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Contracts
University of Toledo School of Law
Klein, James M.

Contracts Outline
There Ain’t No Crying in Contracts!

INITIAL QUESTIONS
· UCC or CL?
o Is the subject a movable “good”?
§ “YES”=UCC (§§ 2-2-1, 2-205)
· If no UCC on point=CL (§ 1-103)
§ “NO”=CL

Does the Statute of Frauds (SoF) apply?(Is a “record” required?)

NOTE – Depending on modification this may need to be discussed more than once w/in problem
MY LEGS – All the following require a “record” (may be hard or electronic)

Marriage

i.e. Prenuptial agreements, Marriage license, Divorce decree

Year

If “by its terms” K cannot be completed w/in year

“Year” starts when K is formed

If K is Indefinite: (i.e. at-will employment, “for life,” etc.)

K is enforceable w/o a record

Alternative performance:

If one option allows K to be complete w/in year no record required

Right of Termination/Renewal:

K cannot be completed w/in year, BUT
Either party can terminate with notice to other party before completion

Majority: K requires a record
Minority: K has “alternative performance” thus no record needed

Right of Excuse:

K cannot be performed w/in year, BUT
K can be excused due to death or incapacitation

Minority: K requires a record

Land

Includes ANY interest in real property (i.e. Lease or Purchase)

Executor

If executor is satisfying a K from their own funds/estate

Goods

Anytime price of goods exceeds $500 (§2-201(1))
Anytime modification to K causes price to then exceed $500, K must then satisfy SoF (§ 2-209(3))

Suretyship

When a party agrees to answer to the debt of another in case of default (i.e. co-signers)
Leading Object Rule:

When party benefits, obligation is not considered “secondary”

Satisfying SoF – UCC

§ 2-201(1) – Writing & Signature

Record is valid
Shows K for sale of goods made
Quantity Included (no gap filler)
Signed by party against whom enforcement sought

§ 2-201(2) – No Signature required

Between Merchants
W/in a reasonable time
Valid record confirming previous oral K
Sufficient against sender

Must show sender is bound under § 2-201(1)

Received by the correct person
UNLESS: Receiver objects in writing w/in 10 days

§ 2-201(3) – Enforceable oral Ks regardless of SoF

2-201(3)(a) – White Elephant

Goods = Special order for buyer, AND
Goods not suitable for others in the ordinary course of business, AND
Circumstances reasonably indicate goods are for buyer (i.e. P.O., phone calls), AND
Preparations/manufacture started before notice of repudiation, THEN
K is enforceable

2-201(3)(b) – Admissions

Buyer admits to oral K in pleadings, depo, etc.

2-201(3)(c) – Acceptance

Buyer accepts goods and uses them, OR
Seller accepts payment and cashes/uses it

Obligation of Good Faith?

Can § 139(1) be used to enforce an oral promise?

Split of opinion

Satisfying SoF – CL

Writing & Signature

Record valid
All essential terms present

No gaps allowed
Can be pieced together from multiple documents

Signed by party against whom enforcement sought, OR
Document signed indicates parties later intent to authenticate § 1-201(39)

CL Alternatives – No record required

Any written admission of K exists
Partial performance of K begun (taken possession, etc.)
Circumstances unequivocal

ge (§ 33)
§ The language is specific
· Parties stated
· Subject is explicit
§ The O is complete – it is not missing a material term
· Price
· Quantity
· Date
· Any other that circumstance may require
§ Unequivocal language of commitment
o Selectivity
§ Is the O directed toward the public? “Yes” O not likely
§ Is O directed to an Individual? “Yes” O = likely
o Course of Dealings/Usage of Trade
§ Dealings w/in the industry
§ Prior contact between parties
§ Factors in the market
o Timing:
§ Initial communications are typically NOT offers
· NOT an Offer:
o Ads – Unless clear, definite, and explicit, and leave nothing open for invitation or negotiation (Lefkowitz, Pepsico)
o Price Quotes – Not O, but language can sometimes indicate intent to contract
o Estimate – See Price quotes
o Opinions – Two exceptions
§ Lawyer’s implied promise (Collins)
§ Doctor’s promise/guarantee of certain results (McGee)
o Negotiations – Initial communications, invitations to bid, etc.
· Definiteness & Intent to Memorialize
o Is the O “definite”?
§ CL – § 33
· Terms of the K must be reasonably certain, AND
· Provide the basis for deciding breach/remedy
· The more open terms, the less likely there was intent
· “Objective Theory” – Would a R person in O’ee’s shoes think O’or made an O? “Yes” = K
§ UCC – § 2-204(3)
· Terms can be missing if:
o Intent to K is found, AND
o R certain basis for giving appropriate remedy
· UCC Gap Fillers:
o The Trio
§ Usage of Trade – Industry customs/slang
§ Course of Performance – Prior dealings regarding same subject
§ Course of Dealings – Past dealings between the parties
o Price – R price at time of delivery (§ 2-305)
o Output, Reqs & Exclusive dealings (§ 2-306)
§ Output – Seller will sell all he produces to Buyer
§ Requirements – Buyer will buy all he requires from Seller
§ Exclusive – Implies obligation of “best efforts” if nothing is said
o Delivery – Single lot if not specified (§ 2-307)
§ If multiple lots specified payment only due on what is delivered at time