Lucy v. Zehmer: How would a reasonable person interpret the other person's actions?
Embry vs. Hargedine: Inner intention does not matter if outer conduct is sufficient to form a written or oral K
Stage one: Was there an offer?, First: Content of communication., Not all terms must be spelled out or included., Watch for vague or ambiguous terms (fair, appropriate, reasonable) --> can be too vague to constitute offer (I will buy some X from you, maybe)., But there are requirement contracts (I will buy all the X I need from you). Exclusivity denoted by only, exclusively, all, solely, requirements., Look at party intent - would a reasonable person intend to read the communication as an offer?, Advertisements are generally invitations to offers (Lennard v. Pepsico), EXCEPT where it is clear, definite, explicit, leaves nothing open to negotiation - (Lefkowitz), Payne v. Cave - Auctioneer "ivnites bids" rather than acceptances. Otherwise, bidder would be bound by his acceptance while auctioneer was not.
Stage two: Was there a Revocation?, Revocation of offer, Revocation communication must constitute c/a notice and must be unambiguous. Words or conduct is sufficient, Dickinson v. Dodd: Cannot receive notice, even from a third party, that offer was accepted by someone else and thus no longer valid., Four offers cannot be revoked, Option - paid-for promise not to revoke (Common Law)., UCC Firm Offers, Made by a merchant, in signed writing, with a reasonable time (max. 3 months), Offer was foreseeably relied upon in a reasonably foreseeable way, Offer was for unilateral K and offeree made part performance., Must respond within reasonable amount of time, Offeree dies or is incapacitated, Acceptance must be reasonably timely, or else offer is revoked
Third Stage: Was there an acceptance or a rejection/counter-offer?, Where offer specifies no way of acceptance, any reasonable-under-the-circumstances form of acceptance is is valid, Mailbox Rule Question: 1. Two people are making a deal at a distance; 2. Both people use methods of communication that involve delays; 3. Communications are inconsistent, thus it is important to know when what communication became effective, Adams v. Lindsell: Where Mailbox Rule comes from, Rule 1: Most communications are legally effective only when received., Rule 2: Acceptances are valid upon dispatch, regardless on when or if they are received. #Policy:, Morrison v. Thoelke (Allan): Florida Mailbox Rule, DIRECT REJECTION - Notice must be given to accept an offer, Hill v. Gateway (Easterbrook) - Method of acceptance can be specified in offer. Here, it was a unilateral K agreed upon by keeping a computer past 7 days. Also, when there is only one form, 2-207, INDIRECT REJECTION can take four different forms, Counter-offer is a form of rejection., Beaumont v. Prieto (Holmes): A counter-offer terminates power of acceptance. Cannot accept an offer that one has rejected. Counter-offer is distinguished from mere inquiry. FACTS: "Alright, we accept, but by may first" is counter-offer, "We accept, but can it be May 1st? would be an acceptance + mere inquiry, I accept IF..., I accept AND..., Common Law mirror image rule would mean that there is no acceptance, UCC2-207: Battle of the Forms - two communications with discrepancy. Does not apply to offer of condition., First question: Not sure if a K was formed because offer and acceptance have differing terms, Second question: What are the terms of the contract., LAPSE OF TIME: Akers v. Sedberry (Felts): Time duration of PoA can be dictated in offer. Otherwise reasonableness.
"PRE EXISTING DUTY RULE. An act that happened previous to the agreement cannot be bargained for., EXCEPTION: "Life saver" scenario, Webb v. McGowin: Where a person for instance saves another person's life and the savee then promises to pay money, courts will presume that the savee would have made the same bargain if given the chance and that the promise is thus enforceable because of consideration, EXCEPTION to EXCEPTION - Where its not about life, Mills v. Wyman (1825) - D's son, a 25-year old, becomes ill while travelling, P nurses him back to health. After recovering, D promises to pay P's expenses. HELD that D's promise was void for lack of consideration., Promises to pay past/pre-existing debt., COMMON LAW, Foakes v. Beer - P receives judgment of 2000 against D. P and D agreed for D to pay it off in installments. D complies. P sues for interest in installments. HELD that the installment plan agreement is void for lack of consideration, Pinnels case - And agreement to render partial payment of debt to extinguish whole debt is valid for lack of consideration., UCC2-209: No consideration necessary for modifications to Ks.
MODIFICATIONS TO CONTRACTS, Common Law requires nrew consideration, treating each modification as new K, Alaska Packers v. Domienico: Corporation and workers agree for workers to work. Workers get there any shit is shitty. Workers axe for more dollar bill y'all. Corporation wins, because workers can't bargain with performance., POLICY: Do not let someone in a K coerce the other party into changing the terms by withholding performance, EXCEPTION: Where there modification is made in response to a new situation. No attempt of coercion, Watkins v. Kerrig: Dude hires miners to mine. Miners mine and discover adamantium. Dude and miners agree for dude to remove the adamantium at a price., UCC makes a modification to an existing K enforceable without consideration if the modification is in writing.
Non-consideration. Love and affection, a penny, or a prior act cannot constitute consideration, even if it is purported to be., Schnell v. Nell - Dude inherits a bunch of dollar bills. Wants to do the right thing and give it to his kids. HELD, void.
Bargained-for forebearance from a legal right iconstitutes causation., Dyre v. National Byproducts - A good-faith belief that one is refraining from a legal right is sufficient. HERE, iP thought he was forebearing from suit even though works comp. was his only remedy anyway., Hammer v. Sidway - Uncle asks nephew that if you stop smoking I'll give you $$$. Nephew stops smoking. --> Nephew limited his freedom enough to constitute legal detriment.
Best efforts can be implied., Wood v. Lady Duff Gordon - W and LDG agree for LDG to exclusively endorse W's products. LDG claims that is is unenforceable because of lack of consideration. HELD that there is an implied good faith effort consituting consideration from W.
ACCORD IN SATISFACTION - Common Law and UCC3-311 agree, CHECK CASHING PROBLEM - UCC3-311: Usually, a person cashing a check for less than the full amount due will lose. EXCEPT where 1) check is accompanied by a conspicuous writing saying that the instrument is tendered in full satisfaction; 2) claims was either unliquidated or subject to a good-faith dispute; 3) debtor acted in good faith., IFC Credit Corp v. Bulk Petroleum - A owes money to B. A and B agree for A to pay less than the full amount that is due. A sends check to C and explanation to B. B is bought out by C, so C receives the new letter. B receives explanation, then C cashes check and gives B money. HELD that this is okay because there was accord in satisfaction because check was cashed knowing of the explanation/intent to tender in full satisfaction.
Promissory Estoppel under R2d90, Where there is a promise, and the promisee has foreseeably relied upon that promise in a reasonable/foreseeable way, the Court should enforce the promise to the extent of preventing injustice., Knott v. Racicot - Detrimental reliance can substitute in option Ks, too. Even if it was not meant as an option K, it will be treated as one., Early Cases, Ricketts v. Scothorne - D was P's grandfather, and promised P to pay her $X annually so she would have to work any more. P quits her job. D pays for a little and then refuses to pay. HELD that equity demands PE/DR., Devecmon v. Shaw - D says: Take this trip to Europe and enjoy yourself, and I'll pay for it. D then refuses to pay, arguing that P just had a good time in Europe. HELD that it doesnt matter that the effect is detrimental, just that the action was changed., Kirksey v. Kirksey - Dissent is trying to force facts into consideration scheme. Widow is offered a place to stay by husband's brother. Brother then kicks her out. Court holds that it is a gratuitous promise., Retirement cases, Feinberg v. Pfeiffer - D works for P. P institutes new retirement packages. D keeps working in same capacity and then retires. Detrimental reliance because she wouldn't have otherwise retired knowing that she would not be able to find work again due to her age., Haze v. Plantation Steel - Different from Feinberg because D announces that he will retire, and afterwards discusses retirement plan. HELD that causation element is missing, and thus no detrimental reliance., Contractor/Subcontractor, TRAYNOR - Drennan v. Star Paving - P receives bid from D, a subcontractor, and then places a bid hiimself. D wants to get out of the offer and claims mistake. HELD that the mistake was not obvious, and thus P reasonably relied on it to his detriment., Snap-Up Offers, Hoffman v. Red Owl - NO SNAP UP OFFERS.. Where P should have known that a mistake was made in putting up the offer (too good to be true), P is barred from invoking detrimental reliance/PE., EXCEPTION: Gifts to charities are binding even in the absence of consideration., CARDOZO: Allegheney College v. Jamestown., POLICY: Began as an R2d invention, and now applies in pretty much every state.
C.V v. Drake - Doctrine of Reliance is created - Court states that expenditure and effort by promisee in response to promise should be consideration in equity.
TRANSFER OF INTEREST IN REAL ESTATE falls within SoF
LEASES FOR ONE YEAR OR LESS fall within SoF
A K FOR A SERVICE THAT IS TRULY IMPOSSIBLE TO PERFORM WITHIN A YEAR falls within the SoF. NOTE: One year period begins at time agreement is made., Note: Any task with no time indication will fall into this box - test is theoretically possible with unlimited resources. A K to tour the country for 18 months is not possible to do within 12 months even with unlimited resources.
MARRIAGE or Ks WHERE MARRIAGE IS CONSIDERATION fall within SoF
SALE OF GOODS FOR $500 OR MORE
EXECUTION OF A WILL falls within SoF
THERE MUST BE A WRITING (=Evidence of a K) SATISFY THE STATUTE OF FRAUDS (and render the K enforceable), Under Common Law, the writing must meet the ALL MATERIAL TERMS test. That is, the writing must identify the parties and what the parties agreed upon and be signed by the party against whom enforcement is sought., Radkey v. Brennan - Writing mustn't necessarily be a K, just has to evidence that there existed a K. HERE, it was a K for the sale of land. And the requirements were 1) express statement of consideration, 2) description of the land, 3) signed by the party to be bound, 4) must identify all parties to the K., Consider whether not enforcing the agreement woudl bring undue hardship upon P., LOOSE REQUIREMENTS - Under UCC2-201, the writing must 1) contain quantity of goods to be sold (doesn't have to mention price); 2) be signed by the party against whom enforcement is sought EXCEPT where both parties are merchants., EXCEPTION GENERALLY UCC2-201(3): Specially manufactured goods: No writing is required is goods are 1) specially manufactured for the buyer, 2) are not suitable for sale to others, AND 3) the seller has made either a substantial beginning of the manufacture or commitments for the procurement., UCC2-201(2) EXCEPTION - A memo can be enforceable even against the party who does not sign it, when both parties are merchants AND the recipient does not object within 10 days. In such a case, both the sender AND the recipient are bound. Sender must dispatch "within reasonable time.", St. Ansgar Mills - Mills and D make an oral K every month, Mills keep confirmation until D comes in. One month, D doesn't come in. Thus, he didnt get the confirmation until 40 days after. COURT HOLDS that in determining reasonable time, all circumstances have to be taken into account. Here, the common practice and custom indicated that 40 days was not unreasonable considering that D didn't come in just this one month., DETRIMENTAL RELIANCE EXCEPTION: Cloudcorp v. Hasbro, POSNER - complicated facts, bus essentially there was an oral agreement and no written K. HELD that (private/Kal) SoF can be waived by either 1) detrimental reliance (like HERE, on the other party's silence when P send modifications to them), and 2) clear and unequivocal waiver., MODIFICATIONS, General rule: To determine whether an oral modification of an existing K is effective, the K as modified is treated as if it were the original K. This is true regardless of whether the original K was oral or written. If the modifications are unenforceable, the original K is left standing., FLORIDA EXCEPTIONS, K for the sale of securities is enforceable in the absence of a signed writing even if it falls under an SoF category., Credit agreements must be signed by both parties in order to be enforceable., Newspaper/magazine subscriptions will be enforced ONLY if the buyer orders it in writing., EXCEPTION: ESTOPPEL, Estoppel: A writing is not required "if the party against whom enforcement is sought admits in his pleading, testimony, or otherwise in court that a K for sale was made, but the K was not enforceable UCC2-201(3)(b), CISG (Article 11) does not have a SoF provision, and thus no writing requirement for oral Ks. Can be proved by any means (incl. witnesses). Article 12 says that if you've made an Article 96 declaration, Article 11 is not enforced., EXCEPT where a country has made an Article 96 declaration (the US has). In such case, the state's version of the UCC's SoF would govern. Where the country has NOT made an Article 96, a K may still opt out of the CISG. To so, the K must say "This K is governed by the laws of [state], NOT byt the CISG.", POLICY: The idea here is that if the K specifies "this K is governed by the laws of NY" then the CISG is included in that, because the CISG, as a federal treaty, is included in "NY" by the Supremacy Clause., RELIANCE EXCEPTION: Reliance can be a substitute for writing. But this is not as universally adapted as the general PE doctrine.
Florida SoL, Periods of time, Written K: 5 Years, Oral K: 4 Years, To sue for rescission: 4 Years, K guaranteeing the outcome of a medical procedure: 2 Years, Limitation starts running at the time the breach occurs, rather than when damages occur. The end date is the date of filing the suit., Private, Kal, extensions of the SoL period are permissible. Privately, Kally, reducing the SoL is not permissible.
In most/other UCC states, in UCC-cases, SoL, Private, Kal, extension of SoL period are permissible. Private, Kal, reductions of the SoL to no less than 1 year (1 year minimum) are permissible.
Sometimes, economic duress, but generally not.
Capacity / infancy
Misrepresentations, Before agreement, one party makes to the other party a knowingly false statement. The second party then reasonably relies upon that statement. These facts make the agreement unenforceable / basis for rescission., In contract law, bona fide misrepresentations as to a material fact are still a basis for rescission for the misrepresented-to party.
Generally, no obligation to disclose. However, the relationship between the parties can be such that the court would find a fiduciary duty to disclose.
Void as against public policy., Two traditional scenarios, Exculpatory Ks - where a person is King away her liability for torts., General rule: Cannot K away liability for intentional torts or gross negligence., Can negligence liability be Ked away? General rule: yes, on an assumption of risk theory., Example: Parking garage tickets usually contain an exculpatory clause that is permissible, Example: Covenant not to compete - reasonableness.
MUTUAL MISTAKE - Where there is a mutual mistake about a material term and the people think they know what's up., Sherwood v. Walker - A cow is sold for a beef-cattle price. Both parties thought they knew that the cow was barren. Before delivery date, seller discovers that cow was preggers. COURT held that the K was not enforceable under the mistake doctrine, because of a mutual mistake as to a material Kal term (the nature of the thing to be sold)., Distinguish WILLING IGNORANCE - If one or both parties know that they do not have full/sufficient information on what was to be sold, the K is still valid because one should not incentivize willing ignorance., Wood v. Boynton - Rock is sold, turns out to be a diamond., A seller should know what she is selling. A court would allocate the risk of mistake to a seller as the least-cost avoider.
MISUNDERSTANDING - where a K term is ambiguous (has two meanings) and the two parties have different meanings in mind. Neither party has a/c knowledge of the other party's differing understanding. In such a case, the court would not find a K., Raffles v. Wickelshouse - Peerless case. There are two ships named Peerless, P had a different one in mind as D. HELD that no meeting of the mind had occurred and thus there was no K., Oswald v. Allen (2nd Circuit, Moore) - No K exists where there was a genuine mutual misunderstanding as to what was agreed upon.
If YES, Under both UCC and Common Law, PAROLE EVIDENCE RULE = applies to written Ks., POLICY: The final, written version of the deal should be a more reliable indication of what was agreed upon than any other document., When can extrinsic evidence be introduced? Depends on the K, An INTEGRATION is a writing which the court deems to be the product of the parties' intent to state the terms of their agreement., Some courts will apply the FOUR CORNERS TEST., Some courts will apply the CORBIN TEST., COMPLETE INTEGRATION: If the K contains a clause stating that it contains all terms for the K., Explanatory extrinsic evidence admissible., No contractictory extrinsic evidence admissible., No complementary extrinsic evidence admissible., PARTIAL INTEGRATION: If the K contains a clause stating that it is a non-final document., Explanatory extrinsic evidence admissible., Complementary extrinsic evidence admissible., No contradictory extrinsic evidence admissible., A MERGER CLAUSE (statement in K that writing constitutes final and complete terms) is not generally conclusive evidence.
If NO, UCC2-207, UCC2-207(1) - Even where an acceptance has different or additional terms than the offer, a K is formed., EXCEPT where the acceptance is made conditional upon the original offeror's assent to the new terms., EXCEPTION: Parties conduct as if a K has been made is sufficient to make a K even where one would not otherwise have been made,, Majority view: KNOCKOUT Rule, DIFFERING terms in acceptance and offer knock each other out and are replaced by UCC Gap Filler provisions., ADDITIONAL TERMS, UCC2-207(2) - The additional terms in the acceptance are then treated as proposals., IF both parties are merchants, The additional and different terms in the acceptance become binding UNLESS, UNLESS the offer is expressly limited to the terms in the offer., UNLESS the acceptance alters the offer materially. Fact-based jury question., EXAMPLES: Negation standard warranties, where clause allows less leeway than for is customary, a clause requiring that complaints be made in a time that is less than customary., UNLESS the offeror objects within a reasonable time AFTER acceptance, but also BEFORE acceptance., If at least one party is not a merchant., The additional and different terms in the acceptance do NOT become binding UNLESS the offeror expressly assents to them., Followed by Northrop Corp. Northrop Corp. v. Litronic Indus. (7th Cir. 1994) - There, there were additional terms in the K. Different terms are treated the same way as additional terms,, Minority view: OFFEROR IS MASTER OF THE OFFER Rule, DIFFERING terms in acceptance have no validity, and terms in offer govern., ADDITIONAL terms in acceptance are treated the same as under the Knockout Rule., Third view: ADDITIONAL and DIFFERING TERMS are TREATED THE SAME., Knockout Rule is applied to both additional and differing terms, and replaced by UCC Gap Filler provisions., NOTE: IF BOTH PARTIES PERFORM Ionics, Inc. v. Elmwood Sensors, Inc. (1997) (overrules earlier Ionics case) (1st Circuit): Can't get out of a K by invoking UCC2-207(1) unless clause or (2) because (3) says that performance means that a K has been created., First situation/2: Parties reach oral agreement, and one party sends WRITTEN CONFIRMATION, Second situation/2: Parties have exchanged writings that are not the mirror image of another., Common Law, Mirror Image Rules means that a purported acceptance with different or additional terms is NOT an acceptance, but RATHER A COUNTER-OFFER., POLICY: The movement away from this rule is to make away with an "easy out" for a party to the K., EXCEPTION - CONTRACT BY PERFORMANCE: Where the parties perform as if there had been an enforceable K, a K is in fact formed., There, the LAST SHOT RULE is applied. Additional or differing terms on the most recent document before performance., Early Ionics case.
An improper performance excuses another party from performance only if the impropriety rises to the level of MATERIAL BREACH., Under K law, there is no recovery for the party materially breaching, In equity, there may be recovery for the party materially breaching on a quasi-K theory.
Unambigous, Under Old Rule, the non-repudiating party would have to wait until AFTER the due date of performance to bring a suit., Under Current Rule, such an unambiguous statement constitutes a breach sufficient to sue., Can wait until performance is due to sue, Can cancel and sue for breach, Can urge to perform in spite of AR
Ambiguous, Under UCC, Where there are reasonable grounds for insecurity regarding the ability of the other party to perform, one can demand an adequate assurance of ability to perform and can withhold payment until such adequate assurance is received.
Under UCC - PERFECT TENDER RULE governs., Under PTR, buyer can REJECT delivery on ANY insufficiency, not matter how small., Seller then has the opportunity to REMEDY THE BREACH within a reasonable time.
A K must contain language of condition for this to be relevant., Express condition, Perfect compliance is required for condition to be satisfied., Good faith requirement - when the condition is within the control of a party, Implied condition, Perfect compliance is required for condition to be satisfied, Constructive condition, Substantial compliance is required for condition to be satisfied., Jacob & Youngs v. Kent - Copper pipe case. Homeowner refuses to pay contrator for failure to install O's favorite type of copper pipe. HELD for contractor, because it was not an express or implied condition, and substantial compliance was sufficient.
Where there is a post-K occurrence that negates the ability of a party to perform, then performance is excused, Taylor v. Caldwell - P and D enter into K for P to rent the operahouse in July. In June, the operahouse burns down. P sues D for non-performance. HELD in favor of D because his performance was rendered impossible by the fire.
Where there is a post-K occurrence that makes the performance of a party more expensive, performance is NOT excused. Court would hold that the party assumed this risk.
FRUSTRATION OF PURPOSE - A post-K unanticipated event that does not affect the ability of the parties to perform, but rather the reason why the party would want to perform., Coronation cases, 1. After the K was formed, but before the coronation, the King got sick. It was still possible to perform the K by renting the room, but the MUTUALLY UNDERSTOOD PURPOSE WAS FRUSTRATED. Thus, parties were excused from performance., 2, 3
Carrol v. Bowersock - P is contracted to put floors into a warehouse. P is halfway done. Warehouse burns down. D refuses to pay. HELD that D has to pay for whatever part is completed and is thus only partially excused from performance.
SPECIFIC PERFORMANCE, Only if money damages would be inadequate., NEVER specific performance in service Ks., Under UCC, specific performance is available where GOODS ARE UNIQUE, rather than fungible. (Example: Rembrandt painting)., In Real Estate Ks, issue depends on whether seller then sold it to another BFP instead.
MONEY DAMAGES, PUNITIVE DAMAGES, Where the breaching conduct rises to the level of a tort, punitive damages are appropriate. Generally, however, they are not, LIQUIDATED DAMAGES, Where the K itself indicates what the damages are for breach., This is valid where the dictated damages are reasonable or limiting., This is invalid where the dictated damages have a punitive purpose., EXPECTATION DAMAGES, BENEFIT OF THE BARGAIN - An expectation interest is the dollar position P had been in if there had not been a breach., CONSEQUENTIAL DAMAGES, DAMAGES THAT FLOWED FROM BREACH - Consequential damages are the dollar amount that was lost to P by the breach., Requirements, Something special about P, and D must know or have reason to know of this "specialness" before entering into the K., Crank Shaft Case, This specialness must then be the reason why the breach inflicts additional, foreseeable injury on P., RELIANCE DAMAGES, DAMAGES INCURRED BY RELYING ON K are awarded in order to "make whole" the P., RESTITUTION DAMAGES, DOLLAR AMOUNT OF BENEFIT INCURRED BY D that is given back to P so that D did not unjustly enrich itself., AVOIDABLE DAMAGES, Cannot recover for damages that could have been avoided. Two possible questions., A is building a bridge for B. B anticipatorily repudiates. A keeps building the bridge instead of canceling ans suing., Law firm offers me a job for 500 a week. Law firm breaches. Another firm offers me a job for 400 a week. In that case, I can only sue for 100. If I don't find another job, I can sue for 500, and I don't have to go look for something totally different like Wendy's.
POLICY: The purpose of remedies at law, and also of remedies at equity, is to compensate.
POLICY: The purpose of remedies at law is to protect P's monetary expectations.
What is the predominant purpose of the transaction? Service or good?, UCC applies where the good is the dominant aspect of the transaction, A specially manufactured good, like a painting, is a K for a good., National Historic Shrines Foundation, Inc. v. Dali - Buy a custom good under the UCC which includes specially manufactured goods. When the labor of the seller is devoted to the creation of goods as the end product of the work, it is the end product—the goods—that are sold, not the service of making them., UCC governs software licensing., Lan Systems, Inc. v. Netscout Service Level Corp. - the purchase of software might seem like an ordinary contract for sale of goods, but in fact the purchaser merely obtains a license to use the software, never is there a passing of title from the seller to the buyer for a price., Sale of a dog (pet), Saxton v. Pets Warehouse, Inc., UCC does not apply where the goods are furnished incidental to a service., Buying a bar is not a sale of goods where the a lot of what is sold is the good-will, liquor license, assignment of lease etc. are central ot the K., D.G Porter, Inc. v. Fridley, Adoption of dog (pet) is a service, Slodov v. Animal Protective League
EXCEPTION: CISG applies unless the parties have EXPLICITLY excluded its application.
Travelers Prop. Cas. Co. v. Saint-Gobain Technical Fabrics Canada, Ltd.
Article 95 declaration (US has made one) means that CISG will only govern where BOTH parties to the contract are headquartered in signatory states.