● Contract (separate the rules into their elements and make

shorter rules)
○ Contract law is state law. It is common law (case law) by default, unless a statute
has been passed covering the issue. Law comes in hierarchies: constitutional
first, then legislation, then common law. So, rights to contract (or freedom to
contract) are guaranteed only by the common law and maybe statutes. (from
Ricks)
○ Unilateral = trade a promise for a performance; binds one party and only
the one who makes a promise.
○ Bilateral = trade a promise for a promisee
○ Theory - Ricks says that most contract decisions can be explained as serving
offorms. One form is an accord and satisfaction.
■ Accord and Satisfaction - An accord is a contract under which an obligee
promises to accept a substituted performance in future satisfaction of the
obligor’s duty. Satisfaction is the execution or performance of the accord
○ Natural Law Theory - Human nature needs a certain amount of law to get to a
flourishing society
● COffer
○ Assent
■ Adams v. Lindsell
● MAILBOX RULE: The defendants must be considered in law
as making, during every instant of the time their letter was
travelling, the same identical offer to the plaintiffs; and then the
contract is completed by the acceptance of it by the latter.
(STILL THE LAW; applied whenever acceptance attempted by
post where post is acceptable method of acceptance)
○ carbolOfferor makes the same offer during every instant
letter is travelling. Contract forms by acceptance.
○ Attempted Withdrawal
■ Where the offeror attempts to withdraw the offer but
the withdrawal reaches offeree only AFTER offeree
has dropped acceptance in the post office box.
● Acceptance valid once dropped in mail;
withdrawal valid upon receipt.
○ Withdrawal only valid if received
before acceptance dropped
○ Repudiation of an Acceptance
■ Cases where offeree drops acceptance in post then
repudiates before received by offeror (by phone or
wire before acceptance received). Under Mailbox
Rule, contracts formed
● Only Court of Claims holds differently
 ○ Loss of an Acceptance
■ Cases where offeree drops acceptance in the post
and post office loses it. Contract forms even if last.
○ Time Required for Acceptance
■ Cases where offeror specified a time frame for
acceptance - dropping acceptance in mail by
specified date would suffice.
○ Offeror can overcome Mailbox Rule by specifying
acceptance must be RECEIVED to be valid
■ Lucy v. Zehmer -
● We must look to the outward expression of a person as
manifesting his intention rather than to his secret and
unexpressed intention. ‘The law imputes to a person an
intention corresponding to the reasonable meaning of his words
and acts.’’
● The mental assent of the parties is not requisite for the
formation of a contract. If the words or other acts of one of the
parties have but one reasonable meaning, his undisclosed
intention is immaterial except when an unreasonable meaning
which he attaches to his manifestations is known to the other
party.
● If his words and acts, judged by a reasonable standard,
manifest an intention to agree, it is immaterial what may be the
real but unexpressed state of his mind.
● So a person cannot set up that he was merely jesting when his
conduct and words would warrant a reasonable person in
believing that he intended a real agreement,
■ Kelly v. Holderman
● The discussion was a frolic and banter (lighthearted) and neither
intended to create a contract. no contract was ever made by the
parties, and the finding should have been that no cause of
action existed upon the check to the plaintiff.
○ If parties know their intention to contract is not real, no
contract forms.
■ Raffles (Peerless Ship)
■ § 20. Effect of Misunderstanding.
● (1) There is no manifestation of mutual assent to an
exchange if the parties attach materially different meanings to
their manifestations and
○ (a) neither party knows or has reason to know the
meaning attached by the other; or
 ○ (b) each party knows or each party has reason to
know the meaning attached by the other.
● (2) The manifestations of the parties are operative in
accordance with the meaning attached to them by one of the
parties if
○ (a) that party does not know of any different meaning
attached by the other, and the other knows the meaning
attached by the first party; or
○ (b) that party has no reason to know of any different
meaning attached by the other, and the other has
reason to know the meaning attached by the first party
○ Offer = IS A MANIFESTATION OF WILLINGNESS TO ENTER A BARGAIN
AND MUST BE AN ACT THAT LEADS THE OFFEREE REASONABLY
CONCLUDE THAT A POWER TO CREATE A CONTRACT IS CONFERRED.
■ Leonard v. Pepsico
● The general rule is that an advertisement does not constitute
an offer… It is of course possible to make an offer by an
advertisement directed to the general public (see § 29), but
there must ordinarily be some language of commitment or
some invitation to take action without further communication.
● The exception to the rule that advertisements do not create any
power of acceptance in potential offerees is where the
advertisement is “clear, definite, and explicit, and leaves
nothing open for negotiation,” in that circumstance, “it
constitutes an offer, acceptance of which will complete the
contract.”
● What kind of act creates a power of acceptance and is
therefore an offer? It must be an expression of will or intention.
It must be an act that leads the offeree reasonably to conclude
that a power to create a contract is conferred.
■ § 2–204. Formation in General.
● (1) A contract for sale of goods may be made in any manner
sufficient to show agreement, including conduct by both parties
which recognizes the existence of such a contract.
● (2) An agreement sufficient to constitute a contract for sale
may be found even though the moment of its making is
undetermined.
● (3) Even though one or more terms are left open a contract
for sale does not fail for indefiniteness if the parties have
intended to make a contract and there is a reasonably certain
basis for giving an appropriate remedy.
 ■ Foster v. Ohio State University - Offer of employment with specific
acceptance terms
● The time requirement did not modify or alter any previous
specifications but merely put a time limit on the duration of the
offer. An offer which is unsupported by consideration is subject
to revocation at any time.
● The offeror can wholly terminate or limit the power and mode of
acceptance.
● When an acceptance to a contract for employment does not
meet and correspond with the offer in every respect, no
contract is usually formed.
● A reply to an offer which purports to accept but is conditional on
the offeror’s assent to terms additional to or different from those
offered is not an acceptance but is a counteroffer.
○ Termination of Power of Acceptance
■ Dickinson v. Dodds
● It appears to me that there is neither principle nor authority for
the proposition that there must be an express and actual
withdrawal of the offer, or what is called a retractation.
○ IT DOESN’T HAVE TO BE THE OFFEROR WHO
PROVIDES KNOWLEDGE OF THE OFFER
RETRACTION.
■ Akers v. Sedberry
● An offer may be terminated in a number of ways, as, for
example, where it is rejected by the offeree, or where it is not
accepted by him within the time fixed, or, if no time is fixed,
within a reasonable time. An offer terminated in either of these
ways ceases to exist and cannot thereafter be accepted.
● Ordinarily, an offer made by one to another in a face to face
conversation is deemed to continue only to the close of their
conversation, and cannot be accepted thereafter.
■ Thorson v. Estate of Severtson
● [a]n offeree’s power of acceptance is terminated when the
offeree or offeror dies or is deprived of legal capacity to enter
into the proposed contract.
○ OPTION CONTRACTS REQUIRE CONSIDERATION
SEPARATE AND DISTINCT FROM PROMISE TO PAY
PURCHASE PRICE – OPTIONOR MAKES 2
PROMISES; NEEDS 2 CONSIDERATIONS.
○ Option Contracts
● Restatement (Second) of Contracts § 45. Option Contract
Created by Part Performance or Tender & cmt. e
 ● § 45. Option Contract Created by Part Performance or
Tender.
○ (1) Where an offer invites an offeree to accept by
rendering a performance and does not invite a
promissory acceptance, an option contract is created
when the offeree tenders or begins the invited
performance or tenders a beginning of it.
○ (2) The offeror’s duty of performance under any option
contract so created is conditional on completion or
tender of the invited performance in accordance with the
terms of the offer.
■ Ragosta v. Wilder
● “[w]here an offer invites an offeree to accept by rendering a
performance and does not invite a promissory acceptance, an
option contract is created when the offeree tenders or begins
the invited performance or tenders a beginning of it.” However,
“[w]hat is begun or tendered must be part of the actual
performance invited in order to preclude revocation under this
Section.”
■ Drennan v. Star Paving
● Promissory Estoppel is a means to enforce an offer!!
○ Section 90 of the Restatement of Contracts states:
■ ‘A promise which the promisor should reasonably
expect
■ to induce action or forbearance of a definite and
substantial character on the part of the promisee
and
■ which does induce such action or forbearance is
binding if injustice can be avoided only by
enforcement of the promise.’
○ Firm Offer
■ Uniform Commercial Code § 2-205. Firm Offers, and cmts. 1 and
2.
■ § 2–205. Firm Offers.
■ An offer by a merchant 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 three months; but any such term of assurance on a form
supplied by the offeree must be separately signed by the offeror
[merchant].
● Elements =
 ○ Offer To buy or sell goods,
○ in a signed writing
○ By a merchant
○ Terms give assurance that offer will be held open for no
more than 3 months
● Acceptance
○ Acceptance = manifestation of intent, mirror image of the offer, other half of
the bargain
○ Acceptance via Promise or Performance
■ Gleeson v. Frahm
● Where the manner of acceptance is not specified, the holder may
exercise by promising to perform what the option requires of him.

○ Intent

■ Simmons v. United States - won a prize for catching a $25k fish. If he knew
about the prize, it was income; if he did not, it was a gift.

● For the offer to be accepted and the contract to become binding, the
desired act must be performed with knowledge of the offer. [in a
unilateral contract]

○ Notice of Acceptance

■ Carbolic Smoke Ball

● Supposing that the performance of the conditions is an acceptance

of the offer, that acceptance ought to have been notified.

■ Electric Storage Battery

● The guarantor is entitled to notice of acceptance unless there exists

some special circumstance excusing it.

● ASSENT IN A UNILATERAL CONTRACT IS ASSUMED BY PERFORMANCE

WHEN PROMISE IS KNOWN. CONSIDERATION IS RULE FROM DE CICCO

○ Silence

■ Kaskisto v. North Smrt. Life Assurance

● Silence does not constitute an acceptance of an offer unless a duty to

speak has arisen from a past relationship of the parties, their previous
dealings, or other circumstances

■ Lee v. Sheller

● Shipment was a reasonable manifestation of acceptance

 ● Josephine and Anthony v. Horwitz (Ricks said the case was the same as
Sheller)

○ While silence, of itself, is not an acceptance absent a duty to

speak, “(a) duty to speak is imperative as a matter of law
where conduct, accompanied by silence, would be
deceptive”

■ Oljeselkap v. Hydrocarbon Processing

■ StatOil

● Duty to speak because they had a pre-existing relationship

● Analysis & Rulings: Silence had prompted everyone to perform before

so they could not now say that silence was not acceptance this time.

● STATUTE OF FRAUDS – raised in summary judgment defense;

procedurally deficient because not made in response to a pleading. –
Ricks has told us this 3 times. – Alternate argument 1

● Satisfied Statute of Frauds exception too: Between merchants if

within a reasonable time a writing in confirmation of the contract
and sufficient against the sender is received and the party receiving it
has reason to know its contents, it satisfies the requirements of [this
law] against such party unless written notice of objection to its
contents is given within ten days after it is received.

■ Louisville Tin v. Lay

● where merchandise is consigned to one in his name, in the absence

of an express contract or order or when one person sends or delivers
goods to another, under circumstances which indicate that a sale is
intended and the one to whom the goods are sent or delivered with
knowledge of the facts does not object or offer to return them within
a reasonable time, but retains and uses them as his own or directs
another to do so, a contract of sale and purchase will be implied.

● Analysis & Rulings: Because she kept the goods that implied a sale; her
taking the goods was a manifestation of assent or silence with a duty to
speak

■ Austin v. Burge

● if a party, without subscribing to a paper, declines taking it out of the

post office, he cannot become liable to pay for it; and a subscriber
may cease to be such at the end of the year, by refusing to take the
papers from the post office, and returning them to the editor as
 notice of such determination.” In Goodland v. Le Clair, 78 Wis. 176,
47 N.W. 268, it was held that if a person receives a paper from the
post office for a year, without refusing or returning it, he was liable
for the year’s subscription.

■ 39 U.S.C. § 3009 [pg. 482] – gifts through the mail

■ Negative Option Plans – Like StitchFix or Hello Fresh.

● Silence constitutes acceptance

○ The Battle of the Forms

■ Drafted to address the issue of conflicting terms in purchasing orders and

invoices between merchants buying and selling goods

■ 2-207

● Definite and seasonable expression of acceptance = agreement on

dickered for terms

● The additional terms are construed as proposals for additions.

● Between merchants the terms become part of the contract unless

○ The offer expressly limits acceptance to the terms of the

offer

■ If they ship, acceptance was NOT limited

○ Terms materially alter contract

○ Other party gives notice of objection to terms

● Knock out rule = different terms will be knocked out and comment 6
applied

■ Gardner v. Zemke

● Consideration
○ A bargained for exchange; In other words, the promise and the consideration
must purport to be motive each for the other, in whole or at least in part. (Vian v.
Carey) Consideration is comprised of a bargain and proper form
○ Bargain - the promise and consideration bear a reciprocal inducement;
■ Examples of Bargain
● If I sell my horse to someone for money, there is a bargain.
(Sharington v. Strotton)
● Implied Inducement
○ DeCicco v. Schweizer - Gift to engaged couple enforced
 ■ If the tendency of the promise is to induce them
to persevere, reliance and detriment may be
inferred from the mere fact of performance.
■ Examples of non-Bargains
● Hunt v. Bate - Employer’s Employee was in debtor’s prison.
Pledge replaced him, putting Pledge open to pay Employee’s
debt. Pledge was thinking that the Employer’s work needed to be
done, so he went into prison for Employee. Then Employer came
by and said, “If you have to pay Employee’s debt, I will reimburse
you.” Pledge later had to pay the debt, but Employer was not
bound to pay because Pledge’s going to prison was not induced
by Employer’s promise; rather, he “did it of his own head.”
○ It was past when Employer promised, so it could not have
been induced by Employer’s promise. A shorthand for this
“no-bargain” case might be Past consideration is not
consideration to support a contract. Another way to say it
might be Moral obligation is insufficient consideration.
■ Exceptions when moral obligation is sufficient
consideration: (1) A promise to pay a debt
contracted during infancy (2) A promise to pay a
debt barred by the statute of limitations (3) A new
promise to pay a discharged debt
● Pre-Existing Duty
○ Borelli v. Brusseau - A spouse is not entitled to
compensation for support, apart from rights to community
property and the like that arise from the marital relation
itself. Personal performance of a personal duty created by
the contract of marriage does not constitute a new
consideration supporting the indebtedness, alleged in this
case.
■ Pre-existing duty in marriage
■ One cannot bargain for something one already has
the pre-existing duty to do.
■ Borelli Dissent!
● Policy: Judges do not get involved in live
marriages.
○ Kim v. Son - Man loaned money to the corporation of a
friend and corporation went defunct. Friend said that he
would repay man but never did. Man sued saying that he
forebore his right to sue. Court denied claim saying he
already had a pre-existing duty in that he could not sue a
person for the acts of a corporation.
 ■ If a claim is wholly invalid, neither forbearance to
sue nor a compromise thereof can be good
consideration.
■ Proper Form (3 types)
■ Benefit to the promisor, or
● Riches v. Bridges - Riches owed grain to J.S. by a certain date.
He told Bridges that he would bring the grain to his home before
the due date if he would then give the grain to J.S. by the due
date. Bridges did not and Riches sued but Bridges said there was
no benefit to him by storing and delivering the grain. Court found
that “It shall be intended that he had some benefit thereby.”
Benefit could have been good credit, looking rich or marry-ability.
○ If there was a probable benefit or detriment, court can find
there was good consideration.
● Game v. Harvie - person gave loan to other person to be paid
back on request. Loanee argued that they had no benefit and
should not have to pay but court said there was an implied benefit
of the use of the money even if it had to be paid back.
○ Benefit to the promisor - Implied benefit of the use of the
money.
● Reynolds v. Pinhowe - 4 pounds paid for 5 pounds owed
MINORITY POSITION
○ Not a benefit to the promisor - but the court found for the
defendant because there was satisfaction of a judgment
○ Satisfaction of the judgment debt meant that the plaintiff
received speedy payment and benefitted by not having to
go to court for his money.
○ Probably no consideration because of pre-existing duty to
pay but court allowed it anyway because the court doesn’t
want to authorize creditors to lie.
○ “But it was adjudged good, because speedy payment
excuses and prevents [laborious effort] and expense of
suit.”
● Associated Builders v. Coggins - Associated Builders made deal
with Coggins to settle their debt for 2 payments of 25k and forgive
final 25k if paid on time. 2nd payment late but associated builders
accepted final payment. Constituted a waiver.
■ A waiver is a voluntary or intentional relinquishment
aof a known right.
● “If a party in knowing possession of a right
does something inconsistent with the right
or that party’s intention to rely on it, the
party is deemed to have waived that right.”
 ● Settlement of a disputed claim is sufficient consideration for an
accord and satisfaction.
○ Settlement is the benefit to the promisor.
■ Detriment to the promisee or,
● If the promisee is detrimented by the promise, then he can
bring action on the promise even if the promisor made no profit.
● Keyme v. Goulston - Man promised to pay for tuition, room and
board if woman sent her granddaughter to school. Court said
although there was no benefit to him, there was a detriment to
the promisee.
● DOCTOR AND STUDENT
■ A mutual promise
● Nicholas v. Raynbred - P promised to pay 5 pounds for a cow and
D promised to deliver a cow. D did not deliver cow and P brought
suit. Court said that D had to deliver cow. D would have had to
counter sue to get 5 pounds (that is not the case now - P would
have had to prove performance first). Court said A promise for a
promise is good consideration.
● A reciprocal promise between parties is sufficient for there is
consideration good enough to each
● A promise against a promise will maintain an action
● Mutual promises constitute consideration, each for the other
● In a bilateral contract, the exchange of promises by both parties
constitutes consideration
● Ridge Runner v. Forestry Service - Government sent out for bids
on work and had Ridge Runner sign a “tender agreement” that
said award of the agreement did not preclude the government
from using an agency and award of an agreement does not
guarantee that there will be a need for the equipment offered or
that orders will be placed. Court said the tender agreements were
illusory promises. They do not purport to put any limitation on the
freedom of the alleged promisor, but leave his future action
subject to his own future will, just as it would have been had he
said no words at all.
● Illusory promise = a promise that is so insubstantial as to impose
no obligation at all on the promisor (“I will if I want to”) then that
promise may be characterized as an illusory promise.
○ An illusory promise does not constitute consideration for
the other promise
■ Impose no obligation
■ The reservation of an option to change intention
means that there can be no promisee who is
justified in an expectation of a performance
 ○ Forrester’s Case - A minor brought an action and jury
found for minor. D said that the promise was void because
it was brought by a minor and lacked consideration but the
court said that the money was paid according to minor’s
promise and consideration was executed.
■ An unenforceable promise can be consideration.
○ Problem 12 - Mattei v. Hopper - Realtor tried to sell
Hopper’s land to Mattei several times but Hopper would
not accept any proposals. Hopper submitted one herself
and Mattei accepted with the condition that he only buy if
he obtained satisfactory leases for the land he was to buy.
Hopper then said he would not sell but Mattei obtained the
leases and wanted the land. Hopper claimed Mattei’s
promise was illusory but court said that it was not.
■ 2 categories of “satisfaction” clauses (do not render
contracts illusory)
● 1. Contracts where the condition calls for
satisfaction as to commercial value or
quality, operative fitness, or mechanical
utility - dissatisfaction cannot be claimed
arbitrarily, unreasonably or capriciously;
RPP standard used in determining
satisfaction.
● 2. Contracts involving fancy, taste or
judgment.
○ Where question is one of judgment,
promisor’s determination of
dissatisfaction, when made in good
faith, has been held to be a defense
to an action on the contract.
○ Promisor’s duty to exercise his
judgment in good faith is adequate
consideration to support contract
● A promise conditional upon the promisor’s
satisfaction is not illusory since it means
more than that validity of the performance is
to depend on the arbitrary choice of the
promisor.
○ Moral Obligation
■ Moral Obligation - A promise made in recognition of a moral obligation,
arising out of a benefit previously received, is not enforceable
● Contracts during Infancy
 ○ Edmonds Case - Defendant, child, asked the Plaintiff to
pay a debt that he incurred. He then waived his infancy by
promising to pay the debt back after he was an adult.
■ Reinstating a promise incurred during infancy
creates a second promise, which is enforceable.
● Discharging a Debt - USC 524 - Effects of Discharge
○ (a) A discharge in a case under this title—
■ (1) voids any judgment at any time obtained, to
the extent that such judgment is a determination of
the personal liability of the debtor with respect to
any debt discharged under section 727, 944, 1141,
1228, or 1328 of this title, whether or not discharge
of such debt is waived;
■ (2) operates as an injunction against the
commencement or continuation of an action, the
employment of process, or an act, to collect,
recover or offset any such debt as a personal
liability of the debtor, whether or not discharge of
such debt is waived; and
■ (3) operates as an injunction against the
commencement or continuation of an action, the
employment of process, or an act, to collect or
recover from, or offset against, property of the
debtor of the kind specified in...
○ An agreement between a holder of a claim and the debtor,
the consideration for which, in whole or in part, is based on
a debt that is dischargeable in a case under this title is
enforceable only to any extent enforceable under
applicable nonbankruptcy law, whether or not discharge of
such debt is waived, only if—
■ (1) such agreement was made before the
granting of the discharge …;
■ (2) the debtor received the disclosures described
in subsection (k) [omitted] at or before the time at
which the debtor signed the agreement;
■ (3) such agreement has been filed with the court
and, if applicable, accompanied by a declaration or
an affidavit of the attorney that represented the
debtor during the course of negotiating an
agreement under this subsection, which states that
—
● A gratuitous promise is not enforceable (Kirksey v. Kirksey)
 ● A gift is not consideration (Hunt v. Bate 2) ASK HIM WHY THE
PLAINTIFF RECOVERED!! [I think it’s because the court did not
go with the rule and made an exception because plaintiff wouldn’t
have gotten married without the request of the defendant.
● A case where the court went against the rule because of policy
(Webb v. McGowin)
○ Where the promisee cares for, improves, and preserves
the property of the promisor, though done without his
request, it is sufficient consideration for the promisor’s
subsequent agreement to pay for the service, because of
the material benefit received
○ Moral obligation is a sufficient consideration to support a
subsequent promise to pay where the promisor has
received a material benefit, although there was no original
duty or liability resting on the promisor (in Alabama)
○ If the benefit be material and substantial and was to the
person of the promisor rather than to his estate, it is within
the class of material benefits which he has the privilege of
recognizing and compensating either by an executed
payment or an executory promise to pay
● Children’s Hospital v. Odem - Minor entered into quasi-contract
with hospital and did not pay.
○ Contracts of minors are voidable at the election of the
minor.
■ Except for necessaries (like medical care) but not
attorney fees
○ Policy: It is the policy of the law to protect infants against
their own mistakes or improvidence, and from designs of
others, and to discourage adults from contracting with an
infant.
● Harrington v. Taylor - The defendant assaulted his wife on multiple
occasions. On one occasion, the wife hit the defendant with an
axe and was going to decapitate him but the plaintiff intervened
and caught the axe as it was descending, mutilating her hand but
saving the defendant’s life. The defendant orally promised to pay
plaintiff for her damages but paid her a small sum then did not
send her anymore money. The case was sustained on a demurrer
and the plaintiff appealed.
○ The defendant should be impelled by gratitude to alleviate
plaintiff’s misfortune but a humanitarian act is not such
consideration as would entitle her to recover at law.
■ Moral Obligation Exceptions
● contracts by infants reinstated at adulthood
 ● Promise to pay on contracts barred by statute of limitations
● promises to pay discharged debt.
○ Settlement as Consideration
■ Public Policy - the law favors compromise.
■ Dyer v. National By Products - MINORITY CASE Dyer employed by
defendant and his foot was cut off. Defendant placed dyer on leave
with full pay then returned to his job as a foreman. Three months later
he was indefinitely laid off.
● Settlement of Claims
● (1) Forbearance to assert or the surrender of a claim or
defense which proves to be invalid is not consideration unless
○ (a) the claim or defense is in fact doubtful because of
uncertainty as to the facts or the law, or
○ (b) the forbearing or surrendering party believes that the
claim or defense may be fairly determined to be valid.
■ Associated Builders Rule - Settlement of a disputed claim is sufficient
consideration for an accord and satisfaction.
■ Havard v. Kemper National Insurance - Plaintiff’s home, insured by
Kemper was damaged in an accidental fire. Defendants move for
summary judgment on ground that by cashing Kemper’s check tendered
to plaintiffs in full satisfaction of their policy claim for fire damage, plaintiffs
now have fully discharged their claims under accord and satisfaction.
Court said that Accord and satisfaction is an exception to the general rule
that a party may reserve its rights on an instrument
● Settlement is sufficient consideration for an accord and
satisfaction.
● UCC § 1–308. Performance or Acceptance Under Reservation
of Rights.
○ (a) A party that with explicit reservation of rights performs
or promises performance or assents to performance in a
manner demanded or offered by the other party does not
thereby prejudice the rights reserved. Such words as
“without prejudice,” “under protest,” or the like are
sufficient.
○ (b) Subsection (a) does not apply to an accord and
satisfaction.
● UCC § 3–104. Negotiable Instrument.
○ (a) Except as provided in subsections (c) and (d),
“negotiable instrument” means an unconditional promise or
order to pay a fixed amount of money, with or without
interest or other charges described in the promise or order,
if it:
 ■ (1) is payable to bearer or to order at the time it is
issued or first comes into possession of a holder;
■ (2) is payable on demand or at a definite time;
and
■ (3) does not state any other undertaking or
instruction by the person promising or ordering
payment to do any act in addition to the payment of
money, but the promise or order may contain (i) an
undertaking or power to give, maintain, or protect
collateral to secure payment, (ii) an authorization or
power to the holder to confess judgment or realize
on or dispose of collateral, or (iii) a waiver of the
benefit of any law intended for the advantage or
protection of an obligor.
○ (b) “Instrument” means a negotiable instrument.
○ (c) An order that meets all of the requirements of
subsection (a), except paragraph (1), and otherwise falls
within the definition of “check” in subsection (f) is a
negotiable instrument and a check.
■ A CHECK IS A NEGOTIABLE INSTR.
■ § 3–311. Accord and Satisfaction by Use of Instrument.
● (a) If a person against whom a claim is asserted proves that (i)
that person in good faith tendered an instrument to the claimant as
full satisfaction of the claim, (ii) the amount of the claim was
unliquidated or subject to a bona fide dispute, and (iii) the claimant
obtained payment of the instrument, the following subsections
apply.
● (b) Unless subsection (c) applies, the claim is discharged if the
person against whom the claim is asserted proves that the
instrument or an accompanying written communication contained
a conspicuous statement to the effect that the instrument was
tendered as full satisfaction of the claim.
● (c) Subject to subsection (d), a claim is not discharged under
subsection (b) if either of the following applies:
○ (1) The claimant, if an organization, proves that (i) within
a reasonable time before the tender, the claimant sent a
conspicuous statement to the person against whom the
claim is asserted that communications concerning disputed
debts, including an instrument tendered as full satisfaction
of a debt, are to be sent to a designated person, office, or
place, and (ii) the instrument or accompanying
communication was not received by that designated
person, office, or place.
 ○ (2) The claimant, whether or not an organization, proves
that within 90 days after payment of the instrument, the
claimant tendered repayment of the amount of the
instrument to the person against whom the claim is
asserted. This paragraph does not apply if the claimant is
an organization that sent a statement complying with
paragraph (1)(i).
● (d) A claim is discharged if the person against whom the claim is
asserted proves that within a reasonable time before collection of
the instrument was initiated, the claimant, or an agent of the
claimant having direct responsibility with respect to the disputed
obligation, knew that the instrument was tendered in full
satisfaction of the claim.
○ Nominal Consideration = consideration in name only
○ How do you know the difference between nominal consideration and real
consideration? (Look for a bargain or proper form)
■ Schnell v. Nell
● Consideration of 1 cent is purely nominal and is intended to be so.
● As a general rule, inadequacy of consideration will not vitiate an
agreement but this doctrine does not apply to a mere exchange of
sums of money whose value is exactly fixed.
■ Lewis v. Fletcher - option contract case
● The majority of jurisdictions hold that where the recited
consideration has not been paid and no other consideration has
been given, the contract fails for want of consideration.
○ 1. In an option contract, the optionor makes two
promises. One is to sell the item on which the
option is granted. What is the other promise? To hold
the offer open for a period of time
○ What can be consideration for an option? Any non zero
sum. (you never know which way the price is going)
■ OPTION CONTRACTS REQUIRE
CONSIDERATION SEPARATE AND DISTINCT
FROM PROMISE TO PAY PURCHASE PRICE –
OPTIONOR MAKES 2 PROMISES; NEEDS 2
CONSIDERATIONS.
■ Real Estate Co. v. Rudolph (PENNSLYVANIA, MINORITY RULE)
● Document enforced for 5 reasons: (1) Defendant’s answer does
not aver a lack of consideration, (2)guarantor acknowledged
receipt of one dollar and is now estopped to deny it, valuable
consideration, however small or nominal, if given or stipulated
for in good faith, is, in the absence of fraud, sufficient to support
 an action on any parol contract; and this is equally true as to
contracts of guarantee as to other contracts. (3)A stipulation in
consideration of one dollar is just as effectual and valuable a
consideration as a larger sum stipulated for or paid., (4) It is
elementary that the consideration imported from the use of a
seal on such a paper may not be contradicted by proof. Storm
v. United States, 94 U. S. 76, 83, 84, 24 L. Ed. 42. In the light of
this, it, would be neither logical nor consistent to hold that the
intentional insertion of an actual consideration may be
overthrown whenever one of the parties desires to escape
liability. (5)They sold the property (they gave the performance
induced by the promise).
○ Sealed Writings
■ Don’t need consideration
■ Iowa and Texas have seal statutes
■ Taylor v. Fred Clark Felt
● There is a rebuttable statutory presumption that a written
instrument imports consideration. (rebutted by lack of record of
receiving goods in this case)
■ Uniform Written Obligations Act, which provides:
● A written release or promise, hereafter made and signed by the
person releasing or promising, shall not be invalid or
unenforceable for lack of consideration, if the writing also
contains an additional express statement, in any form of
language, that the signer intends to be legally bound.
● Definiteness
○ Academy Chicago Publishers v. Cheevers
■ A contract may be enforced even though some contract terms may be
missing or left to be agreed upon, but if the essential terms are so uncertain
that there is no basis for deciding whether the agreement has been kept or
broken, there is no contract.
○ Martin Deli v. Schumacher
■ a mere agreement to agree, in which a material term is left for future
negotiations, is unenforceable.

○ Cassinari v. Mapes

■ If unable to agree, a court should be allowed to fix the rental since economic
conditions are ascertainable with sufficient certainty to make the clause
capable of enforcement.

○ DaCourt Group v. Babcock

 ■ There is a strong presumption against finding binding obligation in
agreements which include (1) open terms, (2) call for future approvals and
(3) expressly anticipate future preparation and execution of documents.” (4)
The absence of an expression to be bound by the terms.

■ Not contract law but in book – in most states there’s no law for negligent
misrepresentation but it can get you out of a contract. The court said there
isn’t any indication that anyone thought the representation wasn’t true
when they made the deal.

● IT IS POSSIBLE TO FORM A BINDING CONTRACT BEFORE THE CONTRACT

IS SIGNED. THE RULE ARE REASONS TO SAY IT DIDN’T HAPPEN

● THERE WAS NO OBLIGATION TO OPERATE IN GOOD FAITH (NO

CONTRACT FORMED)

● Modification and Waiver

○ Modification of contract enforced if:
■ Parties voluntarily agree
■ Modification occurs before contract fully performed on either side
■ Circumstances unanticipated
■ Fair and equitable
Consideration for Modifications:
○ Foakes v. Beer - Beer obtained judgment against Foakes for 2,077 pounds and
13 pounds interest. They made an agreement for F to pay B 500 pounds
immediately and the remainder in installments. In consideration for F’s payments,
B agreed to forego interest. F paid but B initiated collection for interest. Beer
won. Arguments for each side below:
■ For Foakes:
● Advantageous for creditor to obtain immediate payment of partial
debt than wait
● Potential to press debtor into bankruptcy with only small dividend
for creditor
● Reynolds v. Pinhowe decided the saving of a trouble was a
sufficient consideration
● Pennel’s Case said dictum “payment of a small sum was no
satisfaction of a larger” was wrong and overlooked mercantile
convenience
● It is every day practice for tradesmen to take less in satisfaction of
a larger sum
● It appears to the judges in Pinnel’s that there is no possibility a
lesser sum can be a satisfaction to the plaintiff for a greater sum:
but the gift of a horse, hawk or robe, in satisfaction is good for it
shall be intended that a horse, hawk or robe might be more
 beneficial to the plaintiff than the money otherwise Plaintiff would
not have accepted it.
■ For Beer
● Pinnel’s Case has been criticized by not overruled, rather it is
accepted law
● It could be an improvement in law to take a smaller payment for a
larger sum if creditor is content but should have new consideration
(especially when not under a seal)
● Counsel for Beer thinks Lord Coke misinterpreted Pinnel’s Case
and thinks that all business men accept less money rather than
enforce their rights (he believes they should have the right to
enforce)
○ Alaska Packers v. Domenico - Employer hired fishermen and sailors to work on
boat for $60 each and 2 cents per salmon caught. Workers arrived and saw boat
and net condition and staged a strike. Demanded $100 instead of $60 or they
would stop work entirely. It would be impossible for employer to get other men to
take their place. Someone without authority entered into contract with workers
giving them full amount.
■ A promise by a party to do what he is bound in law to do is not an illegal
consideration, but is the same as no consideration at all, and is merely
void; in other words, it is insufficient, but not illegal.
■ The voluntary performance of an act which it was before legally
incumbent on the party to perform being in law an insufficient
consideration.
■ Consent to a demand through coercion, where the consentee has no
other option, is without consideration.
○ Schwartzreich v. Bauman-Basch - Employer offered employment to
Schwartzreich and a salary of $90 per week. Plaintiff was then offered more
money by another employer and said he was offered $115 a week. Defendant
said they could not get another designer and offered $100 a week; P said if you
give me $100 a week i will stay. They made a new contract and the old contract
was left with Defendant.
■ Any change in an existing contract, such as a modification of the rate of
compensation, or a supplemental agreement, must have a new
consideration to support it. In such a case the contract is continued, not
ended
■ Where, however, an existing contract is terminated by consent of both
parties and a new one executed in its place and stead, we have a
different situation and the mutual promises are again a consideration.
● New contract = new consideration for a new promise
■ Recission is not presumed; it is expressed.
● Getting rid of the old contract is binding because there are mutual
promises not to sue for breach; promises are consideration for
each other
○ Angel v. Murray (1974) - Murray had a contract with the city to provide trash
collection for 5 year contract. He would receive $137k for services. In year 3 of
contract he requested an additional $10k per year because of a substantial
unanticipated increase in collection costs. Court said that modification was ok.
■ Restatement 89D: 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.
● Fair and equitable in this case: Evidence indicates a substantial
increase in dwellings and trash. In light of this, we cannot say the
agreement to $10k increase was not fair and equitable in the
circumstances (we can punt like this if asked)
■ An agreement modifying a contract is not supported by consideration if
one of the parties to the agreement does or promises to do something
that he is legally obligated to do or refrains or promises to refrain from
doing something he is not legally privileged to do.
○ § 2–209. Modification, Rescission and Waiver.
■ (1) An agreement modifying a contract within this Article needs no
consideration to be binding.
● Modification does not need consideration
■ (2) A signed agreement which excludes modification or rescission
except by a signed writing cannot be otherwise modified or rescinded, but
except as between merchants such a requirement on a form supplied by
the merchant must be separately signed by the other party.
● A signed agreement can be retracted by another signed
agreement
■ (3) The requirements of the statute of frauds section of this Article
(Section 2–201) must be satisfied if the contract as modified is within its
provisions.
● Statute of Frauds must be satisfied
■ (4) Although an attempt at modification or rescission does not satisfy
the requirements of subsection (2) or (3) it can operate as a waiver.
● If 2 or 3 are not satisfied, modification can be a waiver
■ (5) A party who has made a waiver affecting an executory portion of the
contract may retract the waiver by reasonable notification received by the
other party that strict performance will be required of any term waived,
unless the retraction would be unjust in view of a material change of
position in reliance on the waiver
● An executory waiver can be retracted unless retraction would be
unjust
○ § 2–104. Definitions: “Merchant”; “Between Merchants”; “Financing
Agency”.
■ (1) “Merchant” means a person who deals in goods of the kind or
otherwise by his occupation holds himself out as having knowledge or
 skill peculiar to the practices or goods involved in the transaction or to
whom such knowledge or skill may be attributed by his employment of an
agent or broker or other intermediary who by his occupation holds himself
out as having such knowledge or skill.
■ (2) “Financing agency” means a bank, finance company or other person
who in the ordinary course of business makes advances against goods or
documents of title or who by arrangement with either the seller or the
buyer intervenes in ordinary course to make or collect payment due or
claimed under the contract for sale, as by purchasing or paying the
seller’s draft or making advances against it or by merely taking it for
collection whether or not documents of title accompany the draft.
“Financing agency” includes also a bank or other person who similarly
intervenes between persons who are in the position of seller and buyer in
respect to the goods (Section 2–707).
■ (3) “Between merchants” means in any transaction with respect to
which both parties are chargeable with the knowledge or skill of
merchants.
○ Gross Printing v. Clarke -
■ Under the UCC a modification of an existing contract within this Article
needs no consideration to be binding. UCC only applies to goods not
services
■ § 2–105. Definitions: Transferability; “Goods”; “Future” Goods;
“Lot”; “Commercial Unit”.
● (1) “Goods” means all things (including specially manufactured
goods) which are movable at the time of identification to the
contract for sale other than the money in which the price is to be
paid, investment securities (Article 8) and things in action. “Goods”
also includes the unborn young of animals and growing crops and
other identified things attached to realty as described in the
section on goods to be severed from realty (Section 2–107).
● (2) Goods must be both existing and identified before any
interest in them can pass. Goods which are not both existing and
identified are “future” goods. A purported present sale of future
goods or of any interest therein operates as a contract to sell.
● (3) There may be a sale of a part interest in existing identified
goods
○ Waiver - an intentional relinquishment of a known right (waiving the legal result
non-occurrence of a condition) [Autonomy public policy]
■ The following elements must be met to find waiver:
● (1) a right must exist at the time of the waiver;
● (2) the party who is accused of waiver must have constructive or
actual knowledge of the right in question; and
● (3) the party intended to relinquish its right.
 ■ Waiver can be inferred from intentional conduct which is inconsistent with
claiming the contractual right.
■ Implied vs. Expressed Waiver
● Implied = intent to waive is drawn from their conduct
● Expressed = statement to waive right
■ Condition vs. Consideration (Associated Builders)
● Condition = a stipulation within a contract
○ Conditions are not a material part of the exchange and can
be waived
○ Condition in a gift vs. Consideration
■ Condition for a gift = no benefit to the promisor and
condition needs to happen to receive the gift
■ Retraction of Waivers
● Executory waiver (being in the nature of a promise) = waiving
something with respect to future performance
○ Must be supported by consideration to be enforceable and
can be retracted
● Waiver Partaking of the Principle of an election =
○ Needs no consideration and can not be waived
Defenses to Contract Formation
○ Duress
■ § 175. When Duress by Threat Makes a Contract Voidable.
■ (1) If a party’s manifestation of assent is induced by an improper threat
by the other party that leaves the victim no reasonable alternative, the
contract is voidable by the victim.
■ (2) If a party’s manifestation of assent is induced by one who is not a
party to the transaction, the contract is voidable by the victim unless the
other party to the transaction in good faith and without reason to know of
the duress either gives value or relies materially on the transaction.
■ § 176. When a Threat Is Improper.
■ (1) A threat is improper if
● (a) what is threatened is a crime or a tort, or the threat itself
would be a crime or a tort if it resulted in obtaining property,
● (b) what is threatened is a criminal prosecution,
● (c) what is threatened is the use of civil process and the threat is
made in bad faith, or
● (d) the threat is a breach of the duty of good faith and fair
dealing under a contract with the recipient.
■ (2) A threat is improper if the resulting exchange is not on fair terms,
and
● (a) the threatened act would harm the recipient and would not
significantly benefit the party making the threat,
 ● (b) the effectiveness of the threat inducing the manifestation of
assent is significantly increased by prior unfair dealing by the party
making the threat, or
● (c) what is threatened is otherwise a use of power for illegitimate
ends.
■ Terminix v. Guillory - The threat of doing a lawful act does not constitute
duress.
■ Miller v. Miller - MARRIAGE CASE
● 1st prong - social embarrassment from the cancellation of
wedding plans, even on the eve of the wedding does not render
that choice unreasonable
● 2nd prong - the threat of a refusal to marry is not wrongful in the
eyes of the law.
■ Holler v. Holler - MARRIAGE CASE
● Whether or not duress exists in a particular case is a question of
fact to be determined according to the circumstances of each
case, such as the age, sex, and capacity of the party influenced
(subjective test).
■ Bethlehem Steel v. Solow
● To have a situation involving economic duress there must have
been some sort of obligation on the part of the party to perform
● Duress in order to render voidable what was done, must involve a
wrongful act or threat precluding the exercise of a free will.
○ Mutual Mistake
■ Chandler v. Lopus - although he knew it to be no bezar-stone, it is not
material; for every one in selling his wares will affirm that his wares are
good, or the horse which he sells is sound; yet if he does not warrant
them to be so, it is no cause of action, and the warranty ought to be
made at the same time of the sale;
■ Sherwood v. Walker [MUTUAL MISTAKE TEST]
● If there is a difference or misapprehension as to the substance
of the thing bargained for, if the thing actually delivered or
received is different in substance (or basic assumption) from
the thing bargained for and intended to be sold, then there is no
contract; but if it be only a difference in some quality or
accident, even though the mistake may have been the
actuating motive to the purchaser or seller, or both of them, yet
the contract remains binding. Ricks told us to add: Likewise, a
party who assumed the risk of a mistaken fact cannot avoid a
contract.
○ 3 types of basic assumptions
■ Frustration of Purpose
 ● A performance rendered useless (I buy a
plane ticket, not knowing that my mother
already bought me a plane ticket)
■ Present Impossibility
● Dinner with abraham lincoln
■ Wild Disparity of Value
■ [ASSUMPTION OF RISK]TACK THIS ON TO THE MUTUAL
MISTAKE TEST
● A party bears the risk of a mistake when
● (a) the risk is allocated to him by agreement of the parties, or
● (b) he is aware, at the time the contract is made that he has
only limited knowledge with respect to the facts to which the
mistake relates but treats his limited knowledge as sufficient, or
● (c) the risk is allocated to him by the court on the ground that it
is reasonable in the circumstances to do so.
○ Unilateral Mistake
■ Hall v. United States -
● Even if the purported contract for sale were to be construed as
authorized, it would be voidable as a result of unilateral
mistake: (1) The mistake was to a basic assumption on which
the government agent made the contract. In fact, it was the
very premise on which the alleged contract was made. Air
Force authorization only allowed the UFC to be sent for repairs
to the repair depot. (2) The mistake had a material effect on the
agreed exchange of performance as the UFC is highly valuable
and was not to have been sold. (3) The consequences of the
mistake are so grave that enforcement of the contract would be
unconscionable. If the contract were allowed to stand, plaintiffs
would recover a windfall of over 11,000 times the purchase
price.
● Government not bound by the unauthorized actions of its agents.
● The person claiming the doctrine of mistake must not assume the
risk of the mistake.
■ First Baptist Church of Moultrie v. Barber - Church asked for bids on a
contracting job and the Defendant (Barber) put in a bid. Soon after, he
tried to withdraw the bid because he had underbid by $93k based on a
clerical error. Court held that he could withdraw his bid based on
unilateral mistake.
● Unilateral Mistake Test [Restatement 153] - “Where a mistake
of one party at the time a contract was made as to a basic
assumption on which he made the contract has a material
effect on the agreed exchange of performances that is adverse
 to him, the contract is voidable by him if he does not bear the
risk of the mistake ... and (a) the effect of the mistake is such
that enforcement of the contract would be unconscionable, or
(b) the other party had reason to know of the mistake or his
fault caused the mistake.” Restatement (2d) of Contracts, § 153
(1979).
● The prerequisites for obtaining such relief [for a contract under
unilateral mistake] are: (1) the mistake is of such consequence
that enforcement would be unconscionable; (2) the mistake
must relate to the substance of the consideration; (3) the
mistake must have occurred regardless of the exercise of
ordinary care; (4) it must be possible to place the other party in
status quo. [Cits.] It is also generally required that the bidder
give prompt notification of the mistake and his intention to
withdraw.
● here are now many decisions to the effect that if the error was a
substantial one and [quick] notice is given before the other
party has made such a change of position that he cannot be put
substantially in status quo, the bargain is voidable and
rescission will be decreed.”
○ Misrepresentation
■ A misrepresentation exists if
● one party makes a false statement, or omission in breach of a
duty to speak,
● of a material fact (or an immaterial fact if the false statement is
made with the intent to mislead),
● on which the other party relies in entering the contract,
● Reasonably.
■ A misrepresentation only arises when one party makes a false
statement or an omission when there is a duty to speak.
● No duty to speak exists when the parties deal at arm’s length
and the underlying facts are reasonably within the knowledge of
both parties.
■ Hendricks v. Lynn - Defendant sold plaintiffs a house with termite
damage. There was a rug on the ground covering up a hole caused by
the termites. Plaintiffs said that they asked defendant if there was termite
damage and she said no. Defendant said that they never asked and she
never spoke. Jury decided that defendant never said there was no termite
damage (never spoke/no false statement) so no concealment
(misrepresentation).
● If there is concealment, there is a duty to speak.
 ■ Caveat emptor = imposes no duty upon the vendor to disclose any
information concerning the premises unless there is a confidential or
fiduciary relationship between the parties or some conduct on the part of
the seller which constitutes active concealment. NY uses doctrine of
caveat emptor w/r/t real estate. An affirmative misrepresentation or partial
disclosure imposes duty on seller to communicate undisclosed conditions
affecting the premises.
● Stambovsky v. Ackley (Haunted House)
○ Even as a principle of law, long before exceptions were
embodied in statute law (see, e.g., UCC 2-312, 2-313,
2-314, 2-315; 3-417 [2] [e]), the doctrine was held
inapplicable to contagion among animals, adulteration of
food, and insolvency of a maker of a promissory note
and of a tenant substituted for another under a lease
(see, Rothmiller v Stein, supra, at 592–593, and cases
cited therein). Common law is not moribund. Ex facto
jus oritur (law arises out of facts). Where fairness and
common sense dictate that an exception should be
created, the evolution of the law should not be stifled by
rigid application of a legal maxim.
○ Unconscionability
■ § 2–302. Unconscionable Contract or Clause.
● (1) If the court as a matter of law finds the contract or any
clause of the contract to have been unconscionable at the time
it was made the court may refuse to enforce the contract, or it
may enforce the remainder of the contract without the
unconscionable clause, or it may so limit the application of any
unconscionable clause as to avoid any unconscionable result.
● (2) When it is claimed or appears to the court that the
contract or any clause thereof may be unconscionable the
parties shall be afforded a reasonable opportunity to present
evidence as to its commercial setting, purpose and effect to aid
the court in making the determination.
■ Brower v. Gateway
● For procedural element, court will look to contract formation
process to determine if one party lacked a meaningful choice in
entering the contract. Factors = the setting of the transaction,
the experience and education of the party claiming
unconscionability, whether the contract contained “fine print,”
whether the seller used “high-pressured tactics” and any
disparity in the parties’ bargaining power – Ricks agreed with
this in class.
 ● For substantive element, the court looks at whether the terms
unreasonably favor one party.
● Not to disturbance of allocation of risks because of
superior bargaining power – ADD TO ELEMENTS (2-302)
sub rule
○ Not trying to level the playing field; helps us know
when something won’t be unconscionable. Must be
something more than that.
■ State of New Mexico vs. Cash Loans - State brought suit against loan
company that was marketing signature loans at over 1000% interest and
using misleading and dishonest tactics to cause people to sign contracts
for loans and repay loans. Court said it was procedurally and
substantively unconscionable.ans
● Section 57-12-3. Unconscionable trade practices are defined in
relevant part as an “extension of credit . . . that to a person’s
detriment: (1) takes advantage of the lack of knowledge, ability,
experience or capacity of a person to a grossly unfair degree;
or (2) results in a gross disparity between the value received by
a person and the price paid.”
○ Said procedural OR substantive unconscionability was
enough (vs. both or just substantive)
○ Statute of Frauds
■ (a) A promise or agreement described in Subsection (b) of this section
is not enforceable unless the promise or agreement, or a
memorandum of it, is
● (1) in writing; and
● (2) signed by the person to be charged with the promise or
agreement or by someone lawfully authorized to sign for him.
■ (b) Subsection (a) of this section applies to:
● (1) a promise by an executor or administrator to answer out of
his own estate for any debt or damage due from his testator or
intestate;
● (2) a promise by one person to answer for the debt, default, or
miscarriage of another person;
● (3) an agreement made on consideration of marriage * * * *;
● (4) a contract for the sale of real estate;
● (5) a lease of real estate for a term longer than one year;
● (6) an agreement which is not to be performed within one year
from the date of making the agreement
■ Rann v. Hughes
● Statute of Frauds does not obviate the need for consideration.
■ Fulton v. Robinson
 ● it is not necessary that the consideration of a contract for the
sale of lands should be expressed in writing.
■ Nakamura v. Fujii
● The statute of frauds is not applicable to an agreement the
performance of which depends on a contingency which may or
may not happen within one year
■ Hooks v. Bridgewater
● to relieve a parol sale of land from the operation of the statute
of frauds, three things were necessary: 1. Payment of the
consideration, whether it be in money or services. 2.
Possession by the vendee. And, 3. The making by the vendee
of valuable and permanent improvements upon the land with
the consent of the vendor; or, without such improvements, the
presence of such facts as would make the transaction a fraud
upon the purchaser if it were not enforced.
Alternate Theories of Recovery
○ Promissory Estoppel
■ Promise
■ Which promisor should reasonably expect to induce action or forbearance
on the part of the promisee
■ Does induce action or forbearance
■ Injustice can be avoided only by enforcement of promise
● Restatement Second §90
■ Equitable Estoppel
● (1) makes a statement of fact to another,
● (2) the other (a) reasonably (b) relies on that statement of fact,
and
● (3) the reliance results in some detriment.
○ Unjust Enrichment
■ To state a claim for unjust enrichment, a plaintiff must allege facts
supporting three elements:
● a benefit conferred on one person by another;
● an appreciation or knowledge by the conferee of the benefit; and
● the acceptance or retention of the benefit under such
circumstances as to make it inequitable for the conferee to retain
the benefit without payment of its value.”
● Damages
○ Expectation Damages: a sum of money intended to place the non-breaching
party in the position that party would have been in had the promise at issue been
performed.
○ Reliance Damages: a sum of money intended to place the non-breaching party
in the position that party would have been in had the promise at issue not been
 made. Generally two kinds of costs to the non-breaching party form a basis for
reliance damages: out-of-pocket costs—direct net costs incurred by a promisee
in reliance on a promise prior to breach; and opportunity costs—indirect net value
that the promisee would have enjoyed if the promisee had taken an opportunity
that the promise led the promisee to forego.
○ Restitution: an order that the promisor account for a benefit that has been
conferred by the injured party on the promisor. Usually the promisor accounts by
returning the benefit received or paying a sum of money equal in value to the
benefit. The purpose of the restitution remedy generally is to prevent the unjust
enrichment of the party in breach, in other words, to put the party in breach back
in the position it would have been in had the contract not been made.
○ Injunction: a court’s order that a party do or not do something other than pay
money damages. For example, in certain, special cases, a court may order
specific performance, that the promisor perform as promised. In other cases, a
court may order that a party to a contract refrain from interfering with another
party’s performance. Courts often say that injunctive relief is inappropriate when
legal remedies adequately compensate the plaintiff. The prototypical case in
which damages are inadequate and specific performance is appropriate occurs
when a promisor breaches a promise to sell land, because each piece of land is
unique and determining the appropriate amount of damages involves too much
speculation.
○ Declaratory Relief: a court’s statement of a party’s legal rights. For example, a
court may state that a contract is void or voidable (rescindable) at the option of
one or either party.
● Policy
○ Rehak v. Mathis
■ It is well settled that neither a court of law nor a court of equity will lend its
aid to either party to a contract founded upon an illegal or immoral
consideration.

● UCC in General
○ § 2–102. Scope; Certain Security and Other Transactions Excluded
From This Article.
■ Unless the context otherwise requires, this Article applies to transactions
in goods; it does not apply to any transaction which although in the form
of an unconditional contract to sell or present sale is intended to operate
only as a security transaction nor does this Article impair or repeal any
statute regulating sales to consumers, farmers or other specified classes
of buyers.
○ § 1–304. Obligation of Good Faith.
■ Every contract or duty within [the Uniform Commercial Code] imposes an
obligation of good faith in its performance and enforcement.
○ § 1–201. General Definitions.
 ■ (a) Unless the context otherwise requires, words or phrases defined in
this section, or in the additional definitions contained in other articles of
[the Uniform Commercial Code] that apply to particular articles or parts
thereof, have the meanings stated.
■ (b) Subject to definitions contained in other [articles] of [the Uniform
Commercial Code] that apply to particular [articles] or [parts] thereof:
● (20) “Good faith,” except as otherwise provided in Article 5,
means honesty in fact and the observance of reasonable
commercial standards of fair dealing.
○ § 2–306. Output, Requirements and Exclusive Dealings.
■ (1) A term which measures the quantity by the output of the seller or the
requirements of the buyer means such actual output or requirements as
may occur in good faith, except that no quantity unreasonably
disproportionate to any stated estimate or in the absence of a stated
estimate to any normal or otherwise comparable prior output or
requirements may be tendered or demanded.
■ (2) A lawful agreement by either the seller or the buyer for exclusive
dealing in the kind of goods concerned imposes unless otherwise agreed
an obligation by the seller to use best efforts to supply the goods and by
the buyer to use best efforts to promote their sale.

■ Promises section in outline

■ A nude contract is where a man maketh a bargain or a sale of his goods
or lands without any recompense appointed for it.
● Doctor and Student
● Wanted to know a reason for the promise
● Promise, recompense and breach
●
● Consideration
● A fresh cause arising from each side (Sharington v. Strotton)
● Plowden said that consideration was required to see that person deliberated
● Consideration is a present exchange bargained for in return for a promise. The detriment
must induce the making of the promise and the promise must induce the incurring of the
detriment.
● Pre-existing duty
○ Police officers have a pre-existing duty; they are on duty even when off duty.
● A humanitarian act, voluntarily performed, is not such consideration as would entitle
recovery
● Labor of the promisee is sufficient consideration
● Consideration may be forbearance to sue on a claim, extension of time, or any other
giving up of a legal right, in consideration of some promise.
 ● The compromise of a claim, either valid, doubtful or disputed (but not void) is good
consideration, the claimant giving up his or her asserted right to recover the whole
amount as consideration for a promise to pay a lesser amount.
● If the forbearance has no value, it will not suffice
● A shareholder/owner generally is not personally liable for the debts of a corporation
● Compromise of a doubtful right asserted in good faith is sufficient consideration for a
promise
○ Even though the invalidity later becomes clear, the bargain is to be judged as it
appeared to the parties at the time; if the claim was then doubtful, no inquiry is
necessary as to their good faith
● (a) If a person against whom a claim is asserted proves that (i) that person in good faith
tendered an instrument to the claimant as full satisfaction of the claim, (ii) the amount of
the claim was unliquidated or subject to a bona fide dispute, and (iii) the claimant
obtained payment of the instrument, the following subsections apply.
○ (b) ... the claim is discharged if the person against whom the claim is asserted
proves that the instrument or an accompanying written communication contained
a conspicuous statement to the effect that the instrument was tendered as full
satisfaction of the claim.
● Conspicuous: a term or clause is conspicuous when it is so written that a reasonable
person against whom it is to operate ought to have noticed it
● - the law protects infants against their mistakes and discouraged adults to contract with
children
-judges don’t get involved in live marriages
-if someone receives a material benefit to life and limb they should honor promise (policy
not rule from McGowin)
-law views marriage as a special relationship and protects the institution
- law enforcement has a duty to the public even when off duty
- medical professionals are encouraged to assist in emergencies
-“unclean hands”
-making someone whole
-contractors shouldn’t be allowed to hold up work
-modifications should not occur under coercion
-pre existing duty should not allow recovery
-the law favors settlement of controversies
-people should have a good reason to make a promise
-people should deliberate over promises
■ -it is unjust for a donee to retain the fruit of a broken promise
WARRANTIES
11/12/18
● Webster v. Blue Tea Room
○ 2-314 UCC
■ Fish Chowder must be fit to eat; the merchant is one w/r/t fish chowder.
 ○ 2. Is a soda bottle with a mouse in it fit for ordinary use? (No, not properly
packaged) How about a fried chicken head found in a McDonald's chicken
McNugget carton? (Not fit) How about a passenger's side seat belt that
unbuckles when a car is hit mostly head-on but slightly from the car's left side
and the passenger's weight is thrown against the buckle itself? (not fit)
○ 3. Are cigarettes fit for ordinary use? (No, except there is a line.) Is butter?
(Consider comment 4 to § 2-313.)
○ The principle behind warranties = to determine what it is that the seller has in
essence agreed to sell,
○ ASK IF Mutual Mistake would apply to Slavik
● Catania v. Brown
○ Defendant told Catania to wire brush loose particles which were flaky and mis the
paint and add a thinner. Catania did so, painted stucco and paint peeled.
○ There was a warranty (UCC 2-315)
○ (1) Seller at the time of contracting has reason to know any particular purpose for
which the goods are required and (2) that the buyer is relying on the seller’s skill
or judgment to select or furnish suitable goods,
○ Warranty that the goods were fit for stucco
● Mohasco Industries v. Anderson Halverson Corp.
○ In a related context, that of a building contractor who performed his work in
accordance with detailed plans and specifications supplied by the owner, we
have ruled that he may recover for his services even though his work may not
have fully accomplished the purposes intended. Home Furniture, Inc. v. Brunzell
Construction Company, 84 Nev. 309, 314, 440 P.2d 398 (1968).
○ [¶ 9] It is apparent that in a case where the sample or description of the goods
may, for some reason, result in an undesirable product, the seller is placed in a
dilemma.
○ where the goods are sold by sample or description and the buyer’s specifications
are so complete that it is reasonable to conclude that he had relied upon himself
and not the seller with regard to the merchantability of the goods.
○ LISTEN TO RECORDING (8:50 pm)
● Dow Agrosciences
○ A term or clause is conspicuous when it is so written that a reasonable person
against it is to operate ought to have noticed it. A printed heading in capitals is
conspicuous
● Bentley v. Slavik
○ To determine whether a warrant was created, the court must examine the intent
of the parties as expressed in the bill of sale and in the circumstances
surrounding the sale itself.
■ The is a question of fact
○ When examining the code section, courts have used a “basis of the bargain” test
which looks to the description or affirmations forming the basic assumption of the
bargain between the parties.
● Nelson v. Rice
 ○ Conscious ignorance:
■ Even though the mistaken party did not agree to bear the risk, he may
have been aware when he made the contract that his knowledge with
respect to the facts to which the mistake relates was limited.
● If he was not only so aware that his knowledge was limited but
undertook to perform in the face of that awareness, he bears the
risk of the mistake. It is sometimes said in such a situation that, in
a sense, there was not mistake but “conscious ignorance.”
■ The court may also allocate the risk of mistake to one party on the ground
that it is reasonable in the circumstances to do so, based on, inter alia,
the purposes of the parties and its general knowledge of human behavior
in bargain transactions.
● Murray v. Holiday Rambler
○ Standard form Warranty for an auto
○ Provides useful rules of UCC 2-719 (limits remedies)
■ Failure of its essential purpose
■ Para. 33: limited remedy of repair or replacement of defective parts fails
of its essential purpose whenever, despite reasonable opportunity for
repair, the goods are not restored to a nondefective condition within a
reasonable time,
● Para. 23: where the cumulative effect of all the nonconformities
substantially impairs the value of the goods to the buyer.
● After the purchase of an automobile, the same should be put in
good running condition; that is the seller does not have an
unlimited time for the performance of the obligation to replace and
repair parts.
○ A disclaimer can be unconscionable

12/1 Review
● In the essay can we speak shorthand - only if we use a key
● The restatement is not attached; title is not part of the statute but will be there with the
language
● Ads are not offers because it is unreasonable to think that sellers have an unlimited
supply
● For consideration, the judge has to be for a plausible contract
● 2-207 only applies when there is a definite and seasonable expression of acceptance or
a signed agreement
● Policy guides the grocery store and perm rules
● Predominant factor test for cases with goods and services
● Zemke says for additional terms you can says 3 things: 1.??? 2. Different terms are
treated as additional under the statute.
● Once a doctrine is at issue, you get credit for talking about the whole thing