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Contracts
SUNY Buffalo Law School
Taussig-Rubbo, Mateo

TABLE OF CONTENTS
Objective Theory of Contracts P. 2
Frustration, Force Majeure P. 2, 46-48
Bargain Theory of Contracts and Consideration P. 3-4
Reliance P. 4- 6
Restitution Interest, Negotiation & Formation of Contract p. 6 – 9
Good Faith Dealing p. 9 – 10
Problems With Standard Form Contracts p. 10 – 12
Statute of Frauds p. 12 – 14
Contents of Contract p. 14 – 16
Interpreting Terms of the Contract p. 16 – 19
Implied Terms and Covenant of Good Faith p. 19 – 22
Express and Implied Warranties p. 22 – 24
Modifications p. 24 – 27
Regulation of Contracts p. 27 – 29
Unconscionability p. 29
Remedies p. 30 – 37
Mitigation p. 37 – 38
Reliance, Restitution and Specific Performance p. 38 – 40
Liquidated Damages p. 40 – 41
Conditions p. 41 – 43
Implied Conditions p. 43 – 46
Frustration, Impossibility and Impracticability p. 46 – 48
Rights and Responsibilities of 3rd Parties p. 48 – 49
CONTRACTS SUMMARY OUTLINE

Objective Theory of Contracts
Reasonable interpretation of acts and words determines if there is a contract and what is in the contract. Actual intent (subjective intent) of the parties does not matter
LUCY V. ZEHMER
· Bar case, Z claims he had no intent to actually sell his farm but ct. says there is a contract based on his objective acts & words
o Z signed an agreement written by L, Z amended the agreement before he signed b/c he saw problems with it, Z had his wife sign it as well, L offered Z $5 in consideration for the deal (in addition to 50k to be paid for the farm).
· Restatement I S 71 – look to the reasonable meaning of words and acts
Frustration, Force Majeure
Force majeure = unanticipated event makes fulfilling the contract impracticable
Frustration = payee assumes the risk that if delivery is worthless to payor then payor can breach
UCC 2-615 Excuse by failure of presupposed conditions
KRELL V. HENRY p.18 – Frustration example case
NIPSCO V. CARBON COUNTY COAL P.14 – Court rejects frustration & force majeure arguments
· NIPSCO was aware of the risk that prices would change, actually agreed to set a price floor (NIPSCO (payor) assumed a risk in price changes, not Carbon County (payee))
· Posner case – awards damages, not specific performance b/c it is economically efficient, maybe an efficient breach case

Bargain Theory of Contracts & Consideration
(subjective theory rather than objective like Lucy V. Zehmer case)

Why require consideration?
To help avoid fraud.
· Consideration is subjective valuation (The deal doesn’t have to be balanced as seen valued by the “reasonable person”)
· Consideration = A makes a promise to B in return for some performance or return promise. *B’s return promise or performance can go to a third party (B can promise something/do something for C).
· Restatement 2d §71 3(a-c) Consideration
o Must bargain for a performance or return promise
o Bargained for = something sought by the promisor from the promisee, in exchange for the promisor’s initial offer/promise.
o Performance can be an act, forbearance (abstaining from using a right), or the creation, modification or destruction of legal relation.
o The promisee may perform or promise to a 3rd party and consideration is still upheld.
HAMER V. SIDWAY Forbearance satisfied consideration
· Might look like a Unilateral contract = promise given in exchange without a return promise for future performance. Promisee is under no obligation to perform but promisor is under an obligation if promise does perform.
· “If A says to B, ‘If you walk across the Brooklyn Bridge I will pay you $100,’ A has made a promise but has not asked B for a return promise. A has asked B to perform, not a commitment to perform. A has thus made an offer looking to a unilateral contract. B cannot accept this offer by promising to walk the bridge. B must accept, if at all, by performing the act. 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.”

· Not considered unilateral contract b/c promisee (Will story 2nd) forbore legal rights so he meets consideration.

· Bilateral contract = promise given in exchange for another promise.

LAKELAND V. COLUMBER Continuation of at will employment actually stands as consideration
· Employee was presented with non-competition agreement & he signed it.
o Majority says the employer gave Columber consideration b/c they continued to employ him or forbore from firing him. (re-negotiation)
o Dissent says there was no change in the employer-employee relationship, Columber was given no new consideration for signing the agreement.
· 6 Elements of a contract
o 1. Offer
o 2. Acceptance
o 3. Contractual capacity
o 4. Consideration
o 5. Mutual assent
o 6. Legality of object & consideration

· Illusory Promise = A promise which makes performance optional isn’t a contract – Restatement 2d S77
PETRO V. KENDRICK P. 48 Consideration via forbearance
· Petro met consideration via forbearance by ceasing to make a certain type of oil if it was no longer being sold to Kendrick
2 circumstances without bargaining that maybe should still be contract
· 1. Moral Consideration – sense of duty toward the p

benefit is conferred without an express previous promise or bargain but the recipient keeps the benefit and it would be unfair for recipient not to repay.
Damages = monetary value of the benefit that party A got from an act of party B

BAILEY V. WEST Failed restitution interest case (who’s horse is it case)
· Implied in fact contract
o Must have intent by both parties for the deal to be done
o P not entitled to restitution if acting w/out request by D
o There was no existing business relationship between P & D

· Quasi contract – obligation based on fairness, not actual bargaining and agreement
o Elements: 1.) benefit conferred upon a D by P 2.) Appreciation by D of such benefit 3.) Acceptance and retention by D of such benefit under such circumstances that it would be inequitable to retain the benefit without payment of the value thereof
· Restitution interest case requires Parties would have bargained for the deal if conditions permitted but under the circumstances it wasn’t prudent to hold negotiation before performance (transaction costs were too high). P in this case does not fit this description.
o This standard discourages people from taking advantage of the situation when negotiation is possible
· In a successful restitution case, you get an objective value of damages, not necessarily exactly how much you spent
· Corbin on Contracts: “if a performance is rendered by one person without any request by another, it is very unlikely that this person will be under a legal duty to pay compensation” p.83
Offer & Acceptance
· Article 2 of UCC provides that language between buyer and seller in orders may be different and still have enforceable contract

SUN PRINTING V. REMINGTON PAPER
If there is a written contract, the essential terms must be expressly written for the contract to stand.
· In this case parties failed to write down price & duration, majority said no offer & acceptance/no contract b/c price charged could be too variable without an express agreement on duration.
FORD V. RUSSELL p.92
An advertisement usually doesn’t meet the requirements of an offer