Contracts (Read Notes)

Question 1

What is a contract?

Answer 1

No entirely satisfactory definition of the term “contract” has ever been devised.

• Every contract involves at least one commitment that has legal consequences.1
• The usual, but not the inevitable, legal consequence is that performance of the commitment may be enforced in court by a money judgment and sometimes by a decree ordering specific performance.
• The obligation to perform present in every contract is stressed in a widely quoted but somewhat inaccurate,
• definition: “A contract is a promise, or set of promises, for breach of which the law gives a remedy, or the 2 performance of which the law in some way recognizes as a duty.”

A contract is not just a promise alone, but the complex set of elements (physical acts, gap fillers, recitals of fact, transfer of assets… etc

• Usually requires the assent of more than one person.
• Every contractual promise is made to someone who is PRIVITY with the promisor.
  
  • The relationship is key to differentiation of the contract and tort as well as property law.
• Is legally enforceable agreement

Question 3

Uncommon definition of a contract.

Answer 3

Professor Macneil has defined contract as “the relations among parties to the process of projecting exchange into the future.”8

One of the merits of this definition is that it stresses that a contract establishes an inter-relationship among the contracting parties that is broader than their promises and agreement.

The agreement is fleshed out by its social matrix which includes such matters as custom, cognizance of the social and economic roles of the parties, general notions of decent behavior, basic assumptions shared but unspoken by the parties, and other factors in the particular and general context in which the parties find themselves.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 2). West Academic. Kindle Edition.

Question 4

Contract law premise

Answer 4

a model consisting of two alert individuals, mindful for their self-interest, hammering out an agreement by a process of hard bargaining.

Question 5

Theory Sovereignty of the individual will -→ individual responsibility of promisors

Sanctity of promise -→ The law upholds moral values

Private autonomy -→ freedom of private sector with controls against excesses

Reliance -→ Fairness to Promises

Needs of Trade -→ Economic efficiency

Question 6

MUTUAL ASSENT

Answer 6

Usually, an essential prerequisite to the formation of a contract is an agreement—a mutual manifestation of assent to the same terms.

UCC Section 2–204 (1) provides: “A contract for the sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties 26 which recognizes the existence of such a contract.”

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (pp. 25-26). West Academic. Kindle Edition.

Question 7

Objective and Subjective ASSENT and INTENT

Answer 7

For more than a century the objective theory of contracts has been dominant.14 Under this theory the mental intentions of the parties are irrelevant.15 Still, even under the objective theory, the acts manifesting assent must be done either intentionally or negligently.16 (To act intentionally means to act with the intent to do the acts and not necessarily to desire the consequences.)

Meeting of the minds

Another portion of the objectivists’ credo is that objective manifestations of intent of the party should generally be viewed from the vantage point of a reasonable person in the position of the other party.18 The phrase “in the position of the other party” means that the other party is charged not only with the knowledge of a reasonable person but also with what that party knows or should know because of that party’s superior knowledge.19

A party’s intention will be held to be what a reasonable person in the position of the other party would conclude the manifestation to mean.

Parties must be serious

Question 8

INTENTION TO BE BOUND

Answer 8

The parties to a contract need not manifest an intent to be bound or think about any legal consequences that might flow from their agreement.30 Parties at the time of contracting do not necessarily think about these matters or discuss them. Corbin points out that if two ignorant persons agreed to exchange a horse for a cow there would be a contract even if the parties were unaware that society offers remedies for the breach of such an agreement.31 This rule is consistent with the rule that mistake as to a rule of law does not necessarily deprive an agreement of legal effect.32 The same result can be reached by employing the reasonable person test because “a normally constituted person” would know, however dimly, that legal sanctions exist.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 28). West Academic. Kindle Edition.

Question 9

INTENTION TO BE BOUND - not

Answer 9

The intent not to be bound or to intend legal consequences need not be explicitly stated; it may be inferred. Thus, if B accepts A’s invitation to dinner and arrives at A’s house at the appointed time and A is not there, B would not have a cause of action because it is a reasonable factual presumption that the parties intended that only a social obligation should result.41 The inference is that the parties did not intend legal consequences. Therefore, the agreement is not binding. The result would be different if the parties had manifested an intent to be bound.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 29). West Academic. Kindle Edition.

Question 10

INTENTION TO BE BOUND - not

Answer 10

The same presumption that the parties do not intend to be bound exists when a husband and wife live together amicably and make an agreement with respect to a housekeeping allowance.42 Even if the parties expressly state that they intend legal consequences, there are still questions of policy to be considered. Many courts have refused to enforce such an agreement on the grounds that the courts would be flooded by such actions, or that the suits would interfere with family harmony, or that the agreements are unfair because changed circumstances may require a greater or lesser allowance.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 29). West Academic. Kindle Edition.

Question 11

OFFER

Answer 11

An offer, with minor exceptions discussed below,44 is a promise to do or refrain from doing some specified thing in the future conditioned on the other party’s acceptance. A promise has been defined as “a manifestation of intent to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.”

While the First Restatement included the word “promise” in its definition of offer, the Restatement (Second) does not, defining an offer as “a manifestation of willingness to enter into a bargain so made as to justify another person in understanding that … assent to that bargain is invited and will conclude it.”49 Apparently the reason that the Restatement (Second)’s definition of “offer” does not include the word “promise” is that it intends to include within the definition an offer to an executed sale or barter where no promise is made by the offeror or the offeree.50

Once it is decided that a party has made an offer, it follows that the offer invites an acceptance. An offer empowers the offeree to create a contract by accepting the offer.51 The acceptance of an offer transforms the offeror’s conditional promise into a contract52 unless there is some other impediment its existence.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 31). West Academic. Kindle Edition.

Question 12

OFFER - Opinion vs. Promise

Answer 12

Because an expression of an opinion is not a promise it follows that it is not an offer. This distinction is often crucial, as illustrated by statements made by a physician in the doctor-patient relationship.

A physician, however, can enter into a binding express contract54 to cure,55 to obtain a specified result,56 or administer a prescribed treatment.

In each of these cases the question is whether the defendant made an offer or merely expressed an opinion. Under the tentative standard proposed, this is determined by inquiring whether a reasonable person in the position of the plaintiff would conclude that the defendant made a promise or merely stated an opinion. Sometimes this is a question of law; at other times a question of fact.71

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 33). West Academic. Kindle Edition.

Question 13

OFFER - Intention, Hopes and Estimates

Answer 13

Statements of wishes, hopes, or desires are not promises or offers.77 Similarly, an estimate is not generally an offer.

It should be clear, however, that the word “estimate” itself is not conclusive because “estimate” in context may be used in the sense of “offer.” For example, if the party in response to an invitation to bid says “I estimate” such an amount, this may be an offer.

Equitable estoppel traditionally requires misrepresentation of fact, reliance and injury.

If A writes to B asking, “Will you sell me your property on Rockledge Drive for $50,000?” This is not an offer but an inquiry. A question is not an offer because it seeks information and is not a commitment.

A statement by a lender to the effect that it was “willing to discuss a workout proposal” along the lines previously discussed is merely an invitation to continue negotiations.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 34). West Academic. Kindle Edition.

Question 14

OFFER - Intention, Hopes and Estimates

Answer 14

If a clothing store advertised a well-known brand of suit in the following terms, “nationally advertised at $440, today only at $250,” and A came to the store in response to the ad, selected a suit and tendered $250, would there be a contract? The answer is, perhaps surprisingly, no.86 Because the ad has not stated a quantity, and there is no 35 language of commitment, the cases hold that the ad is only a statement of intention to sell or a preliminary proposal inviting offers.

If a clothing store advertised a well-known brand of suit in the following terms, “nationally advertised at $440, today only at $250,” and A came to the store in response to the ad, selected a suit and tendered $250, would there be a contract? The answer is, perhaps surprisingly, no.86 Because the ad has not stated a quantity, and there is no 35 language of commitment, the cases hold that the ad is only a statement of intention to sell or a preliminary proposal inviting offers.

If a clothing store advertised a well-known brand of suit in the following terms, “nationally advertised at $440, today only at $250,” and A came to the store in response to the ad, selected a suit and tendered $250, would there be a contract? The answer is, perhaps surprisingly, no.86 Because the ad has not stated a quantity, and there is no 35 language of commitment, the cases hold that the ad is only a statement of intention to sell or a preliminary proposal inviting offers.

store ad: “1 Black Lapin Stole, Beautiful, Worth $139.50 … $1.00 FIRST COME FIRST SERVED.” The plaintiff was the first in line when the store opened and tendered a dollar. The court held that this ad was an offer.92 The Restatement (Second) indicates that the basis of the decision is that the words “FIRST COME FIRST SERVED” are promissory, an element ordinarily lacking in ads for the sale of goods.93 Also, the ad made a statement of quantity (one).94

Even if the ad is not an offer, its terms may be tacitly included in a contract that is subsequently entered into by the parties.97 When the customer makes an offer to purchase, the advertised terms may be an implicit part of the offer.

There is, however, a trend holding that the display of goods in a supermarket does constitute an offer.

Under French law the advertisement is deemed to be a conditional offer which may be accepted by any member of the public subject to the offeror’s power to reject an unreasonable acceptance.104 This seems a satisfactory solution.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 36). West Academic. Kindle Edition.

Question 15

OFFER - Intention, Hopes and Estimates - Auctions

Answer 15

The auctioneer’s query, “What am I bid?,” is not an offer to sell. The query is merely an invitation for offers to purchase. The auctioneer can accept or reject the bids.

The rules governing auction sales of goods, are incorporated in the UCC111 which continues the important distinction between auctions “with reserve” and auctions “without reserve.”

In an auction “with reserve” the bidder is the offeror and a contract is complete when the auctioneer so announces, often by the fall of the hammer.

Unusual rules govern auctions announced to be “without reserve.” The UCC retains the common law rule that the auctioneer may not withdraw the article from sale after calling for a bid on the article (provided that a bid is received within a reasonable time),115 but it permits the bidder to withdraw until the article is knocked down.

governs the rights of the parties where the auctioneer’s, or seller’s agent (a shill) makes a bid and the auctioneer has not retained (“reserved”) the right to have a shill make such bids—a practice called “puffing.”

What is meant by the phrase “at the price of the last good faith bid prior to the completion of the sale?” Suppose only B and A, a shill, bid. B makes the first bid of $40 and each party alternately raises the price by bidding $10 more until the price of $100 is bid by B and at that point the goods are knocked down to B. Note first that B is the buyer even if the auction is “with reserve.” At what price may B claim the goods? Because the UCC provision was designed to protect B against puffing, it has been suggested that B should have the goods at $40 despite the fact that all of B’s bids were literally in good faith, including the last.120 But suppose that C, a legitimate bidder, had made the $90 bid? Although there has been puffing, a third person bid $90. It has been suggested that, in order to protect C’s interests, B, if B elects to buy, must pay $90

Question 16

QUOTATIONS

Answer 16

A price quotation is usually a statement of intention to sell at a given unit price.

Even if the word “quote” is used in a communication addressed to an individual, it is commonly understood to mean that an offer is invited.

In one case136 the plaintiff asked for the defendant’s price on 1000 gross of Mason jars. The defendant answered, stating detailed terms including price, using the word “quote,” but also stating that the price was “for immediate acceptance.” The court decided that defendant’s communication was an offer despite the use of the word “quote.”

In another case S wrote to B, “We quote you Hungarian [flour] $5.40 [per barrel] car lots only and subject to sight draft with bill of lading. We would suggest your using wire [telegram] to order as prices are rapidly advancing that they may be beyond reach before a letter would reach us.” The court held that this was not an offer because S’s communication did not specify a quantity.139 If the word “offer” had been substituted for the word “quote” the result would still be the same because of the failure to specify quantity.140

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 41). West Academic. Kindle Edition.

Question 17

QUOTATIONS - real property

Answer 17

The court held that a reasonable person should have concluded that the defendant was not making an offer, especially because it would be unreasonable to assume that the defendant was willing to be bound by more than one contract.

If the owner is so unwise as to make offers to sell the same property to more than one offeree, each of the offerees who has accepted such an offer will have a remedy against the offeror.

In Harvey v. Facey146 the plaintiff sent the following telegram to the defendant: “Will you sell us Bumper Hall Pen? Telegraph lowest cash price.” (Bumper Hall Pen was a parcel of real property.) The defendant answered, “Lowest price for Bumper Hall Pen £900.” Plaintiff sent a telegram of acceptance. The court reasoned that, because the plaintiff’s first question concerning the willingness to sell the property had not been answered, defendant’s communication did not contain a promise to sell. But couldn’t defendant’s communication be reasonably understood to say, “Yes, I will sell you Bumper Hall Pen for £900?”

Another possible explanation is that courts are quite properly reluctant to construe a communication as an offer unless it is quite clear that a promise has been made.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 42). West Academic. Kindle Edition.

Question 18

PRELIMINARY NEGO

Answer 18

Preliminary negotiations can be defined to include any communication prior to the acceptance148 or any communication prior to the operative offer in the case.149 Because our topic is offers, the second definition is preferable for present purposes. Preliminary negotiations include statements of opinion, statements of intention, hopes, estimates, inquiries, invitations to make offers, advertisements, catalogs, circular letters, invitations to make bids, and price quotations.

under the objective theory of contracts, the test is whether a reasonable person in the position of the plaintiff would conclude that the defendant had made a commitment.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 43). West Academic. Kindle Edition.

Question 19

FOLLOW PROCESS FOR CONTRACT?

Answer 19

In determining whether a communication is an offer or not, some of the important factors are:

1) Whether the communication is an initial communication as opposed to an answer to an inquiry.152 An answer to an inquiry is more likely to be an offer. Does the inquiry ask for an offer as in Fairmount?
2) The words used. Are the words generally associated with promise or are they noncommittal?
3) Are the terms detailed or are only a few terms included? Do they include the quantity and quality terms?
4) Selectivity of Communication—is it clear that the party who sends the communication is negotiating with others with respect to the same subject matter?153 5) Does the case involve real property or goods? Courts are less likely to interpret a message about real property as an offer than a similar message about goods.
6) Relationship of the parties—husband and wife or other close bond.
7) Surrounding circumstances; for example, whether a physician is treating a patient under emergency conditions or not. I
8) Usages of the trade, prior practices of the parties (“course of dealing”), discussed later.154

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 43). West Academic. Kindle Edition.

Question 20

UCC, CISG and UNIDROIT PRINCIPLES

Answer 20

Uniform Commercial Code UCC – joint auspices of American Law Institute and the National Conference of Commissioners on Uniform Site Laws

Some variations exist as Uniform Laws Annoted in the code, some states have statutes that create some variations from the uniform text.

• Orig. has 9 articles
  
  • Article 1 contains general provisions applicable to all transactions governed by the UCC.
  • Article 2 governs the sale of goods; Article 2A deals with the leasing of goods;
  • Article 3 governs commercial paper; Article 4, bank deposits and collections;
  • Article 4A, funds transfer;
  • Article 5, letters of credit;
  • Article 6, bulk transfers;
  • Article 7, warehouse receipts, bills of lading and other documents of title;
  • Article 8, investment securities;
  • Article 9, secured transactions, including sales of accounts and chattel paper.

Most of the provisions of the UCC do not affect basic contract law; those that do are mostly contained in Article 2, which deals with the sale of goods and in Article 9 which deals, among other things, with the assignment (transfer) of some contract rights.

The Act itself is law in the 49 states that have adopted the UCC, but the comments are not; in most states they have not been enacted into law by the legislatures. The comments have, however, proved valuable. The courts have repeatedly turned to them in resolving issues. Of course, if the UCC and a comment are in conflict, the UCC must prevail.

The contract provisions of Article 2 of the UCC make many changes in traditional contract law with the result that very often there is a different rule for “contracts for sale” than for other contracts such as for labor, services and the sale of land.

The UCC does not change all the traditional rules; where it is silent, the traditional rules prevail even as to contracts for sale.

Question 21

MERCHANT

Answer 21

The UCC defines a merchant, as paraphrased by a court, as follows:

[A] person is a “merchant” if he

(1) deals in goods of the kind, or
(2) by his occupation holds himself out as having knowledge or skill peculiar to the practices involved in the transaction, or
(3) by his occupation holds himself out as having knowledge or skill peculiar to the goods involved in the transaction, or
(4) employs an intermediary who by his occupation holds himself out as having such knowledge or skill, and that knowledge or skill may be attributed to the person whose status is in question.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 18). West Academic. Kindle Edition.

Question 22

DOES UCC APPLY?

Answer 22

Frequently, a contract has a mixture of elements—goods are transferred but services predominate.

Perhaps the thrust of an agreement may be the settlement of a dispute with the incidental transfer of goods.

In determining whether the UCC applies, most courts look to the predominant purpose or predominant factor of the agreement.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 18). West Academic. Kindle Edition.

Question 23

CISG, UNIDROIT

Answer 23

Two international documents deserve mention. On October 9, 1986, the United States ratified the

• United Nations Convention on Contracts for the International Sale of Goods (CISG).
  
  • Reference will be made to this Convention from time to time in this text. It governs many transactions for the sale of goods where the parties have places of business in different countries.
  • Many other major trading nations have also ratified it.
• The main exceptions are Japan and the United Kingdom.
  
  • A companion document that does not have the force of law is the UNIDROIT Principles of International Commercial Contracts.
  • It is broader in scope than CISG, but its legal effect is comparable to that of a Restatement. Neither of these documents will be covered in any detail in this text.

Question 24

FORMAL vs. INFORMAL

Answer 24

Three kinds of formal contracts are still important:

• (1) contracts under seal;
• (2) recognizances; and
• (3) negotiable instruments and letters of credit.

All other kinds of contracts are considered to be informal and are enforceable not because of the form of the transactions but because of their substance. Such contracts have also been called “simple” or “parol” contracts.

Question 25

VOID, VOIDABEL, UNENFORCABLE CONTRACTS

Answer 25

VOID -

• When a promisee is entitled to either a money judgment, an injunction or specific performance because of a breach, the contract is said to be enforceable.
• A contract is void, a contradiction in terms, when it produces no legal obligation.

VOIDABLE -

• A contract is voidable if one or more of the parties has the power to elect to avoid the legal relations created by the contract or by ratification to extinguish the power of avoidance.
• This power to avoid or ratify is sometimes given to a minor and to persons who have been induced to enter contracts by undue influence, fraud, mistake or duress.

UNENFORCEABLE -

• Unenforceable contracts are those which have some legal consequences but which may not be enforced in an action for damages or specific performance in the face of certain defenses such as the Statute of Frauds and the statute of limitations.
• Certain contracts which are tainted by illegality but are neither wholly void or voidable may also be classified as unenforceable,
• as can be contracts with those governmental units which still retain a doctrine of sovereign immunity.
• Unenforceable contracts share many of the features of voidable contracts, the main difference being that unenforceable contracts have a variety of legal consequences that voidable contracts do not share, including various methods of indirect enforcement.

Question 26

EXPRESS, IMPLIED and QUASI CONTRACTS

Answer 26

Express

• When the parties manifest their agreement by words the contract is said to be express.
• When it is manifested by conduct it is said to be implied in fact.
• If A telephones a plumber to come to A’s house to fix a broken pipe, it may be inferred that A has agreed to pay the plumber a reasonable fee for the plumber’s services although the parties did not talk about compensation. The contract is partly express and partly implied in fact.

Implied

• A contract implied in law is not a contract but an obligation imposed by law to do justice even though no promise was ever made or intended.
• To illustrate, if a physician gives a child necessary medical care in the face of parental neglect, the physician may recover from the parents, in quasi contract, the value of the medical services. There is nothing contractual about this. The quasi-contractual label arose from a procedural quirk.
• The crux is that a quasi contract is not a peculiar brand of contract. It is a non-contractual obligation that used to be treated procedurally as if it were a contract. The principal function of quasi contract is generally said to be that of prevention of unjust enrichment.

Quasi

• Very often, however, quasi-contractual remedies are employed in contractual contexts.
• When the parties negotiate an agreement which fails because the subject matter is too indefinite,
• or because the agent for one of the parties had no power to bind the principal,
• or the parties each had a different reasonable understanding of the agreement,
• or because the agreement is illegal,
• it is the law of quasi contracts that is looked to for a determination of to what extent any performance rendered under the agreement,
• or other acts in reliance on the agreement, are to be compensated.

Similarly, when a contract is made and avoided for incapacity, mistake, fraud, or duress or is unenforceable for non-conformity with form requirements, or discharged for impossibility or frustration, quasi contract is the body of law to which we look for the reallocation of gains and losses between the parties.

It should be noticed that in the illustration given in the preceding paragraph, the law of quasi contract is the exclusive source of the plaintiff’s rights and remedies. In the illustrations given in this paragraph any recovery is based on the interplay of rules of contract and quasi contract, now renamed “restitution.”

• When there is no agreement between the parties, the basis of the plaintiff’s recovery is the unjust enrichment of the defendant and the amount of recovery is measured on that basis.
• When there is an agreement which has failed from the start or because of subsequent avoidance or discharge, unjust enrichment, unjust impoverishment, relative fault, the allocation of risks in the failed agreement, and fairness of alternative risk allocations are all factors that go into the measure of recovery.

Question 27

LAW and FACT

Answer 27

Here it is sufficient to note that at the trial level, triers of fact, often a jury, determine questions of fact, and the trial judge determines questions of law. Appellate courts, subject to some exceptions, review only questions of law.

• To illustrate: Whether and to what extent subjective intention is relevant in making a particular determination is a question of law.
• Whether a person said “50” or “100” on a particular occasion is a question of fact.
• Whether a reasonable person in the position of the plaintiff would conclude that the defendant had made a commitment is a question of fact, unless the court rules that reasonable persons could reach only one reasonable conclusion.

As Corbin pointed out “since two cases are never identical … the decision made in one of them can never be regarded as a conclusive precedent for the other.”

• It must also be remembered that the printed report never gives all of the facts and may well omit one of the decisive factors that led to the decision.
• There is also a tendency to rule as a matter of law in certain recurring situations, as in the advertising situation, where the law has hardened as to the proper decision.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 44). West Academic. Kindle Edition.

Question 28

INTENT TO MEMORILIZE

Answer 28

During negotiations, parties often manifest an intention that when an agreement is reached it will be formalized.

Does a contract arise when the parties reach an otherwise binding agreement or is there no contract unless the final document is adopted by both parties?

The problem is another aspect of the question of intending legal consequences.

There are three possible scenarios.

• One, if the parties make it clear that they do not intend that there should be legal consequences unless and until a final record is executed, there is no contract until that time.
• Or two, if they make it clear that the prospective record is merely to be a convenient memorial of the agreement, it is binding even though a memorial is never adopted. A party’s refusal to execute the memorial constitutes a breach of contract.
• The difficult case is the third scenario where the parties have not expressly manifested their intent other than by the fact that they intended that there will be a record.
  
  • Some of the cases have held that the parties are not bound until the record is executed.
  • Other cases, however, have concluded that the contract becomes binding when the agreement is reached.
  • This does not mean that there is a conflict in the cases even though they are difficult to reconcile.
    
    • The intention of the parties governs.
    • This often is a question of fact.
    • Some of the cases talk in terms of a presumption that the record is intended merely as a convenient memorial.
    • There is, however, another and contrary formulation to the effect that an understanding that the agreement will be reduced to writing or otherwise recorded raises a presumption that the parties did not intend the agreement to be binding.
  • A better approach is to identify some of the important factors that influence the decisions of the courts.
    
    • The Restatement (Second) lists the following:
      
      • “the extent to which express agreement has been reached on all terms to be included, whether the contract is a type usually put in writing [or otherwise recorded], whether it needs a formal writing [or record] for its full expression, whether it has few or many details, whether the amount involved is large or small, whether it is a common or unusual contract, whether a standard form of contract is widely used in similar transactions, and whether either party takes any action in preparation for performance during the negotiations.”
        
        • In addition, if the agreement is reached by correspondence, it is likely that the parties intend to be bound when they reach agreement.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (pp. 45-46). West Academic. Kindle Edition.

Question 29

RESTATEMENT (Second) of Contracts

Answer 29

The Restatement (Second) of the Law of Contracts is a legal treatise from the second series of the Restatements of the Law, and seeks to inform judges and lawyers about general principles of contract common law. It is one of the best-recognized and frequently cited legal treatises in all of American jurisprudence.

It is one of the best-recognized and frequently cited legal treatises^[1] in all of American jurisprudence. Every first-year law student in the United States is exposed to it, and it is a frequently cited non-binding authority in all of U.S. common law in the areas of contracts and commercial transactions.^[2] It is a work without peer in terms of overall influence and recognition among the bar and bench, with the possible exception of the Restatement of Torts. The American Law Institute began work on the second edition in 1962 and completed it in 1979; the version in use at present has a copyright year of 1981.

Legal scholars and jurists have commented extensively on the Restatement, both in contrasting it with aspects of the first Restatement, and in evaluating its influence and effectiveness in reaching its stated objectives. It is in this context of direct review that one can find numerous arguments both favoring and criticizing some aspects of the Restatement as an independent source of legal scholarship.^{[4][5][6][7][8]}

Although several sections of the Restatement contained new rules which sometimes contradicted existing law, courts citing these sections have predominantly adopted the Restatement’s view, citing them as a court would cite statute or code.^[9]

Far more common, however, is the practice of citing the Restatement to clarify generally accepted doctrine in every major area of contract and commercial law. It is in this context of legal research that one can find the Restatement used as direct substantiation and persuasive authority, to validate the arguments and interpretations of individual legal practitioners.^[10][11]

Question 30

MEMORIALIZE 2

Answer 30

In litigation, one party claims that there was no intention to be bound until there was a formal record. This issue is to be determined by the tentative test previously suggested. If a reasonable person in the position of the other party either knew or should have known that that the opposing party did not intend to be bound in the absence of a formal agreement, there is no contract until a formal agreement is executed.

• Preliminary contracts with binding force can be of at least two distinct types.
  
  • One occurs when the parties have reached complete agreement (including the agreement to be bound) on all the issues perceived to require negotiation.
    
    • Such an agreement is preliminary only in form—only in the sense that the parties desire a more elaborate formalization of the agreement.…
  • The second and different sort of preliminary binding agreement is one that expresses mutual commitment to a contract on agreed major terms, while recognizing the existence of open terms that remain to be negotiated.…
    
    • For the parties can bind themselves to a concededly incomplete agreement in the sense that they accept a mutual commitment to negotiate together in good faith in an effort to reach final agreement within the scope that has been settled in the preliminary agreement.…
    • The second type—the binding preliminary commitment—does not commit the parties to their ultimate contractual objective but rather to the obligation to negotiate the open issues in good faith in an attempt to reach the alternate objective within the agreed framework. .
  • In the first type, a party may lawfully demand performance of the transaction even if no further steps have been taken following the making of the “preliminary” agreement In the second type, he may not. What he may demand, however, is that his counter party negotiate the open terms in good faith toward a final contract incorporating the agreed terms.

As stated there: “[T]he mere affixing of the signatures to the document did not conclusively prove that there was a binding contract. In addition, there must be a delivery, not in the traditional sense of a manual transfer, but in the sense that it was the intent of the parties to have the document become legally operative at some definite point in time, however such intent might be indicated.”

Question 31

INDEFINITENESS - general

Answer 31

Indefiniteness in a communication is some evidence of an intent not to contract.

• The more terms that are omitted in an agreement the more likely it is that the parties do not intend to contract.
  
  • But, even if the parties intend to contract, if the content of their agreement is unduly uncertain no contract is formed.
  • This rule must be understood as a necessary limitation on freedom of contract because an agreement must be sufficiently definite before a court can determine if either party breached it and choose an appropriate remedy.
  • The traditional rule is that if the agreement is not reasonably certain as to its material terms there is a fatal indefiniteness and the agreement is void.
• The rule does not supply a precise standard.
  
  • Indefiniteness is a matter of degree.
  • “All contracts are incomplete.”
  • Many are incomplete because the parties are unable to foresee contingencies that may arise. Many are relational contracts that rely one another’s reciprocal fairness.

It is the agreement, not the offer that must be definite. For example, assume A makes an offer to sell to B from 1 to 10 copies of a specified book at a certain price and adds “state the number in your acceptance.” B replies “I’ll take 5.” B’s acceptance creates a contract, although considered alone the offer might seem indefinite as to quantity.

Question 32

INDEFINITNESS - material terms

Answer 32

What are material terms? Material terms may include subject matter, price, payment terms, quantity, quality, and duration; given the infinite variety of contracts, it is obvious that no precise list or definition can be articulated.192 Indefiniteness as to an immaterial term is not fatal.193

If the agreement is reasonably certain, it is enforced even though the contract does not set forth its terms with “optimal specificity.”194 It is enough that the agreement is sufficiently explicit so that the court can perceive the respective obligations of the parties and provide an appropriate remedy.

“What is reasonable in any case must depend on the subject matter of the agreement, the purpose for which it was entered into, the situation and relations of the parties and the circumstances under which it was made.”

Three types of indefiniteness can be distinguished:

1) The parties purport to agree on a material term but leave it indefinite;
2) The parties are silent as to a material term;
3) Duration problems.
4) The parties agree to agree later as to a material term. At common law each category is treated somewhat differently.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 49). West Academic. Kindle Edition.

Question 33

THE COMMON LAW: Indefinite Purported Agreement

QUANTUM MERUIT

Answer 33

If A says to B, “If you work for me for one year, I will pay you a fair share of the profits,” it has been held that the promise is too vague and indefinite to be enforced.

If, however, B performs under the agreement, B may recover the reasonable value of services rather than a share of the profits

This recovery, known as “quantum meruit,” is sometimes described as quasi-contractual (implied-in-law) and sometimes as a contract “implied-in-fact.

Indefiniteness can also be cured by agreement rather than by conduct. In Perreault v. Hall, the defendant promised to provide the plaintiff a pension that would be “well and enough.” Later, on retirement, the defendant promised to give plaintiff $20 per week, an offer which plaintiff accepted. Thus, the indefiniteness was cured by the new agreement.

Question 34

THE COMMON LAW: Indefinite Purported Agreement

Answer 34

The relativity of “reasonable certainty” may be shown by a comparison of two fact patterns. First, a contractor agrees to build “a first class ranch house” for the owner for a stated price. Before there is any performance, one of the parties repudiates the agreement. On these bare facts, the agreement is too vague and indefinite to be enforced.

Contrast the case where plaintiff sold real property to defendant. In addition, to paying the owner’s price, defendant promised to build a “first class theatre” on the site. Plaintiff, as the defendant knew, desired the theater to enhance the value of plaintiff’s other properties in the area. After the property was sold, defendant resold the property to a third party without having built the theater. Plaintiff sued for damages and defendant argued fatal indefiniteness. The court rejected the defendant’s indefiniteness contention and ruled for the plaintiff.

In the theater case, the court began with a statement made by a number of courts that “the law leans against the destruction of contracts because of uncertainty.”

In addition, the purpose of the defendant was different in the two cases. In the “first class ranch house” case, the detailed specifications would be of great importance to the owner and the court because the owner wanted to use or sell it; the court wanted a reasonable basis to fix damages. In this case, the contract had to be much more definite than in the theater case where any kind of first class theater would meet the plaintiff’s needs—enhancing the value of plaintiff’s nearby properties.

Another significant factor in the case is that evidence of subjective understanding, and other evidence extrinsic to the writing, was admitted and helped explain what the words “first class theatre” meant to the parties. This type of evidence should be admissible in any case where the expression is ambiguous and the evidence can help resolve the problem.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 50). West Academic. Kindle Edition.

Question 35

THE COMMON LAW: Silence as to a material term

Answer 35

The parties’ silence is treated differently from the cases in which the parties have purported to agree on a material term and left it indefinite.

indefinite. If the parties are merely silent as to a material term or discuss the term but do not purport to agree on it, there is a strong possibility that a term may be either implied from surrounding circumstances or supplied by a court using a gap-filler.215 The missing term may be implied from external sources, including standard terms, trade or local usages, a course of dealing between the parties prior to the agreement, and a course of performance after it.

The courts will assume that the parties contracted on the basis of these criteria.

Question 36

THE COMMON LAW: Silence as to a material term - gap filler

Answer 36

A gap-filler, on the other hand, is a term courts supply either because the court thinks that the parties would have agreed on the term if it had been brought to their attention or because it is “a term which comports with community standards of fairness and policy.”

The important point to remember, as elaborated below, is that it is difficult to know, without research, when the courts will or will not supply a gap-filler, and, if they will, how the gap will be filled.

In the language of one court, “[t]erms are implied [supplied] not because they are just or reasonable, but rather for the reason that the parties must have intended them and have only failed to express them … or because they are necessary to give business efficacy to the contract as written, or to give the contract the effect which parties, as fair and reasonable [persons], presumably would have agreed if, having in mind the possibility of the situation which had arisen, they contracted expressly in reference thereto.”221 According to one persuasive source, in filling a gap the court should take into account “(a) the intention of the parties; (b) the nature and purpose of the contract; (c) good faith and fair dealing; and (d) reasonableness.”

Most gap-fillers, however, are based on the first of these four criteria—the intention of the parties.

• If A and B agree that A will perform a service for B and no mention is made of the price to be paid, a court will hold that the parties intended that a reasonable price should be paid and received.
  
  • Where one hires a contractor and no price is set, the term supplied is that the contractor is to be paid the usual charges for such work. In a sale of goods where no price is stated, a court will hold that the parties meant a reasonable price and this rule has been continued by the UCC.
• The rule has been applied even to a sale of real property.
  
  • A reasonable price may be measured by the market price; where there is no market price the reasonable price may be determined by actual cost plus a reasonable profit or other means of valuation.
• If no time is stated for the delivery of goods, for the completion of a building contract, a transfer of real property, for making installment payments, or for seeking governmental approvals a reasonable time is assumed.
  
  • So also every contract of employment in the absence of a contrary agreement “includes an obligation to perform in a diligent and reasonably skillful workmanlike manner.”

Question 37

THE COMMON LAW: Duration Problems

Answer 37

There are situations where the courts disagree whether a gap should be filled.

For example, in employment contracts, if no duration term is provided, most courts have held that either party may terminate at will even if the parties have set the compensation at a specified sum per month, day or year.

• There is a similar division in cases involving the duration of franchise agreements that are silent as to duration.
• In other situations where the agreement is silent as to duration, most courts will decide that a reasonable time is intended.
• Frequently, an employer states that the employment will be “permanent.”
  
  • Most courts have thought that this term creates no commitment. It simply means that the employment is foreseen as steady rather than seasonal or for a particular project; thus, the employment is at will.
  • According to a minority view, however, if permanent employment is promised, the employee is entitled to work so long as the employee is able to do the work and the employer continues in the business for which the employee was hired.
    
    • If this is the express or implied agreement of the parties, any jurisdiction will honor the intention of the parties.
• Even under the majority view, some courts have held that the hiring is not at will if a consideration over and above the consideration supplied by the employee’s services or promises of services is exchanged for the promise of permanent employment.
  
  • This approach gropes toward a fair result but confuses the questions of indefiniteness and consideration. It is possible to reach just results without confusing issues so diverse. Terms such as “permanent employment” have no immutable meaning. When used in different concrete situations by different individuals, different meanings may fairly be attached to the term.
• The orthodox rule as to agreements terminable at will (or even on reasonable notice) has been that the agreement may be terminated “for good cause, for no cause or even for cause morally wrong.” The traditional reason given for this harsh rule is that it would not be good policy to keep the parties locked in the close relationship of employer-employee against the wishes of one of them,256 but this rule is being overturned in many jurisdictions in cases where the discharge is contrary to public policy.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 55). West Academic. Kindle Edition.

Question 38

THE COMMON LAW: Agreements to Agree or Negotiate

Answer 38

The traditional rule is that an agreement to agree as to a material term prevents the formation of a contract.

Two reasons are given.

• First, such an agreement leaves a material term too vague and indefinite to be enforced.
• Second, it shows a lack of present agreement.
• Unlike an agreement to agree, an agreement to negotiate and to use reasonable efforts to reach agreement is enforceable.
  
  • As will be shown below, however, modern courts have been holding that an agreement to agree carries with it an implied promise to negotiate in good faith.
  • Such a duty also arises where the parties reach an “agreement in principle,” as in some letters of intent in which an intent to negotiate in good faith can be inferred.
• There may be a binding duty to negotiate in good faith; if so, failure to do so is a breach.
  
  • At times, recovery has been based on a theory of promissory estoppel.
• Some of the more modern cases (even without relying on the UCC and the Restatement (Second), discussed below) have gone beyond holding that an agreement to agree imposes a duty to negotiate in good faith.
  
  • These cases have recognized that agreements to agree serve a valuable commercial purpose and that the traditional rule defeats an agreement that the parties intended to be binding.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 58). West Academic. Kindle Edition.

Question 39

UCC and Indefiniteness

Answer 39

The UCC provisions on indefiniteness are of two types. Some provisions relate to specific problems.

• Some of these, such as the provision governing open price terms, have already been discussed.
• They must be viewed in the light of the general provision on indefiniteness which is designed to prevent, where it is at all possible, a contracting party who is dissatisfied with a bargain from taking refuge in the doctrine to wriggle out of an agreement
  
  • The guiding principle is:
    
    • “Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.”
  • To satisfy this section the parties must intend to contract.
    
    • Indefiniteness as to material terms does not prevent this intent from existing
  • However, “when a dispute over material terms manifests a lack of intention to contract, no contract results.”
  • Despite the liberality of the UCC, a price list is not a contract or even an offer.
    
    • The test is not certainty as to what the parties were to do nor as to the exact amount of damages due the plaintiff.
    • Nor is the fact that one or more terms are left to be agreed on enough of itself to defeat an otherwise adequate agreement.
    • Rather, commercial standards on the point of ‘indefiniteness’ are intended to be applied, this act making provision elsewhere for missing terms needed for performance, open price, remedies and the like.

Question 40

UCC and Indefiniteness & Omission

Answer 40

What is clear is that the omission of an important term or terms does not necessarily prevent a contract from arising.

• What is not clear is when a court will find that “there is a reasonably certain basis for giving an appropriate remedy.” The unwritten premise is that the court must be able to identify which party has breached.
• Thus, the key issues are intent, remedy and breach.
• The UCC now resolves this problem by providing that, despite “the fact that the agreement leaves particulars of performance to be specified by one of the parties,” there is a contract.
• Under subsection 3, the contract would be breached if the buyer fails to specify the assortment or if the seller refuses to permit the buyer to specify the assortment.
• Although subsection 2 says that, unless otherwise agreed, the specifications of an assortment of goods are at the buyer’s option, this does not mean that the buyer is free to specify or not specify, but rather has both the right and obligation.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 61). West Academic. Kindle Edition.

Question 41

UNILATERAL

BILATERAL

Answer 41

UNLATERAl

• Every contract involves at least two contracting parties.
• In some contracts, however, only one party has made a promise and therefore only this party is subject to a legal obligation.
• Such a contract is said to be unilateral.
• If A says to B, “If you run in the New York Marathon and finish I will pay you $1,000,” A has made a promise but has not asked B for a return promise. A has asked B to perform, not for a commitment to perform. A has thus made an offer to a unilateral contract. B cannot accept this offer by promising to finish the race. B must accept, if at all, by performing. Because no return promise is requested, at no point is B bound to perform. If B does perform, a contract involving two parties is created, but the contract is classified as unilateral because only one party is ever under an obligation.

BILATERAL

• In contrast, a contract where both parties have made promises is bilateral.
• If there are more than two parties, the contract is bilateral if one party is both a promisor and a promisee.
• If A says to B: “If you promise to run in the Marathon and finish the race, I promise to pay you $1,000,” A’s offer requests B to make a commitment. A bilateral contract arises when B promises. If B makes the promise both parties are bound. A contract would also arise if B made an implied promise. B’s promise could be inferred if B started to run in the race in A’s presence. However, if B started to run but not in A’s presence, there would be no implied promise because communication would be lacking. Where an offer to a bilateral contract is made, no contract is created unless B communicates the requested promise either expressly or by implication

All of these conclusions are premised on the notion that the offeror is “the master of the offer” and is thus free to indicate in what manner the offeree can assent.

• There is perhaps one exception to this last statement. If the offeror asks for a promise and the offeree performs the act, instead of promising to perform, there is some authority to the effect that a contract is formed if the performance is completed while the offer is still open and notice of performance is given.
• Although this violates the notion that the offeror is master of the offer, it appeals to common sense where the offeror is not adversely affected by receiving the performance rather than the promise.

HOWEVER, At times it is quite clear whether an offer is to a unilateral or a bilateral contract, but the offer may be ambiguous on the question. The original Restatement espoused the presumption that the offer was to a bilateral contract.317 The reason given was that an offeror ordinarily wants the security of a promise to bind the offeree.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 62). West Academic. Kindle Edition.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (pp. 61-62). West Academic. Kindle Edition.

Question 42

REVERSE UNILATERIAL

Answer 42

In the usual unilateral contract, the promise is made by the offeror.

However, there exists an unusual kind of contract called a reverse unilateral contract.

In a reverse unilateral contract the offeree makes the only promise.

For example, if A, a homeowner, pays $500 to an insurance company asking for the company’s promise to pay A $200,000 if A’s house is destroyed by fire, A is the offeror but has made no promise. Rather A has performed and requested a promise from B, the offeree.

When B makes the promise, a reverse unilateral contract is created.

The most common reverse unilateral contract arises where the offeree silently accepts services that are rendered with the expectation of payment If the facts were changed so that the insurance company made an offer requesting payment, the act of acceptance would be A’s payment of the premium. The payment of the premium would create the usual kind of unilateral contract.

Question 43

THE UCC and types of contracts

Answer 43

The UCC’s § 2–206 has made extensive changes in the common law of offer and acceptance.

Despite variations in language, the Restatement (Second) adopts the same basic approach. Section 2–206 reads as follows:

(1) Unless otherwise unambiguously indicated by the language or circumstances
(a) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances;
(b) an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods, but such a shipment of nonconforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.
(2) Where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 63). West Academic. Kindle Edition.

Question 44

(1) Unless otherwise unambiguously indicated by the language or circumstances
(a) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances;

Answer 44

The word “manner” in subsection (a) relates to the distinction between a unilateral and a bilateral contract.

If the offer was ambiguous on this point it was presumed that the offer required an acceptance by a promise,322 but this section has replaced this presumption with the notion that in the vast majority of cases the offeror is indifferent as to the manner of acceptance. Thus, in many cases the offeree is free to proceed by performance or promise.323

When does an offeror “unambiguously indicate” an exclusive manner of acceptance? The Restatement (Second) furnishes some helpful illustrations that show that it will be an unusual case where the offeror has made such an unambiguous indication.324 The use in the offer of unilateral words such as “deliver” is not enough to 64 prevent an acceptance by promise.325 Conversely the use of the word “promise” does not prevent an acceptance by performance.326 However, where the buyer’s order stated that “seller shall mail to purchaser a signed duplicate copy hereof,” it was held that the offer unambiguously indicated that a promise by writing was the only manner of acceptance.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (pp. 63-64). West Academic. Kindle Edition.

Question 45

(1) Unless otherwise unambiguously indicated by the language or circumstances
(a) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances;

Answer 45

The word “manner” in subsection (a) relates to the distinction between a unilateral and a bilateral contract.

If the offer was ambiguous on this point it was presumed that the offer required an acceptance by a promise,322 but this section has replaced this presumption with the notion that in the vast majority of cases the offeror is indifferent as to the manner of acceptance. Thus, in many cases the offeree is free to proceed by performance or promise.323

When does an offeror “unambiguously indicate” an exclusive manner of acceptance? The Restatement (Second) furnishes some helpful illustrations that show that it will be an unusual case where the offeror has made such an unambiguous indication.324 The use in the offer of unilateral words such as “deliver” is not enough to 64 prevent an acceptance by promise.325 Conversely the use of the word “promise” does not prevent an acceptance by performance.326 However, where the buyer’s order stated that “seller shall mail to purchaser a signed duplicate copy hereof,” it was held that the offer unambiguously indicated that a promise by writing was the only manner of acceptance.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (pp. 63-64). West Academic. Kindle Edition.

Question 46

(1) Unless otherwise unambiguously indicated by the language or circumstances
(b) an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods, but such a shipment of nonconforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.

Answer 46

invitation to acceptance

It shows that an “indifferent” offer “to buy goods for prompt or current shipment” invites an acceptance either by performance or promise. Parenthetically, it should be noted that if the offeree performs, UCC § 2–504(c) requires the prompt giving of notice of shipment. Under that provision failure to give notice is a ground for rejection only if there is a material delay in shipment or if loss ensues. The Restatement (Second) takes the position that notice is ordinarily unnecessary. The UCC prevails where the offer is to a sale of goods.

Under subsection 1(b), shipment is performance and not merely the beginning of performance. Loading goods on the seller’s own truck is not shipment but it may be the beginning of performance. Subsection 2, and not 1(b), applies to the beginning of performance.

counter offer

This section was also designed to prevent the offeree from utilizing what Hawkland calls the “unilateral contract trick.” At common law, a shipment of non-conforming goods in response to an offer to purchase amounted only to a counter-offer. In contrast, under the UCC, if the seller sends non-conforming goods in response to an offer there is a contract. The non-conforming shipment is both the acceptance of the offer and simultaneously a breach. However, there is no contract if “the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.” In that event the shipment would be a counter-offer.

Under subsection 1(b), shipment is performance and not merely the beginning of performance. Loading goods on the seller’s own truck is not shipment but it may be the beginning of performance.334 Subsection 2, and not 1(b), applies to the beginning of performance.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 64). West Academic. Kindle Edition.

Question 47

Performance

Answer 47

The subsection starts out with the phrase, “where the beginning of performance is a reasonable mode of acceptance.”

If the beginning of performance is not a reasonable mode of acceptance, as for example where it is unambiguously clear that an express promise is sought, then this subsection is not applicable and we must consult the common law for solutions.

If, however, the beginning of performance is a reasonable mode of acceptance, the offeree is bound on commencement of performance provided that the beginning of performance unambiguously expresses the offeree’s intent to commit to a contract; the offeree’s beginning of performance operates as if the offeree had made a promise to complete performance.

The net result is that bilateral contracts are favored over unilaterals.

Perillo, Joseph M.. Contracts, 7th (Hornbook Series) (p. 65). West Academic. Kindle Edition.