1. Introduction
a. Sources of Contract Law
i. Problem of digital photographs
ii. Identification of the contract
A. § 2–501. Insurable Interest in Goods; Manner of Identification of Goods.
(1) The buyer obtains a special property and an insurable interest in goods by identification of existing goods as goods to which the contract refers even though the goods so identified are non-conforming and he has an option to return or reject them. Such identification can be made at any time and in any manner explicitly agreed to by the parties. In the absence of explicit agreement identification occurs
(a) when the contract is made if it is for the sale of goods already existing and identified;
(b) if the contract is for the sale of future goods other than those described in paragraph (c), when goods are shipped, marked or otherwise designated by the seller as goods to which the contract refers;
(c) when the crops are planted or otherwise become growing crops or the young are conceived if the contract is for the sale of unborn young to be born within twelve months after contracting or for the sale of crops to be harvested within twelve months or the next normal harvest season after contracting whichever is longer.
(2) The seller retains an insurable interest in goods so long as title to or any security interest in the goods remains in him and where the identification is by the seller alone he may until default or insolvency or notification to the buyer that the identification is final substitute other goods for those identified.
(3) Nothing in this section impairs any insurable interest recognized under any other statute or rule of law.
b. Has to be removal at time of identification
i. Example car
c. § 2–107. Goods to Be Severed From Realty: Recording.
(1) A contract for the sale of minerals or the like (including oil and gas) or a structure or its materials to be removed from realty is a contract for the sale of goods within this Article if they are to be severed by the seller but until severance a purported present sale thereof which is not effective as a transfer of an interest in land is effective only as a contract to sell.
(2) A contract for the sale apart from the land of growing crops or other things attached to realty and capable of severance without material harm thereto but not described in subsection (1) or of timber to be cut is a contract for the sale of goods within this Article whether the subject matter is to be severed by the buyer or by the seller even though it forms part of the realty at the time of contracting, and the parties can by identification effect a present sale before severance.
(3) The provisions of this section are subject to any third party rights provided by the law relating to realty records, and the contract for sale may be executed and recorded as a document transferring an interest in land and shall then constitute notice to third parties of the buyer’s rights under the contract for sale.
D. Gravamen of the action – separating the sale and service of the good and deciding which the issue rose out of
iii. Nim Plastics Corporation v. Standex International Corporation
A. Suing for possible loss of profits that was lost because could not apply finish
A. Important to contracts – give money to put back in economic situation had contract been performed
B. Benefit of bargain
C. Expectation measure
D. 2 counts in lawsuit
i. 2nd count – breach of implied warranty
1. Court agreed that not appropriate legal theory and dismissed
2. Not good b/c service
1. § 2–314. Implied Warranty: Merchantability; Usage of Trade.
(1) Unless excluded or modified (Section 2–316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale.
(2) Goods to be merchantable must be at least such as
(a) pass without objection in the trade under the contract description; and
(b) in the case of fungible goods, are of fair average quality within the description; and
(c) are fit for the ordinary purposes for which such goods are used; and
(d) run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved; and
(e) are adequately contained, packaged, and labeled as the agreement may require; and
(f) conform to the promise or affirmations of fact made on the container or label if any.
(3) Unless excluded or modified (Section 2–316) other implied warranties may arise from course of dealing or usage of trade.
i. Not sale of goods so does not apply
ii. If apply predominant purpose test – more of a service
iv. Restitution
2. Contract formation and alteration
i. What promises are enforceable and why?
A. Consideration
A. Consideration and Estoppel
B. Hamer v. Sidway
i. Uncle will give money to nephew
1. Hypothetical: rights car dealer transferring to bank
1. Right to be paid $ or repossess the vehicle
2. Nephew alleging there was a contract and later breach of contract and later amount of money owed because of the breach
3. Defense argued no consent because no detriment to nephew
4. Not enforceable and no consideration
5. Hypothetical: car insurance company
1. Do not make payments then do not have to perform promise
2. Unilateral
6. It was a forbearance – nephew would not do things
1. Exchange given for promise
2. Nephew giving up rights
7. Might be more useful to look at whether promise is supported by consideration then if contract is supported by consideration
8. If nephew had promised – bilateral
9. Benefit to the promisor or detriment to the promisee
1. Court decided foregoing legal rights shows detriment and benefit not needed
10. § 71 REQUIREMENT OF EXCHANGE; TYPES OF EXCHANGE
(1) To constitute consideration, a performance or a return promise must be bargained for.
xi. § 79 ADEQUACY OF CONSIDERATION; MUTUALITY OF OBLIGATION
If the requirement of consideration is met, there is no additional requirement
A. When college accepted $ implied as promised that they would use in way she wanted
B. Promisory estoppel
A. If college already taken action relying on promise and promisor must keep promise
B. College argued that already acted in reliance on promise
v. Strong v. Sheffield
A. D owed P a debt and and P signed note saying would not cash in until needed and waited until 2 years to cash in
A. There was no consideration
B. Illusory promise
C. Promissory note was payable at anytime demanded
D. D was asking for promise of forbearance
§ 79 ADEQUACY OF CONSIDERATION; MUTUALITY OF OBLIGATION
If the requirement of consideration is met, there is no additional requirement of
(a) a gain, advantage, or benefit to the promisor or a loss, disadvantage, or detriment to the promisee; or
(b) equivalence in the values exchanged; or
(c) “mutuality of obligation.”
v. If he waited 2 years and D asked for 2 years then consideration
vi. D did not ask for forbearance only promise of it
F. Is there bargaining and what is being bargained for?
A. If bargaining for return promise and no return promise then not enforceable
B. Signing promissory note is not obligation
G. Mattei v. Hopper
A. P is real estate developer that wanted land and D would sell as long as P brought satisfactory leases then D repudiated
i. Is the promise illusory since depended on buyer’s performance of leases?
1. Defense of absence of consideration
1. Both parties at time thought had contract and when 1 party breaches try to make excuse to get out of it
2. No
1. Could define satisfactory
