Introduction:

1. Contract = law
a. §1 Restatement: a contract is a promise or a set of promises for the
breach of which the law gives a remedy, or the performance of which the
law in some way recognizes as a duty.
b. Sources: judicial decisions (common law), statutes (UCC), Restatements,
Legal commentary.
c. Legal agreement between two or more parties that is a common
understanding of something that is going to be done in the future by either
one or both.
d. Temporal: Future performance of past expectations.
e. Relational: Contracts allow us to take legal public laws and apply them to
our private relationships to maintain order in our personal relationships.
By taking the public laws and applying them to private relationships we
make our relationships available and susceptible to public judgment.
f. Circular: A contract is an agreement that has a legal effect. An agreement
that has a legal effect is a contract – the definition is circular.
g. What is a promise vs. what is a statement of present intent, a statement
of present intent is NOT a promise.
h. Restatement §1,2,5. What qualifies as a promise. Need NOT actually say
the word “promise.” Generally any manifestation, by words or conduct or
both, which the promise is justified in understanding as an expression of
intention to make a promise.
2. Implied promise
a. §4 Restatement 2nd: a promise may be stated in words either oral or
written, or may be inferred wholly or partly from the conduct.
b. Going FROM express TO implied; If they did NOT expressly state the
promise DID they still IMPLY the promise?
c. Infer by implicationwhat a reasonable 3rd party would have thought
d. Looking at words, conduct, and context, the intent from the actual
agreement. Trying to infer intent the intent may come from a
variety of places
e. Cardozo was readily implying things
f. Found MORE in Modern Regime than in the classical
g. Found mostly in Implied in Fact
3. Lon Fuller: The Functions Performed by Legal Formalities:
a. Evidentiary
i. Seal is the best example
ii. Provides evidence of the existing contract
iii. Evidentiary security may be secured in a number of ways: writing,
attestation, certification of a notary
iv. Makes finding proof and court easier

1
 b. Cautionary
i. deliberation (in bargain for exchange)
ii. acting as a check against inconsiderate action
iii. puts you into the frame of mind appropriate in one pledging his
future.
iv. you know that there are consequences to your promises
c. Channeling
i. Signing of the seal channels the promise into a legally enforceable
contract.
ii. Directs issues into law in general as well as specific areas of the
law.
iii. On the boundaries of the different types of law. A rule within tort
damages that does not allow you to get economic relief when there
is no physical injury. This case would be channeled out of torts
and into contract. Channels disputes into different areas of the law.
iv. Rules are used to channel cases out to other realms of law
d. Interrelations of the 3:
i. whatever tends to accomplish one of these purposes will also tend
to accomplish the other two
ii. Ex: last will and testament
e. Fuller’s article goes on to say that ALTHOUGH the seal has decayed the
Doctrine of Consideration CAN and often does serve one or all of the
above functions that the seal used to serve.
Classical = formalism:
1. 1850-1920; Williston, Holmes, Lyndell
2. First Restatement
3. Channeling the common law and applying those rules to case.
4. Objective, rigid rules not afraid to punish people.
5. You sign it you’re bound.
6. Fairness is determined by symmetry, the mirror image rule applies.
7. Issues of law, less govt., indifferent to issues of morality or social policy.
8. Mechanical black letter law.
9. What promises should the law enforce: promises under the seal that have
remedies.
10. Theoretical applications to the “real world” do not always work. (business
settings)
11. An attempt to develop reasonably clear rules on the various issues the courts
faced in contract cases. Concern with the impact of these rules on
commercial behavior, or with reform of the needs of businesses and
consumers, was NOT considered to be an issue for contract law to address.
12. Result = fundamental gap between law and the way the world actually
works.

2
Modernism = Realism:
1. 1920’s-1980’s; Corbin, Llewellyn, Gilmore, Farnsworth
2. 2nd Restatement, the UCC
3. Subjective: WHAT A REASONABLE PERSON WOULD HAVE
THOUGHT
4. Context is key: “All text is context”
5. Issues of fact
6. Giving better social welfare benefit answers
7. Care about enforcing the agreement as made or at least as adhered to.
8. Decision making process, person affected by person’s point of view, interests
and goals.
9. Business rules are important
10. Llewellyn wanted someone there to help decipher the facts from a business
rules view.
11. Judges immerse themselves in facts, intuition arises, decision is made.
12. Economic view: Chicago school, Judge Possner
13. Moral view: Fried
14. Fundamental: Rules do NOT decide cases, judges do!

Contract Frame
1. Filter = consideration
2. Proof of agreement:
a. Classical: Offer + Acceptance + consideration = contract.
b. Documentary evidence.
c. Modern: Subjective test: if both sides had the same subjective
understanding, thoughts and intents and agreement exists.
3. §24 Restatement 1st: an offer is the manifestation of willingness to enter into a
bargain, so made as to justify another person in understanding that his assent to
that bargain is invited and will conclude it.
Types of Contracts
i. Bilateral Contract:
1. Promise for a promise
2. Formed when the parties exchange promises of
performance to take place in the future.
3. Preliminary negotiations = invitation to make offer. (NOT
binding under Classical).
4. Offer and acceptance or counteroffer.
5. Mirror-image rule:
a. The offer that is made and the offer that is accepted
are ONLY the same if they are mirror images.
b. If they are NOT mirror images THEN there is no
‘meeting of the minds’
6. Rejection of offer = offer disappears, NO contract.
7. Offeror is the master of the contract; has the ability to

3
revoke the offer.
8. It is the offeror’s responsibility to inform the offeree of the
retraction.
9. Offeree has the power of acceptance, UNLESS:
a. Express/implicit time limit lapses.
b. Offeror revokes the offer.
10. §69 Restatement 2nd: Silence as acceptance: facts must
support
f. Where an offeree FAILS to reply to an offer, his SILENCE and inaction
operate as an ACCEPTANCE in the following cases ONLY:
i. Where an offeree takes the benefit of offered services with
reasonable opportunity to object them and reason to KNOW that
they were offered with the expectation of compensation.
ii. Where the offeror has stated or given the offeree reason to
understand that assent may be manifested by silence or inaction,
and the offeree in remaining silent and inactive intends to accept
the offer.
iii. Where bc of previous dealings or otherwise, it is reasonable that
the offeree SHOULD NOTIFY the offeror if he does NOT
INTEND to accept.
g. An offeree who does any act inconsistent with the offeror’s ownership of
offered property is bound in accordance with the offered terms UNLESS
they are manifestly unreasonable. But if the act is wrongful as against the
offeror it is an acceptance only if ratified by him.
1. Mail-Box Rule:
a. Acceptance: the date in which you put it into the
mail box is the effective date of acceptance of a contract.
b. The acceptance must reach the offeror in a timely
fashion.
c. Revocation: the date in which the offeror receives
the revocation in the mail is the effective date of revocation.
d. The mail box rule is the default rule that the court
uses when nothing else is in the contract that states otherwise.
e. The offeror has the power. If the offeror does not
like the mail box rule and makes other specifications for the acceptance
of the offer then those rules apply.
f. Offeror can contract around the mail box rule.
2. §25 of the Restatement 1st : “Meeting of the minds”
a. if from a promise or manifestation of intention or
from the circumstances existing at the time the person to whom the
promise or manifestation is addressed KNOWS or has reason to know
that the person making it does NOT intend it as an expression of his
fixed purpose until he has given a further expression of assent, he has
not made an offer.

4
 3. Lonergan v. Scolnick pg. 162
a. After an exchange of letters the Plaintiff claims that
there was a contract for him to buy the land which the defendant sold
from under him to a third party.
b. ISSUE: Did the defendant offer a contract to sell his
property to the plaintiff?
c. Trial court: there was an offer made, but no contract
bc there was NO timely acceptance.
d. HOLDING: No offer was made so NO contract.
There was no meeting of the minds and therefore no contract. The
newspaper advertisement was an invitation for an offer, not an offer
itself.
4. Izadi v. Machado (Gus) Ford Inc. pg. 166
a. The plaintiff saw an ad for $3000 trade in towards a
new vehicle not matter what the condition of the car you trade in. there
was fine print that said that it would only go towards an Aerostar.
b. ISSUE: was there an offer?
c. “bait and switch:” A binding offer may be implied
from the very fact that deliberately misleading advertising intentionally
leads the reader to the conclusion that one exists. (Modern)
d. Reasonable person: a reasonable person would
have thought that there was an offer. (classical).
e. HOLDING: There is an offer which the plaintiff
accepted and therefore there is a breach of contract claim. Even though
the offeror did NOT intend the offer that it extended.
ii. Unilateral Contract
1. An act for a promise
2. Once you complete the act then my promise will be
enforced.
3. Only one party (offeror) would be a promisor, and the
offeree’s rendering of performance would also constitute her acceptance of the
offer.
4. This view affords maximum protection to the offeror
5. If the offeror should revoke his offer at a time when the
offeree had commenced but not yet completed the requested performance,
classical theory denied the offeree any remedy on the contract bc the offer was
revoked before the proposed contract ever came into being.
6. Offer can be revoked at any time before the act is
completed, even if it is in the middle of the act (pure classical).
7. Performance is the consideration, the completion of the
performance binds the offer (pure classical).
8. But Williston contradicts himself!! Substantial
performance is enough to make the offer irrevocable, thus leading to the
DEATH OF CONTRACTS.
9. §45 First Restatement: PARTIAL PERFORMANCE: is

5
enough so that the offer cannot be revoked.
a. In an offer for a unilateral contract is made and
PART of the consideration requested in the offer is given or tendered
by the offeree in response thereto, the offeror is bound by a contract,
the duty of immediate performance of which is conditional on the full
consideration being given or tendered within the time stated in the offer
or if no time is stated therein within a reasonable time.
b. Corbin like, Not Williston. In conflict with the 1st
Restatement.
c. There is NO Substantial performance in section 45
d. Moral hazard problem in insurance: insurance
distorts behaviors, people tend to act with less caution when they are
insured
e. there is an opportunity for the offeror to act
strategically after accepting an offer and so this section makes it so that
this does not occur, it makes sure that performance has started &
assures that it WILL BE DONE by the deadline.
f. This section creates SYMMETRY in the
unilateral contract.
10. Petterson v. Pattberg pg. 179
a. The defendant offered the plaintiff opportunity to
pay off mortgage at discounted rate. Plaintiff showed up at defendant’s
house with full amount. Defendant did not let plaintiff in or accept the
money, revoking the offer instead. Defendant had sold the mortgage to a
third party.
b. ISSUE: The plaintiff did everything that they
could possibly do in an effort to accept the offer. Did the plaintiff
accept the offer?
c. RULE: under unilateral contract the offeror had
the right to revoke the offer until the performance of the money being
tendered to him was COMPLETED. No acceptance until money is
tendered.
d. HOLDING: Offer of the defendant was
withdrawn before it became a binding promise and therefore that no
contract was ever made for the breach of which the plaintiff may claim
damages. (formalism inside formalism).
e. Dissent: if the defendant would have acted in good
faith then the offer would have been accepted. Instead the defendant
acted so as to obstruct the plaintiff from accepting the offer. The offer
should have been accepted.
11. Cook v. Coldwell Banker/ Frank Laiben Realty Co.
pg.184
a. Cook’s boss offered in March a sales competition.
Cook’s sales would earn her a bonus. Cook made a substantial amount
of sales before the next meeting. At the next meeting the boss
attempted to amend the offer, thus revoking the initial offer. This would

6
have made it so that Cook could not receive her bonus if she left for
other employment.
b. ISSUE: Was the first offer accepted via partial
performance thus creating a unilateral contract? In which case the
offeror could NOT revoke or amend the offer bc it was already a valid
contract?
c. RULE: court cites §45 but does not follow it
exactly. The court talks about substantial performance instead of partial
performance.
d. HOLDING: Bc there had already been a substantial
amt of performance the March offer was accepted, and a unilateral
contract was formed, this could NOT be revoked or amended.

7
iii. Option
4. § 87 Restatment 2nd: Option: an offer is binding as an option contract if it:
i. is in writing and signed by the offeror, recites a purported
consideration for making the offer, and proposes an exchange on
fair terms within a reasonable time.
ii. Is made irrevocable by statute
b. An offer which the offeror should reasonably expect to induce action or
forebearance of a substantial character on the part of the offeree
BEFORE acceptance and which does induce such action or forebearance
is BINDING AS AN OPTION contract to the extent necessary to avoid
injustice.
c. §87: states several ways in which an offer may become “binding as an
option contract” in addition to promise and consideration
d. §87(1)(b): the offer may be “made irrevocable by statute.” This is odd bc
the purpose of the Restatement is to state the common law. But it reminds
us that this is an area where statutes are likely to serve an important role.
5. An offer that is irrevocable, intent to hold an offer open to a specific person for
a specified period of time, fixed price, must be supported by valuable
consideration.
6. Option has to be embedded in some sort of consideration
7. Option needs to be written into the offer contract. Language in the contract
must convey the intent for an option.
8. If seller sells to someone else within the option specified time period then the
seller is STILL obligated to the option holder, must now decide how to
compensate both parties that the house was sold to.
9. Signed under ‘seal’ a formalistic requirement. Is enough to validate an option
WITHOUT consideration.
10. An option is antithetical to a unilateral contract.
11. Counter-offer = Rejection of initial offer:
12. Normile v. Miller PG. 171
a. Normille (buyer) made the first offer to purchase the property. An option
was contained in their offer to hold the offer open until 5:00. Miller signed
the offer under seal, but with some changes (counteroffer). BEFORE
Normile accepted the counteroffer Miller sold the property at 12:00.
Miller communicated to Normile before they accepted the
counteroffer that the offer was revoked.
b. HOLDING: The counteroffer that Miller made was a REJECTION of the
initial offer. The counteroffer did NOT contain the option to keep the offer
open until 5:00.
c. Miller effectively revoked the offer BEFORE it was accepted, No
contract.
13. False consideration:
a. Classical: is NO consideration.
b. Modern: it is good enough just state that you are giving consideration,
you don’t actually have to give it.

8
 14. Berryman v. Kmoch PG. 202
a. Berryman offered Kmoch an option contract to buy his land. On the
contract it stated for $10 consideration, but the $10 was never paid!
Berryman revoked his offer and then Kmoch tried to exercise his option to
buy. Berryman brought the first claim for declaratory judgment to have the
option declared null and void, Kmoch counterclaimed.
b. ISSUE: Is the FALSE consideration sufficient to keep the contract framed
as an OPTION OPEN so that Berryman could NOT REVOKE his offer?
c. RULE: Option: an option contract to purchase land to be binding must be
supported by consideration the same as any other contract.
d. False consideration is NO consideration; An option contract which is
NOT supported by consideration is a mere offer to sell which may be
withdrawn at any time prior to acceptance.
e. HOLDING: Berryman was able to revoke his offer framed as an option b.
False consideration can NOT hold open an option contract. The offer
was a regular contract offer which Berryman had the power to revoke at
any time prior to acceptance.
Invalidating Contracts
1. When it shocks the consciousness of the court.
2. Lack of consideration
3. Lack of Reliance
4. Unconscionability
5. Adhesion Contracts: When might an adhesion contract be enforceable?.
BINDING WHEN:
a. plain and clear notification of terms,
b. if buyer understands what they are consenting to,
c. falls within reasonable expectation of buyers or weaker party.
6. Unconscionable adhesion contract: a standardized contract form offered to
consumers on a ‘take it or leave it’ basis without affording the consumer a
realistic opportunity to bargain. The weaker party has NO choice as to its terms.
a. Substantively unconscionable:
i. actual terms, the contract itself is unfair and one-sided.
b. Procedurally unconscionable:
i. absence of a meaningful choice,
ii. no room for negotiation, pre-printed standardized form,
iii. disparity in power between parties,
iv. arbitration clause in an inconspicuous place

9
7. Burch v. Second Judicial District Court of Nevada pg. 15
a. Dispute by homebuyers over an arbitration clause that was contained in
the homebuyers warranty that was signed 4 months after the closing.
b. HOLDING: Bc the contract qualifies as an unconscionable adhesion
contract the contract is unenforceable.
c. RULE: Federal Arbitration Act: “if the contract is an ‘unconscionable
adhesion contract’ then the arbitration clause is unenforceable”
d. Substantively unconscionable: it gave the builders the unilateral and
exclusive right to decide the arbitration rules.
e. Procedurally unconscionable: absence of a meaningful choice, no room
for negotiation (pre-printed standardized form), disparity in power
between parties, arbitration clause was in an inconspicuous location.
f. Arbitration Clause: Courts MUST HONOR valid arbitration clauses:
Burch is the exception.
8. MISTAKE:
9. §154: When a party bears the risk of a mistake:
a. the risk is allocated to him by agreement of the parties
b. he is AWARE, at the time the contract is made, that he has only limited
knowledge with respect to the facts to which the mistake relates but treats
his limited knowledge as sufficient
c. the risk is allocated to him by the court on the ground that it is reasonable
in the circumstances to do so.
10. Mutual Mistake
a. §152 Restatement 2nd: where a mistake of BOTH parties at the time a
contract was made as to a basic assumption on which the contract was and
has a material effect on the agreed exchange of performances, the
contract is voidable by the adversely affected party UNLESS he bears the
risk of the mistake under the rule in §154.
i. In determining whether the mistake has a material effect on the
agreed exchange of performances, account is taken of any relief by
way of reformation, restitution or otherwise.
b. If there is no subjective meeting of the minds
11. Unilateral Mistake
a. §153 Restatement 2nd : where a mistake of ONE party at the time a
contract was made as to a basic assumption on which he made the contract
has a material effect on the agreed exchange of performances that is
adverse to him, the contract is voidable by him if he does not bear the risk
of the mistake under the rule stated in §154, and
i. the effect of the mistake is such that enforcement of the contract
would be unconscionable, or
ii. the OTHER PARTY had reason to know of the mistake or his fault
caused the mistake.

10
12. Ray v. William G. Eurice and Bros. Inc. (1952) PG. 27
a. HOLDING: Unilateral mistake, therefore contract still valid.
b. Clash of personalities. Eurice and Ray’s contracted to build Ray’s house.
There was no meeting of the minds, Eurice thought that he had agreed to
different specifications and accused Ray of sneaking in the different
specifications without his knowledge.
c. Test in this case is objective and not subjective. It doesn’t matter what
the person who entered the contract was thinking or what they meant, all
that matters is what the law interprets from what they signed, the only
excuse is mutual mistake. Unilateral mistake is no excuse; UNLESS
there is fraud or duress.
d. Instead of the court forcing Eurice to do specific performance told Eurice
they had to pay for the new builders to build Ray’s house, Ray’s
expectation interests were protected.
13. Fraud
a. §162 Restatement 2nd : a misrepresentation is fraudulent IF the maker
intends his assertion to induce a party to manifest his assent and the maker
1. knows or believes that the assertion is not in accord with
the facts, or
2. does not have the confidence that he states or implies in the
truth of the assertion, or
3. knows that he does not have the basis that he states or
implies for the assertion.
ii. A misrepresentation is material if it would be likely to induce a
reasonable person to manifest his assent, or if the maker knows
that it would be likely to induce the recipient to do so.
b. Elements of actual FRAUD:
i. Material misrepresentation of past or existing fact by the party to
be charged, which:
1. Was false,
2. Was made with knowledge or in reckless ignorance of the
falsity
3. Was relied upon by the complaining party, and
4. Proximately caused the complaining party injury.
c. Fraud if actively expressed or passively concealed.
d. Fraud requires a misrepresentation of a present fact rather than a
promise to do something in the future.
e. A breach of promise may be fraud if the promisor did not intend to
perform the promise at the time the promise was made.

11
 14. Park 100 Investors, Inc. v. Kartes pg. 36
a. Park alleges that Kartes got him to sign a personal guarantee of a lease by
fraud. Park tried to collect for the unpaid rent 10 years later when a
different tenant was renting the building. Park claims that Kartes had the
duty to read the form and know what it contained before signing.
b. ISSUE: the 3rd element of FRAUD. Did Park misrepresent the form?
c. HOLDING: Park 100 misrepresented the form, there was fraud, court
found for Kartes.
d. Here the burden of proof to prove fraud is put on the defendant.
e. RULE: Where one employs misrepresentation to induce a party’s
obligation under a contract, one cannot bind the party to the terms of
the contract.
f. “while a person relying on another’s representations must use ordinary
care and diligence to guard against fraud, the requirement of reasonable
prudence in business transactions is NOT carried to the extent that the
law will ignore an intentional fraud practiced on the unwary.”
15. Duress
a. §175 Restatement 2nd:
i. if a party’s manifestation of assent is induced by an improper
threat by the other party that leaves the victim no reasonable
alternative, the contract is voidable by the victim.
ii. If a party’s manifestation of assent is induced by one who is not a
party to the transaction, the contract is voidable by the victim
UNLESS the other party to the transaction in good faith and
without reason to know of the duress EITHER gives value or
relies materially on the transaction.
b. 2 types: 1) the other party is responsible and the other where 2) the
defendant is responsible bc of background circumstances.

3 Doctrines for enforcing a contract

1. Consideration
2. Promissory estoppel
3. Restitution

Consideration
1. Why do we have this filter? So that all promises are not legally enforceable.
2. §71 Restatement :
a. to constitute consideration, a performance or a return promise MUST be
bargained for.
b. A performance or return promise bargained for if it is sought by the
promisor in exchange for his promise and is given by the promise in
exchange for that promise.
c. The performance may consist of:
i. An act other than a promise
ii. A forebearance

12
 iii. The creation, modification, or destruction of a legal relation
d. The performance or return promise may be given to the promisor or to
some other person. It may be given by the promisee or by some other
person.
3. Forebearance is the intuition behind consideration: giving up something to get
something.
4. A valuable consideration in the sense of the law may consist either in some
right, interest, profit or benefit accruing to the one party, or some forebearance,
detriment, loss or responsibility given, suffered or undertaken by the other.
5. 2 tests for consideration:
a. Benefit/detriment &
b. Bargain for exchange theory.
6. Benefit/detriment test:
a. §2 Restatement 2nd : a promise is a manifestation of intention to act or
refrain from acting in a specified way, so made as to justify a promisee in
understanding that a commitment has been made.
b. Arguing for an expansion of the rules (Modern)
c. If I gave up something that I was legally entitled to and I received some
benefit then there is consideration
d. You do NOT have to make the benefit/detriment test symmetrical on
both sides
e. Must have a benefit for the promisor –OR- a detriment to the promisee –
OR- both. Not the other way around.
f. Gratuitous gifts are NOT something that the benefit/detriment test will
find to have consideration.
7. Hamer v. Sidway PG. 41
a. The uncle told the nephew that if he abstained from tobacco, alcohol and
sex until he was 21 then he would give him $5,000. The uncle sent the
nephew a letter that said that he satisfied the performance and is entitled to
the money. The uncle died. Court eventually decided that this letter
created a trust and so consideration was not necessary.
b. The evidentiary function=the letter and the cautionary function= the
nephew abstaining from legal behavior. Both satisfied.
c. ISSUE: was the nephews abstinence from legal acts sufficient detriment
to qualify for consideration?
d. RULE: (Benefit/detriment test) in general a waiver of any legal right at
the request of another party IS sufficient consideration for a promise.
e. Not so much that one party benefits but that other party abandons some
legal right.
f. HOLDING: the promise was BINDING and made upon good
consideration.
8. Bargain for Exchange Theory
a. §17 Restatement 2nd :
i. except as stated in §2, the formation of a contract requires a
bargain in which there is a manifestation of mutual assent to the
exchange and a consideration.

13
 b. (this is also the definition of consideration in the 1st restatement, but it is
conserved in the 2nd restatement)
c. (focuses on process)
d. arguing for a restriction of the rules.
e. bargain does not mean an exchange of things of equivalent, or any value.
It means a negotiation resulting in the voluntary assumption of an
obligation by one party upon condition of an act or forbearance by
the other.
f. Consideration thus insures that the promise enforced as a contract is NOT
accidental, casual, or gratuitious, BUT has been uttered intentionally as
the result of some deliberation, manifested by reciprocal bargaining or
negotiation.
g. It is an attempt to be as reasonable as we can in deciding which promises
constitute contracts.
h. Harder to find bargain for exchange in the family situation and it is also
harder to find than benefit/detriment
9. Baehr v. Penn-O-tex Oil Corp. PG. 47
a. The defendant took control of the oil company when the owner was unable
to run it. The plaintiff called and asked for the money that the owner owed
him or else he would sue. The defendant said that they promised that they
would get the money to the plaintiff.
b. ISSUE: was there a contract?
c. RULE: Bargain for Exchange theory
d. Would a reasonable person who heard that conversation would have
thought that a promise and a contact had been made.
e. HOLDING: Promise to pay: Yes. But contract: No bc there was no
consideration.
f. There is NO evidence that there was any forebearance from suing bc the
plaintiff sued in his own leisurely time. No consideration.
g. no bargain, no consideration, no contract.
10. Gratuitous Promise:
a. Why gratuitous gifts should NOT be enforced as consideration: Eisenberg
i. Proof problems
ii. Present intent
iii. Capacity, often made during emotional states
b. Administrative: it would be too easy to convince the jury that a promise
had been made.
c. Informal vs. deliberative, the promise is more likely to be uncalculated
than deliberative
d. Ingratitude: the person whom the promise is made to would be ingratious
e. A mere written promise that recites consideration will probably NOT
create an obligation enforeceable against the promisor’s estate.

14
11. Plowman v. Indian Refining Co. PG. 64
a. 13 employees and 5 dead bring this case against their old employer. The
employer laid them off and told them that he was thankful for their work
and that if they came to the company each week they could pick up a
check for ½ of their pay. The duration unspecified. The company changed
owners and the payments stopped.
b. ISSUE: is a conditioned promise sufficient consideration for the gratuitous
promise?
c. RULE: Benefit detriment: failed. Bargain for exchange: failed.
d. HOLDING: it is a gratuitous arrangement without consideration and
therefore there is no contract. There is no legislation and there was no
meeting of the minds and therefore there is no contract a conditioned
promise is not sufficient for consideration.
e. legislation? Meeting of the minds? Consideration? Moral Consideration?
A gratuitous promise is NOT enforceable.
f. Moral consideration = NO legal consideration.
12. Donative Gift
13. Dougherty v. Salt PG. 54
a. The old aunt told the boy that she would pay him $3000 for being a good
boy. “because you have always done for me someday I will do for you.”
b. There is an evidentiary function: the note, just as in Hamer. But in
Hamer there was a cautionary function and here there is not.
c. ISSUE: Can a note, be considered the necessary consideration for a
contract, where it states: “for value received”?
d. RULE: Past consideration is NO consideration. “What have you done
for me lately?”
e. HOLDING: The consideration “for value received” might have been
consideration if it had a $$ value placed on it. It did not, this was only past
consideration= no consideration. Gratuitous promise not enforced by
law, no consideration.
14. Adequacy of consideration
a. Historically courts did assess adequacy of consideration, classical regime
stopped. Classical said either there is consideration or there is not.
Modern regime does not address adequacy of consideration in and of
itself, but they address it by other means such as fraud,
misrepresentation, or duress (something else is going on).
b. §79 Restatement 2nd: if the requirement of consideration is met, there is
NO additional requirement of
i. a gain, advantage, or benefit to the promisor or a loss,
disadvantage, or detriment to the promisee; or
ii. “mutuality of obligation.”

15
 15. Batsakis v. Demotsis PG. 59
a. Drachmas case. The defendant borrowed $25 worth of Drachmas, she
signed a contract that said she promised to pay back $2000 + 8%. The
court ruled that the contract is binding, there was consideration, she owes
the money to the plaintiff.
b. ISSUE: Should the court consider adequacy of consideration?
c. HOLDING: ALL that matters is that there was consideration, it does
NOT matter if it was a fair deal or not.
d. This case was framed in consideration, but it would have been better if it
had been judged in a different frame: Fraud =No, misrepresentation= NO,
duress= Maybe.
e. Duress: 2 types: one where the other party is responsible and the other
where the defendant is responsible bc of background circumstances. In
this case the duress would have been the background circumstances.
(can argue that the court would have come to a different conclusion).
Promissory Estoppel Frame
1. Filter = Detrimental Reliance
2. History: went from being a substitution for consideration to being its own entity.
3. Began in the family context and charitable settings and then moved into
commercial settings.
4. §90 is about EQUITABLE REMEDY:
a. More Justice=More Remedy;
b. Less Justice=Less Remedy.
5. Elements of Promissory Estoppel:
a. A promise
b. Reasonable reliance to one’s detriment
c. Reasonable for the promisor to think that the promisee relied
d. Injustice can be avoided only by the enforcement of the promise.
6. §90 of the Restatement 1st :
a. Promise reasonably inducing definite and substantial action is
BINDING. A promise which the promisor should reasonably expect to
induce action or forbearance of a definite and substantial character on the
part of the promisee and which DOES induce such action or forbearance;
is BINDING IF injustice can be avoided ONLY by enforcement of the
promise.
b. Makes the promise that is made enforceable by law.
7. Family context: Promissory Estoppel

16
15. Kirksey v. Kirksey pg. 74
a. Widow was comfortably settled on her property, brother-in-law wrote to
her telling her that she could come to where he lived and he would provide
for her. She left all of her belongings to go to where the brother-in-law
lived. He gave her a house, but later kicked her out.
b. ISSUE: is promissory estoppel a substitution for consideration for
making a promise legally enforceable?
c. HOLDING: Promissory estoppel is a substitution for lack of
consideration. She relied to her detriment on the brother-in-law’s
promise (by leaving her interest and moving) & it was reasonable for the
brother-in-law to believe that she relied. (Foreshadowing theory of
promissory estoppel).
d. The court awards the plaintiff $$ instead of specific performance. Is this
remedy appropriate? Does it put the plaintiff in the position she would
have been had she never relied?
e. Other Frames: consideration or promissory estoppel or unilateral
contract??
16. Greiner v. Greiner pg. 76
a. Father died and left some children uninherited. The mother promised
Frank that if he moved to her town then she would give him a house. The
younger brother doesn’t want Frank to have the house. The mother now
sues to get Frank out of the house.
b. ISSUE: was the mother’s promise to the son legally enforceable?
c. RULE: Reliance
d. HOLDING: Frank relied on the promise to his detriment (by moving). The
mother should sign the deed of the house over to Frank. Court can NOT
say that it would NOT be unjust to deny him the deed.
e. This is a promissory estoppel case where the court preserved the
expectation interests of Frank by awarding him the deed to the house.
f. Other Frame: as a unilateral contract: if you move here then I will give
you the house.
g. Other Frame: consideration: both the benefit/detriment and the bargain
for exchange theory are satisfied. Frank gave up his old house to get the
new house (giving up something to get something). Frank got the new
house (benefit), but he had to move (detriment).

17
17. Charitable Donations
18. Allegheny College v. National Chautauqua County Bank pg. 86
a. Mary signed a subscription for a charitable donation. She was to pay
$5000 when she died and a memorial would be made in her name. she
paid $1000 before she died and the memorial was never made. She
revoked her offer and then died.
b. ISSUE: can a charitable subscription be legally enforceable when the
subscriber attempts to revoke?
c. RULE: promissory estoppel: it was used to make consideration.
d. There is NO promissory estoppel in this case. The school relied on the
promise made by Mary, but they did not do so reasonably.
e. Consideration is manufactured out of promissory estoppel.
f. HOLDING: contract supported by consideration and school gets paid.
g. Cardozo uses §90 to justify consideration. He manufactures
consideration by saying that Mary made an implied promise in fact
for which there is no consideration, but Cardozo filled in the holes of
consideration with §90.
h. This case brought up a lot of discussion about §90.
i. Cardozo works with the rules to make charities win.
j. Dissent: finds no reasoning for a contract, it is a gift. But was there a
unilateral contract? Death has the effect of revoking the offer. No matter
where we look there is no contract. Don’t try and force it into a contract.
19. Promises in a Commercial Setting
20. Kantz v. Danny Dare, Inc. pg. 102
a. Katz was forced to retire from his job. He did not know it, but they
planned to fire him if he did not quit. They offered him a pension if he
quit. Then they told him if he didn’t start working for them part time again
they would quit paying his pension.
b. ISSUE: was there promissory Estoppel?
c. RULE: case lays out the elements of Promissory estoppel
d. HOLDING: The elements of promissory estoppel are present. Once
reliance is found then the expectation interest should be preserved
e. Appeals court says that it does not matter if the company was going to fire
Katz. All that matters is that Katz quit with the reliance on the
promise of Dare that they would pay him the pension.
f. Just bc you benefit it does NOT mean that you detrimentally relied.

18
21. Shoemaker v. commonwealth Bank pg. 108
a. Shoemaker had in their mortgage contract that they must retain insurance
on the house and if they did not then the bank would get it for them.
Shoemaker failed to retain insurance. The bank fulfilled its promise and
got the insurance, but then terminated the policy without informing
Shoemaker. The house burned down.
b. ISSUE: was Shoemakers reasonable reliance on the banks promise
detrimental?
c. The ambiguity of duration in the promise.
d. The plaintiff alleges that she would have maintained insurance if she had
known that the Bank had terminated the policy.
e. HOLDING: the court believed that the Shoemakers had enough
information and evidence to support a claim for promissory estoppel,
enough to let this case go to trial, the jury is to decide whether or not
there was actual promissory estoppel (detrimental).
22. Building Sub-contractors: offer irrevocability
a. Despite arguments in form of a symmetrical, “both parties are bound or
neither is bound” approach; the decisions have continued to invoke
promissory estoppel to protect the general contractor against
subcontractor withdrawal WHILE declining to find the general
contractor bound to a particular subcontractor merely bc its sub-bid
was used.
b. Hand: classical: small §90 circles, only applies to charitable donations and
family settings
c. Traynor: Realist: Big §90 cirlces, applies to commercial setting.
23. James Baird Co. v. Gimbel Bros., Inc. (Hand) pg. 190
a. General contractor was making a bid for a big job. The subcontractor
made a bid to supply the linoleum to the general contractor. The numbers
were wrong and the subcontractor realized that they had made a mistake.
Before the subcontractor could revoke their bid the general
contractor submitted their bid to the big job. The general contractor
now knows that there is an error in his bid to the big job, he cannot
increase his bid, he cannot withdraw his bid without penalty. If he follows
out the contract as is the net profit will be decreased bc the linoleum price
is wrong.
b. ISSUE: was the offer revocable?
c. RULE: Since the offer was withdrawn before it was accepted, the
acceptance was too late. Restatement of Contracts §35.
d. HOLDING: Judge Hand, viewing the facts in this way concludes that a
reasonable person would not think that there had been offer and
acceptance. Hand says that there is NO contract and this is NOT a
candidate for promissory estoppel.
e. This case is a good example of the classical mentality.

19
24. Drennan v. Star Paving Co. (Traynor) PG. 193
a. The general contractor received a bid from the subcontractor. General
went over to sub’s office to accept the offer. At which time sub
attempted to revoke the offer.
b. ISSUE: does §90 apply in the commercial business setting?
c. Bid numbers are a careful and deliberate promise.
d. Defendant had reason to expect that if its bid proved the lowest it would
be used by the plaintiff, never mentioned right to revoke. If he had this
would be considered.
e. HOLDING: it is only fair that the plaintiff has the opportunity to accept
the bid when there is sufficient reliance. The defendant’s mistake should
not bar plaintiff from recovery under §90.
f. Channeling Function: Traynor’s tortbased reasoning: acts as a
channeling function. The defendant committed a tort by negligently
preparing a bid that caused harm to the plaintiff.
25. Negotiations: Pre-contract reliance
26. Pop’s Cones, Inc. v. Resorts International pg. 208
a. Pop’s negotiated to rent land at Resorts. They agreed for Pop’s to set up
moveable cart as a trial run. Resorts told Pop’s that the contract would be
approved and to plan on moving in. Pop’s left their old location and put
their stuff in storage anticipating the contract with Resorts. Resorts
submitted copy of boilerplate lease form but as a non-binding
template for a future contract subject to changes by parties. Resorts
cancelled negotiations and said that they never offered.
b. ISSUE: is it reasonable to rely on promises made during the course of
negotiations?
c. Unsophisticated plaintiff and defendant’s sales dept. in negotiations for
plaintiff to relocate TCBY.
d. Pop’s reasonably relied to its detriment on the promises and assurances
of Resorts that it would be permitted to relocate its operation to Resorts
location.
e. By not renewing its lease and by packing its belongings into storage Pop’s
altered its position.
f. Here defendant should have reasonably expected the promises made
would induce action by the plaintiff and the plaintiff detrimentally relied.
g. Strict loyalty to a “clear and definite promise?” NO
h. More equitable analysis designed to avoid injustice- YES
i. HOLDING: this raises a question for the jury to decide.
j. Hoffman: The court cites with approval to Hoffman, a leading decision
HOLDING that assurances made during negotiations that a contract
will be forthcoming amount to a promise sufficient to invoke
promissory estoppel, WHEN the promisee relied to its detriment by
giving up another business location and incurring out-of-pocket expenses
in preparation for the new location.
k. If judge Hand would have decided the case he would have said that the

20
 defendant owed nothing to the plaintiff and the plaintiff should not have
done any of the acts that they did in order to prepare for the move into the
new store without a sufficient contract.
l. Some courts have kept to the strict rule that there must be a “clear
and definite promise” in order to enforce by promissory estoppel.
Restitution: UNJUST ENRICHMENT
1. PURE Restitution is equity
a. Non-promissory theory for recovery
b. Not a promise filter
c. A completely different legal theory for recovery
d. Core of restitution: I confer a benefit to you and it is unjust for you to
retain it without paying.
e. CONTRACT TRUMPS RESTITUTION!
f. Restatement of Restitution §2: under the rule recovery is denied so that
one will NOT have to pay for a benefit forced upon one against one’s will
g. § 116 Restatement of Restitution: tells us that: in certain circumstances
restitution for certain services performed will be required even though the
recipient did NOT request or voluntarily consent to receive such
services. The hospital must have acted unofficiously.
h. §107 Restatement of Restitution: Contracts trump restitution: cannot
have a claim for unjust enrichment if there is a claim for a contract!! There
cannot be a claim for both. When there is a contract, contract trumps
restitution, this is so that strategic behavior is stopped. This is also a
channeling function. This channels the disputes that have both
components into contract. If the contract fails as it does in this case (bc
of incapacity) now the case is kicked into restitution. In this case
restitution acts as a safety feature when contracts fail.
2. Implied in Law (contract) Quasi-contact
a. UNJUST ENRICHMENT
b. Social obligationsanyone in this situation should be paying to serve the
social context; socially imposed duty
c. Are NOT contracts at all
d. Where a person performs services for another; which are known to and
accepted by the latter, the law implies a promise to pay for those services,
as long as the actor who performed the services acted unofficiously.
e. You have a legal obligation to pay whether or not you wanted the
services
f. Elements:
i. A benefit was conferred on the defendant by the plaintiff
ii. Appreciation or knowledge of the benefit by the defendant
iii. Acceptance or retention of benefit by the defendant under
circumstances make it inequitable for the defendant to retain the
benefit.

21
 g. Implied in law definition: is an obligation imposed by the law without
regard to either party’s expressions of assent either by words or acts.
Such contracts DO NOT ARISE from the usual bargaining process. They
rest on a legal fiction arising from considerations of justice and the
equitable principles of unjust enrichment. As such they are not real
contracts and the general rules of contracts therefore do not apply to
them.
27. Credit Bureau enterprises Inc v. Pelo pg. 118
a. Pelo was ordered by the magistrate at 3AM to be admitted against his will
to the hospital. At the hospital he received treatment for bi-polar disorder
even though he did not consent to the treatment.
b. ISSUE: was there a contract implied in law?
c. RULE: § 116 of the Restatement of Restitution tells us that: in certain
circumstances restitution for certain services performed will be required
even though the recipient did not request or voluntarily consent to receive
such services. The hospital must have acted unofficiously.
d. The defendant in this case did not give consent to the acts. Bc of his
mental state he did not have to capacity to decide whether or not he
would consent to the treatment. If the court could find that the defendant
would not have consented to the treatment had he been in the right mind
then they could not claim restitution.
e. HOLDING: Pelo was legally obligated to pay for those services based on
an implied in law contract theory (quasicontract theory). Bc there was
an implied in law contract there is no need to decide whether or not there
was an express contract conferred when he signed the form.
f. The court is basically saying that they are seeing this as a restitution
claim, they should have gone through and first proven that there is no
express contract bc contract trumps restitution.
28. Commerce v. Equity Contracting pg. 127
a. The subcontractor was contracted out by the general contractor to put
stucco on the defendant’s bldg. the general contractor never paid the
subcontractor. The defendant did pay the general contractor. General
contractor filed bankruptcy.
b. ISSUE: was there a contract implied in law?
c. RULE: unjust enrichment
d. The defendant paid the general contractor for the subcontractors services.
The general contractor was the one that had to pay the subcontractor.
e. HOLDING: in order to recover under implied in law the plaintiff must
prove that the defendant did not pay the general contractor in full.
f. There was no contract implied in fact bc the defendant only conversed
with the general contractor and never the subcontractor. It was the general
contractor that asked the subcontractor to perform the services.

22
 29. Implied in Fact (contract)
a. Is in fact a contract
b. Supported by parties intentinferring the intent by acts and conduct
as opposed to words: MUST have knowledge
c. If there was a contract between them it would be supported by the facts.
Here the facts are there, but the underlying contract is NOT there, the
court WILL recognize the contract.
d. They asked for the services, they know that the services cost money, now
they refuse to pay for them.
e. It substitutes for an expressed contract
f. Emphasize independent will.
g. Based on the parties actions not just words
h. IMPLIED PROMISES: are most often found here.
30. Watts v. Watts PG. 134
a. The girlfriend lived with her boyfriend for 12 yrs. They “fronted” as a
married couple and procreated. After she worked for him without being
paid they broke up, she moved out and he gave her nothing.
b. ISSUE: Can the ex-girlfriend recover based on unjust enrichment when
the contract was implied in law?
c. RULE: unjust enrichment: one who has received a benefit has a duty to
make restitution where retaining such a benefit would be unjust. (quasi
contract)
d. They shared assets jointly, she helped him run the business and was not
compensated for it, he knew that she was doing it and he benefited from it.
He kicked her out and retained everything, she got nothing.
e. Allowing no relief at all to one party in a so-called “illicit” relationship
effectively provides total relief to the other by leaving that party owner of
all the assets acquired through the efforts of both.
f. HOLDING: unjust enrichment is an implied in law contract. the facts
alleged are sufficient to state a claim for recovery based upon unjust
enrichment.
g. ISSUE: was there an implied-in-fact contract?
h. RULE: A change in one party’s circumstance (she quit her job when he
promised to take care of her) in performance of the agreement may
imply an agreement between the parties.
i. HOLDING: the facts imply that there was an implied-in-fact contract.
Promissory Restitution
1. IT IS a promissory theory
2. Boundary between contract and restitution
3. Material benefit was conferred and then there was a promise to pay for it after
the fact.
4. Material Benefit Rule: if a person receives a material benefit form another other
than gratuitously a subsequent promise to compensate the person for rendering
such benefit is enforceable.
5. You did the service for me. NOW I promise to pay you for that past service.

23
6. Damages: what you promise to pay, unless it is grossly unproportional to the
benefit conferred
7. It is a theory based on the ex-post promise.
8. §86 Restatement 2nd : PROMISSORY RESTITUTION:
a. a promise made in recognition of a benefit previously received by the
promisor from the promisee is binding to the extent necessary to prevent
injustice.
b. A promise is NOT binding under Subsection (1)
i. If the promise conferred the benefit as a gift or for other reasons
the promisor has not been unjustly enriched; or
ii. To the extent that its value is disproportionate to the benefit.
9. §86 recognizes several limitations on the availability of promissory restitution.
10. Promissory restitution cases occupy the middle ground between classical contract
law and pure restitution.
11. Promissory restitution bears a similarity to classical contract: the obligation rests
on the assent of the person subject to liability. But promissory restitution
cases involve liability even though no bargained-for exchange has occurred.
12. The measure of recovery is based on restitutionary principles.
13. Rescuing: a nonprofessional that rescues another may not be compensated for
their out of pocket costs incurred by the rescue. Although justice would require
that the rescuee who has enjoyed the benefits of a rescuer’s efforts bear the costs
of that benefit to the extent the rescuee is financially able.
14. Moral Obligation: as sufficient consideration
31. Mills v. Wyman pg. 146
a. The plaintiff took care of the defendant’s son until he died. The father
(defendant) wrote a letter to the plaintiff telling him that he would repay
him for the service he provided to the son.
b. ISSUE: was defendant’s moral obligation to pay enforceable under
promissory restitution?
c. Moral obligation is sufficient consideration for an express promise is to
be limited in its application to cases where at some time or other a
good or valuable consideration has existed.
d. HOLDING: the plaintiff NEVER introduced evidence that the son owed
him anything, there is NO claim under promissory restitution unless
the son owed something. The moral obligation is NOT SUFFICIENT.

24
 32. Webb v. McGowin pg. 151
a. Webb worked for McGowin. Instead of letting the block of wood land on
McGowin he broke its fall and suffered injuries. McGowin promised to
pay him $15 every 2 weeks. McGowin paid until he died.
b. ISSUE: Did McGowin’s moral obligation qualify as sufficient
consideration to enforce the contract when the benefit was conferred
in the past?
c. RULE: Material Benefit Rule: if a person receives a material benefit
form another other than gratuitously a subsequent promise to compensate
the person fro rendering such benefit is enforceable.
d. RULE: a moral obligation is a sufficient consideration to support a
subsequent promise to pay where the promisor has received a
material benefit, although there was no original duty or liability
resting on the promisor.
e. HOLDING: The defendant received a material benefit from the plaintiff
and subsequently the defendant promised to pay for that benefit, under
the material benefit rule the defendant is legally obligated to pay.

UCC Frame
1. Civil law system based on codes
2. Legal formalism on steroids
3. Developed by Llewellyn who was a common law advocate and liked flexibility in
the standard.
4. Rejects the “mirror image rule”
5. The UCC only has jurisdiction over goods, ‘this is not a goods case’ – instead
of applying a statute that the judge does not like
6. Problem does not fall under the UCC – apply common law standards
7. Goods = anything moveable except money
8. “Good faith and fair dealing”
9. UCC rules are very general and there is a lot of common law flavor to them.
10. Buzz words: “situation sense” and “all text is context.”
Firm Offer: Irrevocability by Statute:
11. §87: states several ways in which an offer may become “binding as an option
contract” in addition to promise and consideration
12. §87(1)(b): the offer may be “made irrevocable by statute.” This is odd bc the
purpose of the Restatement is to state the common law. But it reminds us that this
is an area where statutes are likely to serve an important role.
13. UCC §2-205: FIRM OFFERS
a. An offer by a merchant to buy or sell goods in a signed writing which by
its terms gives assurance that it will be held open is NOT revocable, for
lack of consideration, during the time stated or if no time is stated for a
reasonable time, but in no event may such period of irrevocability exceed
three months; but any such term of assurance on a form supplied by the
offeree must be separately signed by the offeror.

25
14. The UCC §2-205 also has some provisions making certain offers irrevocable.
a. UNLESS you are a merchant you CANNOT make a firm offer, in
which case then the common law rule would prevail.
i. The common law rule is that the offer is available but it can be
revoked at any time until it is accepted
b. Restricting the seller’s freedom to withdraw from sale goods being
offered in an “auction without reserve”
c. ‘firm offer’: The UCC allows merchants to make irrevocable offers
without the qualification of consideration. UCC allows options to be
made without consideration. Trying to map the law onto the practice
that we already notice is going on in free business.
d. `A ‘firm offer’ MUST express in its language the INTENT to keep the
offer open.
e. “Firm” offer will be held open for the reasonable period of
irrevocability created which might be less than 3 months, but will
NEVER exceed that time UNLESS there is consideration.
f. Any “Firmness” supplied on a form by the offeree MUST be signed
separately by the offeror. This is to provide protection against
inadvertent signing of a “Firm” offer.
g. What does to “sign” mean under the UCC? It does NOT have to be a
signature as long as it is authenticated; anything that is functional and
serves this purpose is ok, a letterhead. I want to make sure that it is
coming from you but I don’t want to get caught up in the details. As long
as it is in tangible form.
15. ONLY merchants can make a ‘firm offer’
16. UCC §2-104: “merchant”
a. Means a person that deals in goods of the kind or otherwise by his
occupation holds himself out as having knowledge or sill peculiar to the
practices or goods involved in the transaction or to whom such knowledge
or skill may be attributed by his employment of an agent or broker or other
intermediary who by his occupation holds himself out as having such
knowledge or skill.
17. relationship between the UCC (§2-205) and the principle of reliance-protection
exemplified by the Restatement § 90.
a. Llewellyn had little enthusiasm for the principle of promissory
estoppel, at least in business affairs, he preferred to bring the law in line
with the expectations of business people, not by protecting reliance, but by
expanding the concept of agreement, free from any of the technicalities
that plagued common law.
b. Llewellyn wanted to change the way that the UCC is interpreted in order
to better facilitate business. But a lawyers theory of how business would
best work is NOT always right.
c. Bc of these reasons Gibson suggests that the UCC (§2-205) should be read
as precluding any pre-acceptance protection for an oral firm offer to buy
or sell goods substantially relied on.
d. Gibson also says that many courts have seen UCC (§1-103) as an

26
 invitation to apply the principles of “estoppel” under the Code unless
“displaced” and have not viewed §2-205 as such displacement.
Battle of the Forms
1. UCC §2-207: additional terms in acceptance or confirmation: BATTLE OF
THE FORMS:
a. A definite and seasonable expression of acceptance or a written
confirmation which is sent within a reasonable time operates as an
acceptance even though it states terms additional to or different from
those offered or agreed upon UNLESS acceptance is expressly made
conditional on assent to the additional or different terms.
b. The additional terms are to be construed as proposals for addition to the
contract. Between merchants such terms become part of the contract
UNLESS:
i. The offer expressly limits acceptance to the terms of the offer
ii. They materially alter it; or
iii. Notification of objection to them has already been given or is
given within a reasonable time after notice of them is received.
c. Conduct by both parties which recognizes the existence of a contract is
sufficient to establish a contract for sale although the writings of the
parties do not otherwise establish a contract. In such case the terms of the
particular contract consist of those terms on which the writings of the
parties AGREE, together with any supplementary terms incorporated
under any other provisions of this Act.
2. ask 2 questions:
a. is there a contract
b. what are its terms
3. Which form rules as contract?? 3 approaches: deciding whether different or
additional terms get into the contract: It depends on the jurisdiction which rule
will be applied:
a. Last-shot rule
b. Fist-shot rule
c. Knock-out rule
4. Last shot Rule:
a. classical courts followed the last shot rule to determine when a
counteroffer was accepted. Under that rule a partly implied assented to and
thereby accepted a counter-offer by conduct indicating lack of objection to
it
5. First-shot Rule:
a. The UCC tried to fix the problem of the last-shot rule, but instead they
developed the problem with the first-shot rule.
b. If the different term does not come in, then the “first shot” is how the
contract will stand. Not coming in says whatever was in the initial offer
stays.

27
6. Knock-out Rule:
a. Apply the knock-out rule: rather than being added to the contract, the
different term will erase out the old term. Now the default rules of the
UCC will replace. The knock-out rule says that we should not give
privilege to either the first-shot or the last-shot, clearly the parties are in
conflict so we should throw out both of the terms and replace it with
the UCC rules.
b. Courts usually apply the knock-out rule.
c. Is there potential for people to act strategically when they know that they
are in a jurisdiction that employs the knock-out rule?
7. Mixed cases: Which Law Governs???
a. Predominant factor test: Bonebrake
i. Transaction for sale of Goods with Services incidentally involved
 UCC
ii. Rendition of Services with Goods incidentally involved
Common Law
iii. 3 Factors to consider the NATURE of the contract:
1. The language of the contract
2. The nature of the business supplier
3. The intrinsic worth of the materials.
8. Last-shot Rule:
a. After applying the Predominant factor test the court rules that this is
a common law case and applies the LAST-SHOT RULE although
they do NOT cite the last-shot rule.
33. Princess Cruises, Inc. v. General Electric Co.
a. GE performed services for Princess. They performed the services
negligently and caused Princess’s ship to be out of commission.
b. Princess sent GE an offer. They accepted the offer over the phone. GE
then sent an acknowledgement of the acceptance which contained
different and additional terms. Princess accepted the counter-offer.
c. ISSUE: which law governs UCC or common law?
d. RULE: Bonebrake: Predominant Factor Test: the test for inclusion or
exclusion is not whether they are mixed, but granting that they are mixed,
whether their predominant factor…3 Factors to consider.
e. HOLDING: The GE-Princess transaction was primarily concerned with
servicesapply common law
f. ISSUE: which form is the contract?
g. Princess did everything necessary to accept the counter-offer by GE.
h. HOLDING: the counteroffer made by GE was the contract. Court used
the “last shot rule,” but the court does NOT cite the “last shot rule.”

28
34. FORMING THE CONTRACT: which form is the contract??? Using the
First-Shot Rule:
35. Brown Machine Inc. v. Hercules, Inc. pg. 231
a. Brown sent to Hercules a “price quote” for them to make an offer
containing the indemnity clause. Hercules sent their offer to buy the
machine without the indemnity clause. Brown returned the form with the
indemnity clause. Hercules said that they agreed to the contract except for
anything that was not included in their offer to buy the machine. They did
NOT expressly state that they would not accept indemnity clause.
b. ISSUE: was the indemnification clause in the contract?
c. UCC: IF the first price quote was an offer then that is the one that binds
by the contract.
d. The UCC is layered on the Common law: the common law says that a
price quote is NOT an offer.
e. RULE: UCC: The counterforms even if they are different will usu
constitute as an acceptance; UNLESS the form that comes back is
expressly conditioned and says that these are the terms you must agree to.
These are deal breakers.
f. Hercules generally assented to Brown’s terms, Hercules did NOT
expressly state that they would accept the indemnity clause. They were
SILENT!! Silence is NOT acceptance to different terms, the indemnity
clause is a different and material term as a matter of law.
g. RULE: Under §2-207 additional terms become a part of the contract
between merchants unless a) the offer expressly limits acceptance to the
terms of the offer; b) they materially alter it; c) notification of objection to
them has already been given or is given within a reasonable time after
notice of them is given.
i. `Hercules’ purchase order here expressly limited acceptance to the
terms of its offer. Given such an express limitation the additional
terms, including the indemnification provision, FAILED to
become part of the contract between the parties.
ii. The additional terms MATERIALLY ALTERED THE
CONTRACT.
h. HOLDING: there is NO indemnification bc the contract was formed
under Hercules terms. FIRST-SHOT RULE WAS USED.
i. Brown’s acknowledgement is NOT a counter offer. Acceptance will be
considered a counteroffer ONLY IF the acceptance is expressly made
conditional on assent to the additional terms. Brown’s acknowledgement
operates as acceptance with additional or different terms from the offer
since the purchase order contained no indemnity provision.
j. First-shot rule is poor substitute for the last-shot rule of common law
contract.
k. The court could not find any way to get the indemnification clause in so it
is out.

29
36. Additional terms:
a. Silence= acceptance of Additional terms; they will be included in a
contract UNLESS they are material.
37. Different Terms:
a. Silence does NOT make acceptance.
b. 3 approaches on how to treat different terms:
i. Treat the “different” terms as “additional” terms if they are
material then they will NOT be included.
ii. The offeror’s terms control bc the offeree’s different terms merely
falls out; §2-207 cannot rescue the different terms since that
subsection applies only to additional terms. Knock-out rule is
NOT applicable bc it refers only to conflicting terms in
confirmation forms following oral agreement, NOT conflicting
terms in the writings that form the agreement.
iii. Knock-out rule: (preferred) the conflicting terms cancel one-
another out. The ultimate contract then includes those non-
conflicting terms and any other terms supplied by the UCC,
including terms incorporated by the course of performance, course
of dealing, usage of trade, and other “gap fillers” or “off –the-rack”
terms.
38. What is material?
a. Something that is normally bargained for
b. Terms that materially alters the contract
c. “Surprise or Hardship Test” to determine whether or not the term
materially alters the contract- as a matter of fact.
i. SURPRISE: whether the new term would catch the buyer
unaware. If the buyer is generally aware OR should have known of
the provisions in the industry then that is enough.
ii. HARDSHIP: Whether a limitation of consequential damages
would impose “substantial economic hardship”
d. Essential elements: price, time, quantity, ARE material
e. Indemnification clauses are material as a matter of law
f. Warranty is a material term as a matter of law.
39. If you treat the materiality as the test then the different terms will all be left out bc
they are material. Only nonmaterial terms will be allowed in.
40. Easy case: conditioned acceptance: if a party includes the “magic words” then
the terms apply as they intend. If you do not accept these terms then there is no
contract.
41. Problem: Boilerplate language. Standardized Forms: Where the language is in
one of the exchanged forms, but it is NOT reflected in the intent of the
accepting party. Should the terms be enforced, as they are in the language of the
boilerplate, or should we look at the intent of the parties to see if they intended to
accept these conditions???

30
42. CONTRACT ALREADY FORMED: DIFFERENT TERMS
43. Dale R. Horning Co. v. Falconer Glass PG. 240
a. Dale had a contract to put glass windows on the credit union. If they did
not finish by a certain date they would suffer penalties. Dale made a
contract with Falconer over the phone for glass. At the same time they sent
each other forms containing different provisions. Falconer’s form
included a limitation on consequential damages.
b. ISSUE: whether Falconer’s limitation of consequential damages contained
on its standard form is a term of the parties’ contract under the UCC??
c. RULE: §2-207: such terms become part of a contract UNLESS they
materially alter the prior agreement. (this is subsection 2, subsection 1 is
about forming a contract which there already is) (what we are addressing
here is how subsection 2 addresses such additional terms)
d. limitations on warranties will always be viewed as material, material as
a matter of law. We know this from the comments of the code.
e. Indemnification is normally always viewed as material.
f. RULE: An additional term is said to materially alter a contract “if its
incorporation into the contract without express awareness by the
other party would result in surprise or hardship.”
g. HOLDING: It is reasonable to believe that the party should have expected
a provision like this, NO SURPRISE. BUT the other party should NOT be
able to reasonably rely upon a boilerplate clause in a boilerplate form and
a corresponding operation of law to shift substantial economic burdens
from itself to a non-assenting party when it had every opportunity to
negotiate it if it so desired. There IS HARDSHIP.
h. The court employs the surprise or hardship test, but they ultimately rely
on their own intuition. “if it is important enough then the parties would
have brought it up and bargained about it. Then it would be material.” “if
it is important enough that the parties would want to bargain about it ex-
ante then it is material.”
i. Merely inserting boilerplate provisions into standard forms is not the end-
all way to deal with the UCC. Such post-agreement action is not always
enough to force one party’s desires upon another.
j. Court inserted the Default rule of the UCC that consequential
damages are unlimited.

31
44. Additional terms: Electronic contracting
45. Hill v. Gateway 2000, Inc.
a. a customer orders a computer over the phone. The order arrives and in the
box there are additional conditions. It states that 30 days after receiving
the box the additional conditions will apply. One of the terms was an
arbitration clause. The plaintiffs kept the computer for more than 30 days
before complaining about the performance.
b. ISSUE: are these terms effective as the parties contract, or is the contract
term-free bc the order-taker did not read any terms over the phone and
elicit the customers assent?
c. RULE: ProCD: terms inside a box bind consumers who use the software
after an opportunity to read the terms and to reject them by returning the
product.
d. FAA:
e. COURT USES COMMON LAW and looks to ProCD, they do NOT use
the UCC §2-207 bc they decide that it is not applicable bc there is only
ONE form in the case, NO exchange of form(s).
f. Judge Easterbrook frames the case: EITHER there is a contract with all of
Gateways terms, OR there is no contract at all bc the telephone operator
never told them of the additional terms.
g. Judge Easterbrook. CONTRACT FORMATION: Gateway made an offer
that made it clear that they would ship the box and upon receipt the
plaintiff would find the additional terms and that by keeping the
computer for 30 days they accept the additional terms. the terms in the
box bind Gateway to repair the computer JUST AS the arbitration clause
binds the Hills. Notion of giving something up to get something, bargain
theory.
h. Shoppers have 3 ways to discover things:
i. They can ask the vendor to send a copy before they buy
ii. Consult public sources
iii. They may inspect the documents upon delivery.
i. HOLDING: The Hills knew in advance that the box containing the
computer would hold some additional specific claims and they did not
choose to discover those in advance. By keeping the computer beyond 30
days the Hills accepted Gateway’s offer, INCLUDING the arbitration
clause.

32
46. Additional terms:
47. Klocek v. Gateway, Inc.
a. Facts: the plaintiff received a computer and in the box there was a booklet
that contained additional terms and agreements. One was the arbitration
clause. In bold print on the front of the booklet it stated that if you keep
the computer for 5 days then you accept these terms and conditions.
b. ISSUE: If there is a contract then is the arbitration clause in it?
c. Court cites Brown Machine “the conditional nature of the acceptance
must be clearly expressed in a manner sufficient to notify the offeror that
the offeree is unwilling to proceed with the transaction UNLESS the
additional or different terms are included in the contract.”
d. The court cites Brown Machine “express assent CANNOT be presumed
by silence or mere failure to object.”
e. HOLDING: The buyer was the offeror, the seller accepted by shipping
the computer. Therefore there is a contract that is enforceable under §2-
207. The additional terms are NOT in the contract bc the purchaser was
NOT a merchant & Gateway did NOT sufficiently communicate that the
additional terms are part of their conditional acceptance and the buyer did
NOT expressly assent to those terms. Silence is NOT acceptance.
f. If we use 2-207(3) there and fill in the gaps with the default UCC rules
then there is no arbitration clause bc there is no arbitration clause in
the UCC.
g. RULES:
h. §2-207: it says forms, but in this case there is only one form. The court
says that it does NOT matter that there is only one form and the rule
should be applied. (This court recognizes that Hill & ProCD did not use
the UCC bc there was only one form, this court thinks that UCC still
applies even though there was only one form.)
i. RULE: §2-204: Contract Formation: the court cites it to define a
contract and whether or not there was a contract. In §2-204 it is a very
flexible definition.
j. §2-204 UCC:
i. A contract for sale of goods may be made in ANY manner
sufficient to show agreement, including conduct by both parties
which recognizes the existence of such contract.
ii. An agreement sufficient to constitute a contract for sale may be
found even though the moment of its making is undermined.
iii. Even though one or more terms are left open a contract for sale
does not fail for indefiniteness if the parties have intended to
make a contract and there is a reasonably certain basis for giving
an appropriate remedy.
k. §2-206: offer and acceptance: “an order or other offer to buy goods for
prompt or current shipment shall be construed as inviting acceptance
either by a prompt promise to ship or by the prompt or current shipment.”
oral, or by shipping will be acceptance of the offer. The court said that

33
 the buyer of the computer was the offeror. Gateway accepted the offer by
shipping it out.
l. §2-206 UCC:
i. unless otherwise unambiguously indicated by the language or
circumstances
1. an offer to make a contract shall be construed as inviting
acceptance in any manner and by any medium
reasonable in the circumstances;
2. an order or other offer to buy goods for prompt or
current shipment shall be construed as inviting acceptance
either by a prompt promise to ship or by the prompt or
current shipment of conforming or non-conforming
goods, but such a shipment of non-conforming goods does
NOT constitute an acceptance if the seller seasonably
notifies the buyer that the shipment is offered only as an
accommodation to the buyer.
ii. where the beginning of a requested performance is a reasonable
mode of acceptance an offeror who is not notified of acceptance
within a reasonable time may treat the offer as having lapsed
before acceptance.
Agreement to Agree
1. When parties have completed their bargaining and think that they have reached an
agreement. Their agreement is incomplete either bc:
a. Some matters usu dealt with in such agreements have not been explicitly
covered
b. Bc the parties themselves have designated certain matters for postponed
decision, agreement at some future time.
2. both the UCC and the Restatement recognize that parties may be bound
contractually when they have reached agreement in principle, even though they
contemplate either further negotiations (agreement to agree) or the execution of a
formal written contract (formal contract contemplated).
3. There are 2 different things that are happening in these cases:
a. an agreement to agree, at a later date
b. “formal contract contemplated:” agreement in principle in a letter of intent
which contemplates the execution of a formal contract.
4. Does NOT award expectation damages
5. Will award reliance based damages
6. Will award liquidated damages
7. Corbin (Classical):
a. Even though one of the parties may believe that the negotiation has been
concluded, all items agreed upon, and the contract closed, there is still no
contract UNLESS he is reasonable in his belief and the other party ought
to have known that he would so believe.
b. If the contract that the parties agreed to make is to contain any essential,
material term that is not expressly agreed on, no contract has yet been made;
and so-called “contract to make a contract” is NOT a contract at all!

34
8. Common Law: does NOT enforce any contract where the parties failed to
agree on either a specific price or at least a method.
9. Common law does NOT like the agreement to agree
10. UCC: takes the opposite position of the common law.
a. §2-305: provides that an “open price term” will NOT prevent
enforcement of a contract for sale, if the parties intended to be bound by
the agreement.
b. When the parties leave the price to be determined at a later date the court
may enforce the contract.
c. If the parties later fail to agree on a price the court may enforce a
“reasonable price”
d. If one party has the power to fix price, he must do so “in good faith”
e. Under §2-305(4) the court may conclude that the parties did NOT
intend to be bound unless the price was fixed by agreement. In that event,
failure to reach agreement on price will mean that NO enforceable contract of
sale has been made, and the court will NOT fix a “reasonable” price for the
parties.
11. §2-305 UCC: OPEN PRICE ITEM:
a. The parties if they so intend can conclude a contract for sale even
though the price is NOT settled. In such a case the price is a reasonable
price at the time of delivery if:
i. Nothing is said as to price; or
ii. The price is left to be agreed by the parties and they fail to agree;
or
iii. The price is to be fixed in terms of some agreed market or other
standard as set or recorded by a third person or agency and it is
not so set or recorded.
b. A price to be fixed by the seller or by the buyer means a price for him
to fix in “good faith.”
c. When a price left to be fixed is otherwise than by agreement of the parties
fails to be fixed through fault of one party the other may at his option
treat the contract as cancelled or himself fix a reasonable price.
d. Where, however, the parties intend NOT to be bound unless the price
be fixed or agreed and it is NOT fixed or agreed there is NO contract.
In such a case the buyer must return any goods already received or if
unable so to do must pay their reasonable value at the time of delivery and
the seller must return any portion of the price paid on account.
12. In Quake the court held that whether a contract is formed in cases of agreement to
agree or formal contract contemplated turns on the factual question of whether the
parties intended to be bound when they agreed in principle OR only after further
negotiations prove successful. The court identified a number of factors that are
relevant to a determination of the parties’ intention.

35
13. Indefinite terms to be decided: left open in the contract: NOT enforceable:
14. Walker v. Keith
a. the lessors lent a property to the plaintiff for 10 yrs @ $100/month. The
contract said that the plaintiff had the option of extending the lease, under
the same terms and conditions except as to rental. The renewal option
provided: “rental will be fixed in such amount as shall actually be agreed
upon by the lessors and the lessee…” The plaintiff gave the proper notice
to renew but the parties were unable to agree upon the rental rate.
b. ISSUE: whether the quoted provision is so indefinite and uncertain that
the parties cannot be held to have agreed upon this essential rental term of
the lease?
c. RULE: Common law!!!! To be enforceable and valid, a contract to enter
into a future covenant MUST specify all material and essential terms.
Terms in a contract may be left for future agreement, but merely leaving
them without some sort of method for future determination is NOT
sufficient, it renders the agreement unenforceable for uncertainty.
d. court must be able to determine the exact meaning. (Williston)
e. An agreement to agree is not a contract.
f. HOLDING: Uncertainty  NOT enforceable. A renewal option should
be treated as a contract, rent is a material term of a lease. If the parties do
not fix it with reasonable certainty it is not the business of courts to do so.
The judgment is reversed.
g. The court says give me a formula in order to find the number for the
amount of rent, or give me a process from which I can determine the
rent and I will do that, but you have NOT provided anything by
simply agreeing to agree.
15. Letters of Intent: Intent of the parties: specific terms are enough to enforce
contract.
16. Quake Construction, Inc. v. American Airlines, Inc. pg. 278
a. Jones was employing a contractor for work for American Airlines. He
gave the job to Quake. Jones sent Quake a letter on April 18 that had some
of the conditions of the agreement, but it said that it was not a formal
contract and that a formal contract would follow. The letter was sent to
induce Quake to act. At the end of the letter there was a cancellation
clause. At the meeting Quake was told that the agreement had been
terminated.
b. ISSUE: whether the letter of intent was an enforceable contract???
c. RULE: although letters of intent may be enforceable, such letters are not
necessarily enforceable unless the parties intend them to be contractually
binding.
d. Factors in determining intent for an agreement to agree:
i. Whether the type of agreement involved is one usu put into
writing,
ii. Whether the agreement contains many or few details,
iii. Whether the agreement involves a large or small amount of money

36
 iv. Whether the agreement requires formal writing for the full
expression of the covenants,
v. Whether the negotiations indicated that a formal written document
was contemplated at the completion of the negotiations.
e. HOLDING: The number and extent of the terms in the letter can
indicate the parties’ intent to be bound by the letter. The final contract
only need to be substantially based on the terms in the letter as long as the
parties intended the letter to be binding.
f. There is ambiguity so the plaintiff is allowed to introduce more evidence
and the jury will decide whether or not there was an open agreement or an
agreement to agree.
g. Parole evidence rule: if I have a writing and if that writing is intended by
the parties to be a final and complete statement of their intent, then I will
look only to that writing and will exclude any other evidence either
i. If the writing is ambiguous then I can introduce other parole
evidence in order to clear up the ambiguity.
ii. If the writing is unambiguous then I do not let any other writing in.
h. Different ways to look at this case: what we are asking is what the
parties intended in this case, they could have intended one of three
things:
i. no contract is one theory in this case
ii. an agreement with open terms
iii. an agreement to agree

STATUTE OF FRAUDS:
DOES NOT ENFORCE A CONTRACT!!!
ELIMINATES A DEFENSE
IT IS A SEPARATE LINE OF INQUIRY FROM CONTRACT
Does NOT require a written contract
Writings may be used as evidence to enforce the contract.
Under the common law
1. All of the essential terms MUST be in writing;
2. the pasting of all of the essential terms is very important
3. ask 2 questions:
a. is the contract at issue one of the types to which the statute of frauds
applies so that a signed memorandum will be required for its enforcement?
b. If YES: is the statute of frauds satisfied?
i. Is there some sort of written statement of its terms,
ii. Signed by the defendant,
iii. That is sufficient to meet the statutes requirements?
c. If YES: then the statute again presents no bar to enforcement and the case
may proceed in normal fashion.
d. If NO; are there other factors in the case, such as performance or reliance
by the plaintiff, which might invoke an exception to the statutory bar?

37
4. §110 Restatement 2ND: STATUTE OF FRAUDS: classes of contracts covered:
a. the following classes of contracts are subject to statute, commonly called
the Statute of Frauds, forbidding enforcement unless there is a written
memorandum or an applicable exception:
i. a contract of an executor or administrator to answer for a duty of
his decedent (the executor-administrator provision)
ii. a contract to answer for the duty of another ( the suretyship
provision)
iii. a contract made upon consideration of marriage (marriage
provision)
iv. a contract for the sale of an interest in land (the land contract
provision)
v. a contract that is not to be performed within one year from the
making thereof (the one-year provision)
b. the following classes of contracts which were traditionally subject to the
statute of frauds are NOW governed by Statute of Frauds provisions of
the UCC:
i. a contract of the sale of goods for the price of $500 or more (UCC
§2-201)
ii. a contract for the sale of securities (UCC §8-319)
iii. a contract for the sale of personal property not otherwise
covered, to the extent of enforcement by way of action or defense
beyond $5,000 in amount or value of remedy (UCC §1-206)
5. Pasting of writings: Under common law
6. Crabtree v. Elizabeth Arden Sales Corp. pg. 298
a. The defendant denied that they had agreed to employ the plaintiff for 2
yrs, even if they had agreed defendant argues that the statute of frauds
barred the contract’s enforcement.
b. ISSUE: was the memorandum that was taken by the secretary on the
telephone order blank sufficient writing to satisfy the memorandum of
terms requirement (it stated 2 yrs and payment plan)?
c. RULE: it is enough to meet the statute’s demands that at least one
writing, the one establishing a contractual relationship between the parties,
must bear the signature of the party to be charged, while the unsigned
document must on its face refer to the same transaction as that set
forth in the one that was signed.
d. HOLDING: Statute of frauds was implicated bc the contract was for 2
yrs and it was satisfied by pasting together the payroll cards and the
memo stated the terms. There was a contract and it should be enforced.
7. Partial performance: Equitable Doctrine: to enforce contract
a. §129 Restatement 2nd ; PARTIAL PERFORMANCE UNDER THE
STATUTE OF FRAUDS:
i. A contract for the transfer of an interest in land may be specifically
enforced notwithstanding failure to comply with the Statute of
Frauds if it is established that the party seeking enforcement:
1. Reasonable reliance on the contract on the continuing

38
 assent of the party against whom enforcement is sought
2. Has so changed position that
3. Injustice can be avoided only by specific performance
ii. 4 requirements:
1. promise
2. reasonable reliance
3. change in position
8. Justice requires enforcement
9. Winternitz v. Summit Hills Joint Venture pg. 305
a. there are 2 contract agreements in this case. 1) that the defendant would
renew the lease to the plaintiff 2) that the defendant would allow the
plaintiff to transfer the lease over to the person that the plaintiff sold his
business to. The plaintiff seeks money damages in this case, legal
damages. He is NOT asking for equitable damages which would be
specific performance. The plaintiff argues that he paid the first months
rent of the renewed lease and that qualifies as partial performance for
the contract.
b. RULE: §129: Partial Performance; Law is clear and well est that “part
performance” is an equitable doctrine available only where the
principle relief sought is specific performance of an oral agreement. It
has NO application in an action at law for money damages.
c. HOLDING: Since the doctrine is NOT applicable in this claim for legal
damages, it cannot be used to enforce a contract, NO CONTRACT.
d. The statute of frauds is invoked bc the one yr and this is an interest in
land.
e. This case is a candidate for pasting.
f. the defendants conduct was malicious and so the plaintiff may bring a
claim in tort law using the breach of contract as evidence.
10. Reliance: Reasonably relied to detriment: enough to enforce contract
a. §139: reliance under the statute of frauds: how far liberal and modern the
court will go to get around the statute of frauds
b. 2nd Restatement §139: RELIANCE UNDER STATUTE OF FRAUDS:
i. a promise which the promisor should reasonably expect to induce
action or forbearance on the part of the promisee or a third person
and which does induce the action or forebearance is enforceable
notwithstanding the statue of frauds if injustice can be avoided
only be enforcement of the promise. The remedy granted for
breach is to be limited as justice requires.
ii. In DETERMINING whether injustice can be avoided only by
enforcement of the promise the following circumstances are
significant: 5-factor test:
1. The availability and adequacy of other remedies,
particularly cancellation and restitution
2. The definite and substantial character of the action or
forebearance in relation to the remedy sought
3. The extent to which the action of forebearance corroborates

39
 evidence of the making and terms of the promise, or the
making and terms are otherwise est by clear and convincing
evidence
4. The reasonableness of the action or forebearance
5. The extent to which the action or forebearance was
foreseeable by the promisor.
c. §139 gives a 5-factor test that must be applied, this is why §139 is more
strict than §90. §90 is only the regular reasonable person standard to
decide whether or not there is injustice.
11. Alaska Democratic Party v. Rice pg. 314
a. Plaintiff was offered a job for 2 yrs. She quit her job and moved to Alaska
for the job and when she got there she was told that there was no job.
b. RULE: §139: Reliance, injustice only avoided by enforcement; 5-factor
test.
c. HOLDING: The promise is only enforceable where injustice can only be
avoided by enforcement of the promise.
d. The jury was correct in finding that there was an enforceable contract.
e. The statute of frauds is invoked bc it meets the 1yr requirement.
Under the UCC
1. §2-201 UCC: STATUTE OF FRAUDS:
a. except as otherwise provided in this section a contract for the sale of goods for
the price of $500 or more is NOT enforceable by way or action or defense
UNLESS there is some writing sufficient to indicate that a contract for sale
has been made between the parties and signed by the party against whom
enforcement is sought or by his authorized agent or broker. A writing is NOT
insufficient bc it omits or incorrectly states a term agreed upon but the
contract is NOT enforceable under this paragraph beyond the quantity of
goods shown in such writing. (The only term that needs to be stated and
agreed on is the quantity).
b. Between merchants if within a reasonable time a writing in confirmation of
the contract and sufficient against the sender is received and the party
receiving it has reason to know its contents, it satisfies the requirements of
subsection(1) against such party UNLESS written notice of objection to its
contents is given within 10 days after it is received.
c. A contract which does NOT satisfy the requirements of subsection(1) but
which is valid in other respects is enforceable;
i. If the goods are to be specially manufactured for the buyer and are
not suitable for sale to others in the ordinary course of the seller’s
business and the seller, before notice of repudiation is received and
under circumstances which reasonably indicate that the goods are for
the buyer, has made either a substantial beginning of their
manufacture or commitments for their procurement; or
ii. If the party against whom enforcement is sought admits in his
pleading, testimony or otherwise in court that a contract for sale was
made, but the contract is NOT enforceable under this provision
beyond the quantity of goods admitted (there is a contract, but not

40
 for the amt that the plaintiff alleges, ONLY for the amt that the
defendant admitted in testimony); or
iii. With respect to goods for which payment has been made and accepted
or which have been received and accepted. (partial
performance/payment)
2. Requirements to Invoke the Statute of Frauds under UCC:
a. MUST be a sale of goods
b. over $500
3. why is it different from the common law?
a. Need a writing, the writing needs to infer a contract, the UCC is far more
liberal in what constitutes as “signing”
b. Difference comes from how Llewelyn is different from Williston
c. The pasting of all of the essential terms is NOT as important here as it was in
the common law; the one that must be in writing is quantity.
4. Functionalism vs. formalism; we just want to know that there is a real transaction
here, we need to know that there is a quantity; any other specifications do NOT need
to be included.
5. Statute of frauds §2-201(1): 3 requirements to enforce contract:
a. contract
b. signed
c. stated quantity
6. Exceptions to the UCC statue of frauds:
a. Merchants exception
b. Specialized goods exception
c. Partial payment or partial performance
d. Judicial admissions (testimony)
7. Merchants exception to the statute of frauds:
a. §2-201(2)
b. It has to be a contract BETWEEN merchants
c. Written confirmation
d. Sent within a reasonable time; depends on the situation sense.
e. The written confirmation has to be valid against the sender- go up to
subsection 1; would this be valid. MUST be a writing indicating a contract
signed by the party to be charged that states a quantity.
f. Party who receives it must have reason to know its contents- worried about
notice as to its contents
g. The party fails to object within a reasonable time- 10 days, I have 10 days and
only 10 days to object
i. After 10 days you cannot raise the statute of frauds as a defense.
8. specialized goods exception:
a. §2-201(3)
b. if the goods themselves bespeak a contract then it should be enforced

41
9. partial payment or partial performance exception:
a. §2-201(3)
b. it might not get the whole contract enforced but it will enforce it to the point
that the contract has been partially paid for or partially performed
10. Judicial admissions exception:
a. §2-201(3)
b. if there is testimony that there was a contract, the quantity stated in the
testimony is the one that will be enforced.
11. Mixed cases
a. Predominant factor test
b. Written confirmation
c. 10 days to object of else the terms are accepted.
12. Buffaloe v. Hart pg. 326
a. The parties agreed for the plaintiffs to buy the barns in an oral agreement.
Agreement was for 4 payments of $5,000 each. The plaintiff delivered the first
check and the defendant accepted it. The next day the defendant called and
said that they tore up the check and were not going to sell the barns.
b. UCC GOVERNS BC THE BARNS ARE GOODS THAT ARE MOVABLE.
c. §2-201(1): a check may constitute writing sufficient to satisfy §2-201
provided it
i. contains a writing sufficient to indicate a contract of sale between the
parties
ii. is signed by the party or his authorized agent against whom
enforcement is sought.
iii. States a quantity.
d. The writing in this case is a personal check which specifies 5 barns and
contains the amt of $5,000, but does NOT satisfy §2-201 bc it is NOT signed
by the defendants.
e. Since the check was NOT sufficient to satisfy the plaintiff argues partial
performance
f. RULE: §2-201(3): the seller must deliver the goods and have them
accepted by the buyer. acceptance must be voluntary and conditional and
may be inferred from the buyers conduct in taking physical possession of the
goods or some part of them. for the buyer he is required to deliver something
to the seller that is considered part-performance. Payment may be made by a
check that is accepted by the seller.
g. Evidence that the plaintiff accepted the barns under the condition of the
contract: they bought insurance, contracted someone to fix the barns, found
someone to buy the barns from them.
h. Evidence that the defendant accepted a payment for the barns under the
terms and conditions of the contract.
i. HOLDING: the writing is NOT sufficient to satisfy the statute of frauds,
BUT there is an argument for partial performance. Whether or not the
agreement to sell was accepted is a question of fact for the jury to decide.

42
13. Bazak International Corp. v. Mast Industries, Inc. pg. 333
a. the seller never sent the goods. buyer is trying to enforce the contract. Here
the statute of frauds is being used as a defense, the defendant must show
that there was no enforceable contract bc the statute of frauds is not satisfied.
b. ISSUE: were the documents here sufficient to indicate the existence of the
prior agreement, is the merchants exception to the statute of frauds satisfied?
(should the merchants exception be interpreted strictly or loosely??)??
c. RULE: Writings were sufficient bc they were very specific. Writings
sufficient so long as they afford a basis for believing that they reflect a real
transaction between the parties. These were sophisticated parties.
d. Of the various requirements of UCC §2-201 4 are not in controversy:
i. Both parties are merchants
ii. The writing was sent within a reasonable time after the alleged
agreement
iii. That it was received by someone with reason to know of its contents
iv. That no written objection was made
v. If the writings can be construed as confirming the alleged oral
agreement, they are sufficient under UCC §2-201
e. LOOSE INTERPRETATION of the merchants exception. By interpreting
the merchants exception loosely they are eliminating a defense, the
defendant cannot use the defense that the statute of frauds is NOT satisfied
and so there is NO contract.
f. HOLDING: The court says that the purchase order form signed by the buyer,
sent to the seller and retained by the seller without objection (10 days) falls
within the merchants exception of §2-201 and satisfies the statute of frauds.

43
DAMAGES
1. Expectation interest
a. Put the plaintiff in the same position as if the promise had been kept
b. Forward looking
c. Specific performance
d. Money damages
e. Classical Contract theory will award this
f. Modern theory: more flexible  whatever it takes to serve justice
2. Reliance interest
a. Put the plaintiff same position as if no promise made, undo harm
b. Backward looking
c. Specific performance OR $$$$$  does $$ fulfill this goal??
d. Promissory estoppel
3. Restitution
a. Pay plaintiff for benefit of value conferred
b. The value of the contractual obligation
c. If the expectation CANNOT be measured then revert and compensate for
the reliance interest.

UCC Gap Fillers

1. Implied warranties
2. Consequential damages
3. Reasonable price
4. Good faith
5. Reasonable time period
6. NO arbitration clause

44