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University of California, Hastings School of Law
Lefstin, Jeffrey A.

K’s are legally enforceable promises (defined: RS §47)
· Made as part of bargained for, valid consideration
· Reasonably induced to rely on promise/performance to promisee’s detriment
· Deemed enforceable by statute absent consideration
· Express: manifested by words (what you think of when you think K)
· Implied-in-fact: Manifested by conduct
· Implied-in-law: “quasi-K” = obligation imposed by court bec justice requires it
Sale of Goods:
· Governed by UCC Article 2 – not limited to merchants in general
· Goods=tangible/movable things (incl: currency exchanged as a commodity)
o NOT: minerals/buildings attached to land to be severed by buyer or where severing causes material harm to land
§ Minerals severed by seller are goods
o NOT intellectual property, investment securities
· Sale = transfer of title for price
o K’s for goods & services evaluated to see which is primary purpose – UCC doesn’t govern K’s for services though its provisions are compelling and may be invoked if goods are involved

K Formation:
Mutual Assent:
· RS §18: exchange of promise for promise/performance
· RS §19: Manifestation can be made wholly or in part by written or spoken words or by conduct of a party. Conduct alone is insufficient UNLESS party intended to be bound.
· Objectively evaluated offer/acceptance
o Outward manifestations: meeting of the mends determined by examining what a reasonable person in the position of each party would be led to believe by the words/conduct of other party.
· Subjective in so far as it relates to INTENT of parties to be bound
o Inner thoughts: Not sufficient to indicate assent/dissent
o Embry v. McKittrick: Employment K renewal: Outward expression of intent is binding regardless of inner thoughts.
o Lucy v. Zhemer: drunken farm sale: Outward manifestation evaluated under RPS not secret joke.
Basis for Remedy
· W/out valid K no remedy available: Sufficiently definite terms are needed to establish formation of non-goods K’s; goods K’s indefiniteness can be fixed with gap-filling terms.

Offer: Manifestation of intent to be bound upon acceptance by other party
· Creates power of offeree to accept – Bargaining can be concluded with only one more step
o Effective when received by offeree/offeree’s agent
o Effective for “reasonable time” after receipt
o Accep
· RS §24: Elements
o Communicated btw ptys
o Indicates desire to enter a K
o Directed at a person or specific group of persons
o Provides invitation of acceptance
o Possible K will arise without further negotiations
· Terms of Certainty:
o Established by parties
o Identified price
o Subject matter
o Time of performance
· Addressee: offeror determines the person in whom is created power of acceptance
· UCC 2-204: Gap Items
o If offer is incomplete despite intent to be bound, offer creates power to accept though terms may need to be subject to further negotiations:
§ Terms:
ú Open price
ú Specified place of delivery
ú Specified time
ú Notice of termination
§ Sun Printing (initial negotia

nt it is not an offer.
ú Nebraska Seed v. Harsh: letter for seed, no specific terms included: Ad != offer if it contains general nonspecific terms.
o Exception: Rewards K
§ Does not need notice of acceptance because performance of the action leading to reward is acceptance (unilateral K’s): lost dogs, free pizza for first 100 customers etc.
ú Carill v. Carbolic Smoke Ball: continuing offer accepted by performance of conditions specified by offer.
· Offer vs Proposal
o Words communicated generally more vague/prelimnary
o Omits significant terms
o Not specifically directed at particular group
o Relationship of parties not established
o Common practices of industry
§ Empro v. Ball Co.: letter of intent for transaction: Parties will not be bound if they have no intention to be bound. Letter of intent was not an offer therefore not bound by its terms.

Acceptance: Mirror Image Rule
Effective upon dispatch: mailbox rule
Unilateral Ks = Performance
· Traditional acceptance only considered satisfied when performance was complete
· Modern approach: K formed at start of performance/when offeror learns performance has begun
Bilateral Ks = Promise
· Promise to perform obligation
· Failure to perform that obligation = breach