2nd Half

Question 1

What do at common law we do if parties do not realize that they have conflicting terms, but enter a contract?

Answer 1

Result depends on if there was performance.

No performance = mirror image rule tells us the offer has not been accepted and the second statement with different terms is treated as a counteroffer.

Performance = “Last Shot Rule” = if the offeree performs anyways, the allowance of the performance would be treated as acceptance of the offerees counteroffer by conduct. Contract does exist and is on the offeree’s terms. Precedence to the terms last communicated before performance.

Question 2

When do we know if we can use the beautiful UCC Battle of the Forms flow chart and what is it?

Answer 2

MUST FIRST BE A SALE OF GOOD (if hybrid = predominate purpose test).

2-207 was drafted to avoid the effects of the mirror image and last shot rule.
Normally deals with preprinted forms or boilerplate forms, but doesn’t have to.

Question 3

2-207 Q1:
Was there a “definite and seasonable expression of acceptance”?

Answer 3

Definite = clear intent to accept
Seasonable = timely (if specified or reasonable time to avoid lapse of time termination §36)
Expression of acceptance = express offeree’s intent to accept and be relatively close to the terms of the offer.
- Where the terms differ can give you a clue as to whether it qualifies as acceptance under (1)

If the only difference lies in general boilerplate terms (nothing specific to the transaction), then acceptance is most likely an expression of acceptance.

If the difference is between the non-boilerplate terms then maybe expression of acceptance went too far.

Question 4

2-207 (Q1)
What does the next question mean: Was the acceptance expressly conditional?

Answer 4

Did the acceptance specify that it only wants to be considered acceptance if the offeree agrees to its change of terms.

Question 5

2-207 (2)
What do we do if both parties are NOT merchants?

Answer 5

Contract exists on the terms of the offer. The additional terms are considered proposals.

Question 6

2-207 (2)
What do we do if both parties are merchants?

Answer 6

Terms in the acceptance are part of the contract UNLESS a-c which in reality creates a pretty wide door… which makes us end up treating merchants and non merchants the same.

Question 7

2-207 (2)
How do we know if (b) the terms materially alter the offer?

Answer 7

An additional term materially alters the contract if it would cause “unreasonable surprise or unreasonable hardship”

Question 8

2-207 (3)
What do we do if parties perform the contract without fixing the conflicting terms?

Answer 8

The contract is going to be on the terms that do agree.
Throw out the terms that conflict.
Rest of the holes in the contract will be filled by gap fillers from Article 2 or, if none exist, any default rule supplied by common law.

Question 9

What are the three possibilities of the legal significance to preliminary agreements?

Answer 9

1. BINDING. That the parties intended the preliminary agreement to constitute a binding agreement, knowing that terms would be negotiated later;
   
   2. GOOD FAITH. That the parties intended the preliminary agreement to only bind them to a promise that they will continue to negotiate in “good faith” with the goal of reaching a final agreement;
2. MEANINGLESS. That the preliminary agreement did not commit the parties to anything, but it was merely a gesture or communication.

Question 10

How do I determine the legal significance of a preliminary agreement?

Answer 10

Look at the BINDING FACTORS and the GOOD FAITH factors in outline.

Question 11

What situation could lead to a court not enforcing a contract that the parties both assented to? (not talking about consideration or PE).

Answer 11

If the terms are so uncertain, indefinite, or incomplete (§33) that it is impossible to enforce the contract.
Essential minimum terms include price and duration.
“At some point, due to vagueness of a contract, interpretation becomes alteration” Baer v. Chase

Question 12

What is the statute of frauds? What is its purpose?

Answer 12

Law that tells us certain types of contracts have to be in writing to be enforceable. No one statute, but more of a collection of laws that say the same thing.

We want to prevent a party from making up a contractural obligation.
Having the document helps us figure out what the contract is about.

Question 13

What are the six things that are subject to statute of frauds?

Answer 13

Rest. §110: Classes of contracts covered
1. pay for debt or obligation of another
2. answering for the duty of your decedents
3. upon the consideration of marriage (prenup)
4. sale of land or transfer of interest in land
5. cannot be preformed within a year form the date they are made

2-201
6. Sale of goods over 500

Question 14

Statute of Frauds:
What does it mean that a contract cannot be preformed with in a year from the date it is made?

Answer 14

From the date the contract is made until it is fully preformed.
The performance doesn’t have to take over a year, it could take 30 seconds and still violate this.
If agreed to take place over a year, but is terminated before year mark, not subject to SOF.
Courts vary on what to do with contracts that CAN hypothetically be completed within a year.

Question 15

Statute of Frauds:
What are the requirements of the writing?

Answer 15

1. Must be a tangible medium (including electronic records)
2. Does not need to be structured in any particular farm. Does not need to have been created with the intent of serving as a record.
3. Record may include multiple documents to make up the parts.
4. Must be signed by the party against whom the contract is to be enforced (not both parties)
5. Whatever the form is, it must be consciously made or adopted (cannot be automatically generated).
6. Must contain enough info to show a contract is made by identifying subject matter and other essential terms.
7. Under UCC 2-201 (only for sale of goods) writing must specify a quantity.

Question 16

Recognized exceptions to the statute of frauds

Answer 16

1. Partial performance accepted
2. Promissory Estoppel
3. SALE OF GOODS Specifically manufactured goods

Question 17

Purpose of consideration as a requirement of an enforceable contract?

Answer 17

We want to limit the kinds of promises that are enforceable in court. We do not want every promise out there to have a legal remedy.

Question 18

What does a detriment mean?

Answer 18

A detriment exists where the promise does something she did not have a legal obligation to do, or refrained from doing something that she had the legal right to do.

Question 19

Two questions asked in the §71 “bargain theory of consideration”

Answer 19

1. Was the original promise made in order to induce a promise or performance in return?
2. Was the returned promise or performance given in response to the original promise?

Question 20

What do we look at to answer the first consideration question: “was the original promise made in order to induce a promise or performance in return?”

Answer 20

1. What was said and not said
2. The nature of the request (is what is being asked one that would require incentive)?
3. Is the promisor asking the promise to do something the promisor does not already have?
4. Was there a pre-existing duty to do what the promisor is asking?
5. Does the promise made by the promisor bind the promisor (not an illusory pormise)?

Question 21

Where does nominal/sham consideration fail?

Answer 21

When looking at the degree of detriment. The promise was not made to incentivize the sham.

Question 22

What factors do we look at when answering consideration question 2: “was the returned promise or performance given in response to the original promise?” (consideration)

Answer 22

1. Consider the promisee’s response
2. Has the promisee already done what the promisor is asking (past considerations)
3. Was the promisee already obligated to do it (pre-existing duty)?

Question 23

Do we examine the adequacy or fairness of consideration?

Answer 23

NO! §79 - or else everyone would come to court when they made a bad deal! Only exception is if the inadequacy is so gross that it “shocks the conscience” of the court.

Question 24

What is promissory estoppel?

Answer 24

Promissory Estoppel (PE) is a tool for enforcing promises which might not be enforceable as contracts because one of the §17 elements (mutual assent or consideration) is missing OR because for some other reason the contract is unenforceable (e.g., statute of frauds).

Question 25

Elements/questions of Promissory Estoppel §90

Answer 25

1. Was there a promise?
2. Should the promisor have reasonably expected to induce reliance by the pormisee?
3. Did the promisee rely?
4. Can injustice only be avoided by enforcing the promise?

Question 26

PE
What do we look at to know the answer to question 1:
Was there a promise?

Answer 26

Clear and definite, but not to the extent required by an offer, just clear enough to be reasonably relied upon.
Can also be via suggestion (Conrad)

Question 27

PE
What do we look at to answer question 2:
Should the promisor have reasonably expected to induce reliance by the promisee?

Answer 27

Reasonable person standard.
What did the promisor know? What did the promisor know the promisee knew?

Question 28

PE
What are the different approaches we can take to answer question 4:
Can injustice only be avoided by enforcing the promise?

Answer 28

Can focus on the reasonableness of the promisee’s reliance. Were the actions taken in reliance reasonable?
Can focus on the equities of enforcing or not enforcing the promise.

Question 29

What is the difference between expectation damages and reliance damages?

Answer 29

Expectation damages = forward looking. Put the plaintiff in the same position it would have been if the contract had been fully performed. Typical damage of breach claim.
Reliance damages = backward looking. Put the plaintiff BACK in the position it was prior to the contract by giving the plaintiff any reasonably foreseeable costs incurred in reliance on the contract.

Question 30

How can we predict which type of damages are appropriate for PE?

Answer 30

If PE is being used as a substitute for consideration, breach claim = expectation damages.
If PE is being used as an alternative cause of action = reliance damages.

Question 31

Key points about option contracts

Answer 31

1. Exist in parallel to another contract
2. needs to satisfy both elements of §17 mutual assent and consideration
3. Although the offeror promises not to revoke the offer, the offeree does not promise to accept it.

Question 32

How does a court treat consideration in an option contract

Answer 32

SUPER flexible.
Allows sham/nominal consideration to count.
Even allows mere recitals of consideration to count without the actual exchange.

Question 33

UCC’s version of an option contract

Answer 33

Firm Offer 2-205
1. by a merchant
2. signed writing

Does NOT need consideration. Even easier.

Question 34

When would the doctrine of Material Benefit be used?

Answer 34

Past consideration renders the contract unenforceable.

Question 35

What is Material Benefit?

Answer 35

Enforcement of a promised made in recognition of a benefit (past consideration) where the benefit was not intended as a gift and where the defendant promised to pay for the benefit later.
Restatement 2d §86

Question 36

When would the doctrine of Unjust Enrichment be used?

Answer 36

When an unfair transfer of value/benefit has been made and there is no remedy for breach because the contract is unenforceable or doesn’t exist.

Question 37

Elements of unjust enrichment

Answer 37

1. conferred a benefit
2. it would be unjust to deny recovery for the benefit

Question 38

What are situations where keeping the benefit (unjust enrichment) would NOT be unjust?

Answer 38

1. Benefit given with gratuitous intent
2. Intermeddler (trying to take advantage)
3. Plaintiff did the act for own benefit… D indirectly benefited.
4. Unjustifiably imposed benefit