party believes that the claim may be valid at the time of the
bargain
7. The Pre-Existing Duty Rule
a. Levine v. Blumenthal
i. OLD RULE! Modification of the original K is formation of an entirely new
K.
ii. Rule: Where nothing new is given up, the 2nd bargain wasn’t supported
by consideration.
a. It is elementary that the subsequent agreement, to impose the
obligation of a K, must rest upon a new and independent consideration.
b. Duties Imposed By Law
i. The pre-existing duty rule applies not under to duties that exist under a K,
but also to a duty that is imposed by law.
a. Can't use something that is in the general scope of your duties as
consideration for a K.
c. Fisherman
i. K exists, then new K, but no new consideration therefore no new deal.
a. Policy--- Court seems to be concerned with coercion.
d. Angel v. Murray
i. Modification that has no new consideration is binding if parties acted in
good faith:
a. The K is not fully performed on either side, modification fair and
equitable, circumstances arise that were not anticipated when the K
was made, parties voluntarily agree to change.
ii. Modern trend, courts should enforce agreements modifying contracts
when unexpected or unanticipated difficulties arise during course of
performance of a K.
a. As long as parties voluntarily agree, fair, and made in good faith.
i. R2nd 73 Performance of a Legal Duty
a. Performance of a legal duty owed to a promisor which is neither
doubtful nor the subject of honest dispute is not consideration; but a
similar performance is consideration if it differs from what was required
by more than more than a mere pretense of bargain.
ii. R2nd 89 A promise modifying a duty under a K not fully performed on
either side is binding:
a. If the modification is fair and equitable in view of the
circumstances not anticipated by the parties when the K was made; OR
b. To the extent provided by the statute; OR
c. To the extent that justice requires enforcement in view of
material change of position in reliance on the promise.
e. Three Party Cases and Pre-existing Duty Rule
i. A will give B money to ride in race. C, outsider with no right to the
performance under the K, promises to pay A $500 if he wins.
 a. Classic Rule A may not recover because A was only performing an
obligation all ready owed to B.
b. Other view adopted by Restatement and most modern courts is
that C's promise is enforceable.
i. Less likelihood of duress.
f. Agreement to Accept Part Payment in Satisfaction of a Debt
i. Part payment by a debtor of an amount here and now indisputable is not
detriment to support a promise by the creditor to discharge the entire amount.
a. No detriment by the debtor.
b. Rule doesn’t apply if in addition to the part payment, there is a
detriment that is in fact bargained for.
g. UCC 2-209
i. An agreement to modify a K within this article needs no consideration to
be binding.
a. Must meet the test of Good-Faith.
b. FORK---Sale of goods? Statute of Frauds?
h. Ways to Get around Pre-existing Duty Rule
i. Terminate old K---make new K, New or additional consideration, UCC 2-
209---No Consideration needed if waived in good faith, R2nd 89.
8. Mutuality of Obligation
a. General rule is that both parties must be bound or neither is bound.
i. Need a mutuality of consideration.
b. Illusory Promise
i. An expression cloaked in promissory terms but which upon closer
examination, reveals the promisor has made no commitment.
c. Whiskey Case
i. Contract lacks mutuality when one of the parties is not obligated to
render performance on the K.
ii. If one is not bound than neither is bound.
d. McMichael v. Price (Sand)
i. Requirement Contract
ii. The parties intended the K to be binding(requirement K).
iii. Court said that it is implied in the parties intended it to be binding.
iv. Rule---Requirement K's are generally enforceable.
e. UCC 2-306-1 (sale of Goods)
i. Where a K for goods measures the quantity by either (1) output of the
seller, or (2) requirements of the buyer.
a. Unless the parties agree otherwise, they are bound by a good-
faith requirement to use their best efforts to supply or sell the goods
subject to K.
f. Wood v. Lucy-Duff
i. Exclusive dealing K, Court implied term that he would use best efforts,
solved the mutuality problem.
g. UCC 2-306(2)
 i. In exclusive dealing K's for the sale of goods:
a. Seller obligated to use best efforts to supply goods; and
b. Buyer is obligated to use best efforts to promote their sale.
9. Moral Obligation: Promise Plus Antecedent Benefit
o Jurisdiction makes big difference.
o Restitution meaning---theory of liability for unjust enrichment.
o Moral obligation will almost never constitute consideration.
o As a general proposition a person who performs unrequested services for
another does not thereby acquire a right to compensation or restitution, even
though the performance entailed a high cost to the former and a benefit to the
latter.
o Mills v. Wyman (Father)
i. Moral duty alone isn't sufficient to make a subsequent promise binding.
ii. Rule: Mere verbal promise, without consideration, cannot be enforced by
action
iii. No quasi-K, benefit not to father.
o R2nd §86
i. A promise made for a benefit previously received by the promisor from
the promisee is binding to the extent necessary to prevent injustice
ii. Such promise is not binding if:
a. Promisee conferred the benefit as gift or
b. For other reasons the promisor hasn’t been unjustly enriched or
c. To the extent that the value of the promise is disproportionate to
the value of the benefit.
iii. Minority Position
o Manwill v. Oyler
i. SoL has expired,
ii. Rule---Promise to repay a lapsed legal liability is generally binding without
additional consideration.
a. No legal liability here because at the time of transfer they didn’t
expect compensation.
iii. Rule---Promise to repay is not enforceable if the original transfer was a
gift or gratuity.
a. P couldn’t show they expected repayment.
iv. Material Benefit Rule--A promise to pay may be binding if:
a. Promisor receives something of value from the other party.
b. Under circumstances that create a moral obligation; and
c. P expected compensation when conferring the benefit.
o Webb v. McGowin
i. McGowin made promise to pay after life saved by Webb, Webb didn’t
expect compensation at time of the act.
ii. Rule: (minority ruling) Yes, under the MBR, moral obligation to pay arose
from act he would have contracted for if given the opportunity.
 a. He received the MB personally.
o Harrington v. Taylor
i. Humanitarian act preceding promise isn't consideration.
a. Ct. might not have had MBR.
o R2nd §82
10. Promissory Estoppel: Promise + Unbargained for Reliance
1. Restatement 90
a. Promise which promisor should reasonably expect to induce action or
forbearance on the part of the promisee or 3rd party AND
b. which does induce such forbearance or action.
c. Binding if injustice can be avoided only by enforcement of the
promise(remedy may be limited as justice requires).
d. (2) A charitable subscription or marriage settlement is binding without
proof that the promise induced action or forbearance.
2. Ricketts v. Scothorn
a. Rule---Court focuses on change of position, relied on promise, her
position worse on faith of the note, good-faith(reasonable reliance) changed
her position
1. A promise can be enforceable without consideration, if the
promisee has acted in reliance to their detriment.
2. Remedy---only what detriment was.
b. Restatement 90---Doesn’t require detrimental reliance.
3. Congregation
a. Ct. says read R2nd 90 (2) in conjunction with R2nd (1), charitable
subscription, which says that there must be an injustice, which the Ct. said
there wasn’t.
1. Effectively eliminating prong (2).
4. Blinn v. Beatrice
a. For promissory estoppel, under Nebraska law only need reasonable
reliance even if promisor did not manifestly intend to be bound.
1. Statement needs to induce reasonable reliance.
i. States vary on this point.
2. If he knows boss is a liar, not reasonable reliance.
11. Statute of Frauds
o Remember SoF is a defense, only invoke SoF if your client is being sued.
o General Principle: K's have to be evidenced by writing; they do not address the
requirements of the writing. The contracts just require some written proof.
o SoF exists to show proof of agreement.
o Does the K fall within the statute of frauds?
i. If yes, then look at the requirements of the SoF. Are these requirements
satisfied?
1. Must be in writing
2. Must be signed by party against whom enforcement is sought (D).
 3. Must indicate that a K has been made
ii. Is there a statute of frauds defense? Defense against enforcement of this
type of agreement.
o What is covered under the SoF? (MYLEGS---Marriage, Year, Land, Executor,
Goods, Surety)
i. Marriage-promise in consideration of marriage(something more);
something to do in addition to promise to marry.
ii. Year---Service K not being able to be performed within 1 year from
making the K.
iii. Land---Real Estate Transfer---lease/mortgage---usually go on for more
than 1 year.
iv. Executor---executor paying expenses out of own pocket
v. Goods-Sales of Goods for $500 or more (See also §2-201)
vi. Surety-Promises to answer for debts of another (guarantor). Not just
promise to pay, but promise to pay if someone else does not (exception: if
promise benefits the promisor)
o The "One Year" Clause
i. There must not be the slightest possibility that the service can be fully
performed within 1 year for SoF to apply.
1. R2nd §130---K. Not to be Performed Within A year.
i. Where any promise in a K cannot be fully performed with
a year from the time the K is made, all promises in the K are within
the SoF until one party to the K completes his performance.
ii. When one party to a K has completed his performance,
the one-year provision of the statute does not prevent enforcement
of the promises of other parties.
o Satisfaction of SoF By a Memo
i. R2nd §131 (General Req's)
1. Unless additional req's, a K within the SoF is enforceable if it is
evidenced by any writing, signed by, or on behalf of the party to be
charged, which
i. Reasonably identifies the subject matter of the K
ii. Sufficient to indicate a K b/n the parties or offered by the
signer to the other party, and
iii. States with reasonable certainty the essential terms of the
unperformed promises in the K.
ii. §132 Several Writings
1. Memo may consist of several writings, if one is signed, clearly
indicate related to same transaction
iii. §135 Who Must Sign
1. K is enforceable against the signers but not against the others.
iv. §139 Enforcement by Virtue of Action in Reliance
1. Promise which the promisor should reasonably expect to induce
action or forbearance on the part of the promisee and which does induce
 the action or forbearance is enforceable notwithstanding the SoF if
injustice can be avoided only by enforcement of the promise.
2. Rule is promissory estoppel may apply in SoF cases if injustice can
be avoided only by the enforcement of the promise.
i. Availability and adequacy of other remedies
ii. Definite and substantial character of the action of
forbearance
iii. Direct result from promise
iv. Reasonableness
v. foreseeability
o Ohio, writing required for:
i. Special promise to pay lapsed debt, transfer or interest in real estate,
agreements not fully performed within one year…
o §2-201 (Sale of Goods)
i. Provides SoF for sales of goods
1. $500 or more, a writing is not insufficient b/c it omits or
incorrectly states a term agreed upon, but the K is not enforceable
beyond the quantity of goods shown in each such writing.
2. Merchants-if within a reasonable time a writing in confirmation
of the K and sufficient against the sender is received and the party has
reason to know its contents, satisfies requirements of (1) against such
party unless written notice of objection to its contents is given within 10
days after it is received.
3. (3) Doesn't satisfy (1), valid in other respects if:
i. 2-201(3)(a) goods are specially manufactured for the
buyer, not suitable for sale to others in the ordinary course of
business, and S, before notice of repudiation is received under
circumstances which reasonably indicate the goods are for the B,
has made substantial beginnings of their manufacture or
commitments of procurement, or
ii. 2-102(3)(b) Party for whom enforcement is sought against,
admits in pleading, testimony, or otherwise in Court a K exists, but
not enforceable beyond the quantity of goods admitted or
iii. 2-201(3)(c) goods for which payment has been made and
accepted or which have been received or adopted.
iv. 2-201(4) makes it clear that a K enforceable under this
section is "not rendered unenforceable merely because it is
capable of being performed within one year or any other
applicable period after its making.
ii. Exceptions (Where you don't need a writing)
1. Partial performance(Sullivan v. Porter)
2. Admission of a K (D.F. Activities)
i. P still has to prove the oral K here though, don’t forget!
o Sullivan v. Porter
 i. General Rule: A K for the transfer of real property is not enforceable
unless it is in writing.
1. Exception: Partial Performance:
i. 1 Party partially performed on the K, and her
performance was induced by other parties misrepresentation.
(Can include acquiescence or silence)
ii. When these things are present, infer a K was in place.
o Crabtree (K for Service)
i. 3 documents, SoF requires a writing.
ii. Rule: SoF doesn’t require a unitary document, separate documents are ok
if:
1. They relate to each other and one of them is signed by person
against whom the K is seeking to be enforced.
iii. UCC 2-201 just looking for evidence of agreement.
1. For sale of goods---need quantity.
o DF Activities (Chair)
i. Rule: When a Party admits a K, SoF doesn’t apply.
o Merchants
i. B/n Merchants?
1. §2-104 someone who deals with goods of the kind at issue or
someone who by his occupation holds himself out as someone knowing
about the kind of goods at issue, or someone who employs such a person
ii. Within reasonable time?
1. Custom of the trade, forum dealings,
iii. Writing and confirmation of the K?
1. Needs to contain quantity, don’t need all the specific terms
iv. Party receiving has reason to know its contents?
v. Satisfies unless written notice to its contents is given within 10 days?
o UCC
i. Will fill in terms the parties omit from their dealings, UCC implies
reasonable price will be paid.
ii. Quantity?---NO gap filler for quantity, Parties must agree on quantity.
o Effect of Non-Compliance
i. Oral K within which is within and does not satisfy the SOF is not a
complete nullity, it may be waived.
12. Manifestation of Mutual Assent
a. Ascertainment of Assent: The Objective Test
i. It is not the meeting of the minds of the parties, but rather the
expression of their mutual assent that culminates the bargaining process.
1. Assent is legally sufficient if each party, by deliberate use of
words or conduct, manifested agreement to be contractually bound.
a. The subjective intent of the parties is not to be
considered.
2. Embry v. Haradine.
 a. General Rule: There is no K unless the parties have a
"meeting of the minds"
i. Depends on whether both parties intend to be
bound.
b. Subjective Intent doesn’t matter.
ii. Manifestations of assent interpreted from the standpoint of reasonable
person in the position of the party to whom the manifestation was made.
1. Not what the words subjectively meant, but how they should
have been understood from the reasonable person with knowledge and
attributes of the party to whom they were directed.
2. Lucy v. Zehmer Rule
a. Agreement or mutual assent necessary, mental assent
isn't necessary, look at parties outward manifestations of assent
b. Joke? We look at parties outward manifestations of
intent from viewpoint of a reasonable person.
iii. Objective notice is focused on writings, spoken words, or behavior
pertinent to transaction.
iv. Cohen v. Johnson
1. Whether the parties are merely negotiating a K or entering into
a present K is a question of intent.
2. Courts must look at specific language, subject matter contracted
about, relationship of parties, circumstances surrounding around
transaction.
a. Place themselves in same position the parties occupied
when the K was entered into and view circumstances as the
parties did.
b. Consequences of the Objective Approach
i. If X and Y didn’t intend to sell but both acted honestly, the Objective
Test excludes as irrelevant what they actually intended.
1. Policy---was P actually harmed?, OBJ test should only apply
where the D has carelessly used language which actually induced
ACTUAL and JUSTIFIED reliance by the P, consequence court gets to
regulate or control exchange behavior of private parties.
c. Intention that the Agreement be Memorialized
i. If parties agree not to be bound unless and until they sign a formal
agreement, won't be bound until that time.
1. If the future writing is meant only as a convenient memorial
then they are bound whether or not the writing is prepared or signed.
d. Implied In Fact Agreement
i. Taco Bell
1. K if all normal elements except parties don’t talk about
agreement.
2. Mutual agreement can be inferred from silence.
 3. Looking to see if one party accepts a benefit from the other,
knowing that the other expects to be paid---Implied in fact.
a. TB argued not specific.
b. Court found the essential elements present.
c. Usually the usual elements are still required.
4. 3 prongs For Implied In Fact K:
a. Idea must have been sought(evidence of bargaining)
b. D knew P expected to be paid
c. Used it.
13. Offer: Creation of Power of Acceptance
a. R2nd §24
i. An offer is a manifestation of willingness to enter into a bargain, so made as to
justify another person in understanding that this asset to that bargain is invited and
will conclude it.
b. Lonergan Scolnick($2500 rock bottom)
i. Rule: No offer if A has reason to know B "does not intend it as an expression of
his fixed purpose until he has given a further expression of assent.
1. If A knows B wants to negotiate further, no offer.
2. Offer must express final intention to be bound.
c. Lefkowitz
i. Rule: Offer is a clear, definite, and explicit and leaves nothing for negotiation it
constitutes an offer, acceptance of which will complete a K.
ii. Rule: Advertisement is almost never an offer BUT an ad is an offer if:
1. It promises a particular performance, is clear definite and explicit; and
the circumstances indicate that the alleged offeror intended to enter into a
binding relationship without further negotiation.
d. Pepsico
i. Usually Ad is not an offer, Must have language of commitment or some invittion
to take action without further communication.
1. Not definite, need to look at catalog, take further steps.
ii. Offer made in jest is no offer at all.
1. Reasonable person test as to whether it was a joke.
iii. Disparate value
iv. Rewards cases---Generally a promise to pay a reward is enforceable if it is
specific enough.
1. Here however commercial didn’t induce specific performance.
e. R2nd §26
i. The manifestation is not an offer if the offeree knows or has reason to know
that offeror doesn’t intend to conclude bargain until offeror makes further
manifestation of assent.
1. Comment b---generally, ads are not offers, you would have burden to
show they are.
f. R2nd§33
i. (1) Even if manifestation is intended to be an offer, won't be legally enforceable
if the terms are not certain. (2) terms reasonably certain if they provide basis for
determining the existence of a breach & for giving appropriate remedies (3) when one
or more terms are left open or uncertain, it may show not intended as an offer.
14. Acceptance
a. La Salle Bank
i. Rule: Offeror has complete control over the terms of the offer, determines how
the offer can be accepted.
1. Master of the offer.
2. When the language governs the mode of acceptance, no other mode
may be used.
b. Hendricks v. Behee
i. Default Rule: No K until the offeree communicates acceptance by promise to the
offerror (agent same as principal)
ii. Rule: If acceptance made through promise, it must be communicated to offeror,
otherwise no legally binding K.
iii. Until acceptance is communicated to offeror, they have the power to revoke the
offer.
c. Ever-Tite Roofing
i. General Rule for Acceptance
1. Offer can be withdrawn before its acceptance and that no obligation is
incurred.
ii. General Rule
1. Power to accept terminates at the time specified in the offer, or if no
time is specified, at the end of a reasonable time.
a. Reasonableness is a question of fact, look at nature of business
customs, nature of K, other circumstances.
iii. Rule: If offeree accepts through performance, don’t need to notify, acceptance
begins at the start of performance.
iv. If K doesn’t specify the mode of acceptance any reasonable mode of acceptance
will work.
d. Corinthian Pharm Systems
i. UCC 2-206(B)
1. Shipment of the ordered goods= acceptance
2. Shipment of non-conforming goods can be acceptance.
a. Unless seller notifies buyer that non-conforming shipment is an
accommodation.
i. Arrangement of engagement made as a favor to
another.
ii. Therefore shipment wasn’t acceptance.
e. UCC 2-206
i. Unless otherwise ambiguously stated:
1. Offer invites acceptance in any way that is reasonable in the
circumstances.
ii. An order to buy goods is an offer, may be accepted through:
1. A prompt promise to ship goods, or
2. Shipment of conforming or non-conforming goods.
iii. If A accepts B's offer through performance, A must notify B that he has begun
performance within a reasonable time.
1. If A doesn’t notify B, B can treat the offer as though it has lapsed.
iv. But common law caveat
 1. Beginning of performance under common law essentially creates an
option, offer may be held open.
f. Restatement Equivalent
i. § 53 Offer can be accepted by rendering a performance only if the offer invites
performance,
ii. §30(2): Offer that does not specify a means and mode of acceptance can be
accepted in any manner and medium reasonable under the circumstances.
1. This includes performance, if it's reasonable.
g. §54(1)
i. Requires notice of acceptance by performance unless the offeror knows or has
reason to know of the performance.
1. "Performance" means the entire performance.
2. Just beginning the performance does not count for performance.
a. But the beginning of performance may force offeror to hold
offer open in some circumstances.
ii. 54(2) Offeree who accepts by rendering performance has reason to know the
offeror has no adequate means of learning of performance with reasonable
promptness and certainty, the contractual duty of the offeror is discharged unless:
1. Offeree exercises reasonable diligence to notify offeror of acceptance,
or
2. Offeror learns of performance within a reasonable time, or
3. Offer indicates that notification of acceptance is not required.
h. Carbolic Smoke Ball
i. Rule: Objective manifestation of intent governs
ii. Rule: Ads that offer rewards are open to anyone who performs the stated
conditions.
iii. Vagary in the K is not enough to defeat it, vagary has to have impact.
iv. Have to notify of acceptance?
1. IF UCC and Restatement---offeree would have had to notify Carbolic of
acceptance of their offer.
2. Rule: Default: Offeree must notify offeror of acceptance, but may waive
the default rule.
a. Waiver can be implied from the facts and circumstances.
i. Glover v. Jewish War Vets
i. Rule: Cannot accept offer unless you are aware of it.
1. Offer didn’t invoke performance.
j. Industrial American (Merger of companies case)
i. In order for a K to form there must be an overt manifestation of acceptance of
the offer.
ii. If an offeror specifies performance as acceptance, the performance itself is an
overt manifestation of assent.
1. Performance must be done willfully, just has to be trying to do the
required performance.
iii. Offer can be only a slight factor in the offeree's decision
1. Court looking at subjective intent.
iv. Pre-existing duty rule covers parties in the K, but not a 3rd party---exception
when pre-existing duty is mandated by law.
 v. RULE: IF someone knows about the offer and they render performance, they
are deemed to be responding to the offer, unless someone proves otherwise.
k. Little League Ad
i. Generally newspaper reward ads are offers.
ii. §51
1. If you learn of an offer halfway through performance, you accept the
offer if you complete the performance.
l. R2nd §30
i. Offer can specify details of acceptance, if silent offeree can choose either
promise or performance.
1. Must be reasonable.
m. R2nd §32
i. In case of doubt, offer is interpreted as inviting either promise or performance
(an offer may refer to one of these things without meaning to.)
1. Look at where language or circumstances may make the promise
worthless.
a. Promising to return lost dog.
n. Offer where you being performance, does it count?
i. Only full performance counts as acceptance.
o. R2nd §45
i. If offer invites acceptance through performance, and does not invite acceptance
through promise, an option K is created when the offeree begins performance.
ii. Option K---"I will pay you $1 to hold offer open until Friday.
iii. Offer can't be revoked until specified time has elapsed.
1. Specified time = completion of performance.
2. Offeree has not yet accepted, so she is not obligated to finish.
p. R2nd §62
i. If offer invites acceptance through either a promise or a performance.
1. The beginning of performance is treated as a promise to perform.
a. Amount to acceptance legally binding K is formed.
ii. Differs from option K, b/c promise to perform obligates the offeree to complete
performance.
q. R2nd §53
i. Where an offer of a promise invites acceptance by only performance , the
rendering of the invited performance does not constitute an acceptance if before the
offeror performs his promise the offeree manifests an intention not to accept.
(Spiderman thing)
r. R2nd §63 Commentary
i. Subjective intent doesn’t matter, only objective manifestations.
ii. If you are aware of an offer, and still do the performance that was specified by
the offer, you must give some sort of objective manifestation of your desire not to
accept the offer, otherwise you are stuck with acceptance.
s. Scoular
i. §2-205 Firm offer---offer by merchants to buy or sell goods in a signed writing
which by its terms gives assurance that it will be held open is not revocable, for lack of
consideration, during the time stated or, if no time is stated, for a reasonable time,
but in no event may such period of irrevocability exceed 3 months; but any such terms
 of assurance on a form supplied by the offeree must be separately signed by the
offeror.
ii. Where UCC is silent, common law fills gaps.
iii. UCC 2-205
1. Written and signed offer that guarantees its own irrevocability for a
stated or reasonable time is a firm offer.
a. Denney doesn’t fit here and no option K.
iv. SoF argument 2-201(2) Merchants exception rule
15. Acceptance by Silence
a. Russell v. Texas Co.
i. Continued dominion was acceptance.
ii. Restatement 72(Old)
1. Where offeree exercises dominion over something offered to them, he
has accepted unless circumstances indicate otherwise.
b. Ammons(Shortening)
i. Prior dealings, silence equals acceptance?
ii. R2nd 69
1. Silence or inaction can operate as acceptance only in the following
cases:
a. Where offeree fails to reply to an offer, his silence and inaction
operate as acceptance in the following:
i. Offeree takes benefit of offered service with reasonable
opportunity to reject them and with reason to know that they were
offered with expectation of compensation(Russell).
ii. Offeror has stated or given offeree reason to
understand that assent may be manifested by silence or inaction,
and the offeree, in remaining silent, INTENDS TO ACCEPT, or
iii. Where b/c of previous dealing, reasonable to offeree he
should notify offeror if he does not want to accept (Ammons).
c. Mailbox Rule
i. 2nd S63(default rule).
1. If the offer does not specify otherwise, and the offeree accepts using
the invited manner and medium, then
2. Acceptance is effective as soon as it is put out of the offeree's
possession, regardless of whether the offeror receives it.
d. When Are Acts Effective
i. Offer:(When received)(Glover)
ii. Acceptance: When Sent (R2nd 63)
iii. Rejection of Offer: When received (R2nd 40)
iv. Revocation of Offer: When received (R2nd 42)
1. Receipt means place where available to the receiver, communication
controlled by recipient.
16. Nature and Effect of Counter-Offer
a. Minneapolis Railway
i. Old Rule: Offer must be accepted on its own terms (Mirror Image Rule)
1. Acceptance that varies from the terms of the offer is rejection.
a. Rejection closes the offer.
b. R2nd 59
 i. Reply purporting to be acceptance but is conditional on the offeror's assent to
terms additional to or different from those offered is not acceptance---C/O.
c. R2nd 39
i. Offeree who makes C/O loses her ability to accept offer, but:
1. Either the offer or counter offer can specify that the counter offer will
not terminate the original offer.
d. R2nd 61
i. Acceptance that requests different or additional terms is not invalid unless the
acceptance is conditioned on the offeror's agreement to changes.
1. Conditional "only if person accepts conditioned on the thing I ask you to
do.
17. UCC 2-207
a. UCC 2-207
i. (1)---A definite and seasonable expression of acceptance or a written
confirmation which is sent within a reasonable amount of time operates as an
acceptance even though it states terms additional to or different from those offered
or agreed upon, unless acceptance is expressly made conditional on assent to the
additional or different terms.
ii. (2)The additional terms are to be construed as proposals for addition to the K.
Between merchants such proposals become part of the K unless:
1. The offer expressly limits acceptance to the terms of the offer
2. They materially alter it; or
3. Notification of obkjection to them has already been given or is given
within a reasonable time after notice of them is received.
iii. (3)---Conduct by both parties which recognizes the existence of a K is sufficient
to establish a K for sale although the writings of the parties do not otherwise establish
a K. In such case the terms of the particular K consist of those terms on which the
writings of the parties agree, together with any supplementary terms incorporated
under any other provisions of this Act.
b. UCC 2-207(2) (Only reach 2-207(2) when we decide there is an acceptance---will tell us
what terms mean.
i. When both parties are merchants
c. 2-207(3)
i. Parties act like they have K.
ii. Terms of K are terms in both parties writings, and UCC gap fillers (like
reasonable price).
d. Textile v. A…BMH