Restatement

Question 1

Restatement 2: defining a promise:

Answer 1

A promise is a manifestation of intention to act or refrain from acting in a specified way, so as to justify the promisee in understanding a commitment has been made

Question 2

Restatement § 344: Purpose of Remedies (Expectation, Reliance, Restitution)

Answer 2

Judicial Remedies serve to protect one or more of the following interests in a promise:
(1) Expectation: Putting P in the position they would have been in had the contract been fulfilled.
(2) Reliance: Putting P in the position they would have been in had the contract never been entered.
(3) Restitution: Restoring to P what was given to the other party.

Question 3

Restatement 42 and 43: Revocation by Offeror

Answer 3

An offeree’s power of acceptance ends either when he receives from the offeror a (1) manifestation of intent to to enter; or (2) offeror takes definite action inconsistent with intent to enter into the proposed contract and the offeree is aware.

Question 4

Restatement §§ 17: Requirements of a Bargain

Answer 4

Generally, contract formation requires a bargain in which there is a manifestation of mutual assent to exchange and consideration.

Question 5

Restatement §§ 71: Requirement of Exchange; Types of Exchange “Bargained-for Exchange”

Answer 5

(1) To constitute consideration, a performance or return promise must be bargained for.
(2) It is bargained for if it is sought by promisor and given by promisee in exchange for each other’s promises.
(3) Performance may consist of an act, or forbearance, or the creation, modification, or destruction of a legal relation.
(4) Performance may be given either to the promisor/promisee or some other person.

Question 6

Restatement §§ 74: Settlement of Claims

Answer 6

(1) Forbearance to assert or the surrender of a claim or defense which proves to be invalid is not consideration unless: (a) it is doubtful because of uncertainty of fact or law, or (b) the forbearing or surrendering party believes it may be fairly determined to be valid.
(2) Execution of a written instrument surrendering a claim or defense by one who is under no duty to execute it is consideration if the execution is bargained for.

Question 7

Restatement §§ 75: Exchange of Promise for Promise

Answer 7

A promise which is bargained for is consideration only if the promised performance would be consideration.

Question 8

Restatement §§ 79: Adequacy of Consideration; Mutuality of Obligation

Answer 8

If the requirement of consideration is met there is no additional requirement of a benefit to the promisor or a detriment to the promisee or equivalence in the values exchanged or “mutuality of obligation.”

Question 9

Restatement 62: Performance when offer invites either Performance/Promise

Answer 9

The tender or beginning of the invited performance is acceptance by performance, but such an acceptance operates as a promise to render complete performance.

Question 10

Restatement 73: Performance of a legal duty owed to a promisor…

Answer 10

which is neither doubtful nor the subject of honest dispute is not consideration; but a similar performance is consideration if it differs from what was required by the duty in a way which reflects more than a pretense of bargain.

Question 11

Restatement 86: A promise made in recognition of a benefit previously received by the promisor from the promisee…

Answer 11

is binding to the extent necessary to prevent injustice. A promise is not binding if the benefit was conferred as a gift or to the extent that the value is disproportionate to the benefit.

Question 12

Restatement 89: A promise modifying a duty under a contract not fully performed on either side is binding if

Answer 12

(1) the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made; or
(2) to the extent provided by statute; or
(3) to the extent that justice requires enforcement in view of material change of position in reliance on the promise.

Question 13

R134: Signature Defined

Answer 13

Any symbol adopted with actual or apparent intent to authenticate the writing as that of the signer

Question 14

Restatement § 139: Promissory Estoppel applied in spite of Statute of Frauds

Answer 14

1. Promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce the action or forbearance is enforceable notwithstanding the Statute of Frauds if injustice can only be avoided by its enforcement.
2. Enforcement limited to what is needed to avoid injustice.
3. Factors for determining whether injustice can be avoided only by enforcement:
   a. Availability and adequacy of other remedies; especially cancellation and restitution;
   b. The definite and substantial character of the reliance in relation to the remedy;
   c. The extent to which the action corroborates evidence of the existence and details of the promise, or when the making and terms are established by other clear evidence;
   d. Reasonableness of the reliance
   e. The foreseeability of the reliance by the promisor

Question 15

R151: Mistake Defined

Answer 15

A mistake is a belief that is not in accord with the facts

Question 16

R152: When (mutual )Mistake of Both Parties Makes a Contract Voidable

Answer 16

Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake under the rule stated in 154.
In determining whether the mistake has a material effect on the agreed exchange of performances, account is taken of any relief by way of reformation, restitution, or otherwise.

Question 17

R153: When (unilateral) Mistake of One Party Makes a Contract Voidable

Answer 17

Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances that is adverse to him, the contract is voidable if he does not bear the risk of the mistake under the rule as stated in R154, and
The effect of the mistake is such that enforcement of the contract would be unconscionable, or
The other party had reason to know of the mistake or his fault caused the mistake.

Question 18

R154: When a Party Bears the Risk of a Mistake

Answer 18

A party bears the risk of a mistake when
The risk is allocated to him by agreement of the parties, or
He is aware, at the time the contract is made, that he has only limited knowledge with respect to the fact which the mistake relates but treats his limited knowledge as sufficient, or
The risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so.

Question 19

Restatement §§ 175,176: When Duress by threat makes a contract voidable; When a Threat is Improper

Answer 19

(1) If assent is induced by an improper threat that leaves the victim no reasonable alternative, the contract is voidable by the victim.
(2) If the threat is from a non-party, it is voidable by the victim unless the other party in good faith and without reason to know of duress gives value or relies materially on the transaction.

(1) A threat is improper if: what is threatened is a crime, tort, criminal prosecution, bad faith civil suit, or breach of good faith and fair dealing.
(2) A threat is improper if the resulting exchange is not on fair terms and: threat would harm the recipient and not benefit the threatmaker, the effectiveness of the threat is increased by the unfair dealing, or what is threatened is use of power for illegitimate ends.

Question 20

Restatement 177: When Undue Influence makes a Contract Voidable

Answer 20

(1) Undue Influence = unfair persuasion on the basis of domination or relation
(2) If assent is induced by undue influence the contract is voidable by the victim
(3) If the threat is from a non-party, it is voidable by the victim unless the other party in good faith and without reason to know of the undue influence gives value or relies materially on the transaction.

Question 21

Restatement § 208: Unconscionable Contract or Term

Answer 21

If a contract or term is unconscionable at the time the contract is made, the court has discretion regarding enforcement.

Question 22

Restatement 205: Duty of Good Faith and Fair Dealing

Answer 22

Each party has a duty of good faith and fair dealing in performance and enforcement

Question 23

Restatement 224: Condition Defined

Answer 23

A condition is an event which must occur before performance under a contract becomes due.

Question 24

Restatement 225: Effect of Non-Occurrence of a Condition

Answer 24

(1) Performance cannot become due
(2) Duty is discharged, unless the condition has been excused
(3) Non-occurrence is not a breach unless there is a duty that the condition occur

Question 25

Restatement 228: Satisfaction as a condition for performance

Answer 25

Interpretation is preferred by the measure of whether a reasonable person in the obligor’s position would be satisfied

Question 26

Restatement §§ 234: Order of Performance

Answer 26

(1) When all or part of a performance can be exchanged at the same time as the promise, they are due at the same time, unless indicated otherwise. (2) Except as in (1) Where performance of only one party requires a period of time, his performance is due before that of the other party, unless indicated otherwise.

Question 27

Restatement §§ 237, 241, 242: Effect of Performance and Non-Performance

Answer 27

237: Effect of Failure to Render Performance on the Other Party’s duties:
It is a condition of each party’s remaining duties to render performances that there be no uncured material failure by the other to fulfill any past duties of performance.

241: Determining whether a Failure is Material and 242: When remaining duties are discharged
The following circumstances are significant for materiality and dischargement
(1) Extent that the injured party will be deprived of reasonably expected benefit;
(2) Extent that injured party can be adequately compensated for the deprived benefit;
(3) Extent that the failing party will suffer forfeiture;
(4) Likelihood that the failing party will cure his failure;
(5) Extent that the failing party is acting in good faith and fair dealing;

242: The following circumstances are significant only for dischargement
(a) Extent that delay may reasonably be expected to prevent or hinder the injured party from making substitute arrangements;
(b) Extent that the agreement provides for performance without delay but does not state that failure on a specific will discharge the other party;

Question 28

Restatement §§ 261, 265, 266: Discharge of Duty of Performance by… 2 kinds

Answer 28

261,265; Supervening Impracticability/or Frustration
When after a contract is made, performance is made impracticable; or the principal purpose of performance is substantially frustrated; without fault by an event the non-occurrence of which was a basic assumption under which the contract was made

266; Existing Impracticability or Frustration
The above also apply to situations where the frustration or impracticability already existed, but neither party had a reason to know, unless language provides otherwise.

Question 29

Restatement § 250: When a Statement or Act is Repudiation

Answer 29

Repudiation is (a) a statement by the obligor that they will commit a breach that would give a claim for damages or (b) a voluntary affirmative act that renders the obligor unable to perform without such a breach

Question 30

Restatement §§ 370, 371, 374: Restitution

Answer 30

370: A party is entitled to restitution only to the extent that he has conferred a benefit upon the other party by part performance or reliance

371: Restitution may be measured as justice requires either by (1) the reasonable value of what was received by the other party, or (2) the extent to which the other party’s property has increased in value or his other interests have advanced.

374: Restitution in Favor of Party in Breach
If a party justifiably refuses to perform on the grounds of the other party’s breach, the party in breach is entitled to restitution for any benefit conferred by part performance/reliance in excess of the loss caused by his breach; unless the contract reasonably allows this performance to be retained.

Question 31

Restatement §§ 350: Limitation of Damages by Avoidability

Answer 31

Damages are not recoverable for loss that the injured party could have avoided without undue risk or humiliation; except when the injured party has made reasonable but unsuccessful efforts to avoid loss.

Question 32

Restatement §§ 351: Limitations of Damages by Unforeseeability

Answer 32

(1) Damages are not recoverable for loss that the breaching party had no reason to foresee as a probable result of the breach when the contract was made.

(2) Loss is foreseeable if it follows from the breach (a) in the ordinary course of events, or (b) due to special circumstances that the breacher had reason to know.

(3) Courts may limit damages for foreseeable loss by excluding loss of profits, allowing recover only for loss from reliance, or otherwise if justice requires.

Question 33

Restatement §§ 352: Limitations of Damages by Uncertainty

Answer 33

Damages are not recoverable for a loss beyond an amount that the evidence reasonably establishes.

Question 34

Restatement § 348: Alternatives to Loss in Value of Performance

Answer 34

If a breach delays use of property and the loss in value is uncertain,
(1) he may recover based on rental value or the interest on the value of the property.
(2) Or if bad construction, on the decrease in market value of the property, or the cost of completing performance or remedying defects.

(3) If a breach is of a conditional promise based on a fortuitous event, and it is uncertain whether the event would have occurred without a breach; the injured party may recover for the value of the condition at the time of brea

Question 35

Restatement § 356(1): Liquidated Damages and Penalties

Answer 35

(1) Damages for breach by either party may be liquidated in the agreement, but only at an amount reasonable in light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss. Public policy renders a term for unreasonable liquidated damages unenforceable.

Question 36

Restatement §§ 353: Loss due to Emotional Disturbance

Answer 36

Recovery for emotional disturbance from breach of contract is not valid
(1) Unless the breach also caused bodily harm or
(2) the breach is of such a kind that emotional disturbance is particularly likely to result

Question 37

Restatement §§ 355: Punitive Damages

Answer 37

Punitive damages are not recoverable for breach of contract.

Question 38

Restatement §§ 317: Assignment of a Right

Answer 38

(1) Assignment of a right is a manifestation of the assignor’s intent to transfer it to another.
(2) A contractual right can be assigned, unless (a) it would materially change the duty or value for the obligor, or (b) it is forbidden by statute or public policy or, (c) assignment is precluded in the contract.

Question 39

Restatement §§ 318, 336: Delegation of Performance

Answer 39

(1) An obligor can delegate performance unless it is contrary to public policy or the terms of the promise.
(2) Unless otherwise agreed, a promise requires performance by a particular person only to the extent that the obligee has a substantial interest in that person doing the performance.
(3) Unless the obligee agrees otherwise, delegation does not discharge the original obligor of their duties or liability.

336: Any right of the assignor against the obligor is transferred to the assignee.

Question 40

Restatement §§ 302: Intended and Incidental Beneficiaries

Answer 40

(1) An intended beneficiary is one who is intended by the parties to receive money or the benefit of the promised performance.
(2) An incidental beneficiary is a beneficiary who is not intended.

Question 41

Restatement §§ 309: Defenses Against the Beneficiary

Answer 41

(1) A promise creates no duty to a beneficiary unless a contract is formed; and if a contract is voidable or unenforceable when it is made the right of any beneficiary is similarly void
(2) If a contract ceases to be binding in whole or in part the right of any beneficiary is discharged or modified to that extent.
(3) The right of a beneficiary against the promisor is not subject to the promisor/promisee’s claims/defenses against each other or the beneficiary.
(4) A beneficiary’s right against the promisor is subject to any claim or defense arising from his own conduct or agreement.

Question 42

RSTMT 20: Misunderstanding

Answer 42

1. There is no mutual assent if the parties attach materially different meanings to their manifestations; and
   a. Neither party knows or has reason to know; or (accidental misunderstanding)
   b. Both parties know or have reason to know (purposeful misunderstanding)
2. There is mutual assent to one of the parties’ meanings if
   a. One party does not know of the other’s special meaning, while the other knows of the one party’s special meaning; or
   b. That party has no reason to know of special meaning, and the other party has reason to know of special meaning

**Seems to me personally to basically say if one party is aware/should be of special meaning and chooses to leave the other party ignorant, then the ignorant/should not know party wins.

**If both parties know/don’t know, no K. If one party knows, then K in favor of the one that didn’t know

Question 43

RSTMT 21: Intent Requirement Generally

Answer 43

Neither real nor apparent intention that a promise be legally binding is essential for the formation of a contract.

Question 44

RSTMT 24: An offer is

Answer 44

The manifestation of willingness to enter into a bargain,

So made as to justify another person in understanding that

His assent to that bargain is invited

And will conclude it

Question 45

Restatement 25: If from a promise, manifestation of intent, or from circumstances,

Answer 45

1. the person to whom the promise is addressed
   knows or has reason to know that the person making it doesn’t intend it as an expression of a fixed purpose until he has given a further expression of assent,
2. he has not made an offer.

Question 46

RSTMT 26 Preliminary negotiations:

Answer 46

A manifestation of willingness is not an offer IF
1. Offeree knows or has reason to know that the person making it doesn’t intend to conclude a bargain
2. Until he has made a further manifestation of assent

Question 47

Restatement § 30, 32: Forms of acceptance invited

Answer 47

(1) An offer may invite or require acceptance to be made by
an affirmative answer in words,
or by performing or refraining from performing a specified act,
Or may empower the offeree to make a selection of terms in his acceptance.

(2) An offer invites acceptance unless otherwise indicated. An offer can specify performance as acceptance (R32)

Question 48

R33: Certainty

Answer 48

1. Even though a manifestation of intent is intended to be an offer, it can’t form a contract unless the terms are reasonably certain
2. The terms are reasonably certain if they provide a basis for determining breach and appropriate remedy
3. The fact that one or more terms may be open or uncertain may show that a manifestation of intent is not intended to be an offer or acceptance

Question 49

R39: Counter Offer

Answer 49

(1) A counter offer is “relating to the same subject matter” and proposing a bargain differing from the original proposed by the offer
(2) An offeree’s power of acceptance is terminated by making a counter offer,

Question 50

R40: Time when Rejection/Counter-Offer Terminates the Power of Acceptance

Answer 50

Whichever one reaches the offeror first is binding

Question 51

Restatement 45: Option Contract Created by solely Performance or Tender

Answer 51

Where offeror invites an offeree to accept solely by performance, an option contract is created when the offeree begins the invited performance or tenders a beginning of it.

Question 52

Comparing RST 54 vs. RST 56: Notification of offeror when…

Answer 52

54: Acceptance by performance.
No inherent requirement to communicate (Default rule)

56: Acceptance by promise
Reasonable effort to notify the offeror required (Except R69: Silence)

Question 53

R59,61: Mirror-Image Rule; Exception

Answer 53

R59: A reply that purports to be an acceptance but adds additional terms or requirement of performance is not an acceptance.
R61: But an acceptance that requests a change is not invalidated unless acceptance is made to depend on an assent to the requested change.

Question 54

R63 (a) Mailbox Rule: Unless the offer provides otherwise,

Answer 54

(a) an acceptance made in the manner and medium invited by the offer is operative when put out of the offeree’s possession regardless of whether it reaches the offeror

(b): Acceptance under an options contract is not valid until received by the offeror

Question 55

Restatement 65. Reasonableness Of Medium Of Acceptance

Answer 55

1. Unless circumstances known to the offeree indicate otherwise,
   a. a medium of acceptance is reasonable if
   b. it is the one used by the offeror or one customary in similar transactions at the time and place the offer is received

Question 56

RSTMT 69: Silence

Answer 56

Silence default rule: Silence does not constitute acceptance

Silence is acceptance when
1. Offeree takes the benefit of offered services
2. Where the offeree gives reason to understand silence is acceptance and offeree intends to accept by silence
3. Where because of previous dealings, it is reasonable that the offeree should notify offeror if they don’t intend to accept

Question 57

Restatement 87: Option Contract

Answer 57

An offer is a binding option contract if
1. In writing, signed, recites a purported consideration, and proposes an exchange; or
2. Is made irrevocable by statute
3. Options contracts can also be made in a similar way to promissory estoppel

Question 58

R90: Promissory Estoppel

Answer 58

(1)A promise is binding despite lacking consideration in which the promisor
a. Should reasonably expect to induce action or forbearance
b. Does induce such action or forbearance

(2) This requirement waived in cases of marriage settlement or charitable subscription. (Generally used for written, but not oral promises.)
a. Injustice can be avoided only by enforcing the promise
b. Remedy may be limited depending on circumstances

Question 59

R110: Six Classes of Contracts Required in Writing to be Enforceable (Last 3 are relevant for Final)

Answer 59

1. Promise by an executor to pay the debts of the estate out of their own assets;
2. Paying debts of another;
3. Consideration of marriage;
4. Transfer of interest in land;
5. Contracts not capable of being fully performed within one year of the date of formation;
6. UCC 2-201: Sale of goods where price is $500 or more