Define “express contract” and “implied contract”
Express - formed by words (promises communicated by language [oral or written])
Implied - formed by conduct (parties’ conduct indicated that they assented to be bound)
Define quasi-contract
Not a contract!
But restitution action allowed when an unenforceable K leads to unjust enrichment - P can recover restitution action to recover amount of benefit conferred on D
(Restitution is a remedy of last resort)
bilateral K
exchange of a promise for a promise
unilateral K - what it means and how to ID it
offeror asks for performance rather than a promise - offeror/promisor promises to pay upon completion of performance by the offeree/promisee → Once the act is COMPLETED, a K is formed.
can only accept unilateral K by performance - not return promise
Occurs only when:
- offeror clearly (unambiguously) indicates that completion of performance is the only manner of acceptance → look for words “offer only by” e.g. “My offer can be accepted only by…” (means offerree has to perform in order to accept)
- there is an offer to the public → look for a reward offered (e.g. reward for missing dog)
When does Article 2 of UCC apply?
when there is a sale of goods: anything movable when identified to the contract
- For all sales of goods at any price - UCC Article 2 applies
- goods = tangible personal property
Everything else is common law!
What does “merchant” mean under Article 2 of UCC?
- One who regularly deals in goods of the kind sold, or
- Holds themselves out as having special knowledge or skills as to the practices or goods involved
NB: A merchant must be acting in their “mercantile capacity” (that is, relating to their business) in order for merchant rules to apply
When a K applies both goods and services, what law applies?
- apply ALL article 2 or ALL common law depending on the more important part of the transaction
If K divides payment between goods and services, what law applies?
- UCC applies to the goods portion, common law applies to the services portion
What is “good faith”? What is typically involved in a breach of “good faith and fair dealing”?
good faith = honesty in fact and the observance of reasonable commercial standards
breach usually involves exercising discretion in a way that deprives the other party of the fruits of the K
What is included in “mutual assent,” and how what is the standard for mutual assent?
Offer + Acceptance
- objective standard - did words or conduct manifest a present intention to enter into a K?
Offer
- must create a reasonable expectation in the offerree that the offeror is willing to enter into a K with those terms
- promise, undertaking, or commitment
- with definite and certain terms
- communicated to the offerree”
- NOT just an invitation to negotiate
- objective standard - did words or conduct manifest a present intention to enter into a K?
Acceptance must be made before ____
termination by revocation, rejection, or operation of law
When are advertisements offers?
- typically, ads are announcements of prices at which the seller is willing to receive offers (invitations to offers)
- exception:
- ad contains a promise,
- terms are certain and definite, and
- the offerree is clearly identified
How to know if an offer is definite and certain in its terms
A K including the terms would be capable of being enforced
Typically needs to include:
- Offerree’s name
- Offer’s subject matter
- Price
Land sale offers must include
- price - most courts will not submit a missing price term for realty
- description of land - with some particularity, but does not need deed description
Sale of goods offers must include…
what if price is missing?
- quantity term
- Article 2 states that if price is missing on a sale of goods offer, the price will be a reasonable price at the time of delivery
define “requirement” Ks and “output” Ks
What assumptions are implicit in these Ks?
Requirements K - buyer promises to buy from seller all goods B requires
Output K - seller promises to sell to B all goods S produces
- these are both Ks for sale of goods
- assumed that parties will act in good faith: cannot be a tender of/demand for a quantity unreasonably disproportionate to 1) any stated estimate or 2) (in the absence of a stated estimate) any normal or otherwise comparable prior output or requirements (okay if requirements jump a percentage or so, but not a bunch)
What is required for employment/other services Ks?
- Employment K: if the duration not specified, offer - if accepted - construed as creating at-will K (terminable at the will of either party)
- Other services: nature of the work must be included in the offer
What happens if there are missing terms in a K?
- generally
- price
- time
- missing terms do not prevent the formation of a K if it appears that the parties 1. intended to make a K and 2. there is a reasonably certain basis for giving a remedy → court can supply reasonable terms for those that are missing
- price - except for real property Ks, failure to state a price does not prevent formation of K if parties intended to form a K without the price being settled
- time - law implies it needs to be performed within a reasonable time
What happens if a K has vague terms?
- if parties have included a term that makes the K too vague to be enforced, no presumption that intent was to include reasonable term (cf. missing terms)
- but uncertainty may be cured by part performance that clarifies the vague term or acceptance of full performance
N.B. if a MATERIAL term is vague/ambiguous → not an offer either at common law or under the UCC (watch for terms like “appropriate”, “fair,” and “reasonable)
What happens if K contains terms to be agreed on later?
- if the term to be agreed upon later is MATERIAL → too uncertain, not an offer
Types of termination of offer by offerree:
- Lapse of time: if no deadline specified, failure to accept within reasonable period → termination (N.B. on bar exam, if more than a month has passed, raise this issue)
- Rejection: effective when received by offeror
- express rejection
- counteroffer as rejection: offer made by offerree that contains same subject matter, but different terms → rejection and new offer (but cf. “mere inquiry” or “mere bargaining” - there, q is whether reasonable person would believe offer was rejected)
What is the effect of a counteroffer?
Compare counteroffer and conditional acceptance.
What is the effect of a “mere inquiry”?
“A counteroffer is a killer”
counteroffer (offer made by offerree that contains same subject matter, but different terms) → rejection and new offer
conditional acceptance is a type of counteroffer that imposes a new condition → rejection and new offer
but cf. “mere inquiry” or “mere bargaining” - there, q is whether reasonable person would believe offer was rejected
Revocation (termination of offer by offeror)
How may an offer be revoked?
What if the offer was made in a publication?
When is revocation effective?
- Offeror directly communicates revocation to offerree
- Indirect communication: offerree receives:
- correct information
- from a reliable source
- of acts of the offeror that would indicate to a reasonable person that the offeror no longer wishes to make the offer (e.g. if there was one of an item and it was sold)
For direct and indirect communications, revocation effective when received by the offerree (does not matter if offerree actually reads it though) - (NO MAILBOX RULE FOR REVOCATION - that’s only for acceptance)
- Offer made by publication may only be revoked by publication through comparable means (e.g. the same newspaper) - revocation effective when published
