CONTRACTS – KETTLE – ESSAY CHART

STEP 1: FORMATION (Threshold Question: UCC or Restatement?) (OFFER + ACCEPTANCE = MUTUAL ASSENT) (MUTUAL ASSENT + CONSID = K)
BiL: offer invites accept. by return prom. R 2nd 30(2) offer invites by perform./ prom. offeree chooses & beginning is a return promise R 2nd 62
UniL: offer can be accept. by perform. if MOO specifies R 2nd 53, beginning perform. is not accept. if offeree notif. offeror of non-accept. R 2nd 53 (2), notif. not necessary unless MOO requests R 2nd
54.
IIL/ Quasi K: (1) benefit on D by P (2) apprec. by D of benefit (3) accept. of benefit [Bailey v. West, court found no quasi K where benefit was officiously conferred on West]
Output/ Req. K: a term which measures quantity by the output of the seller or the reqs. of the buyer means such actual output or reqs. as may occur in good faith UCC 2-306 [ McMichael v. Price,
sand case, K was enforceable b/c good faith that McMichael could/would sell was understood at time of K ]
Offer (intent to be bound, to definite terms, comm. to Acceptance (must be definite and unequivocal) Consideration (benefit or detriment; bargained for
offeree) R 2nd 24 “acceptance of an offer is a manifestation of assent to the terms exch.)
Termination: 1. Lapse of time, 2. Revocation, 3. Rejection thereof made by the offeree in a manner invited or required by Adequate: Once req. met, no req. of adequacy R 2nd 79 [Hamer
(includes Counter-Offer) 4. Offeree dies the offer” R 2nd 5(1); “unless otherwise unambiguously indicated v. Sidway, nephew gets $ for not smoking or drinking, can be
Rejection: by c/o (mere inquiry v. counter); effective when by the language or circumstances an offer to make a K shall be forbearance, does not have to be adequate or equitable, must
rec’d; option K offeree can reject & accept later before option construed as inviting accept. in any manner and by any medium induce promise]
expires UNLESS offeror detrimentally relies on offeree’s reasonable in the circumstances” UCC 2-206 Inducement: does not itself have to induce promise R 2nd 81
rejection @ Common Law: Mirror-Image  otherwise c/o [Thomas v. Thomas, widow allowed to stay even though
Irrevocable Offers: -any conduct that evidences MOM is accept. agreement was made out of respect for dead brother, $1
1. By merchant UCC 2-205 – Firm Offer: promise to -Mailbox Rule – accept. valid when sent; no MBR for opt. k and payment sufficient consid. regardless of why they made the
hold open, irrevocability can’t exceed 3 mo. MBR invalid if offer said no MBR
deal]
[Lonergan v. Scolnick, buying 40 acres of Joshua -accept. then reject. – MBR applies unless reject. arrives 1st
Nominal: a sham or nominal consideration does not satisfy R 2nd
Tree. Held: letter from seller not offer b/c buyer had @ UCC: Add. & diff. terms  object. Intent to accept UNLESS
71, R 2nd 79 cmt. D [In re Edwin Farnham Greene, couple in an
no reason to believe that his acceptance would seal accept. expressly conditional on assent on new terms; OR
affair create a K once they breakup but $1 not sufficient
the deal] -both parties start to perform
-accept. by unauthor. method is still accept. if rec’d by offeror consideration because it is nominal]
2. Option supported by consideration NO Consideration If…
3. Option inducing reliance: must be in writing, signed when offer is still open
UCC 2-606: Acceptance of Goods  (a) after reasonable - Illusory promise (uncertain terms)
by offeror, and a reasonable time R 2nd 87 (1)
4. Detrimental reliance by offeror – req. reasonable opport. to inspect goods signifies to the seller that the goods are - Moral obligation EXCEPTION where there is a
expectation & creates option K to avoid injustice R conforming or that he will take or retain them in spite of their material benefit [Webb v. McGowin, man saved
2nd 87 (2) non-conformity; or (b) fails to make an effective reject., (c) does from block of lumber = material benefit] [Mills v.
5. UniL offer where offeree has begun performance – any act inconsistent w/ seller’s ownership Wyman, no enforceable promise where moral
must get reasonable time to perform, mere prep. [LaSalle National Bank v. Mel Vega, buyer sent K & said it obligation is not material benefit]
doesn’t count R 2nd 45 cmt. (f) [Marchiondo v. would be executed when signed by trustee, seller executed & - Past consideration EXCEPTION binding to extent
Scheck, P is broker and finds buyers for D seller. D sent back, buyer did not have trustee sign so no K] necessary to prevent injustice but not binding if
revokes offer for sale. Held: broker accepted by By shipment…[Corinthian Pharmaceuticals v. Lederle conferred as gif or value is disprop. R 2nd 86
performance is entitled to commission] Laboratories, partial shipment of non-conform. is c/o not - Pre-existing duty EXCEPTION where agreement
6. Mailbox Rule – once acceptance sent by mail offer accept. b/c it explicitly stated it was an accomm.] UCC 2-206 modif. needs no consid. UCC 2-209(1); where
cannot be revoked By shipment… FOB/ Destination – seller allocates risk till perform. of legal duty can be new consid. if it is
Revocable when: offeree receives a manifestation of intent not goods reach buyer, FOB/ Shipment – buyer takes risk upon different R 2nd 73 [Levine v. Blumenthal, agreement
to be bound shipment UCC 2-319 to reduce rent is unenforc. b/c duty to pay rent is
Advertisements: offer when clear, definite, explicit and leaves By perform… Accept. by perform. req. part of offer requests PEED so no consid.]
nothing up to negotiation [Lefkowitz v. Great Minneapolis perform. & includes accept. by a perform. which operates as a Promissory Estoppel: substitute for consideration. R 2nd 90, 139:
Surplus Store, fur coats case] return promise R 2nd 50 (2); where offeror invites accept. by only Detrimental reliance on promise, foreseeable/reasonable, remedy
perform. then option K R 2nd 45 is limited as justice requires [Rickets v. Scothorn, grandfather’s
promise enforced because granddaughter unjustly relied on it]

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STEP 2: PERFORMANCE (is K Void: a K that cannot be enforced; is K Voidable: either party can avoid valid K; is K Unenforceable: valid but one party refuses to
carry out its terms)
A. Contract Terms: Interpretation & Construction
Certainty:
- Even though a manifestation of intention is intended to
be understood as an offer, it can’t be accept. so as to form
a K unless the terms of the K are reasonably certain R 2 nd
33 [Varney v. Ditmars, employer offered to give
employee a “fair share of profits” the court found that
the terms were so indefinite it was pure conjecture]
Indefiniteness:
- R 2nd 33 (2) term of K reasonably certain if they provide
basis for determining the existence of a breach and for
giving approp. remedy (3) missing terms may show lack
of intent to K [MGM v. Scheider, actor in TV series, Held:
missing term of start date of film could be determined
by customs of industry]
Price Gaps:
-@ UCC 2-305 K can be concluded even if price is
unsettled, price is reasonable price at time of delivery but
MUST include quantity  OPEN PRICE TERM
-@ CL: R 2nd 204 when parties to a bargain defined to be
a K have not agreed to a term which is essential to their
rights and duties, a term which is reasonable under the
circumstances is supplied by court [Oglebay v. Armco,
after finding intent to K regardless of the failure of the
pricing system held that the terms were to be filled and
the K enforced]
Interpretation (prior dealings/ industry customs):
UCC 2-202: terms of K can’t be contradicted by outside
evidence but can be supplemented and explained 
LOOK TO PAROL EVIDENCE RULE
nd
R 2 206: In choosing among meanings, the meaning is
chosen which operates against the drafter of the
document
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A. Contract Terms: Modification
 CL R 2nd 89: modif. of K not fully performed is
binding if modif. fair and equitable, and
circumstances not anticipated at time of K
 UCC 2-209: an agreement modifying K doesn’t
need consid. to be binding
[Angel v. Murray, garbage delivery case, court allowed
modification b/c it met reqs. in R 2nd 89]
@ CL Last Shot Rule: if perform. happens after exchange of
messages, parties believed K existed, whoever sent last form
prevails
@ UCC Knockout Rule: UCC 2-207
If Additional  one party is not merchant then
terms are a proposal
If Additional  both merchants then terms become
part of K unless: materially alter, offer expressly
limits to terms, or offeror rejects w/in reason. time
If Diff.  one party is not merchant terms adopted
If Diff.  both merchants then “Knockout Rule”
Parol Evidence Rule: Evidence not allowed where the K is
fully integ. If not, then evidence of the agreement outside of
writing can be allowed in ONLY to supplement not to
contradict. UCC 2-202
B. Third Parties:
Assignment of Rights
@ UCC 2-210: Must not increase the burden on the other party
or allow them to receive less than he would have for his bargain
@ CL R 2nd 317 (2): a K right may be assigned unless it (a)
materially changes burden on other party, (b) statute forbids, (c)
assignment is validly precluded BUT under R 2nd 322 K
prohibition limits rights NOT power
Delegation of Duties
@ CL R 2nd 318: An obligor can properly delegate his duty
unless the oblige has a substantial interest in having that person
perform the K
Novation
An agreement between two parties in a K for a third party
to step into replace one of the parties. All must sign.
C. Discharge of Duty:
Performance:
@ CL Substantial perform. is enough; factors to decide if
substantial perform. is ok (1) how much of K benefit did
innocent party receive, (2) to what extent will damages make up
for imperf. perform., (3) extent to which breach was wrongful or
in bad faith
@ UCC “Perfect Tender Rule” UCC 2-601 is required.
UNLESS (a) goods do not conform but time of perform. not
expired UCC 2-508, OR (b) if it is an installment K
Changed Circumstances: Impossibility,
Impracticability, and Frustration of Purpose
 UCC 2-615: unless a greater obligation is assumed,
no breach if by the occurrence of a contingency the
non-occurrence of which was a basic assumption on
which K was made
 @ CL FOP – R 2nd 265: (1) a purpose without which
the K makes little sense, (2) substantial (more than
profit loss), (3) non-occurrence of frustrating event is
a basic assumption on which K was made
 @ CL Impracticability – R 2nd 266: (1) performance
is impracticable or (2) frustrated without fault of
party by event that non-occurrence of which is basic
assumption on which K was made
Accord & Satisfaction: (1) good faith dispute over amount,
(2) in writing, signed by parties, (3) states that it is an “Accord &
Satisfaction”
D. Excuse of Condition:
Anticipatory Repudiation: UCC 2-610 (1) info about
potential breach must be from reliable source, (2) duty to
inquire, (3) duty to cover  Duty to mitigate triggered
Can file suit OR wait for non-performance
Retraction of Repudiation: when no reliance
Actual Material Breach
Duty is discharged but material breach to core of K; party can
treat as (a) partial breach or (b) total breach. Can terminate
performance and collect for entire K.
Immaterial Breach
Remedy for promise broken is merely damages but must
continue to perform; breaching party can get restitution.
Condition Precedent: Never Occurred  No Duty
Waiver/ Estoppel: if party waives other party’s conditional duty,
original party may retract waiver UNLESS other party relied on
the waiver of the duty
STEP 3: REMEDIES
Damages for Breach
1. Expectation: R 2nd 344 (a). Having the benefit
of the bargain, being put in as good as a
position as if the contract had been performed.
2. Reliance: R 2nd 344 (b). Reimbursed for loss
caused by reliance, put in as good a position as
he would have been had the contract not been
made
3. Restitution: R 2nd 344 (c). Having restored to
one any benefit one conferred on the other
party. The goal of this remedy is to undo the
unjust enrichment of the breaching party
 Disgorgement: repayment for ill-gotten
gains imposed on wrongdoers by court
 USE Restitution for K that terminates due
to FOP and for Rescission
@ UCC Buyer’s Remedies: UCC 2-711
When seller’s time for perform. arises seller may:
(1) do nothing – breach by seller
(2) make nonconforming tender – breach by seller
(3) make conforming tender – perform. by seller
Seller’s Failure to Tender – Buyer can get…
 Damages: recover market price minus K price
 Cover: purchase similar goods elsewhere and recover
replacement price minus K price. See UCC 2-712.
 Specific Perform. See UCC 2-716.
 Replevin: buyer can get identified undelivered goods from
seller if similar goods available in marketplace. See UCC 2-716.
ONLY IF (a) seller becomes insolvent w/in 10 days
of receiving payment from buyer OR; (b) goods were
partially paid for by buyer only for family or personal
purposes
@ UCC Seller’s Remedies: UCC 2-703
a. Right to price upon accept.
b. Right to reclaim goods
c. Wrongful rejection: if buyer wrongfully rejects
seller has alternative remedies (1) collect damages (2)
resell goods (3) recover the price (4) incidental
damages IN ADDITION to other three
d. Loss volume seller: seller can recover for lost
profits if seller has a large capacity to sell goods and
seller would have made sale if buyer hadn’t breached
(K price minus seller’s costs); See UCC 2-708(2)
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Limitations to Damages Rescission, Reformation and Release
- Mitigation: duty to not make position worse; Rescission: the undoing of K and restoring the parties to
See R 2nd 350 their pre-K positions. See UCC 2-209.
- Foreseeability: can recover (1) all damages
reasonably foreseeable at time of K; (2) special Reformation: seeks to restore the efficacy of a writing
conditions communicated to all parties; See R that improperly reflects the agreement. See R 2nd 155.
2nd 351
 Hadley Rule: Loss of profits not *** Rescission & reformation are usually a result of a
recoverable where violating party did not have mutual mistake regarding a material fact of the K***
ability to foresee the loss at the time the K was
made; See UCC 2-715(2)(a) OR See R 2nd 351 Release: writing that manifests intent to discharge other
(1) person of duty.
- Certainty: must be able to prove damages with @ CL: release must generally be supported by
reasonable certainty; See R 2nd 352 consideration to discharge duty
@ UCC: a claim of right can be discharged in whole or
Specific Performance (See UCC 2-716, R 2nd 357) part w/o consideration by waiver or renunciation that is
is appropriate when the contract refers to something that signed and delivered by aggrieved party. See UCC 1-306.
is unique and other damages or remedied would not
succeed in restoring the non-breaching party
 Elements for Specific Perform.: (1) difficulty of proving
damages w/ reasonable certainty, (2) difficulty of procuring a
suitable substitute perform. by means of money awarded as
damages, and (3) likelihood that damages will be collected
*** Usually NOT awarded for service K b/c forcing
someone to perform a service may be against labor laws,
constitutional rights etc. ***
Injunctive Relief: getting a court order saying that
something must occur or restrain the occurrence of
something.
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