Contracts Checklist

Steven Watmore Is There a Contract? 1. Does the Code apply? a. Contracts for sale of goods 2. Is there an offer? a. Offer = manifestation of willingness to enter into a bargain i. Must be unequivocal and definite; offer exists when there is nothing left to negotiate and all that is left is for offeree to accept. b. Gratuitous promises are not offers. i. Nothing is being bargained for; terms are simply to facilitate giving of gift. ii. Can still be enforceable under 90 if promisee reasonably relies on gratuitous promise. 3. What type of acceptance is being sought? a. Offer seeking performance? i. No K until performance is completed. b. Offer seeking promise? i. K when return promise is given. 4. Can the offer still be accepted? a. Offers can be revoked at any time before acceptance. i. Revocation is effective upon receipt by offeree. b. Power of acceptance can be terminated by death or incapacity of offeree. c. Option contracts cannot be revoked. i. Can be created by consideration, part performance of unilateral K ( 45), reliance ( 87(2)), or firm offer ( 2-205) d. Revocation need not be unequivocal; enough to show that offeror is having second thoughts. 5. Was the offer accepted? a. Under mailbox rule, acceptance effective immediately upon dispatch via a reliable means. i. If acceptance incorrectly addressed, not effective until received. ii. Acceptance under an option K not effective until received. b. Acceptance must be mirror image of offer. i. Acceptance w/ additional or different terms is a rejection and/or counter-offer, no K created. ii. CODE CASES DO NOT USE MIRROR IMAGE RULE SEE 2-207! 6. Is there consideration? a. Sufficiency of consideration not an issue; only requirement is that offeror and offeree have bargained. i. Promisor gives promise seeking promisees perf/promise; promisee gives perf/promise seeking promisors promise. b. Past acts and pre-existing duties are not consideration i. Cannot bargain for something that you already have or has already occurred. 7. If no consideration, is there a substitute? a. Reliance - 90 i. Promisee has taken action or forborne from exercising a legal right in reasonable reliance on promise ii. K enforceable to extent necessary to prevent injustice iii. Charitable contributions and marriage settlements are binding without proof that the promise induced action/forbearance b. Past benefit - 86 i. Promisor has been unjustly enriched by non-gift performance of promisee 8. Is the contract enforceable?

a. Incapacity i. Minors and mentally incapacitated adults are not able to make Ks b. Statute of Frauds i. Need signed writing ( 131) evidencing contract for: 1. Contracts taking longer than a year ( 130) a. Unless terms of contracts dont explicitly state performance cannot occur within a year b. Unless one party has given full performance c. Unless there is reliance ( 139) 2. Contracts for sale of real property ( 125) a. Unless there is part performance ( 129) b. Unless there is reliance ( 139) 3. Contracts to be a surety for another ( 112) a. Main Purpose exception ( 116) b. Make sure its not a novation ( 115; p. 298) 4. Contracts for sale of goods in excess of $500 ( 2-201) a. Merchants exception ( 2-201(2)) b. Unless they are custom goods ( 2-201(3)(a) c. Unless the charged party admits to the K (2-201(3)(b)) d. Unless goods have already been shipped/accepted or paid/accepted ( 2-201(3)(c)) e. POSSIBLY 139 ii. Not all jurisdictions allow 139, see Ozier. c. Misrepresentation/Concealment i. Misrepresentation: assertion not in accord with the facts. ( 159) ii. Concealment: action taken to prevent other party from discovering facts ( 160) iii. Actionable if misrepresentation is material or fraudulent. iv. Bare nondisclosure not misrepresentation except for 161 d. Duress i. Improper threats ( 176) which leave the victim no choice but to agree to K. ii. Voidable under 175. e. Undue Influence ( 177) i. Pressure which is not quite duress; status issues which are not quite incapacity. ii. Overpersuasion. What are the Terms of the Contract? Or, How I Learned to Stop Worrying and Love 2-207 - Is there a definite and seasonable acceptance or written confirmation which has different or additional terms? o If it is not expressly conditional, then there is a K under 2-207(1). Go to (2): Additional terms are part of the contract if both parties are merchants, unless: the offer expressly limits acceptance to terms of the offer they materially alter the K offeror has given, or gives within a reasonable time, notice of objection to the terms. If both parties are not merchants, then additional terms are not in the K. Different terms (those which clash with terms in offer) are dealt with in three ways: Offerors terms win o Under this, offerees different terms are dropped from the K. Knockout rule o Under this, offerees and offerors terms are dropped and replaced with UCC gap-fillers.

Treat different as additional o Different terms receive same analysis under (2) as additional terms. If it is expressly conditional, no K under (1). Go to (3): If the conduct of the parties recognizes existence of a K (i.e., seller ships goods and is paid for them, buyer pays for and accepts shipment of goods), then the terms of the contract are those on which the parties writings agree, plus UCC gap-fillers. If not, no K.