Contracts Initial Outline

- Difference between a contract and an agreement

o Types of 'real' K's
 Express
 Quasi  Implied-in-fact: a real K, but w/o using words -- created by the
parties' actions
o Is this a K that is a long-K, or a one-shot K?
o A 'K' is an agreement that the law will enforce.
 Must have three elements  Offer, Acceptance, and Consideration
1) Excuses: Illegality, Public Policy [R.R. v M.H., Surrogate Baby K]
o Differences in bargaining power is fine, right up until the
court says it's not [policy]. Yes it's a K, but not enforceable.
2) Mutual Assent: Not Necc. an independent element unto itself.
Rather, evaluate the existence of assent by analyzing the parties'
agreement process through the lens of offer and acceptance.
- In a Contract, the Specific Governs overs the General
- Everything in Contract Land is a function of allocation of risk.
- Attorney Fees in breach of K Cases
o American Rule: Each party pays its own attorney fees
 Unless K states otherwise
o Rest of the world: Loser Pays
- Seven Step Process [Almost the Whole Class]
o 1. Does the K fall within the UCC [goods + quantity] or
Common Law [services +/or land?]
 What is a good?
1) Good: a Tangible Movable Thing at the time of identification to
the contract. An RV is classified as a good.
 If both, dominant element in the K controls  Predominant Purpose Test.
 The UCC is not limited to merchants. Applies in a sale of goods to two
non-merchants.
o 2. Has a K been formed? Freedom of/from Contract.
 Elements of a K [to prove existence of a K, P must plead]
1) Offer
o Objective: offeree 'reasonably' believes  Lucy v. Zehmer
o Subjective: offeror believes
 Advertisements in newspapers are not offers, they
are mere invitations to make an offer.
o Protects sellers if they run out of
inventory.
  Generally, the customer is the
offeror of the inventory + the
price, and the store is the offeree
and accepts at the price.
2) an ad can lead a reasonable person to believe
a unilateral K can be accepted
o If vague, presumption is a bilateral K, not a unilateral K
 Bilateral K's
1) A bilateral K is one in which there are
mutual promises between two parties to the
K; each party being both a promisor and a
promisee, the contract being formed
immediately.
 Unilateral K's: One formed by performance of a
requested act rather than a return promise
 Price Quotes, if specific enough, can be offers
 An option K is not a 'mere offer' to sell
o Offeror Has Control over the Manner of Acceptance
 The power to create a K by acceptance of an offer
terminates at the time specified in the offer, or, if no
time is specified, at the end of a reasonable time.
 Performance is acceptable w/o notification, unless
Offeror expressly requires promise
o Since offerors [generally] draft the rules of the offer,
interpretation of the offers tilt toward offerees
 Preserving the Offer: Holding the offer window
'open' for longer.
1) Offeror is the ruler of the offer.
o As an offeror, you want to be
specific.
o Consideration must happen each
time you extend a K w/ options.
o Killing an Offer: [Four Ways to Terminate]
 1) Rejection  Offeree
1) Once rejection happens, expressly or
impliedly, an offer is terminated.
o Imperfect Acceptances
o Implied Rejections
2) Counteroffer; rejects the first, and switches
the party. Treated as an indirect objection.
o A mere statement requesting a better
offer is ordinarily not a counteroffer.
[RD39]
 3) Preserving the Offer: Option K is a Real K
keeps the offer open for a certain period
o Underlying offer is a 'mere offer'
4) Conditional Acceptances
o Treated as a rejection b/c the
response continues on and insists on
additional / different terms.
 2) Revocation  When the caterpillar never
becomes a butterfly.
1) Direct Revocation "I take it back":
o Unambiguous words or conduct +
offeree must be aware of the
revocation.
o Exception! Offers can still be
revoked, even if they're stated to be
irrevocable, unless supported by
consideration.
2) Indirect Revocation "somebody taking
advantage of the offer first"
o Dickinson v. Dobbs 'first in time,
first in right'
 Requires something that tells
an offeree the offer is not
available anymore.
3) 3 Situations with no possibility to revoke
1) K options prevent the offeror from
revoking the offer
a. Options can be binding, and can
be
2) UCC Firm Offer Rule. If in writing,
signed by a merchant, that promises not
to revoke, that offer is irrevocable.
a. Limited to 3 months max, unless
expressly written before then.
3) Under R2D: If the offeree reasonably
relies on the offer, that makes the offer
irrevocable.
 3) Lapse  Inaction
1) "Reasonable amount of time"
2) Offeror can waive the lapse, Late acceptance
can be a new offer.
3) Lapses can be caused due to market
fluctuation
  4) Death/Incompetence of the Offeror [or Offeree]
1) Adjudication of incompetence or
appointment of a guardian has the same
effect as a death.
o Even if the guy is dead and even if
the acceptance is in transit.
 Add'l: Offer  Crazy  Acceptance = No K
1) Offer  Acceptance  Crazy = K
2) Acceptance
o If offer prescribes time, place, or manner, the offeree must
strictly comply with those requirements to create a K.
 If no prescription, then reasonable tests kick in
[means, place, time]
 Acceptance must be communicated to offeror,
unless Mailbox Rule
o Four Means of Acceptance -- Restatement of Contracts 50
o Acceptance of an offer is agreement
to the terms made by the offeree in a
manner invited or required by the
offer.
o Agreement to a K, or mere prelim
negotiations?
 1) Acceptance by Full Performance
1) Acceptance in any manner and by any
medium reasonable under circumstances
2) Don't have to notify o'or before you perform
 Can't accept an offer you
don't know about.
 2) Acceptance by Partial Performance requires that
at least part of what the offer requests be performed
or tendered and includes acceptance by a
performance which operates as a return promise.
1) Part performance by the offeree results in a
contract with a condition [full performance
by the offeree.]
2) Fuzziness between mere preparation and
performance
o Intent is mere prep
o If the offeree starts performance, it's
a promise to finish performance.
87[2]
 o Failure to finish performance
becomes a breach
 3) Acceptance by a promise requires that the offeree
complete every act essential to the making of the
promise.
1) Exception: elects to accept by performance
and o'ee has reason to know o'or has no
adequate means of learning of the
performance
o Sailed around the world and come
back to a painted house
2) E to the E: offeree exercises reasonable
diligence to notify, or the offeror otherwise
learns of performance, or offer states no
notice needed.
 4) Acceptance by Silence or Inaction  R2D69
1) Rare, but 3 exceptions apply
o 1) Reason to Understand: o'or gave
o'ee reason to understand assent
may/will happen with silence or
inaction
o 2) Prior Conduct: Previous dealings
mean silence is reasonable
o 3) Benefit of Services: Offeree takes
benefit of offered services with
reasonable opportunity to reject them
and reason to know they were
offered with expectation of
compensation.
2) If offeror is justified in expecting a reply OR
the offeree is has to reply
o Imperfect Acceptances  UCC 2-207 Land
 Common Law: Mirror Image Rule: an acceptance
must be coextensive with the offer and may not
introduce additional terms or conditions
1) Immateriality exception: if the changes don't
affect terms of the K, but varies by courts
 UCC 2-207: Battle of the Forms [see flow]
1) "Acceptance must be Expressly Conditional
on offeror's assent to changed terms" 
What's conditional?
2) UCC fills in the gaps when different terms
fall out
 o Both parties must be merchants for
2-207-2
 Form and one party is not a
merchant? Additional terms
are 'Mere Proposals'
3) Three Approaches to 2-207 'Different
Terms'
o 1) Cmt. 3 approach: different is a
mere typo, and should be treated as
'additional terms'
 Unless it materially alters the
deal.
o 2) 'literalist approach:' different
terms never become part of the K
unless O'or specifically and
separately agrees to them
o 3) Cmt. 6 approach, uses the knock-
out rule  one discussed in class
 Comment 4: "A clause
reserving to the seller the
power to cancel upon the
buyer's failure to meet any
invoice when due" is a clause
that materially alters the K.
 Comment 5: Interest clauses,
or fixing a reasonable time
for complaints do not
materially alter K's, b/c of no
element of unreasonable
surprise.
 R2D20 is a flexible interpretation, and still depends
on how you pick out the facts; Tease out all
potential interpretations from the fact pattern.
1) R2D20[1]: No K
2) R2D20[2]: K on innocent person's terms
o "Last Clear Chance"
 If UCC is blank, then you add in R2D20. Give law
and operative facts to bolster your argument, they
have to be in there, especially if she disagrees.
o Deficient Agreements  When agreements suck
 Misunderstood, Incomplete, and Indefinite Terms
1) When non-material terms are ambiguous, K
still enforceable  'Mutual Mistake Rule'
 2) Agreement must be neither vague nor
indefinite
3) Cannot receive benefit and then hide behind
a cloak of vagueness
 Problems of Postponed Agreement
1) K to enter must specify all Mat'l + Ess'l
terms AND leave nothing agreed upon as a
result of future negotiations
2) If renewal neglects to stipulate price for
additional term, court finds new rent fixed at
reasonable / fair market value
o If parties intend to be bound, courts
will use gap-fillers to enforce that
intention
3) PE problem when one intends to be bound
and the other cuts off. Parties should have
good-faith in one another.
3) Consideration
o Consideration: Promises bargained for and received by a
promisor from a promise. Consideration or a valid
substitute is required to have a contract.
o Must be legal, cannot bargain under
illegality: i.e., I'll pay you $25K to
not smoke cocaine anymore.
2) Bargain: is it good, and is it sufficient [a
reasonable person would think w/in bounds
of reality that parties would trade.]
o Not GC's: past behavior, past
obligations and gifts
o Not SC: No reasonable person would
make this K.
3) Agreeing to not do something = exchange
 Moral Obligations in Consideration:
1) MO: sufficient consideration to support an
express promise.
 Natural obligation: exists when there is a moral, but
not a judicially enforceable, duty to render
performance where the law implies a particular
moral duty to render a performance.
o What's Not Consideration?
 Pre-existing Duty  Past consideration
1) Performing a duty already owed
  Conditional Promise:
1) Not consideration if o'or knows condition
cannot occur
 Alternative Promise:
 Illusory Promise: promise the performance which is
entirely at o'or's discretion is not consideration.
o No Consideration? Mere Gift.
 Check out Quasi-Contract-
ville
 Exceptions to 'No K = No
Consideration'
o Estoppel  Equitable and Promissory
 We are going to hold you to something. We are
going to prevent you from denying it.
o Promissory Estoppel [PE] in consideration:
1) We use PE when we can't enforce the K.
 A promise is enforceable by law to hold parties
accountable and ensue equity, even in the absence
of consideration. Courts use PE to mitigate the
harshness of 'no consideration, no luck.'
o "I will" = doing something in the
future
 Three Elements of PE  Section Ninety
1) Induces Reliance
2) Reasonable Reliance
3) Avoid Injustice
o Diff b/t implied-in-fact K and PE
 iifK: parties knew they were
making a K, 'mimes' instead
of words
 Courts will enforce a promise without consideration
with evidence the promise was reasonably relied
upon, and that reliance resulted in some sort of
damage to the promisee.
o Equitable Estoppel: a statement of fact about something
that is currently happening or has already happened.
 If intended to rely.. Equitable Estoppel applies.
4) Examples of Consideration that may be tested on your exam.
o Non-bargained for benefit/detriment and performance = no
K, even with an actual benefit.
o Actions occurred before a promise = no consideration of a
promise
 o Most likely tested  this was class on Sep. 27 [K
modification. New consideration is required for any
contract K]
5) Even if no issue to o/a, agreements are not legally enforceable
unless you have Manifestation of Mutual Assent with
consideration or PE.
-
 Even if Offer / Acceptance / Consideration are met, Six
Reasons for not enforcing a K  Defenses
 Defenses Balance two competing values:
1) 1) Ease of making most types of K's [per the
UCC's goal]
2) 2) Keeping very important types of K's well-
documented
2) Statute of Frauds: Affirmative Defense  No fraud without
intent
o S of F: When a K must be written down and signed to be
enforceable
 Real K's, but somebody did not sign, so you can't
sue them on it.
o MANTRA: If it's within the S of F, it is without the ability
to enforce the K against the non-signer. Can't enforce a K
against a non-signer if the K itself requires their signature.
o When a non-signer sues: non-signer
is agreeing the K was valid.
 Six Categories of Statutes of Frauds
1) Executor answers for a duty of his decedent
2) Answers for the debts of another
3) In consideration of marriage
4) For the sale of Land
o Easements, or plots/parcels of land
also count.
5) Cannot 'conceivably' be completed within 1
year.
o If conceivable  Out of S&F Land
 To determine 1 year: after the
K is executed, when
performance starts, could
completion conceivably be
performed within 1 year?
 K that really does take nine
months to do, but
 performance starts five
months later, it cannot
possibly be performed in a
year. = Signature Req'd under
S of F.
 Even if it is for a massive
building, not in S&F land if
K does not say when
performance is
started/completed.
6) For sale of goods of $500 or more  UCC
2-201
 2-201 and S&F
1) 2-201-1: Must be a writing signed by the
party asserting SOF Defense
o Objections must be sent within 10
days of receipt of a purchase order.
3) Misrepresentation
o Assertion without the facts
 Must be innocent and deliberate
 Only the person who received the misrepresentation
can void the K.
o Fraudulent Misrepresentation: R2D162
 Knows/believes assertion not in accord with facts
 No confidence he states or implies truth of the
assertion
 Knows he does not have the basis
1) Material: if the misrepresentation is likely to
induce a RP to manifest his assent
4) Lack of Capacity:
o Infancy: If you K w/ a minor, run the risk of voidable,
unless the K is for necessaries
o Mental Capacity: Intoxication  Zehmer Case
5) Inordinate pressure: duress and undue influence
o Good/Sufficient Consideration: C/L
o With Good Faith: UCC
 Distinguishing Leverage from Inordinate Pressure
with K Adhesion
o Duress / undue influence met when:
 Victim is justified in assuming other party will act
in a manner inconsistent with his welfare
 The advantaged party engages in 'unfair persuasion'
 1) Unfair persuasion: unfair bargain, no
opportunity to seek ind't advice, susceptible
if just in an accident or in pain
6) Illegality
7) Unconscionability  NR 'might' have a ?, no guarantee
 Public Policy Bar to enforceability of a term.
1) Placement AND
2) Overreaching
o The court decides unconscionability, not the jury.
o K's of Adhesion, don't assume it’s automatically
unconscionable
 K of adhesion: when one side has overwhelming
bargaining power. Adhesion alone is not enough,
usually.
 Adhesion rarely wins b/c it requires
1) Unconscionability, fraud, ambiguity, or
other excuses.
o Exception: Courts can determine P's
waiver of rights are beyond
reasonable expectations of P and
invalidate a K on adhesion.
[Broemmer v. Abortion Services]
o Occurs almost never, but is brought up on exams
 P + S are on sliding scales, the more of P, the less of
S
o Unconscionable requires both procedural and substantive
unconscionability. Determined at the time the parties enter
into the K.
 Procedural Unconscionability: "Whether and how it
was hidden"
 Substantive Unconscionability: "Nobody would
agree with this."
1) When do we have mere leverage, and when
do we have unconscionability?
8) Mistake
o R2D151: Belief not in accord with the facts
o When in K Formation: "What did the parties think they
were buying and selling?"
o Best way to think about a mistake: who bought the risk of
there being a mistake.
 Whether or not this mistake goes to a basic
assumption of the K
o If one party is mistaken, it's really hard to let that party out.
  When a one-party mistake makes a K voidable: One
may rescind for a unilateral mistake of law only
1) if the other party knows of,
o but does not correct,
 and takes advantage of or
unfairly obtain the benefit of
the rescinding party's mistake
of law.
o If both parties are mistaken, much easier. = NO K
 Gap Fillers: Under both the Restatement 2d and the UCC, a contract will
still fail for indefiniteness if the court cannot find a reasonably certain
basis to determine the existence of a breach or fashion an appropriate
remedy. Restatement 2d § 33(2); UCC § 2–204(3).
1) Courts won't gap fill for either subject matter or quantity under the
K.
- Privity: When two or more parties in a contract are in privity, all parties are bound by the
contract and are obligated to each other in some way. For instance, one party may receive
remedies for breach of contract or force fulfillment of the contract because of privity of
contract.
o 3. What are the material forms / terms of the K? 
 Figuring out what is in the K. Interpretation
1) When we don't have words, we go to a parties' context
o Express Terms of the K.
o Course of Performance  Their actions
 If the K involves repeated occasions for
performance + the other party accepts the
performance or agrees without objection
One-Shot K? = No Course of Performance
o Course of Dealing: Involves Prior K's, usually when a
person orders similar goods over time from the same
supplier.  Their Prior Actions
o Usage of Trade:  Actions of similar competitors
 Place: Geography
 Vocation: Regular occupation
 Trade: More of a merchant's shop
o You do not have to be a merchant to
be bound by a T/U.
o We presume the parties understand what they are doing, but
that is a rebuttable presumption.
 Cases: Acting in good faith is part of the bargain
 1) Wood v. Lucy, Lady Duff Gordon:
o Promise of acting in good faith leads
to consideration.
o Promise may be lacking within a K,
and yet the whole writing may be
instinct with an obligation,
imperfectly expressed, if so, K.
2) Stokes and Locke: Parties trading things of
value may not need to imply in good faith.

Parol Evidence Rule

Goal: Ask yourself when a court should include in the K a term that only one side believes to
exist
PER: one party is trying to admit evidence of missing terms into the interpretation and
enforcement of the FWC. The other party is trying to block that evidence.
- Purpose of the PER: sometimes K's need to be considered final
Parol Evidence Rule: It's a rule with numerous exceptions.
- The court decides if the evidence can be admitted, THEN, a jury takes it from there in
terms of credibility issues.
 PER is admissible if the alleged term agreed to is a 'consistent additional
term.'
o Remember how unconscionability works? Same process here.
- We must concentrate on the parties' intent, which is Subjective, based on our Objective
evaluation of the K's context.
PER applies to prior and contemporaneous negotiations until a FWC is signed.
- After a K is signed, any changes fall under 'modifications' category and the PER does not
apply.
Typical fact pattern for PER:
- One party has a FWC
- Other party wants to introduce a side deal not mentioned in the FWC.
Determining PER
- If a court finds a K triggers a PER issue, it has to then decide
o Is the K integrated?
 If yes, is it partially integrated or completely integrated?
1) Partially Integrated: PER is only a problem IF someone wants to
introduce missing terms into the part of the FWC that IS integrated.
 o What evidence can we introduce to clarify what the parties
meant?
o What would you expect to see in the K?
2) Completely Integrated: Introducing evidence of missing terms at
all requires getting around the PER.
o Merger Clauses are persuasive, but not determinative. They
often get you close to a C/I but it is not sufficient.
o Very hard to prove a K is C/I without the merger clause.
 If no: PER does not apply at all.
o Inconsistent terms?
 K must be n/I at all to introduce inconsistent terms, and even then,
introducing inconsistent terms will be difficult.
o Do any PER exceptions apply? NR is GOING TO TEST THESE
 Ways to circumvent the PER
1) Later negotiations or modifications after the K is executed
2) Evidence the K is not valid in the first place [forgery, fraud,
duress, joke, etc.]
3) Interpretation of the terms of the agreement
o Two best friends for interpretation:
 Vagueness: could be one point in a range of a
thing/characteristic
 Ambiguity: could be one of two or more different
things
4) Oral Conditions precedent, so the K has not kicked in yet
o CP: an event that must occur before parties are obligated to
perform.
5) Scrivener's error
o Person drafting makes a typo
o More K Interpretation
 K interpretation is a bit like Newton’s Third Law of Physics—for every
interpretation, there is usually an (almost) equal and opposite
interpretation—so the maxims might be able to break a tie.
1) Rules of Construction:
o When each party argues a K means something different
from what the other party says, how do you decide who
should win?
 Specific and Exact Terms are given more weight
than general language.
1) Back to the list:
o Express Terms
o Course of Performance
o Course of Dealing
 o Trade/Usage
 Frigaliment v. BNS: When
one party is not a member of
the trade, his acceptance of
the T/U standard must be
made to appear by proving
either he had actual
knowledge of the usage or
the usage is so generally
known in the community his
ind'l can be inferred
 Contrast to Peerless where
they were so far apart = No
meeting of the minds.
 Analyzing: Vague [range]
/Ambiguous [a or b]
 It's ambiguous b/c no degree
of chickenness

Warranties - UCC 2-313 / 2-318

Goal: Figure out what sorts of guarantees come with a K and how to get out of
such a guarantee. We must put the risk somewhere. 'Who is in the best position to
prevent stupid?'
Express Warranties: statements made, or assurances given by the seller concerning the
quality / characteristics of the goods subject to the K become part of the basis of the bargain.
Arise from overt manifestations from the seller to the buyer. A lot like ordinary K Promises. 
UCC 2-313
- BoB: Used by the courts to determine if an EW exists 2-313.
- Ways out of the BoB: if the buyer knows that the seller is lying about the quality of the
goods. BoB under 2-313 does not apply.
Puffing: 'merely stating the seller's opinion' is not an express warranty. Negligent
misrepresentation does not mean omissions; there must be some affirmative false statement [2-
315].
Timing of the warranty: think of express warranties as super-glue. Possible to take off, but very
difficult.
- If given before or at the time of the K: a warranty is part of the K.
- If given afterwards: mere modification that adds a warranty.
o NR note: modification should be part of an agreement b/t the parties and not just a
gratuitous statement. Pay attention to whether a BoB moment is involved.
Implied Warranties: assurances concerning the seller's title to the goods and their basic
quality. Supplied by operation of law. Implied warranties are automatically part of the K unless
they are exclude from the K by affirmative agreement of the parties.
- Warranties are in UNLESS they are taken out.
o A seller can, by taking affirmative steps under the Code, eliminate the warranty
from the K by way of an express disclaimer [2-316].
- Implied warranties do not depend on anything the seller says or does.
o Trickiest element for the buyer in a claim for breach of the implied warranty of
merchantability is establishing a causal link b/t the breach and the loss for which
recovery is sought.
 IWM applies to merchants, IMFPP applies to all buyers / sellers.
o Sometimes no breach of I/W if a buyer should have anticipated performing some
function to maintain merchantability.
- You can have both express and implied warranties. Under 2-317-c, if two warranties
cannot be construed consistently with one another, the express warranty displaces the
merchantability warranty.

Merchantability: A promise that something that is sold will be merchantable and fit for the purpose
for which it is sold. "It will do the thing it's promised to do."

- Goods may be merchantable in general, but not necessarily warranted for particular purposes. A
shoe is merchantable as a shoe, but it is not warranted to work as a hammer.

Disclaimers: Disclaimers get you out of warranties, express or implied. Can't throw
disclaimers out of an agreement if buyer is aware of them.
- Affirmative Defense:
o 4. Have those material terms been performed?
- First, determine what the terms of the K are,
o Then, compare what the terms require to what the party did [this chapter]
- K law focuses on the performance due and rendered from each party.
o Terms set the obligations, and court compares the parties' action [or inaction] with
those obligations.ute
 Match, no breach
 ANY variance, breach

Representation – an assertion of fact. (“I represent that I am the joint owner of

Diana and Shadow.”)
Warranty – a representation (an assertion of fact) with a remedy [an implied
promise of compensation] if that assertion turns out not to be true.
Contractual Obligations:
 - Obligations to which parties expressly agreed
o Promises [including warranties] [remedy for breach is typically money damages]
o Express Conditions [which require strict/literal performance.]
 Failure to generally comply generally constitutes a waiver of a claim.
- Obligations Implied
o Implied terms [good faith, implied warranties]  "Off the Rack"
o Constructive Conditions [require substantial performance, not strict performance]
 Can't fly until you've paid for your airline ticket.
- NR: We prefer to construe obligations as promises, rather than conditions, unless the
parties are very, very clear about making something an express condition. (Another
example of how we get around harsh rules, such as the rule that express conditions
require strict compliance.)

Conditions: Can turn duties on or off. 'an on-off switch.'

- Condition Precedent: Non-performance of a duty has not turned on yet is not a breach.
B/C NO DUTY.
- Condition Subsequent: Non-performance of a duty that has turned off is also not a
breach. B/C the duty has ceased to be.
o An enforceable obligation unless something happens before the obligation that
discharges the duty
- Concurrent condition: Depends on Simultaneous Performance
o "When parties employ mandatory terms to characterize an obligation whose
fulfillment hinges on third-party actions, this indicates an express assumption by
one party of the risk of the condition going unfulfilled.

Promise – an undertaking that the party will do something (or won’t do it,
depending on context). Almost always within the control of the contracting parties.
- Full performance not req'd.
o Substantial performance can be OK. Then pay the difference b/t sub/full
performance.
 - If parties know how to use conditional language in parts of the K, but did not in the
disputed part = MERE PROMISE
If a condition is not satisfied, no duty ever arises and thus there is no breach [and no remedy]. If
a promise/covenant is not satisfied, that is the definition of a breach.
Magic Words to distinguish:
- Condition: "If and only if," "Provided, However"
- Promise:
- Can Go either way: "IF"
o 5. If not, has performance been excused?
Excuse: Failure to perform terms or to satisfy conditions because of
external factors.
Four Categories to Excuse Performance
1) Parties’ post-formation conduct.
• Modifications/amendments.
• Schinkel v. Maxi-Holding: parties may modify a written agreement by a
later agreement not in writing. The later agreement may be proved through
the conduct of the parties. Where the parties' conduct after signing the
written agreement conforms with a previous oral modification, rather than
with the terms of the written agreement, it may reasonably be inferred
that the parties have agreed after the signing to be bound by the oral
modification of the written contract, ratifying it, in effect, by their
conduct.
• Waiver
• Kamco Supply v. On The Right Track: when a party materially
breaches a contract, the non-breaching party must choose between two
options: it can elect to terminate the contract or continue it. If the non-
breaching party chooses to continue to perform or accept performance, it
loses its right to terminate the contract based on the prior breach.
1) If you waive the CP, you cannot go back and terminate, and you
may be held liable for future non-performance.
2) The intentional relinquishment of a known right.
• Estoppel

• Difference between Waiver / Estoppel:

 • Waiver is the voluntary surrender of a right. Waiver depends on
what he himself intends to do. Waiver arises from the voluntary
actions of the contract's obligor alone.
• Estoppel depends upon what he caused his adversary to do.
Estoppel requires both obligor and obligee to act. Estoppel requires
inducement + reliance.

2) External factors: The parties cannot cause the external factor.

• What did the parties INTEND?
• If intent is unclear, we'll default to calling something
a promise, rather than a condition
• best indication of the parties' intent is the ordinary meaning of a
contract's terms.
• Then C/P, Then C/D, Then T/U.
- Impossibility
o Nobody in the known universe can do something.
o Death makes unique performance impossible.
o Easiest to prove b/c it's an on/off switch.
 Force Majeure: for this to trigger, event alleged must have been beyond
the party's control and not due to any fault or negligence by the non-
performing party.
 Can't use economic events outside control b/c D made other
decisions, not impossibility.
 Economic downturns are foreseeable, so the parties should allocate
the risk.
- Impracticability
o How outrageously more expensive something is. It can be done, it's just so
ridiculous to pay for it.
- Frustration of Purpose:
o Both parties knew, this is why I'm entering the agreement. And if both parties
know the 'why' goes away, both parties are able to leave performance. Both
parties have to agree at the time of the K.
o A contract may be rescinded if a key provision in the contract becomes
impossible to perform due to no fault of either party.
 Put frustration of Purpose in the recitals and make it explicit.
o Diff b/t FOP + Impossibility: FOP performance remains possible but the EV of
the performance to the party seeking to be excused has been destroyed.
- Prevention by a Party
- Unexpected Forfeitures
- Unspecified order as to when each party is supposed to do something.

3) Breach by one party (material or partial).

 - Material
- Partial
Note: Breach excuses performance by the other party until the breach is resolved.

4) Repudiation/anticipatory repudiation.
• "I just tell you that I'm not going to perform. You don't have to perform either."
If we excuse parties, need to keep things fair.
- For partial performance, payment for the value of the performance.
o 6. If not, have the [material] terms been breached?
Breaches: [COMMON LAW]
- Does not matter if the breach is intentional or not.
- Bigger the breach, the more remedy you have.
If the breach is a promise or a condition.
- If you're talking about promises = substantial performance
- If you're talking about conditions = strict performance

Steps to Examine the Breach:

Was there a breach?
- Or is the non-performance:
o Excused?
o Waived?
o Modified?

If the performance really was a breach:

- Partial or total?
o Jacob & Youngs: Breach does not always have to lead to abolishing the K. Just
pay the damages and move on.
 what should you care about more? The economic deal [maj] or the parties'
preference? GO WITH BOTH ARGUMENTS
Remedies follow from interpretation of the K's meaning:
- If the breach is material, then measure of damages is expectation value [cost of
replacement]
- If the breach is minor, then it's still expectation value [but only tiny breach $$$]
o Exception: IFF the cost of completion is grossly + unfairly out of proportion to
the good to be obtained, then the measure of damages is reduction in value.
Material Breach  Common Law Concept
- Material breaches excuse future performance, not past performance.

Non-Material Breach
An omission can be atoned by the allowance of the resulting damage and will not always be the
breach of a condition to be followed by a forfeiture.
You can always sue for damages for a breach. W/a material breach, you can also suspend your
own performance.

Exceptions to Material Breaches

- Divisible K's
o Idea is to provide an exception to the harsh rule of material breach = damages + suspend
performance. But the K MUST make 'divisible' either explicit or easy to infer.
 Dividing the K into two sets of partial performances.
 Failure to perform one part does not bar recovery for performance of another.
- Election of Remedies
o When a material breach occurs, non-breaching party may
 Elect to terminate K and recover full damages
 Or continue the K and recover damages solely for the breach.
o Difference between waivers and remedies
 “If a party waives her right to performance under a contract, then she has no
remedies to elect because she has waived her ability to enforce the relevant
provision.”
UCC  Perfect Tender
UCC + Perfect Tender: NR's favorite part
Two Worlds/Jurisdictions [mutually exclusive]  either 2-601 "loves this rule" OR 2-612
- UCC 2-612 [installment K's] = One K, receiving separate lots.
- Everything else is Perfect Tender under 2-601: how you describe the good the other party
is buying
o Perfect tender rule violated even if the good given is nicer than what was agreed
to. Better tender is NOT perfect tender.
 If you reject, must be effective.
 If not effective, you have accepted the goods, even if you did not
intend to do so.
- Exceptions to 2-601;
o Notice Rule: 2-605
 Condition precedent to recover under the 2-601
 Can Reject
o If you reject, you must tell the seller WHY you are
rejecting the goods
o Saving the K; Cure Rule 2-508
 Seller can seasonably notify of intention to fix AND make a conforming
delivery.

Anticipatory Repudiation
What do you do when the other party says, "Hey I'm going to breach."
- If repudiation is VERY CLEAR: Non-breaching party can sue as if time for performance
of the duty has already occurred
o Can sue immediately
o Or can wait until performance is due, then sue for damages
- If it's unclear, want to build in some way of checking
o Safest thing to do is to ask for adequate assurance of future performance
 If unclear, may not be AR, but a mere request to modify the K.
- Retracting Repudiation: until and unless the other party has relied
o 7. If there has been a breach, what's the remedy?
 Damages:
1) Performance Damages: Dollar Consequences of no breach
 2) Expectation Damages: People make K's expecting the other party
will perform

Your Mantra is start w/ expectation and use it unless there's a good

reason not to.
• Variations from expectation damages:
• Foreseeability issues (we’ve already covered that one).
• Mitigation issues (ditto).
• When reliance or restitution is more likely to work (proof
problems, and maybe “losing Ks”).
• Can't use consequential damages for reliance
• Certainty issues (also involves proof problems, which is why
some parties try liquidated damages).
• Limitations on remedies (think “repair/replace”).
• Specific performance (think “unique”).
• Injunction (“do this”) / negative injunction (“you can’t do
that”).

Quasi-K
Unjust Enrichment
1. Beneficiary was aware that the provider of the benefit expected payment.
2. There was a benefit in fact.
3. It’s unjust to allow beneficiary to retain value of benefit w/o paying.

Equitable Remedies:
• The one you’ll need (and use) most: quantum meruit.
 • Courts generally use equitable principles when law is just too darn harsh and the court wants to
be creative (e.g., Pull, p. 979).

Similarities between the UCC and Common Law

Good Faith in K's  Everything implies good faith and fair dealing.
• UCC 1-304: Every contract or duty within [the UCC] imposes an obligation of good
faith in its performance and enforcement.
• R2dK 205: Every contract imposes upon each party a duty of good faith and fair dealing
in its performance and its enforcement.
Differences between the UCC and Common Law [CL]
1) Parties Matching
- CL: Matters who offeror/offeree is, and that they match
o At any moment want to say, "poof, a K!"
- UCC: Does not matter as much
o Might not exactly be sure when a K is formed, less formal
o Quantity is very important for CL
o Between 2-207 and CL
1) 2-207 makes an imperfect acceptance effective as an acceptance,
rather than as a counter offer.
2) Differ on the last shot rule as well. 2-207-3 does away with it, c/l
still uses it.
 Under common law, an acceptance or confirmation which contains terms
additional/different from those of the offer or oral agreement is a rejection
of the offer/agreement and becomes a counter offer
 Under UCC 2-207: a definite expression of acceptance which is sent
within a reasonable time operates as an acceptance even though it states
terms additional/different from those offered/agreed upon
1) Unless acceptance is expressly made conditional on assent to the
additional/different terms.
2) K Modification
- CL: Requires real consideration
- UCC: You don't need consideration, only good faith under UCC 2-209
 Pay attention to whether your jurisdiction has adopted the UCC's
comments or just the sections
3) Failure of Seller to Perform
a. CL: Material Breach + Exceptions
b. UCC: Perfect Tender
i. 2-601, 2-605-1, 2-508, 2-612

Uniform Commercial Code  Relevant #'s

UCC § 2-201
(1) A writing is not insufficient because it omits or incorrectly states a term agreed upon but the
contract is not enforceable under this paragraph beyond the quantity of goods shown in such
writing.
(2) 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 subsection (1) against such party unless written
notice of objection to its contents is given within 10 days after it is received. . . .
- NR: [the “answer the darn letter” exception to the S of F for merchants]
Ways to get around 2-201
(3): A contract which does not satisfy the requirements of 2-201 (1) but which is valid in other
respects is enforceable
(a) if the goods are to be specially manufactured for the buyer and are not suitable for
sale to others in the ordinary course of the seller’s business and the seller, before notice
of repudiation is received and under circumstances which reasonably indicate that the
goods are for the buyer, has made either a substantial beginning of their manufacture or
commitments for their procurement [special orders exception]; or . . .
(b) if the party against whom enforcement is sought admits in his pleading, testimony or
otherwise in court that a contract for sale was made, but the contract is not enforceable
under this provision beyond the quantity of goods admitted [sworn statements]; or . . .
(c) with respect to goods for which payment has been made and accepted or which have
been received and accepted (Sec. 2-606) [admission by conduct].

UCC § 2-202  Parol Evidence Rule

Terms with respect to which the confirmatory memoranda of the parties agree or which are
otherwise set forth in a writing intended by the parties as a final expression of their
agreement with respect to such terms as are included therein may not be contradicted by
evidence of any prior agreement or of a contemporaneous oral agreement but may be
explained or supplemented
(a) by course of performance, course of dealing, or usage of trade (Section 1-303);
and
(b) by evidence of consistent additional terms unless the court finds the writing to
have been intended also as a complete and exclusive statement [complete integration]
of the terms of the agreement

UCC § 2-205: 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.
UCC § 2-206[1][a] provides that 'unless otherwise unambiguously indicated by the language
or circumstances an offer to make a contract shall be construed as inviting acceptance in any
manner and by any medium reasonable in the circumstances.'

UCC § 2-207  See the Flow Chart

2 ways to find yourself in 2-207  If everything agrees, no 2-207 b/c no problem of
interpretation
If PER does not apply, cannot analyze battle of the forms under 2-207
c. [From 2-207-1 to 2-207-3] Parties have discussions, reach agreement, and say
"we're going to put it in writing."  2-207-1 Or Forms that cross.  2-207-1
i. Add'l/Diff. Terms
1. My way or the highway situation? 'Express Agreement'
a. No?
i. Did they keep performing?
1. Knock-Out Rules + Plug-In's
d. No my way or highway? Have a K, what do they mean?
i. Both Merchants?
1. New terms are automatically in unless
a. Only 2-207-2 Exceptions NR will test  Material
Alterations for
i. Changing the scope of warranty
ii. Brand new limitation of liability
iii. Arbitration instead of litigation
iv. Change in the venue of litigation
v. Sorts of things
vi. Insistence on Cashier's Checks
ii. Only one merchant?
1. 'mere suggestions for inclusion'  Course of performance can
apply to 2-207-2

(1) A definite and seasonable expression of acceptance or a written confirmation which is sent
within a reasonable 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.
(2) The additional terms are to be construed as proposals for addition to the contract. Between
merchants such terms become part of the contract unless:
(a) the offer expressly limits acceptance to the terms of the offer;
(b) they materially alter it; or
 (c) notification of objection to them has already been given or is given within a
reasonable time after notice of them is received.
(3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish
a contract for sale although the writings of the parties do not otherwise establish a contract. In
such case the terms of the particular contract 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.

§ 2-209. Modification, Rescission and Waiver.

(1) An agreement modifying a contract within this Article does not need consideration to be
binding.
(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.
(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.
(4)Although an attempt at modification or rescission does not satisfy the requirements of
subsection (2) or (3) it can operate as 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.

§ 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
a. refuse to enforce the contract,
b. or it may enforce the remainder of the contract without the unconscionable
clause,
c. or it may so limit the application of any unconscionable clause as to avoid any
unconscionable result.
i. In my words: W/ unconscionable K/Clause  Court can refuse to enforce
K at any time, strike the unconscionable clause and enforce the K, or limit
the clause's application.
(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.
 a. Parties get to help give info to the court to show they both do not want an
unconscionable ruling.
GAP FILLERS 
http://daviddfriedman.com/laws_order/laws_order_chapter_12/links/ch_12_160_txt_gap_fill_U
CC.htm

UCC § 2-305:
1) Parties can make a K even if price is not settled. Price is a reasonable price at the time for
delivery.
a) Nothing is said about price or
b) Price is left agreed by the parties and they fail to agree or
c) Price is fixed in terms of some agreed market/standard set or recorded by a third
person or agency is
UCC §2-307: Unless otherwise agreed all goods in a K must be tendered in a single delivery. If
each party wants multiple deliveries, price can be apportioned for each lot.
UCC §2-308: Absence of Specified Place for Delivery
a) Place for delivery of goods is seller's place of business.
UCC §2–309: Absence of Specific Time Provisions; notice of termination
1) K provides successive performances but indefinite in duration it is valid for a
reasonable time, but unless otherwise agreed, may be terminated at nay time by either
party.
2) That provision states that if no time for shipment or delivery is agreed upon, the seller
must tender the goods within “a reasonable time.” What a reasonable time is depends on
all the circumstances, e.g., how complicated the good is to make, past dealings of the
parties, practice within the industry, etc.
NR: Thinks two months is too long of a reasonable time under 2-309 for a sale of a good

§ 2-313  Express Warranties by Affirmation/Promise, Description,

Sample
(1) Express warranties by the seller are created as follows: Any of these will work.
(a) Any affirmation of fact or promise made by the seller to the buyer which relates
to the goods and becomes part of the basis of the bargain creates an express
warranty that the goods shall conform to the affirmation or promise.
 (b) Any description of the goods which is made part of the basis of the bargain
creates an express warranty that the goods shall conform to the description.
(a) Photos of goods are under B.
(c) Any sample or model which is made part of the basis of the bargain creates an
express warranty that the whole of the goods shall conform to the sample or
model.
(a) 3-D rep of what goods 'should' look like.
(2) It is not necessary to the creation of an express warranty that the seller use formal
words such as “warrant” or “guarantee” or that he have a specific intention to make a
warranty, but an affirmation merely of the value of the goods or a statement purporting
to be merely the seller’s opinion or commendation of the goods does not create a
warranty.  Don't need fancy words to have an EW.

§ 2-314  Implied Warranties  Merchantability

(1) Unless excluded or modified (Section 2-316), a warranty that the goods shall be
merchantable is implied in a contract for their sale if the seller is a merchant with
respect to goods of that kind. Under this section the serving for value of food or drink
to be consumed either on the premises or elsewhere is a sale.
(2) Goods to be merchantable must be at least such as
a. pass without objection in the trade under the contract description; and
b. in the case of fungible goods, are of fair average quality within the description;
and
c. are fit for the ordinary purposes for which such goods are used; and . . .
d. run, within the variations permitted by the agreement, of even kind, quality
and quantity within each unit and among all units involved; and
e. are adequately contained, packaged, and labeled as the agreement may require;
and
f. conform to the promise or affirmations of fact made on the container or label
if any.*
i. Differs from express warranties b/c no need for a basis of the bargain
resolution. Also, one does not have to rely on an implied warranty.
(3) Unless excluded or modified (Section 2-316) other implied warranties may arise from
course of dealing or usage of trade

§ 2-315:  Implied Warranties  Fit for the particular purpose

to which the buyer intends to put them.
Where the seller at the time of contracting has reason to know any particular purpose for
which the goods are required and that the buyer is relying on the seller’s skill or judgment to
select or furnish suitable goods, there is unless excluded or modified under the next section an
implied warranty that the goods shall be fit for such purpose.
- To exclude or modify any 'implied warranty of fitness' the exclusion must be a writing
and conspicuous.
- Does not require seller to be a merchant.

§ 2-316:  Excluding and Modifying Warranties

(1) Words or conduct relevant to the creation of an express warranty and words or
conduct tending to negate or limit warranty shall be construed wherever reasonable
as consistent with each other; but subject to the provisions of this Article on parol or
extrinsic evidence (Section 2-202) negation or limitation is inoperative to the extent
that such construction is unreasonable.
a. If you give a warranty, you can't take it away.

(2) Subject to subsection (3), to exclude or modify the implied warranty of merchantability
or any part of it the language must mention merchantability and in case of a writing must be
conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must
be by a writing and conspicuous. Language to exclude all implied warranties of fitness is
sufficient if it states, for example, that “There are no warranties which extend beyond the
description on the face hereof.”
(3) Notwithstanding subsection (2)(a) unless the circumstances indicate otherwise, all
implied warranties are excluded by expressions like “as is”, “with all faults” or other
language which in common understanding calls the buyer's attention to the exclusion of
warranties and makes plain that there is no implied warranty; and . . .
(b) when the buyer before entering into the contract has examined the goods or the sample
or model as fully as he desired or has refused to examine the goods there is no implied
warranty with regard to defects which an examination ought in the circumstances to have
revealed to him; and
(c) an implied warranty can also be excluded or modified by course of dealing or course of
performance or usage of trade.
(4) Remedies for breach of warranty can be limited in accordance with the provisions of this
Article on liquidation or limitation of damages and on contractual modification of remedy
(Sections 2-718 and 2-719).
§ 2-317:  Cumulation and Conflict of E/I Warranties
Warranties whether express or implied shall be construed as consistent with each other and as
cumulative, but if such construction is unreasonable the intention of the parties shall
determine which warranty is dominant. In ascertaining that intention, the following rules
apply:
(a) Exact or technical specifications displace an inconsistent sample or model or general
language of description.
(b) A sample from an existing bulk displaces inconsistent general language of description.
(c) Express warranties displace inconsistent implied warranties other than an implied
warranty of fitness for a particular purpose [2-315].

§ 2-318. Third Party Beneficiaries of Warranties Express or

Implied.
 Most restrictive [A] to Least Restrictive [C]
Alternative A (which is what Nevada chose to adopt):
- A seller’s warranty whether express or implied extends to any natural person who is
in the family or household of his buyer or who is a guest in his home if it is
reasonable to expect that such person may use, consume or be affected by the goods
and who is injured in person by breach of the warranty. A seller may not exclude or
limit the operation of this section.  [human people + family/guest]
Alternative B:
A seller’s warranty whether express or implied extends to any natural person who may
reasonably be expected to use, consume or be affected by the goods and who is injured in
person by breach of the warranty. A seller may not exclude or limit the operation of this
section.  [human people + not just family/guest]
Alternative C:

A seller’s warranty whether express or implied extends to any person who may reasonably
be expected to use, consume or be affected by the goods and who is injured by breach of the
warranty. A seller may not exclude or limit the operation of this section with respect to
injury to the person of an individual to whom the warranty extends.  [not just human
people + not just family/guest]
UCC 2-507  Timing of Payment
2-507(1): “Tender of delivery is a condition to the buyer’s duty to accept the goods and, unless
otherwise agreed to his duty to pay for them. Tender entitles the seller to acceptance of the goods
and to payment according to the contract.”

UCC 2-511[1]  Timing of Payment Continued

• 2-511(1): “Unless otherwise agreed tender of payment is a condition to the seller's duty to
tender and complete any delivery.”
• Note the “unless otherwise agreed” part.
• Cmt. 2 reads in part: “Unless there is agreement otherwise the concurrence of the
conditions as to tender of payment and tender of delivery requires their
performance at a single place or time.”

UCC 2-601  Perfect Tender Rule

Subject to the provisions of this Article on breach in installment contracts (Section 2-612) and
unless otherwise agreed under the sections on contractual limitations of remedy (Sections 2-
718 and 2-719), if the goods or the tender of delivery fail in any respect to conform to the
contract, the buyer may
(a) reject the whole; or
(b) accept the whole; or
(c) accept any commercial unit or units and reject the rest.
Note: Only applies in single-delivery K's, not in installment K's
Exceptions to the Harsh Perfect Tender Rule

UCC 2-605  Notice Provision

(1) The buyer’s failure to state in connection with rejection a particular defect which is
ascertainable by reasonable inspection precludes him from relying on the unstated
defect to justify rejection or to establish breach
(a) where the seller could have cured it if stated seasonably*; or

UCC 2-508  Cure Provision

(1) Where any tender or delivery by the seller is rejected because[it is] non-conforming
and the time for performance has not yet expired, the seller may seasonably notify
the buyer of his intention to cure and may then within the contract time make a
conforming delivery.
 (2) Where the buyer rejects a non-conforming tender which the seller had reasonable
grounds to believe would be acceptable with or without money allowance the seller
may if he seasonably notifies the buyer have a further reasonable time to substitute
a conforming tender.

UCC 2-609: Adequate Assurance of Performance

(1) A contract for sale imposes an obligation on each party that the other’s expectation of
receiving due performance will not be impaired. When reasonable grounds for
insecurity arise with respect to the performance of either party the other may in
writing demand adequate assurance of due performance and until he receives such
assurance may if commercially reasonable suspend any performance for which he
has not already received the agreed return. . . .
(2) Between merchants the reasonableness of grounds for insecurity and the adequacy
of any assurance offered shall be determined according to commercial standards.
(3) Acceptance of any improper delivery or payment does not prejudice the aggrieved
party’s right to demand adequate assurance of future performance.
(4) After receipt of a justified demand failure to provide within a reasonable time not
exceeding thirty days such assurance of due performance as is adequate under the
circumstances of the particular case is a repudiation of the contract. [tick, tick, tick
—time’s running]

UCC 2-610  What happens when one party repudiates.

When either party repudiates the contract with respect to a performance not yet due the
loss of which will substantially impair the value of the contract to the other, the aggrieved
party may
(a) for a commercially reasonable time await performance by the repudiating party; or
(b) resort to any remedy for breach (Section 2-703 or Section 2-711), even though he has
notified the repudiating party that he would await the latter’s performance and has urged
retraction; and
(c) in either case suspend his own performance or proceed in accordance with the provisions
of this Article on the seller’s right to identify goods to the contract notwithstanding breach or to
salvage unfinished goods (Section 2-704)

UCC 2-611  Retraction of Anticipatory Repudiation

(1) Until the repudiating party’s next performance is due he can retract his repudiation
unless the aggrieved party has[,] since the repudiation[,] cancelled or materially changed his
position or otherwise indicated that he considers the repudiation final....
(3) Retraction reinstates the repudiating party’s rights under the contract with due excuse
and allowance to the aggrieved party for any delay occasioned by the repudiation.

UCC 2-612  Perfect Tender does not apply to installment K's

'monthly charges'
1) An “installment contract” is one which requires or authorizes the delivery of goods in
separate lots to be separately accepted, even though the contract contains a clause “each
delivery is a separate contract” or its equivalent.
2) The buyer may reject any installment which is non-conforming if the non-
conformity substantially impairs the value of that installment and cannot be
cured ...; but if the non-conformity does not fall within subsection (3) [non-
conformity ruins the entire K] and the seller gives adequate assurance of its cure the
buyer must accept that installment. . . .
3) Whenever non-conformity or default with respect to one or more installments
substantially impairs the value of the whole contract there is a breach of the whole.
But the aggrieved party reinstates the contract if he accepts a non-conforming
installment without seasonably notifying of cancellation or if he brings an action
with respect only to past installments or demands performance as to future
installment

UCC 2-606  Acceptance of Goods

(1) Acceptance of goods occurs when the buyer
(a) after a reasonable opportunity to inspect the goods signifies to the seller that the
goods are conforming or that he will take or retain them in spite of their non-
conformity; or
(b) fails to make an effective rejection (subsection (1) of Section 2-602), but such
acceptance does not occur until the buyer has had a reasonable opportunity to
inspect them; or
(c) does any act inconsistent with the seller’s ownership; but if such act is wrongful as
against the seller it is an acceptance only if ratified by him.
(2) Acceptance of a part of any commercial unit is acceptance of that entire unit.

UCC 2-607  Effect of Acceptance

[1] The buyer must pay at the contract rate for any goods accepted.
(2) Acceptance of goods by the buyer precludes rejection of the goods accepted and if made
with knowledge of a non-conformity cannot be revoked because of it unless the acceptance
was on the reasonable assumption that the non-conformity would be seasonably cured but
acceptance does not of itself impair any other remedy provided by this Article for non-
conformity.
(3) Where a tender has been accepted
(a) the buyer must within a reasonable time after he discovers or should have
discovered any breach notify the seller of breach or be barred from any remedy; and
(4) The burden is on the buyer to establish any breach with respect to the goods accepted. . . .

UCC 2-608  Revocation of Acceptance in Whole or In Part

(1) The buyer may revoke his acceptance of a lot or commercial unit whose non-conformity
substantially impairs its value to him if he has accepted it
(a) on the reasonable assumption that its non-conformity would be cured and it has
not been seasonably cured; or
(b) without discovery of such non-conformity if his acceptance was reasonably
induced either by the difficulty of discovery before acceptance or by the seller’s
assurances.
(2) Revocation of acceptance must occur within a reasonable time after the buyer discovers
or should have discovered the ground for it and before any substantial change in condition
of the goods which is not caused by their own defects. It is not effective until the buyer
notifies the seller of it.
(3) A buyer who so revokes has the same rights and duties with regard to the goods involved
as if he had rejected them.

UCC 2-615 Excuse by Failure of Presupposed Conditions

Except so far as a seller may have assumed a greater obligation and subject to the
preceding section* on substituted performance:
(a) Delay in delivery or non-delivery in whole or in part by a seller who complies with
paragraphs (b) and (c) is not a breach of his duty under a contract for sale if
performance as agreed has been made impracticable by the occurrence of a
contingency the non-occurrence of which was a basic assumption on which the
contract was made ....
(b) Where the causes mentioned in paragraph (a) affect only a part of the seller’s
capacity to perform, he must allocate production and deliveries among his customers
but may at his option include regular customers not then under contract as well as
 his own requirements for further manufacture. He may so allocate in any manner
which is fair and reasonable.
Does not have to be proportional, has to be reasonable.
(c) The seller must notify the buyer seasonably that there will be delay or non-delivery and,
when allocation is required under paragraph (b), of the estimated quota thus made available
for the buyer.

Second Restatement of Contracts

R2D20: Misunderstanding: Differing from the Mistake Doctrine in R2D 151-
154
Misunderstanding occurs when the parties ascribe a different meaning to the same material term
of a contract. Different from the mistake doctrine
- The mistake doctrine, on the other hand, occurs when an agreement is made on the
assumption of a fact which objectively turns out not to be true.

R2d45 (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.

R2d50(2) Acceptance of Offer Defined; Acceptance by Performance;

Acceptance by Promise
Acceptance by performance requires that at least part of what the offer requests be performed or
tendered and includes acceptance by a performance which operates as a return promise.

R2d51 Effect of Part Performance Without Knowledge of Offer

Unless the offeror manifests a contrary intention, an offeree who learns of an offer after he has
rendered part of the performance requested by the offer may accept by completing the requested
performance

R2d54  Acceptance by Performance; Necessity of Notification to Offeror

(1) Where an offer invites an offeree to accept by rendering a performance, no notification is
necessary to make such an acceptance effective unless the offer requests such a notification.
(2) If an offeree who accepts by rendering a performance has reason to know that the offeror has
no adequate means of learning of the performance with reasonable promptness and certainty, the
contractual duty of the offeror is discharged unless
(a) the offeree exercises reasonable diligence to notify the offeror of acceptance, or
(b) the offeror learns of the performance within a reasonable time, or
(c) the offer indicates that notification of acceptance is not required.

R2d62
(1) Where an offer invites an offeree to choose between acceptance by promise and acceptance
by performance, the tender or beginning of the invited performance or a tender of a beginning of
it is an acceptance by performance.
(2) Such an acceptance operates as a promise to render complete performance.
[in other words, failing to complete the performance becomes a breach]

R2d69  O'ee Silence as Acceptance

1) Where an offeree fails to reply to an offer, his silence and inaction operate as an
acceptance in the following cases only
 a. Where an offeree takes the benefit of offered services with reasonable opportunity
to reject them and reason to know that they were offered with the expectation of
compensation.
b. Where the offeror has stated or given the offeree reason to understand that assent
may be manifested by silence or inaction, and the offeree in remaining silent and
inactive intends to accept the offer.
c. Where because of previous dealings or otherwise, it is reasonable that the offeree
should notify the offeror if he does not intend to accept.

R2d74 - Forbearance/Surrender of a Claim which proves to be invalid is not

Consideration
Unless:
1) the claim or defense is in fact doubtful because of uncertainty as to the facts or the law
OR 2) the forbearing/surrendering party believes at the time promises are made that the claim
or defense may be fairly determined to be valid.

R2d77 - When promises are NOT consideration

A promise or apparent promise is not consideration if by its terms the promisor or purported
promisor reserves a choice of alternative performances unless
2) (a) each of the alternative performances would have been consideration if it alone
had been bargained for; or
3) (b) one of the alternative performances would have been consideration and there is
or appears to the parties to be a substantial possibility that before the promisor
exercises his choice events may eliminate the alternatives which would not have been
consideration
a. In English, this means you can still have consideration even when part of the
consideration is illusory.

R2d86 - Promises made in recognition of a benefit previously received

(1) A promise made in recognition of a benefit previously received by the promisor from the
promisee is binding to the extent necessary to prevent injustice.
(2) A promise is not binding under Subsection (1)
(a) if the promisee gives the benefit as a gift or for other reasons the promisor has not
been unjustly enriched; or
(b) its value is disproportionate to the benefit.

R2d87 - Option K
4) 1) offer is binding as an option contract if it
 a. A) Is in writing and signed by the offeror, recites a purported consideration
for the making of the offer, AND proposes an exchange on fair terms within a
reasonable time; OR
b. B) Is made irrevocable by statute
i. NR: PAY THE CONSIDERATION!!
5) 2) An offer which the offeror should reasonably expect to induce action or
forbearance of a substantial character on the part of the offeree before acceptance
AND which does induce such action or forbearance is binding as an option contract to
the extent necessary to avoid injustice.
Inducement of Reliance + Actual Reliance = Enforceable Promise to the extent of the Reliance.
 Used when we can't find or enforce a K.

R2d89 - Promise modifying under a K but not fully performed

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; or
(b) to the extent provided by statute; or
(c) to the extent that justice requires enforcement in view of material change of position
in reliance on the promise.

R2d90  Promissory Estoppel  Promise Reasonably Inducing Action or

Forbearance  Will be Tested on the Exam
1) A promise which the promisor should reasonably expect to induce action or forbearance
on the part of the promise or a third person and which does induce such action or
forbearance is binding if injustice can be avoided only by enforcement of the promise.
The remedy granted for breach may be limited as justice requires.
a. As justice requires for an actual K  expectation damages  Moving Forwards
b. As justice requires for PE  reliance damages  Moving Backwards
2) A charitable subscription or a marriage settlement is binding under Subsection 1 without
proof that the promise induced action or forbearance.
In my words:
1) Must have a statement fact/promise
2) Promise must be relied on  inducing action or forbearance
3) Reliance must be reasonable
4) B/c of reasonable reliance, injustice if the promise was not enforced.
a. Damages for a K  Expectation Damages  Moving Forwards
b. Damages for a PE  Reliance Damages  Moving Backwards
Relevant only if state courts follow R2d90, # of states don't follow, don't follow PE, or treat PE
as a quasi-K. [Which is how NR treats it]
Notes: Reliance is one of the main bases for enforcement of the half-completed exchange, and
the probability of reliance lends support to the enforcement of the executory exchange.

R2d110[1]: Requiring a writing signed by the party to be charged, before they

are enforceable
1) K's of an executor to answer for a duty
2) K's to answer for the debts of another
3) K's in consideration of marriage

R2d110[2]  When A K needs to be in writing, Before the Other Party Can

Enforce
1) K for Sale of Goods for $500 or more
2) K for sale of securities
3) K for the sale of personal property not otherwise overed, beyond $5K
4) Writing signed by the debtor for an agreement which creates a security interest
5) No promise is sufficient of a new/continued K to take a case out of the statute of
limitations
a. Unless it's made in some writing signed by the party to be charged
i. Statute does not alter the effect of any payment of Principal/Interest
6) In many states other classes of K's are subject to a writing requirement

R2d131 Signed Memo Requirements

a) Reasonably identifies the subject matter of the K
b) Sufficient to indicate a K has been made b/t parties AND
c) States with reasonable certainty the essential terms of the unperformed promises in the K

R2d132 One Signature satisfies Several Writings

- If one of the writings is signed AND writings clearly indicate the same transaction… 75
pages but page 75 is signed by parties.
- Means you don't have to sign a 75 page document 75 fucking times.

R2d135 Contracts for Land Must be in writing to be enforceable [S&F]

R2d139. Enforcement by Virtue of Action in Reliance.  Quasi-K  Not full damages

R2d139 Enforcement by Virtue of Action in Reliance

(1) A promise which the promisor should reasonably expect to induce action or forbearance
on the part of the promisee or a third person and which does induce the action or forbearance
is enforceable notwithstanding the Statute of Frauds if injustice can be avoided only by
enforcement of the promise. The remedy granted for breach is to be limited as justice requires.
In determining whether injustice can be avoided only by enforcement of the promise, the
following circumstances are significant:
a) the availability and adequacy of other remedies, particularly cancellation and
restitution;
b) the definite and substantial character of the action or forbearance in relation to the
remedy sought; . .
c) the extent to which the action or forbearance corroborates evidence of the making
and terms of the promise, or the making and terms are otherwise established by
clear and convincing evidence;
d) the reasonableness of the action or forbearance;
e) the extent to which the action or forbearance was foreseeable by the promisor.

R2d152  Mutual Mistake

Mutual mistake occurs when both parties to a contract are under substantially the same erroneous
belief as to a true, material fact present at the time of the transaction:
- the mistake of both parties must be to a basic assumption on which the contract was
made;
- the mistake must have a material effect on the agreed exchange of performances; and
- the party seeking to avoid the contract must not bear the risk of that mistake.

R2d153:  Unilateral Mistakes

o B) “The most common sorts of such mistakes [unilateral mistakes] occur in bids
on construction contracts and clerical errors in the computation of price or in the
omission of component items.
- To establish an actionable unilateral mistake defense, the mistaken party needs to show
that he or she did not bear the risk of the error under R2D154, and either that
enforcement would be unconscionable or that the other party “had reason to know of the
mistake,” or caused it.

R2d154  When a Party Bears the Risk of a Mistake

- Party bears the risk of a mistake when:
o Risk is allocated to him by agreement of the parties
o He is aware during K formation, that he does not have enough info but treats
limited info as sufficient
  If you are a beginner, cannot use your ignorance/lack of knowledge as a
defense.
o Risk is allocated to him by the court

R2d178  Reasons to not enforce a K on public policy grounds

[1] A promise or other term of an agreement is unenforceable on grounds of public policy if
legislation provides that it is unenforceable or the interest in its enforcement is clearly
outweighed in the circumstances by a public policy against the enforcement of such terms. . . .
(2) In weighing the interest in the enforcement of a term, account is taken of
(a) the parties’ justified expectations,
(b) any forfeiture that would result if enforcement were denied, and
(c) any special public interest in the enforcement of the particular term. . . .
(3) In weighing a public policy against enforcement of a term, account is taken of
(a) the strength of that policy as manifested by legislation or judicial decisions,
(b) the likelihood that a refusal to enforce the term will further that policy,
(c) the seriousness of any misconduct involved and the extent to which it was
deliberate, and
(d) the directness of the connection between that misconduct and the term.

R2d202  Interpreting K Language

(1) Words and other conduct are interpreted in the light of all the circumstances, and if the
principal purpose of the parties is ascertainable it is given great weight.
(2) A writing is interpreted as a whole, and all writings that are part of the same transaction
are interpreted together.
(3) Unless a different intention is manifested,
(a) where language has a generally prevailing meaning, it is interpreted in accordance
with that meaning;
(b) technical terms and words of art are given their technical meaning when used in a
transaction within their technical field
(4) Where an agreement involves repeated occasions for performance by either party with
knowledge of the nature of the performance and opportunity for objection to it by the
other, any course of performance accepted or acquiesced in without objection is given great
weight in the interpretation of the agreement.

(5) Wherever reasonable, the manifestations of intention of the parties to a promise or

agreement are interpreted as consistent with each other and with any relevant course of
performance, course of dealing, or usage of trade.

R2d203  Interpreting K Language

(a) an interpretation which gives a reasonable, lawful, and effective meaning to all the terms
is preferred to an interpretation which leaves a part unreasonable, unlawful, or of no effect;
(b) express terms are given greater weight than course of performance, course of dealing,
and usage of trade, course of performance is given greater weight than course of dealing or
usage of trade, and course of dealing is given greater weight than usage of trade;
(c) specific terms and exact terms are given greater weight than general language;
(d) separately negotiated or added terms are given greater weight than standardized terms or
other terms not separately negotiated.

R2d206  Drafter bears the risk when K's terms/meaning is unclear

In choosing among the reasonable meanings of a promise or agreement or a term thereof, that
meaning is generally preferred which operates against the party who supplies the words or
from whom a writing otherwise proceeds. (Yep, that’s another “risk of loss” concept—the
drafter bears the risk unless otherwise agreed.)

R2d224  Conditions
A condition is an event, not certain to occur, which must occur, unless its non-occurrence is
excused, before performance under a contract becomes due.

R2d225  Conditions  Performance of a Duty

(1) Performance of a duty subject to a condition cannot become due unless the condition
occurs or its non-occurrence is excused.
(2) Unless it has been excused, the non-occurrence of a condition discharges the duty when the
condition can no longer occur.
(3) Non-occurrence of a condition is not a breach by a party unless he is under a duty that the
condition occur.

R2d227  Reducing Risk of Forfeiture

R2d227(1): In resolving doubts as to whether an event is made a condition of an obligor’s duty,
and as to the nature of such an event, an interpretation is preferred that will reduce the
obligee’s risk of forfeiture, unless the event is within the obligee’s control or the
circumstances indicate that he has assumed the risk. . . .

R2d229  Excusing Conditions… RARELY

R2d229: To the extent that the non-occurrence of a condition would cause disproportionate
forfeiture, a court may excuse the non-occurrence of that condition unless its occurrence was a
material part of the agreed exchange.

R2d234  Concurrent Performances

(1) Where all or part of the performances to be exchanged under an exchange of promises can be
rendered simultaneously, they are to that extent due simultaneously, unless the language or the
circumstances indicate the contrary. . . .
(2) Except to the extent stated in Subsection (1), where the performance of only one party under
such an exchange requires a period of time, his performance is due at an earlier time than that of
the other party, unless the language or the circumstances indicate the contrary.
- If one party is going to perform over time and the other has a one-shot performance, the longer
performance HAS TO go first.
- First, look to the parties' own agreement to see if there is an agreed-upon order of performance.
Including express conditions [with strict performance]

R2d237  Material Breaches

[I]t is a condition of each party’s remaining duties to render performances to be exchanged
under an exchange of promises that there be no uncured material failure by the other party to
render any such performance due at an earlier time.

R2d238  Simultaneous Performance = Both parties must perform

R2d238: Where all or part of the performances to be exchanged under an exchange of promises
are due simultaneously, it is a condition of each party’s duties to render such performance that
the other party either render or, with manifested present ability to do so, offer performance
of his part of the simultaneous exchange.

R2d240  Divisible Contracts

If the performances to be exchanged under an exchange of promises can be apportioned into
corresponding pairs of part performances so that the parts of each pair are properly
regarded as agreed equivalents, a party’s performance of his part of such a pair has the
same effect on the other’s duties to render performance of the agreed equivalent as it would
have if only that pair of performances had been promised.

R2d250  Repudiation
A repudiation is
(a) a statement by the obligor to the obligee indicating that the obligor will commit a
breach that would of itself give the obligee a claim for damages for total breach ..., or
(b) a voluntary affirmative act which renders the obligor unable or apparently
unable to perform without such a breach.

R2D251  Demanding Adequate Assurance of Due Performance

(1) Where reasonable grounds arise to believe that the obligor will commit a breach by non-
performance that would of itself give the obligee a claim for damages for total breach under §
243, the obligee may demand adequate assurance of due performance and may, if
reasonable, suspend any performance for which he has not already received the agreed
exchange until he receives such assurance.
(2) The obligee may treat as a repudiation the obligor’s failure to provide within a
reasonable time such assurance of due performance as is adequate in the circumstances of the
particular case.
- AAFP/AADP

R2d261  Impracticability
Where, after a contract is made, a party’s performance is made impracticable without his
fault by the occurrence of an event the non-occurrence of which was a basic assumption on
which the contract was made, his duty to render that performance is discharged, unless the
language or the circumstances indicate the contrary

R2d262  Death or Incapacity of Person Necessary for Performance:

If the existence of a particular person is necessary for the performance of a duty, his death or
such incapacity as makes performance impracticable is an event the non-occurrence of which
was a basic assumption on which the contract was made.
- If you require a person's ability to do it and they are no more, under certain
circumstances, death is an excuse to performance.

R2D347: Expectation Damages  What Courts Prefer

(a) the loss in the value to him of the other party’s performance caused by its failure or
deficiency, plus
(b) any other loss, including incidental or consequential loss, caused by the breach, less
(c) any cost or other loss that he has avoided by not having to perform.

R2d373: Restitution Damages  What Courts Do Not Prefer

(1) Subject to the rule stated in Subsection (2), on a breach by non-performance that gives
rise to a claim for damages for total breach or on a repudiation, the injured party is entitled
to restitution for any benefit that he has conferred on the other party by way of part
performance or reliance.
(2) The injured party has no right to restitution if he has performed all of his duties under the
contract and no performance by the other party remains due other than payment of a
definite sum of money for that performance.
b. When contract price is a limit. The rule stated in Subsection (1) is subject to an important
exception. If, after one party has fully performed his part of the contract, the other party then
refuses to pay a definite sum of money that has been fixed as the price for that performance, the
injured party is barred from recovery of a greater sum as restitution under the rule stated in
Subsection (2). Since he is entitled to recover the price in full together with interest, he has a
remedy that protects his expectation interest by giving him the very thing that he was
promised. . . .
NOTE: Not all courts follow this comment OR the Restatement. Some award more than the K
price if the unjust benefit conferred is greater than the K price.
R2d378  Election of Remedies
If a party has more than one remedy under the rules stated in this Chapter [Remedies], his
manifestation of a choice of one of them by bringing suit or otherwise is not a bar to another
remedy unless the remedies are inconsistent and the other party materially changes his
position in reliance on the manifestation.
- Basic idea: once you pick a remedy, we're going to assume that you meant to pick that
one.

R2D606  PER Rules

(1) A binding integrated agreement discharges prior agreements to the extent that it is
inconsistent with them.
(2) A binding completely integrated agreement discharges prior agreements to the extent
that they are within its scope.

R2D606  What Constitutes Acceptance of Goods?

(1) Acceptance of goods occurs when the buyer
(a) after a reasonable opportunity to inspect the goods signifies to the seller that the
goods are conforming or that he will take or retain them in spite of their non-
conformity; or
 (b) fails to make an effective rejection (subsection (1) of Section 2-602), but such
acceptance does not occur until the buyer has had a reasonable opportunity to inspect
them; or
(c) does any act inconsistent with the seller’s ownership; but if such act is wrongful as
against the seller it is an acceptance only if ratified by him.
2) Acceptance of a part of any commercial unit is acceptance of that entire unit.

Mirror-Image 'strictness' in CL depends on the jurisdiction

MISC:
Possible to create option K by providing the consideration of part performance.
K's can have conditions [P/S/C/] with clauses that are separate
Condition Precedent: Courts can refuse to enforce condition precedents b/c of disproportionate
forfeiture. You cannot insist on a condition precedent while preventing its occurrence. Courts
determine the purpose of the condition precedent.
Condition Subsequent
Condition Concurrent

Quasi-Contractville
6)

DAMAGES
 Expectation Damages: Expectation damages are damages recoverable
from a breach of contract by the non-breaching party. An award of
expectation damages protects the injured party's interest in realizing the
value of the expectancy that was created by the promise of the other party.
  Consequential Damages: Damages suffered because of the injured
party's particular circumstances. Also called special damages, since they
result from a breach of contract and yet would not necessarily be incurred
by every injured party experiencing that breach. Consequential damages
are generally not recoverable in contract disputes, but are recoverable in
tort.
 Incidental Damages: Compensatory damages for additional, reasonable
losses associated with/related to the actual damages caused by another
party's wrongful conduct.

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