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Ras Contracts 2021
Ras Contracts 2021
IS THERE AN AGREEMENT?
5. Acceptance
❑ Did offeree have knowledge of offer?
❑ Did offeree intend to accept?
❑ Did offeree change behavior to accept performance i.e. hole-in-one on purpose?
❑ Mirror image of offer? If not = counter-offer
❑ Was acceptance in form authorized by offer?
❑ If method of acceptance not specified in bilateral contract…
▪ Acceptance by return promise is not effective until communicated to offeror
▪ Acceptance by performance generally does not require the offeree to give notice
to the offeror
❑ Generally, silence ≠ acceptance (unless contracted around)
▪ Or, employee handbook example (good change, continuing to perform =
acceptance, but not if bad change)
6. Mutual Assent
❑ Mutual understanding on material terms of the contract
❑ § 20 No meeting of the minds, no mutual assent
❑ Latent Ambiguity: both parties attached reasonably different meanings to the same
term = no contract
▪ Parties can introduce trade usage to show one party should have known →
COURTS ARE SPLIT → do both parties have to be experienced in the trade?
❑ Patent Ambiguity: ambiguous on its face → written = judge, oral = jury if a
disagreement but always a contract bc they agreed it was ambiguous
❑ Default Rules: can be used to fill in immaterial gaps
7. Clickthrough v. Browsewrap
❑ Buy now, terms later
▪ Seller is master. You can return, but if you keep the good you accept the terms.
Doesn’t matter if you didn’t read them. (ex. Carnival Cruise)
▪ Minority rule: not enforceable bc buyer is not merchant and did not explicitly
agree (BTF)
❑ Clickthrough → always enforceable
❑ Browsewrap
▪ Would a reasonably prudent user have notice of the terms?
▪ Put the hyperlink in a different color, near a button they have to push, not on a
crowded page → better argument they had notice
❑ Policy: Are either of these really mutual assent in any meaningful way?
1. Not an issue in the UCC; don’t need consideration under UCC 2-205
2. Consideration
❑ Something given IN EXCHANGE for the promise THAT IS BARGAINED FOR (§ 71)
▪ Bargaining to have someone come to a place is enough
❑ Legal benefit to the promisor or detriment to the promisee? Some courts
▪ Can you refrain from something illegal?
▪ Argue: no detriment because already not allowed to do it
▪ Argue: yes detriment because still have the power to do it
❑ Promise must induce the consideration
❑ Courts don’t care about the adequacy or fairness of consideration, just care that it exists
▪ Feelings are not consideration, need something else that is bargained for
❑ Bilateral = parties promises are consideration (§ 75)
❑ Unilateral = parties performance is consideration (§ 72)
❑ Consideration is malleable, courts bend when they want a promise enforced
❑ § 81: Consideration can be incidental
▪ Promisor may have more than one motive in a deal, and their main motive does
not have to be the consideration
▪ Ex. main goal is family unity but bargaining for daughter to come over → bargain
for them to go somewhere is consideration
❑ Conditional / Gratuitous Promise
▪ Not consideration UNLESS you can show it was bargained for
▪ Ex. come to my house and I’ll give you a ring ≠ consideration
▪ Ex. come to my house and I’ll give you a ring but really want them to
come over so we can reconcile = consideration
❑ Bargained for exchange = expectation damages
3. Nominal Consideration: courts are split
❑ Argue: YES we should let people be bound when they want to be
▪ 1st restatement
❑ Argue: NO we shouldn’t spend societal resources on this
▪ 2nd restatement
4. “Consideration” Based on Past Acts
❑ Normally unenforceable for lack of consideration EXCEPT:
❑ Promise to pay past debt that would’ve been enforceable If not for SOL
▪ Only the new promise is enforceable; only enforceable up to original promise
❑ Promise to pay a debt discharged by bankruptcy
❑ Promise to perform a previously voidable obligation – i.e. contract as a minor
5. Material Benefit?
❑ Past consideration for a previously received benefit – courts are split
❑ Webb – enforced for saving his life (guy died without rescinding)
❑ If promisee was not the one who benefited → unenforceable (Mills)
❑ § 86: promise made because of previous material benefit from promisee is binding to
extent necessary to prevent injustice
6. Illusory Promise?
❑ Has one party promised so little that they haven’t promised at all? → NO
CONSIDERATION
▪ Parties are free to structure future obligations BUT actually have to promise
something for it to be enforceable
❑ Are any parties actually bound?
❑ Illusory promise = promisor retains FULL discretion
▪ No one is really bound
▪ i.e. “Yeah, if I feel like it…”
▪ i.e. “Payment remains entirely in our discretion”
❑ BUT: If party limits itself in some way, maybe not illusory, of it has good faith duty to
carry out obligation
▪ i.e. “I’ll pay if I am satisfied”
▪ “I’ll buy all the sweaters I need from you”
❑ Court can also imply promises
▪ Lady Duff
7. Promissory Estoppel (§ 90)
❑ Substitute for consideration
❑ Elements
▪ Clear and definite promise
▪ Promise reasonably expected to induce action / forbearance (detrimental
reliance)
▪ Actually does induce detrimental reliance
▪ Injustice can only be avoided by enforcing the promise
❑ § 90(2) - Charitable gifts that are relied on without reliance action?
▪ Courts are split
▪ Allegheny College / DeLeo
❑ § 139: reliance taking you out of the need SoF?
▪ Courts are split (ex. oral promise to gift land, P relies and makes improvements)
▪ Argue both (if they allow reliance to exit SoF, if they don’t allow)
❑ Damages: Split
▪ Williston: enforce to expectation or not at all (most courts are here)
▪ Corbin: this is about reliance → reliance damages → implies PE is independent
theory from contracts
8. Pre-existing duty / Renegotiation
❑ Is the new promise supported by new consideration? → golden
❑ § 89: is the renegotiation result of unforeseen changed circumstance and in good faith?
→ will enforce EVEN WITHOUT consideration
❑ BUT: if renegotiation is opportunistic taking advantage of a party without reasonable
alternative → no good faith → unenforceable for economic duress
❑ § 2-209: UCC agreement modifying contract is enforceable without new consideration
so long as it is in good faith
9. Type I v. Type II?
❑ Type I
▪ Basically have a deal
▪ Agreement on all material terms but just haven’t memorialized it to writing yet
▪ Binding as an enforceable contract
❑ Type II: NOTE: not all jurisdictions allow enforcement of these contracts
▪ Agreement to have fully formed contract
▪ Agreement on some material terms, others left open
▪ Bound to negotiate open terms in good faith
▪ Can have partial performance
▪ Good faith negotiations = no damages if it doesn’t work out
▪ Bad faith negotiations ONLY = reliance damages
▪ Bad faith negotiations + there would have been mutual assent if there had
been good faith negotiations = expectation damages
1. Statute of Frauds
a. Sale of land; transactions that by their terms extend beyond a year; and under
UCC sale of goods over $500; 2-201
b. What happens if there is an oral promise that was supposed to be in writing but
it wasn’t but it was relied upon - § 139 – courts can enforce based off that
reliance – courts are split if they would use this
i. We have an agreement, have a basis to enforce it, but the agreement
was just supposed to be in writing
ii. SEPARATE § 90 AND § 139 – because not all courts will follow
1. Two different inquiries
2. Yes you have reliance BUT can you get out of statute of frauds
with it
1. Ambiguities
❑ Ambiguous on its face OR after looking at outside evidence?
▪ Course of Performance RS + UCC
▪ Course of Dealing RS + UCC
▪ Trade Usage RS + UCC
▪ Negotiation History
▪ Common Sense
❑ *First 3 are hierarchy, rest as needed
❑ IF A CONTRACT ON IT’S FACE IS AMBIGUOUS → introduce ALL evidence
❑ Language is inherently ambiguous: plain meaning v. purpose of language – courts are
split
▪ Plain meaning: dictionary definition
▪ Purpose: look at what the contract intended and interpret the term in that way
❑ Contract is silent on terms? → Gap fillers
▪ UCC Gap Fillers:
▪ NO GAP FILLER FOR Q, NEED QUANTITY
▪ 2-308: place of delivery → seller’s residence or place of business
▪ 2-309: time for performance? → reasonable time
▪ 2-305: price? -> reasonable price (ONLY if there is a well-established mkt
price)
▪ 2-314: implied warranty of merchantability
2. Parol Evidence Rule:
❑ UCC § 2-202; RS § 209 - § 216
❑ Going to strike out some evidence in order to privilege the writing – but the question is
how much
❑ Only applies to agreements reached before or contemporaneously with the original
contract
▪ Does NOT bar evidence to interpret ambiguities
▪ Does NOT bar evidence to introduce fraud or mistake
❑ STEPS
▪ Is the writing integrated?
▪ If No → all evidence comes in
▪ Is it completely or partially integrated? To decide –
▪ Williston: four corners – privilege the writing - does the writing appear
complete? (NY is here)
▪ Corbin: look at ALL evidence to determine intentions – does it appear
complete? (UCC/RS are here)
▪ If Partially Integrated
▪ Introduce all consistent terms (not contradictory)
▪ If Completely Integrated
▪ Only outside evidence you can introduce is collateral (outside scope)
❑ Integration / Merger Clauses: helpful evidence if you are trying to prove this is a
completely integrated contract
▪ SPLIT: if follow Williston → conclusive; if follow Corbin → creates a presumption
it is complete but still look at evidence to make sure
3. Battle of the Forms
❑ STEP 1: is there an agreement
▪ Objective theory
▪ Can have differing terms, UNLESS the terms were conditional
▪ If second form is silent on an issue, first form WINS
❑ STEP 2: Are there DIFFERING TERMS? If so,
▪ White: Majority Rule:
▪ terms cancel each other out; use gap fillers or ignore
▪ Summers: Minority:
▪ First form controls
❑ STEP 3: Is there an ADDITIONAL Term? If so,
▪ Both parties are Merchants: automatically becomes part of contract if not
objected to UNLESS it materially changes the contract
▪ Not Merchants: party who’s form was silent has to explicitly agree in order for it
to become part of the contract
4. Duty of Good Faith
❑ Before the contract: you just can’t lie (hard balling is ok)
❑ You don’t have to put the other sides interests over your own BUT can’t advance your
own interests by throwing them under the bus
❑ Market Street: specifically not mentioning the paragraph v. saying “pursuant to our
lease” → argue good and bad faith
❑ Once you have a contract → try in good faith to perform
❑ The standard of good faith is ambiguous in contract law, but often based on a set of
facts you can argue one way or another
5. Statement of Opinion v. Statement of Fact
❑ UCC 2-313: statements of facts about the goods, description of goods, sample of goods
= express warranties → turns out false → can sue for expectation damages
(misrepresentation)
❑ Common Law: statements of facts can become express warranties → if not incorporated
into the contract use parol evidence → can sue for misrepresentation if found false
❑ § 168: Statements of opinions are generally not warranties
Do We Respect the Bargaining Process
Damages?