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Contracts
Temple University School of Law
Smyth, Sophie E.

EXAM: Issue, Rule/Law, Application, Conclusion (don’t put conclusion up front!) (“this questions raises the issues of…”). The general rule is….one uses this test to find if it applies….[then apply facts of hypoàthis is where facts of cases b/c relevant)
UCC à1952
Elements of K:
·         Bargain (agreement to exchange promises, exchange promise for perf, or exchange perfs
·         manifestation of mutual assent (offer & acceptanceàmeeting of the minds) or Promissory Estoppel
o        1 – the words used
o        2 – surrounding circumstances
o        3 – to whom the words are conveyed
o        4 – definiteness of terms            
o        5 – intent
·         exchange
·         consideration or promissory estoppel
For cause of action (breach) also need
·         Enforceability (damages, SP, or promissory estoppel)
·         Breach, unjust enrichment, or detrimental reliance

I. MUTUAL ASSENT offer-acceptance (making promise) or begin/render perf
·         mental reservation/secret wishes don’t negate mutual assent (look to outward manifestations)
o        Use objective standard to determine presence of K: would what was said have been taken by a reasonable person to be a K (manifestation of intent, not secrete wishes)
§         Case 1: Embry v. Hargadine, re-employment after end of K taken as new K
§         Case 2: Lucy v. Zehmer, drunken sale of land on back of restaurant check signed by witnesses =K
§ 19 Conduct as Manifestation of Assent
·         (1) written, oral, or conduct
·         (2) conduct = manifestation if party intended & knows or reason to know other party assumes assent
o        Case 3: Texaco v Pennzoil Pennzoil had deal Getty and a memo of intent. Texaco came in and stole the deal
·         (3) If conduct = manifestation, but no actual assent, look for fraud, duress, mistake, etc                         

A. OFFER
requirements for a valid offer: 
·         1 – manifestation of present contractual intent
o        us. in form of offer/acceptance. §22, p 331
o        BUT there may be a manifestation of mutual assent even if neither offer nor acceptance can be identified and even if the moment of formations cannot be determined (eg., in complex negotiations).
·         2 – certainty and definiteness of terms §33: Certainty
o        reasonably certain if provide basis for determining breach a/o remedy
o        can be open terms, but might = no manifestation 2-204 (see elmts of K p1) (NE Seedàtoo many open terms)
·         3 – communication to the offeree
o        §29: To Whom an Offer is Addressed : only that person can accept
Following DO NOT = offer:
·         opinions,
·         statements of intention (including letters of intent which merely memorialize negotiations),
·         invitations to submit a bid,
·         ads/mass mailings
o        Case 4: Nebraska Seed Co v Harsh letter was invitation to purchase seeds
§         Factors to consider – trade customs, # of persons communication was addressed to, completeness/definiteness of terms in “supposed” offer
o        Case 5: Leonard v Pepsico TV commercial didn’t =offer b/c no reasonable person would have concluded such: reserves details to sep writing that negates offer of jet
o        See below Empro
·         price estimates,
·         Preliminary negotiations (more formal writing contemplated)
o        Case 7: Empro Man v Ball-co Manufacturing letter of intent doesn’t =K b/c P left too many outs for themselves (didn’t commit-so P didn’t have to) à just prelim neg
o        EXCEPT: Promissory Estoppel Goodman 59, Hoffman 60; and § 27: Sufficient manifestations of assent =K even if plans to later put to writing.
§         Case 6: Texaco v Pennzoil written memo is K even tho intended more formal writing b/c intent to have K was present
§         Things to look at to determine intent (if memorial actually needed to form K):
§                 1 – is there an explicit “no agreement until signing” clause?
§                 2 – is there acceptance of partial performance?
§                 3 – is there literally nothing left to negotiate?
§                 4 – what is the transactional/industry norm – does complexity require writing?
§ 2-204 Formation in General
§ 2-206 Offer and Acceptance

Revoking an Offer
Duration of offer is as stated or for reasonable time determined by nature of K, trade usage, prior dealings, etc. § 35
Acceptance after offer expires is a counter-offer.

requirements of an effective revocation:
1 – words or conduct (inconsistent w/intention to enter into K) must be clear (Dickinson)
o        Case 8: Dickinson v Dodds option K where D gave P till next day to purchase property, but then sold it to 3d party àrevocation by conduct § 43 (not really option K, no consideration)
2 – must be communicated to offeree
3 – effective when received (even if immediately before acceptance)
o        Case 9: Petterson v Pattberg D had agreement with P that he would reduce principal if debt was paid off early. D attempted to pay early and P refused to reduce principal at moment of acceptance. This was an option K, and the majority says that payment=perf, but Dissent says tendering (being able to pay)=perf:
o        BUT see § 37 à option K offers are irrevocable (loveless 113)
Offer is irrevocable if:
·         statute,
·         induced foreseeable and reasonable reliance on implied/express promise of offeror not to revoke (PE)§ 87 (p10), § 25
·         contracted as option K § 37 (BUT see Petterson),
o        See Loveless  (113)
·         Unilateral K and offeree commenced performance (accepted, but didn’t complete) àneed consideration for option K (seprate from other K)
§ 2-205. Firm Offers (held open) in writing signed by both parties: can’t be revoked but can’t be held open longer than 3 mos). à don’t need consideration

B. ACCEPTANCE
§30/2-206: acceptance invitedcan be by words or performance (default = whatever is reasonable in circs);
-acceptance must be overtly manifested to offeror ( offeror must actually know or should reasonably know of it) w/in reasonable time
·         Case 10: White v Corlies and Tifft K for building offices, Bldr gives estimate; 1st D letter says start tomorrow but requests notification, P buys wood, D retracts next day à P had duty to give notice of acceptance via letter for offer to start tomorrow          
Mailbox ruleà p326-327 Offeror can revoke any time before mailing of acceptance w/o notice
§ 65 medium of Acceptance same as offer or what is customary
§ 66 Acceptance Must be Properly Dispatched p328
§63 When Acceptance Takes Effect 
·         acceptance is operative as soon as it’s sent/communicated
·         except option Ks which are not operative until received by offeror
Acceptance by Performance or “unilateral” Ks
Bargain is not complete until performance is complete (but what constitutes perf can be subjective: in Petterson 9, the majority said that payment=perf, whereas dissent says that tendering (being ready to pay)=perf
§54: Acceptance by Performance; Necessity of Notification to Offeror p342
·         (1) when offer invites acceptance by performance, notice is not necess



no agreement, only seemed to be mutual assent
Ambiguous Termsmust be material term (substantive) to negate mutual assent (raffles)
§201 Whose Meaning Prevails?
·         Xs meaning prevails if at the time the agreement was made if X didn’t know of any dif meaning attached by Y, and Y knew meaning attached by X; or
·         Otherwise, if dif meanings and both were unaware àno mutual assent         
o        Case 17: oswald v allen Swiss coin collections, P thought two collections for price, D thought one collection for price
§         No K unless one party had reason to be aware of other’s understanding.
§         R2: Although mental assent of parties is usually not a requisite to formation of contract this case is an exception because there is “no sensible basis for choosing between conflicting understandings”. (Applies Raffles)
ú          Embry (1) standard still applies, but these guys don’t pass the test, an objective observer wouldn’t be able to tell
·         each parties interpretation must be reasonable to render K unenforceable
o        Case 18 (see 84): raffles v wichelhaus, mistaken ID of Peerless boats leaving at dif times used in delivery of goods = mutual mistakeb/c boat determined arrival date, which was material term in K
§202 Rules in aid of interpretation (can include parol evidence if ct follows PG&E ruling)
·         (1) words interpreted in light of circumstances (given gen meaning or appropriate tech meaning), intention of parties is given much weight
·         (2) writing is interpreted as a whole
·         (4) look to past or partial performance (did they object to def then?)
·         (5) look to relevant course of performance, course of dealing, or usage of trade. Weinberg (19)
§1-205 Hierarchy: look first at express terms, then course of dealing (past relationship), course of perf (conduct under agreement à PRICE (frig)), then usage of trade (only if written trade case)
§2-208 course of dealing (continued use of product) can=acceptance Hobbs 13, Frig 20)

Vague Terms terms that can be applied beyond their clear core meaning
·         Case 19: Weinberg v Edelstein “dress” v shirt-skirt combos. construed term narrowly. Used same tests as above (see hierarchy)
·         Case 20: Frigaliment importing v B.N.S. int’l sales corp D thought “chicken” included fowl and sold it to P who strictly construed it to mean young chik. –Used same tests as above, looked at dept. of Agric. Def; price (also looked at fact that Frig accepted first shipment and asked them to go ahead on 2d, but with “corrected” product)


Filling Gapswhether to provide terms omitted or declare too insufficient to be K
Implied-in-fact terms are those that the parties actually, albeit implicitly, have agreed to; 
implied-in-law terms are thought to be imposed on parties w/o their consent.