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Contracts
University of California, Hastings School of Law
Knapp, Charles Lincoln

Contracts Outline

I. What is the applicable law?
a. UCC Article II
i. Sale of goods that are tangible property not real estate, see and touch (take note of UCC provisions)
1. All moveable items
ii. Article II A deals with leasing of goods
iii. Merchant UCC 2-104
1. Someone who regularly deals with the types of goods involved in the transaction or who is an expert in the good
b. Common Law
i. Applies to all other types of k’s
1. Contract for services
2. Real estate
II. Is there a combination of goods and services?
a. Predominant factor test
i. UCC applies if goods are the main factor in the transaction
1. Assess the relative cost of the goods to the services and the language of the K to see if the dominate subject matter of the transaction is the goods
b. Gravemen of harms test
i. UCC applies when the source of the breach concern the goods in the transaction
III. What is the objective theory of contracts?

New modern approach

An offeror and offeree ‘s intent is deemed to be what a reasonable person in the position of each party is an objective illustration of that intent
Based on the manifestation of the parties and not on their subjective beliefs

d. Meeting of the minds

Whatever you are thinking is not binding,

Whatever your words represent to a reasonable person is binding

IV. Was it a bilateral or unilateral k?
a. Bilateral: exchange promise for a promise
i. Part performance can be an implied promise making it a bilateral contract
ii. Modern trend says you generally always have a bilateral k
b. Unilateral: promise in exchange for specific performance
i. Full performance equals acceptance plus consideration
1. Part performance creates an option
ii. Classical view says full performance before acceptance
1. Remains revocable until full performance
iii. Contract should specifically state that the only way to accept is performance
iv. Modern trend: one you start substantial part performance the offer is irrevocable
v. Irrevocable offer is made by detrimental reliance, not mere preparation
1. Did something to their detriment because they relied on the offer
2. Prepared for it then you can still revoke the offer
V. modern view (UCC and Restatement):
a. on unilateral contract are limited to 2 circumstances
i. offeror says only method of acceptance is performance
ii. where there is an offer to the public
iii. one party has a right and the other has a duty
b. on bilateral contracts
i. at the time the contract is formed each party has a right and a duty
VI. Is there a Valid K?
a. A valid contract is a legally enforceable promise that is bargained for through mutual assent and an objective meeting of the minds. A valid contract has an offer, acceptance, and consideration.
i. Mutual assent
1. RP think the parties intended to ne bound
b. Is there an Offer?
i. An offer is a promise, which is the present commitment/intent to be bound to do or not do something in the future, creates a power of acceptance
ii. Created power of acceptance
iii. Can give multiple offers to different ppl: need to make them aware only when someone else accepts the offer
iv. Was it a mere invitation, preliminary negotiation (further assent needed so not an offer, doesn’t intent to conclude the bargain until he has made further manifestation of assent), form letter (not addressed to specific person so not an offer, lack of intent, advertisement), advertisement (can be if contains specific promissory language), price quote is invitation, future intent to sell
v. Purchase orders can serve as offers (negotiations prior to PO are prior negotiations, not offers)
a. Prior negation plus intent can make a k
2. Is there a Promise?
a. A promise is the present commitment to do or not do something in the future.
3. Are there Clear and Definite terms?
a. UCC
i. Quantity must be specified
ii. Court can gap-fill certain other terms
iii. UCC 2-305
1. Looks at intent of the two parties and if they find they intended to be bound then they will fill in missing gaps, even price.
2. Open price term will not prevent enforcement of the k if the parties intended to be bound
3. 2-204 open or uncertain terms will not void a k if there is a reasonably certain basis for giving an appropriate remedy
4. Terms not set
a. Go to battle of the forms
i. Buyers PO and sellers acknowledgment contain conflicting terms
b. Common Law R 33
i. Parties
ii. Price
iii. Subject matter
iv. Time
v. Place of performance
vi. Missing terms can be filled in by the court where a valid offer is found
4. Is there a communication?
a. The offer must be communicated in some form to the other party.
c. Is

ices and bad bargains allowed
b. Pre-existing duty
i. No new consideration
c. Promise to pay for past services
i. No consideration where services were performed without reasonable expectation of compensation
4. When consideration is not met
a. A pre-existing duty is not consideration
b. Conditional gift
i. Meet the condition to get the gift
c. Illusory promise: a statement that appears to be promising something but which in fact does not commit the promisor/promisee to anything, you don’t have all three elements of an offer
i. If the legal detriment is lacking in the offer
1. If legal detriment on either side there is consideration
ii. Not definite and specific
iii. Not supported by consideration
iv. Not enforceable
v. Appears to promise something but does not commit the promisor to do anything at all, when you are not obligated to do something
5. Benefit to the promisor or the detriment to the promisee
a. Detriment emphasized a little more now days
6. Exception: Don’t need consideration
a. Firm offers
b. Promissory estoppel
i. No valid K but can argue PE
c. UCC modification 2-209 or extending the contract
i. If the modification materially alters the contract then 2-207 kicks in and the offeror has to assent, one party changes it is accepted if the party performs unless the other party objects
ii. 2-207 doesn’t need consideration
7. Substitutes for consideration
a. Promissory estoppel
i. Promise
1. Reasonably foreseeable
2. Promisee would rely
3. Enforced so that injustice can be avoided
VII. Was the offer terminated?
a. Lapse of time
b. Make a counter-offer
c. Express/direct revocation
d. Indirect revocation
i. Find out from something else before you accept
d. Have the offeror indicating his unwillingness to be bound by the offer and the offeree being aware of the revocation
e. Still have the right to accept until it is revoked in one way or the other