Because just as good morals, if they are to be maintained, have need of the laws, so the laws, if they are to be observed, have need of good morals. -- Niccolò Machiavelli


PREMIUM LEGAL RESOURCES LEGAL FORMS ASK A LAWYER

A. Types of Ks
1. Express or Implied
a. Express is statemts of mutual assent; willingness to enter into
a K
b. Implied is no statements; conduct
2. Bilateral, Unilateral or Code
a. Code is sale of goods & no bi/uni distinction
b. Bilateral formed w/ mutual promises of parties, perf. of both
fully executory
c. Unilateral promise 1 side & fully executed perf. the other (K no
formed until fully executed 1 side)
3. Telling if Bilateral or Unilateral
a. Unilateral if offer warns only accept by act or if public offer
b. Bilateral always if asks for return promise
c. Offer indifferent (can't tell if promise or perf. requested) MAJ
it's bilateral

B. Offer: commitment communicated to identified offeree & containing
definite terms
1. Commitment: reas. person hearing words under these circum.
believes speaker intends to enter into K (OBJECTIVE) (Public ad to
identified offeree, 1st 10, is an offer)
-> Code's way of objectively determining is course of dealing -
worst is actual words used
2. Communicated to ID'd Offeree (ACTUAL KNOWLEDGE)
-> Another can tell him; public offer accepts & is ID'd at same
time
3. Containing Definite Terms: must address s/matter of K w/ certainty
to be valid
a. Real Estate (desc. & price)
b. Goods (quantity, except offers for total requiremts based on
past hx or offers for total outputs are based on last yr output or most
mfrs)
c. Services (term of e/mt by task or time, unless not stated then
at will)
-> All other material terms supplied by ct, but if offer tries to
address material term, must do so w/ certainty or offer is INVALID
4. Limits on Terminating Offers
a. Merchant Firm Offer Rule: Merchant who puts offer in writing &
it says will hold open Xtime or indefinitely (Rrrevocable for time
stated but not open more than 3 mos. w/o consideration
b. Option K (like a mini-K): consideration to hold open or
consideration substitute; substitute when offeree detrimentally, reas. &
foreseeably relies on offer (sub bid) (detrimental reliance or prom.
estoppel used)
c. Offer to Make Unilateral K: to give time to perform. Reasons
can't terminate (best to worst) (1) stay open reas. time if perf. begun
(2) reliance by offeree - supplies (3) doctrine of divisibility - reas.
time to comoplete any "in works" (4) implied bilateral prom. to complete
by commencing perf.
5. Ways to Terminate b/4 Acceptance
a. Revocation by Offeror
(1) Express w/ ID'd offeree efftv when receives it (not read or
actually knows of) w/ delivery to offeree, anyone offeree's control
Express w/ public offer revocation same or comparable medium as
offer
(2) Implied when offeror does act preventing perf. and when
offeree learns of act from reliable source
b. Rejection by Offeree (refusal or counteroffer)
(1) Express when offeror receives or anyone in his control (no
actual knowledge); can never be revived
(2) Implied (conduct) letting offer lapse past time stated or
reas. time
c. Operation of Law: s/matter destroyed b/4 accept; supervening
illegality; death or incapacity of either offeror or offeree terminates
OFFER

C. Acceptance
1. For UCC Offer: by promise or perf. (no distinction bet. uni/bi)
a. If perf. takes time, must send notice perf. occurring; can ship
conforming or non-conforming (K and breach same time)
b. EXCEPT: non-conforming not acceptance if S says sending as
accommodation, unless B takes & uses them
2. For Unilateral Offer:
a. Perf. of requested act & must notify performed if offer requires
or wouldn't otherwise come to offeror's attn
b. Public offer to determine perf. look to objective intention of
offeror; what reas. person would think offeror wanted, to accomplish the
objective (eat/buy sundaes)
3. For Bilateral Offer (Express or Implied Bilateral Promise in
Return)
a. Express Bilateral Acceptance: a commitmt communicated using
correct method (offer requiremts or same way came or reas. way)
-> reas. means as speedy or faster as offer & as legally
dependable as way offer presented
-> Mailbox: efftv sent if properly addressed, delivery prepd
EXCEPT:
(1) Offer requires receipt of acceptance
(2) *Receipt b/4 end of option K
(3) Accept then reject-mailbox applies unless offeror gets
rejection 1st and acts on it
(4) Reject then accept-no mailbox & 1st there prevails
b. Implied Bilateral Acceptance (conduct)
(1) doing conduct offer requires (yellow hat; except not silence)
(2) accepting benefits of unsolicited goods (MAJ)
(3) starting perf. of act promised to do - creates implied prom.
you accept & will complete

D. Counteroffers (Code & Non-Code)
1. Non-Code: acceptance must mirror; any new/different is
counteroffer (except mere inquiry)
2. Code: counteroffer only:
a. when non-conforming sent as accommodation or
b. if acceptance expressly condtn'd on new terms, to add them in:
(1) if consumer 1 party the addtn is separately accepted/rejected
(2) if just merchants automatic unless offer said ltd to its
terms, offeror expressly rejects them, or new term materially alters K

E. Consideration (each party makes 1 consideratn supported prom.)
1. 3 Tests for Consideration:
a. Prom. must induce current perf. in exchange (bargained for
exchange)
b. Detriment from Promisor (offering detriment)
c. Promise binding, not illusory (mutuality of the prom.)
2. Promise Induced for Current Perf. in Exchange (giving $ or
conduct)
a. Promises based on moral feelings FAIL
b. Promises based on past acts & don't ask anything currently in
exchange FAIL, EXCEPT:
(1) debt barred by technical defense, new written promise to
revive enforceable (amt stated up to debt)
(2) Promisor requested act & promisee perf. w/ expectation of
paymt, most enforce payment
3. Detriment From Promisor (detriment to Promisee)
Doing something promisor not otherwise required to do or NOT doing
something promisor has rt or good faith belief had rt to do (can be a
legal disadv. - not smoking)
a. Signif. MIN says if no detriment from promisor look for benefit
to promisee
b. NOT a detriment if Promisor had PRE-EXISTING duty to do it
EXCEPT:
(1) unforeseen difficulty so severe could walk away but promise
to do anyway (John Denver)
(2) Good faith exception to disputed duties (misunderstand & new
prom. to compromise; Denver $10,000 pymt; bona fide good faith dispute)
4. Binding, Not Illusory Promise: can't have unrestricted or total
discretion on whether to perform (mutuality of obligation)
a. NOTE: Requirement & Output promises look illusory but not b/c
Doe imposes reas. quantity requirement, nor are satisfaction conditions
b/c must be SUBJECTIVE good faith dissatisfaction
5. Consideration Substitutes (MAKE SURE PROMISE DOESN'T ALREADY HAVE
CONSIDERATION FIRST!)
a. Code Consideration Substitutes
-> Merchant's firm offer to keep open enforced up to 3 mos.
unless consideration then for time stated
-> For CODE, don't need consideration for modificatn IF MADE IN
GOOD FAITH
b. Common Law Consideration Substitutes
(1) MIN accept Ks under seal w/o consideration, or
(2) Prom. Estoppel: if promisee detrimentally, reas. &
foreseeably relies on promise, it's enforceable though no good
consideration (buy car based on prom. to pay when your thumb smashed)
-> Make sure not good consideration 1st b/4 you apply these

F. Defenses to Formation or Enforcement of K (best to worst)
S U M F I G (St/Frauds, Uncon, Mistke, Formatn, Incap, Garbage)
1. Formation Defense (no offer, acceptance, consideration)
2. Statute of Frauds (tangible evidence for Ks easily imagined or
very valuable) (K UNENFORCEABLE, NOT VOID)
a. Tangible Evidence Required
(1) Part/full perf. by either party for any of these (don't do
for nothing; satisfied up to extent perf.), or
(2) Writing that ID parties, s/matter, consideration, signed by
party to be charged (written on anything)
b. Kinds of Ks Protected ("MY LEGS")
(1) Ks where marriage is the consideration/reason for the K
(2) Suretyship K (ans. for another's debt) BUT to require a
writing for SofF must be collateral promise (to ans. for primary) &
can't be for benefit of the surety
(3) Real Estate Ks (including mtg or easemt or lease longer than
yr) to enforce requires writing or part/full perf., but part perf needs
poss'n + improvements. Real est. K in writing so agent's authority must
be in writing (Equal Dignity Rule)
(4) Ks can't perform w/in 1 year (FROM DATE K FORMED). If any
way could have been completed w/in 1 year, though not, writing not
required:
(a) Lifetime Ks could die tomorrow so no writing required but
MIN require b/c always fails
(b) And Excusable nonperf. w/in 1 year isn't complete perf. for
the rule (3 yr job K says can end w/ 30-day notice)
(5) Sale of Goods $500 or more: writing or Code also accepts: (a)
commence mfr special goods per oral request (b) merchant's confirming
memo per oral order & no objtn w/in 10 days, or (c) admit to K existence
in judicial context
3. Incapacity (lack of K'l capacity)
a. VOIDABLE by 1 lacking cap. & can expressly or impliedly affirm
if capacity ceases but always obligated for necessaries (based on living
standard)
b. Infants under 18; adjudicated mental incompetent totally VOID;
unadjudicated can affirm if lucid; intoxicated MAJ require other to know
to make K VOIDABLE
4. Garbage Defenses (illegality, fraud, duress)
a. Illegality: s/matter illegal totally VOID; purpose illegal
VOIDABLE by innocent party
b. Fraud: in the execution (don't know K) totally VOID; in the
inducement (deceived as to s/matter) VOIDABLE by defrauded party - can
enforce it wants
c. Duress: personal duress VOIDABLE; economic duress no defense
unless party caused himself
5. Unconscionability: At formation terms unfair/oppressive to 1
party (Ct decides)
-> Blue Pencil Rule: can do anything to make fair, sever or rewrite
clause or void entire K
6. Mistake/Ambiguity
a. Mutual Mistake: VOID K - no meeting of minds (usually s/matter
or quality of s/matter doesn't exist)
b. Unilateral Mistake: 1 party mistaken as to MATERIAL fact of K;
no defense for uni mistake unless other knew/should have
-> Can be unilateral mistake as to perf. (air condtnr), value or
person w/ whom you're dealing
c. Ambiguity in K Term: material term susceptible of more than 1
meaning (fruit); No K unless both intend same meaning or only 1 knows
there's ambiguity (enforced non-knowing 1's way)

G. Non-Party Rights
(3P Ben'y/Assignmts/Delegation)
1. General:
-> non-party time formed is 3P ben'y; non-party later is assignmt or
delegation
-> NON-PARTY RTS ALWAYS DERIVED SO DEFENSES OK
2. 3P Beneficiary (look a promise at a time) (3P ben'y of which
promise?) 5 RULES:
a. Intended or Incidental Ben'y
(1) Incidental no rights, just benefit
(2) Intended gets rights; intended b/c ID'd in promise, perf. runs
to you & ben'y/promisee relationship supportg intention to benefit
b. Donee or Creditor Ben'y
(1) Donee gets as gift
(2) Creditor when promisee owed debt & using promisor's perf. to
satisfy
c. Ben'y can enforce promise way it existed when rts vested
-> Promisor/ee can change, or rescind promise until vests
-> Vests when ben'y learns & assents (words/conduct), but promise
can reserve power in promisee
d. Promisee can also enforce promise against promisor (MAJ)
e. Creditor ben'y can sue promisee on underlying obligation or
Promisor on 3P promise
3. Assignment (if assign whole K, that's assignmt of rts & delegation
of duties)
-> Obligor (owes perf.), Assignor, Assignee
a. Is it Assignable? Not if:
(1) K prohibits EXCEPT privilege, not power to assign destroyed so
assignmt valid, but Assignor breached and totally enforceable under Code
(no breach)
(2) Law Prohibits (make sure it's an ASSIGNMENT 1st!)
(3) Pers. Services K where assignmt = substn'l change in perf., or
(4) Substant'l change in perf. b/c of assignment (requirements Ks
suspect or change in time/place of perf.)
b. Was it Properly Assigned?
-> Need desc. of rt assigned & words of present transfer (even if
perf. for future)
-> Warranting to assignee assignable & enforceable (Assignee can
sue for W breach)
c. Obligor must perform to Assignee, Assignee can enforce, Assignor
no rt anymore
d. Problems:
(1) Assignor dealing w/ Obligor
-> if b/4 Obligor gets notice, assignee v. assignor for breach W
-> if after notice, assignee v. Obligor, whose stuck paying twice
(2) Assignor multiple assignments
(a) Are any Gratuitous (automatically revoked unless writing
delivered, token chose, or estoppel (detrimentally, reas. & foreseeably
relied)
(b) Otherwise 1st w/ valid unrevoked assignment unless subsequent
w/o knowledge of others gets 1) pd, 2) judgment, 3) token chose from
Obligor or works 4) novation w/ Obligor (4 "horsemen" of assignment)
4. Delegations (of duty)
Delegator (of duty), Delegate (does duty), Obligee (gets perf.)
a. Is it Delegable? NOT IF:
(1) K prohibits (works here!)
(2) Prohibited by law
(3) Pers. Services (unless routine)
(4) Substantially changes char. of perf. (output Ks or time/place
change)
b. No particular form for delegation (unlike assignment)
c. If delegate for consideration, Obligee can force delegate to
perform (delegate makes promise to Delegator to perf. to original
Obligee & Obligee now 3P ben'y of their K)
H. Conditions (must be EXCUSED or SATISFIED)
1. Types:
a. Condition Precedent: must occur b/4 duty matures
b. Condition Concurrent: happens same time duty performed
c. Condition Subsequent: after duty matures, then discharged
2. Express Conditions (1 of 3 expressed in K)
Problems:
a. True Condition: event outside control either party
b. Condition & Covenant of 1 Party: party has some control over
event so covenant good faith to occur (house buy)
c. Condition & Covenant of Both Parties: both have some control &
covenant of good faith to bring about event (portrait if satisfied)
3. Implied (Constructive Conditions)
Constv condition if:
a. 1 party's perf. precedes the others it's constv condition to
other's
b. 1 party's perf. takes longer than other's, longer constv.
condition to shorter
c. Simultaneous, instantaneous performances, both constv conditions
concurrent to other
4. Excuse of Condition: Excused if party to perform:
a. Fails to cooperate or prevents occurrence of condtn
b. Anticipatorily Repudiates the K
(1) All condtns on perf. leave (other side doesn't have to perf.
& can sue immediately for breach)
(2) If repudiates b/4 other side has perf., repudiation
accelerates the breach & makes breacher's duty mature & performable
immediately
(3) If repudiates after other side performed but b/4 breacher's
duty has matured, must wait to see if they retract
-> IF NOT SURE REPUDIATING? Can (not MUST) make written demand
for adequate assurances & consider a repudiation if no reas. time
response
c. Voluntarily Disables Themselves (prospective inability to
perform)
-> Prevent perf. by anticipatory repudiation by conduct; excuses
all condtns & accelerates breach if b/4 other side performed
d. Estoppel
-> B/4 condtn occurs, says will perf. anyway even if doesn't
occur and other party changes position b/c of statement (cancel other
house sale Ks)
e. Waiver
-> After supposed to occur says will perform anyway; waived
period regardless if changed positions
5. Satisfying Unexcused Conditions
a. Completely: must happen perfectly for express condtns, or single
deliveries of goods under Code
b. Substantial Satisfaction: all other constv condtns (so substan'l
OK unless expressly stated otherwise)
c. Doctrine of Divisibility: as substantially complete each 1 get
paid
-> After conditions excused or satisfied, are duties discharged or
absolute?
I. Discharge of Duty (no perf. required & no breach)
F A N F I M M I
1. Modification to K: discharges duties under 1st K (and UCC modiftns
w/o consideration OK if made in good faith)
2. Mutual Rescission (cancellation or release); can be for all or
some of K duties
3. Accord & Satisfaction:
a. Later agreement (accord) used to resolve disputed duties under
the K, compromise
b. MAJ states also require 2nd agreement fully performed
(satisfaction) to discharge duties under 1st
-> If not, can try to enforce old duties as understand them
-> Ck tender for disputed amt is accord & satisfaction
4. Novation: (IF UNILATERALLY DONE THAT'S DELEGATION OR ASSIGNMENT)
-> Substitute party to K by all 3 agreeing; new party steps in
shoes completely
5. Doctrine of Impossibility: OBJECTIVELY impossible to perf. (no
reas. person could)
a. EXAMPLES: (1) s/matter destroyed (2) death/ill pers. performer
(3) failure of sole or agreed supply source (4) supervening illegality
b. UCC Supplements Impossibility (Casualty to ID'd Goods b/4 Risk
of Loss Passes)
-> K either describes the goods or Seller designates them; Risk
of Loss passes when S completes his perf.
(1) Face to Face:
(a) Merchant-S risk passes when B physically gets
(b) Non-Merchant S risk passes w/ tender of delivery (notify B
goods available & keeping available reas. time)
(2) Carrier:
FOB (free on bd) place is price to place; FAS (free alongside)
port is price to port; CIF (cost ins. freight) place is to that place;
C&F (cost & freight) place is to that place
-> Risk passes when S delivers to carrier & makes reas. trans.
K; destroyed b/4 to carrier all duties discharged; after to carrier B's
loss
-> EXCEPTION: FOB place other than S's location (Destination K)
destroyed b/4 to place all duties discharged
(3) Partial Casualty Destruction: B can treat K as terminated
(all duties discharged) or take w/ price adj.
6. Impracticability (Judged SUBJECTIVELY these parties/this K)
Unforeseen event so severe & unassumed, unfair to require perf. as
written. Duties disch. to extent impracticability permanent; if only
temporary MAJ suspends perf. til ends then must promptly perform
(construction)
7. Frustration: can perform fine but reason to is gone (real purpose
of K frustrated by some supervening event)
8. Failure to Excuse/Satisfy Condition Subsequent (ins. policy
required timely report following incident)
J. Performing Absolute Duty (not discharged)
(WAYS SAME AS SATISFYING UNEXCUSED CONDITION)
1. Completely required for:
a. All express terms (room size exactly) and
b. Implied terms for single delivery of goods under Code
-> BUT: S can cure up to perf. time or have addt'l time if
thought tender going to be acceptable (b/c w/in industry norm)
2. Substantial Perf.: all non-expressed or non-single delivery K
terms
3. Doctrine of Divisibility: substant'lly completing each unit
K. Remedies for Breach
1. Non-Code
a. Basic Remedy: put non-breaching party in as good a position as
perf. of duty would have & ADD
(1) Consequential damages reas. foreseeable when K'd (Hadley v.
Baxendale) (lost rentals); and
(2) Incidental Damages to find substitute
LESS
-> damages owner could mitigate if acted difft/sooner
b. Alternative Remedies:
(1) Specific Perf. (unique s/matter but not pers. serv.)
(2) Damages in Quasi-K (no K BUT 1 party benefited other in
attempting so MAJ awards value to prevent unjust enrichmt or cost
incurred in reliance) (sister on street or new tires)
(3) Liquidated Damages (preagree in K damages on breach enforced
if damages difficult to assess and amt reas.)
2. Code Remedies
a. Seller's Remedies (B breaches)
(1) Status Quo Remedies (keep or get goods back)
(a) Breach during Mfr S can do anythingg reas.
(salvage/complete)
(b) Breach in transit can stop & recover ANY goods if B
insolvent or LARGE shipmts if just breaching
(c) Breach post-delivery insolvent B can reclaim w/in 10 days
(2) Post Status Quo
(a) Resale (commercially reas.) w/ notice to B unless
perishable & S gets difference K price & resale
(b) Mkt Price Damages: difference K price & mkt price at tender
(even if not sold)
(c) Lost volume seller can seek lost profit
(d) Action on the Price (= spec. perf.) no mkt so forced pymt &
delivery
b. Buyer's Remedies
(1) Status Quo Remedies (force non-conforming goods back to S)
(a) Rejection of any nonconformity so long as didn't accept
(b) Revocation of Acceptance if substan'l defect difficult to
discover or S said would fix & didn't
-> To revoke or reject must notify S & if can cure await
instructions that must be followed if res.
-> No instns or unreas., B can do anything reas. w/ goods
(2) Post Status Quo Remedies (after goods back)
(a) Cover: reas. sub. w/o unreas. delay gets diff.
(b) Difference Bet. Mkt Price at Breach & K price
(c) Specific Perf., or
(d) Remedy for W Breach
(3) Breach of W Remedies (ANY of these B's remedy is diff. value
if met W less value goods in B's hands)
(a) Express W from desc. of goods that that's what it is; fact
stated (like only driven 10 mi.); promises as to goods (will repair 6
mos.) or sample or model (will match)
*Express W was part of basis of bargain
(b) Implied W of Title: S owns & has rt to transfer
(c) Implied W of Merchantability: fit & safe for ordinary
purpose & only by S who deals in goods of that kind
(d) Implied W of Fitness for a Particular Purpose: S knows B
relying on skill to select/deliver goods for particular purpose
L. Parol Evidence Rule
If final written agreement, no prior oral or written negotiations or
contemporaneous oral negotiations may be introduced to vary or
contradict the writing
1. Complete integration if K says so OR if unstated, would res.
person similarly situated have included the prior or contemporaneous
negotiations in the document? (Williston & MAJ) (if yes, then complete
integration)
2. Always introduceable to prevent ENFORCEMENT of the K
3. Can introduce to explain unintentional ambiguity (fruit) or
intentional (software program X)
4. Can always introduce SUBSEQUENT events to K signing

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