UCC and Restatement

Question 1

UCC §2-204 (Formation in General)

Answer 1

(1) a contract for sale of goods may be made in any manner sufficient to show agreement including conduct by both parties which recognizes the existence of such a contract
(2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undermined
(3) 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

Question 2

UCC § 2-201 (Statute of Frauds)

Answer 2

A sale of a good protected under the statute of frauds is not enforceable unless in writing and signed by the party not seeking to enforce the contract

-And exception to this rule is the sale of goods between two merchants

Question 3

UCC § 2-207 (Additional Terms regarding Acceptance or Confirmation)

Answer 3

Generally, adding additional terms when accepting an offer (conditional acceptance) kills the original offer, and becomes a new offer. (§ 59 of the Restatement)

However, when conditional acceptance is given between two merchants, the original offer is considered to be agreed upon and the new terms are treated as mere proposals unless:

(1) the offer expressly limits acceptance to the terms of the offer
(2) the new terms materially alter the original agreement
(3) notification of objection to the new terms has already been given or is given within a reasonable time after notice of them is received

Question 4

Restatement § 25 (Option Contracts)

Answer 4

a promise which meets the requirements for the formation of a contract and limits the promisor’s power to revoke an offer (See § 87 of the Restatement)

Question 5

Restatement § 30 (Form of Acceptance Invited)

Answer 5

(1) an offer may invite acceptance to be made by an affirmative answer in words, or by performing or refraining from performing specified act, or may empower the offeree to make a selection of terms in his acceptance (Think unilateral vs. bilateral)
(2) Unless otherwise indicated by the language of the circumstances, an offer invites acceptance in any manner and by any medium reasonable in the circumstances (default rule)

Question 6

Restatement § 40 (Time When Rejection of Counter-Offer Terminates the Power of Acceptance)

Answer 6

Rejection or counter-offer by mail or telegram does not terminate the power of acceptance until received by the offeror, but limits the power so that a letter or telegram of acceptance started after the sending of an otherwise effective rejection or counter-offer is only a counter-offer unless the acceptance is received by the offeror before he receives the rejection or counter-offer. (mailbox rule)

Question 7

Restatement § 50

Answer 7

Bilateral and unilateral forms of acceptance. (promise to perform vs. performance)

Question 8

Restatement § 54 (Acceptance by Performance; Necessity of Notification to Offeror)

Answer 8

Offeree is not required to notify the offeror if acceptance is through performance, unless notification is stipulated in the offer.

And exception to this rule is if the offeree knows or has reason to know that the offeror has no adequate means of learning of the performance with reasonable promptness and certainty. In these cases the offeree is at least required to exercise reasonable diligence to notify the offeror that performance has begun.

Question 9

Restatement § 62 (Effect of Performance by Offeree Where Offer Invites Either Performance or Promise)

Answer 9

In such a case, the tender or beginning of the invited promise is acceptance.

Question 10

Restatement § 63 (Time When Acceptance Takes Effect)

Answer 10

The mailbox rule: acceptance is valid as soon as it leaves the possession of the offeree.

The exception to this rule is for option contracts, where acceptance is valid when the offeror receives the acceptance.

Question 11

Restatement § 69 (Acceptance by Silence)

Answer 11

Silence is only considered acceptance when:

(1) an offeree takes the benefit of the offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation.
(2) an offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction
(3) because of previous dealings it is reasonable that the offeree should notify the offeror if he does not intend to accept

Question 12

Restatement § 17 (Requirements of a Bargain)

Answer 12

Formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange (offer and acceptance) and consideration.

Question 13

Restatement § 20 (Effect of Misunderstanding)

Answer 13

There is not manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations and:

(1) neither party knows or has reason to know the meaning attached by the other; or
(2) each party knows or has reason to know the meaning attached by the other
* If one party knows that the other party attached a different meaning than the one they used, then the court uses the meaning of the ignorant party.

Question 14

Restatement § 33 (Certainty)

Answer 14

Even if there is a manifestation of mutual assent to be bound, there is no contract unless the terms of the contract are reasonably certain.

Terms are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.

Question 15

UCC § 2-209

Answer 15

Modification, Rescission and Waiver

Question 16

Restatement § 71 (Requirement of Exchange)

Answer 16

To constitute consideration, a performance or a return promise must be bargained for. Something is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.

Question 17

Restatement § 73 (Performance of a Legal Duty)

Answer 17

Performance of a legal duty already owed to a promisor is not consideration.

Question 18

Restatement § 89 (Modification of Executory Contract)

Answer 18

A promise modifying a duty under a contract not fully performed on either side is binding if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made.

Question 19

Restatement § 45 (Option Contract Created by Part Performance or Tender)

Answer 19

When an offeror does not stipulate the mode of acceptance, the beginning of performance or tender on the part of the offeree creates an option contract conditional upon his completing the required performance.

Question 20

Restatement § 90 (Promise Reasonably Inducing Action or Forbearance)

Answer 20

A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee and which does induce such action is binding if injustice can be avoided only by enforcement of the promise.

Charitable subscriptions do not require “reasonable expectations to induce” in order to be binding.

Question 21

Restatement § 159 (Misrepresentation Defined)

Answer 21

Misrepresentation is an assertion that is not in accord with the facts

Question 22

Restatement § 160 (When Action is Equivalent to an Assertion)

Answer 22

Action intended or known to be likely to prevent another from learning a fact is equivalent to an assertion that the fact does not exist.

Question 23

Restatement § 162 (When a Misrepresentation is Fraudulent or Material)

Answer 23

A misrepresentation is fraudulent if the maker intends his assertion to induce a party to manifest his assent and the maker

(1) Knows or believes that the assertion is not in accord with the facts, or
(2) does not have the confidence that he states or implies in the truth of the assertion, or
(3) knows that he does not have the basis that he states or implies for the assertion

A misrepresentation is material if it would be likely to induce a reasonable person to manifest his assent or if the maker knows that it would be likely to induce the recipient to do so.

Question 24

Restatement § 164 (When a Misrepresentation Makes a Contract Voidable)

Answer 24

(1) If a party’s manifestation of assent is induced by either a fraudulent or material misrepresentation by the other party upon which the recipient is justified in so relying, the contract is voidable by the recipient.