1) Bargained For/ Mutual Inducement

Consideration:

Common Law

1)  bargained for/ mutual inducement

2)  benefit/ detriment

R2

1)  bargained for/ mutual inducement

2)  promise or performance

Mixed Motives – enough consideration

Peppercorn – enough consideration

Gift Promise – not consideration

Sham Consideration – not consideration

Pre-existing duty – not consideration

Except:

1)  unanticipated changes

2)  neither side fully performed

3)  fair and equitable (not extortion)

Exception:

Unconscionability – must have substantial & procedural unconscionability

– ct may take out unconscionable clause

Illusory Promise – no consideration

Requirements and Output Contracts – OK

Best Efforts implied in exclusive dealings – Lucy Lady Duff-Gordon

Moral Obligation/ Non-Contractual Recovery

Moral obligation alone = no K

Implied in Law K/ Quasi K – not a real K, but sometimes implied to do justice

Restitution (no later promise)

1)  P conferred a measurable benefit?

2)  P expected compensation?

3)  D should have known P expected compensation?

R2 § 86 (later promise)

1)  P conferred benefit

2)  P expected compensation

3)  B promised to pay for benefit

1. But still only has to pay what it’s worth

Promissory Estoppel

1) Did promisor mean for promisee to rely?

2) Should the promisor have reasonably foreseen that promisee would rely?

3) Did promisee rely to his detriment?

4) Would it be unjust to the promisee if promise was not enforced?

Damages

Expectation interest –had the contract been fully performed

Reliance interest – had the contract not been made

Restitution interest –benefit conferred on the other party

Equitable Relief

1. $$
2. Injunction - prevents person from working anywhere else during the contracted time

Specific Performance

1.  The goods are unique; or

2.  In other proper circumstances.

Compensatory Damages

1)  Pecuniary damages

a) Direct Damages = straight contract damages

b) Consequential Damages

i. Reasonably foreseeable at time of formation, that would arise from a breach

A. UCC – exception: personal injury dmgs w/ proof of proximate cause

B. R2 – personal injury only w/ forseeability

2)  Non-Pecuniary damages

a)  Pain and suffering ect

b)  emotional disturbance

i.  unless also caused bodily harm

ii.  OR was a particularly likely result

c)  Punitive damages

i.  Not usually recoverable

ii.  Must bear reasonable relation to actual dmgs ((9X?)

Mutual Assent

The Objective Theory (two part test)

Objective Test – Would a reasonable man in the position of the offeree under the circumstances believe that he was empowered to accept?

Subjective Test – Did offeree actually know that offeror was not in earnest?

Offer:

Advertisements as Offers:

Usually ads aren’t intended or understood to be offers to sell; they are solicitations for offers. Except if:

-  Advertisement is clear, definite, and explicit, and leaves nothing open for negotiation.

Auction: with reserve, without reserve

Acceptance:

Promise = must be communicated

words

part performance

Performance (full) = need not be communicated

An indifferent offer can be accepted by either promise or performance.

Silence

1)  take benefit

2)  intend to accept by silence

3)  previous dealings

Shipment at different Price:

UCC 2-204 = rejection

UCC 2-206 = acceptance at original price (unless communicated that it’s an accommodation)

Rewards:

Acceptance by performance

-  only if knew of reward

Mailbox Rule

Contract is formed at the time of posting acceptance

-Revocations, Counteroffers, and Options don’t use mailbox rule

Change in terms = counteroffer = no acceptance

Request for Change in terms = acceptance

UCC 207

(1)  A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

(2)  Additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become party of the contract unless:

1. Offer expressly limits acceptance to the terms of the offer
2. They materially alter it; or
3. Notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

(3)  Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consists of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act.

Note:

-  Cts are split on whether arbitration terms are material

-  Cts agree that warranty and liquidated damages terms are material

Click wrap – must know terms exist and make unambiguous assent

Shrink wrap – must know terms exist and have opportunity for return

Revocation & Termination

Revocation/withdrawal – must be communicated before acceptance to be effective

Termination of power of acceptance:

-  if offeror takes action inconsistent with offer and offeree acquires reliable info about it

-  non-occurrence of a condition of acceptance under the terms of the offer.

-  OR

(a) Rejection or counter-offer by the offeree

(b) Lapse of time

(c) Revocation by the offeror

(d) Death or incapacity of the offeror or offeree

Options and Irrevocable Offers

Rule: Irrevocable Offers do NOT bind the offeree.

Types of Irrevocable Offers and Options Contracts:

1) formal option - A payment to keep open for a certain length of time

2) 2-205 firm offer “An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time,

3) R2d § 45 – partial performance – option to finish in a reasonable time is created if performance is started on an offer that can only be accepted by performance

4) R2d § 87(1) – purported consideration if it’s in writing an signed by the offeror, recites a purported consideration for the making of the offer, and proposes an exchange on fair terms within a reasonable time

5) R2d § 87(2) – substantial preparation that was foreseeable to offeror- applies to unilateral (performance) and bilateral (promise) offers – if offeror should have expected it to induce action then offer is accepted when offeree takes substantial steps toward completing it

6) Construction bids – is irrevocable for a reasonable amount of time

Insufficient Agreements

(Elizabeth’s explanation of § 20):

-  both oblivious (R2d § 20(1)(a)) = No contract

-  both conniving (R2d § 20(1)(b)) = No contract

-  one conniving one oblivious (R2d § 20(2)) = contract on the innocent party’s terms

Agreement to agree

Common law = agreement to agree not a contract

Current law = agreement to agree mini-contract to negotiate in good faith, but you can’t be compelled to perform, if after good faith bargaining, an agreement can’t be reached.

UCC 2-204(3)

Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have indented to make a contract and there is a reasonably certain basis for giving an appropriate remedy

Elements that UCC will fill in:

-  reasonable price (at time of delivery)

-  delivery place = sellers business

-  payment due upon receipt

-  Note: if no amount, UCC will fill in zero

Remedies for Agreement to agree and reliance in negotiation stage – reliance dmgs