A contract is a promise or set of promises for the breach of which the law provides a remedy or the performance of which the law, in some way, recognizes as a duty. Show
Goods are all things movable at the time they are identified as the items to be sold under the contract. A merchant is one who generally deals in goods of the kind sold or who otherwise by his profession holds himself out as having special knowledge or skills as to the practices or goods involved. For Art. 2 provisions dealing with general business practices (Statute of Frauds, confirmatory memos, firm offers, modifications) almost anyone in business can be deemed a merchant. But with respect to provisions that require the party be a merchant with respect to goods of the kind involved in the subject transaction (implied warranty of merchantability) construe merchant much more narrowly. Requirement of good faith performance under the UCC Every contract within the UCC imposes an obligation of good faith performance. Good faith means honesty in fact and observance of reasonable commercial standards. Common law implied duty of good faith and fair dealing implied in every contract, breach of duty usually involves exercising discretion in a way that deprives the other party of the benefit of the bargain or fruits of the contact. formed by language, oral or written formed by the manifestations of assent other than oral or written language; formed by the parties' conduct quasi-contract or implied in law contract not contracts at all; constructed by courts to avoid unjust enrichment and permit Π to bring an action in restitution to recover the reasonable value of the benefit conferred on the Δ. exchange of mutual promises; each party is both the promisor and the promisee Unilateral contract (traditional view) one in which the offeror requests performance rather than a promise. Usually, the offeror-promisor promises to pay upon the completion of the requested act by the promisee. Once the act is completed, a contract is formed. unilateral contract (modern view) unilateral contract can be formed only by full performance and occurs in only two situations: 1. when the offeror clearly and unambiguously indicates that completion of performance is the only manner of acceptance; and 2. where there is an offer to the public, such as a reward for finding a lost dog. one that is totally w/o any legal effect from the beginning and cannot be enforced by either party. (e.g. a contract to commit a crime; a murder for hire). one that one or both parties may elect to avoid by raising a defense that makes the contract voidable such as infancy or mental illness an agreement that is otherwise valid but which may not be enforceable due to a defense extraneous to contract formation such as the statute of limitations of the SoF requirements of contact formation 1. mutual assent objective test for mutual assent did the words or conduct of the parties manifest a present intention to enter into a contract? offer (promise, undertaking, or commitment with definite and certain terms communicated to the offeree) and acceptance before termination by revocation, rejection, or operation of law creates a power of acceptance in the offeree and corresponding liability on the part of the offeror. Requirements of valid offer must create a reasonable expectation in the offeree that the offeror is willing to enter into a contract on the basis of the offered terms.
Factors considered in deciding whether a communication creates a valid offer: 1. Was there an expression of a promise, undertaking, or commitment to enter into a contract? 2. Were the essential terms definite and certain? 3. Was there communication of the offer to the offeree? Promise, undertaking, or commitment for a communication to be an offer there must be an intent to enter into a contract. language indicating communication ≠ offer I quote, I am asking for $30, I would consider selling for = invitations to deal rather than offers factors considered in determining whether communication intended as an offer 1. language used (I offer / I promise not required) Offer requirements: Definite and certain terms; basic determination basic determination is whether enough of the essential terms have been provided so that a contract including them would be capable of being enforced Offer requirements: Definite and certain terms; identification of offeree statement must sufficiently identify offeree or a class to which she belongs to justify the inference that the offeror intended to create a power of acceptance Offer requirements: Definite and certain terms; Definiteness of subject matter subject matter of
the deal must be certain b/c court can enforce promise only if it can tell with reasonably accuracy what the promise is. fact that one or more terms missing doesn't
prevent K formation IF: Court will supply reasonable terms for those that are missing *Common law:* except in K for real property, failure to state price term doesn't prevent formation of a K if the parties intended to form a K without the price being settled. *UCC:* a reasonable price at the time of delivery if agreement doesn't specify time in which an act is to be performed, the law implies that it is to be performed within a reasonable time presumption that parties intended to include reasonable terms goes to supplying *missing* terms; presumption can't be made if parties included a term that makes K too vague to be enforced. Vague terms can be cured by part performance or by acceptance of full performance. Offer that states material term to be agreed on at later date = too uncertain to enforce Communication to the offeree to have power of acceptance, offeree must have knowledge of the offer Recap: requirements of valid offer an offer is a communication that creates a power of acceptance in the offeree. To be valid, an offer must: Termination of offer; methods of termination An offer may be terminated by an act of either party or the operation of law. *Acts of parties* *Operation of law* effect of termination of offer an offer cannot be accepted after it has been terminated. A revocation is the retraction of an offer by the offeror. direct methods of revocation offeror may revoke by communicating the revocation directly to the offeree. Offer made by publication can be revoked by comparable means (e.g. offer published in WSJ cannot be revoked by publication of revocation in Better Homes and Gardens). indirect methods of revocation an offer may be revoked indirectly if the offeree receives: e.g. after offer to sell car to offeree, the offeree is told by a reliable 3rd party that the offeror sold the car to someone else time of effectiveness of revocation generally effective upon receipt; revocation by publication effective when published What constitutes receipt of revocation delivery to a place of business to which the offer was made or another location authorized to receive this type of communication; doesn't matter whether recipient actually read the communication Limitations on offeror's power to revoke: an offer can be revoked at will by the offeror, even if she has promised not to revoke for a certain period, except in the following circumstances: an option is a distinct contract in which the offeree gives consideration for the offeror's promise not to revoke an outstanding offer. 1. if a merchant (if offer states time longer than 3 months, irrevocable only for 3 months; but three month limitation applies only to offers not supported by consideration. option supported by consideration = option K and can be held open for as long as the parties specify) Limits on revocation; detrimental reliance 1. when offeror could reasonably expect that offeree would rely to her deteriment on the offer, AND limits on revocation; beginning of performance, offer for unilateral contract an offer for a unilateral contract becomes irrevocable once performance has begun; offeree must be given a reasonable time to complete performance; offeree not bound to complete performance--may withdraw at any time prior to completion of performance; no acceptance until performance is complete; preparations to perform do not make offer irrevocable but may constitute detrimental reliance sufficient to make promise binding to extent of detrimental reliance limits on revocation; beginning of performance, offer for bilateral contract bilateral contract can be accepted by either promise or performance. Therefore, a bilateral K formed upon the start of performance. Once contract is formed, revocation is impossible; attempt to revoke = repudiation 1. Express rejection A counteroffer is an offer made by the offeree to the offeror that contains the same subject matter as the original offer but differs in its terms both a rejection and a new offer; terminates the original offer and reverses the role of the parties When is a rejection effective? A rejection is effective when it is received by the offeror. b/c an option is a K to keep an offer open, a rejection of or a counteroffer to an option does *not* constitute a termination of the offer. The offeree is free to accept the original offer within the option period unless the offeror has detrimentally relied on the rejection Rejection vs. Mere Inquiry a counteroffer constitute a rejection; a mere inquiry doesn't. Mere inquiry = a communication by offeree in response to an offer that indicates offeree is still considering the original offer. Test = would a reasonable person believe that the original offer had been rejected? Rejection by lapse of time an offer by be terminated by offeree's failure to accept w/in the time specified by the offeror or, if no deadline was specified, within a reasonable time. Termination by operation of law the following events will terminate an offer by operation of law: an acceptance is a manifestation of assent to the terms of the offer. generally, only person to whom offer communicated has power of acceptance; usually power of acceptance cannot be assigned EXCEPT if offeree has paid consideration to keep option open then the right to accept is transferable Acceptance; knowledge of offer required the offeree must know of the offer in order to accept it regardless of whether bilateral or unilateral K. If A performance act requested by offer for unilateral K w/ no knowledge of offer, no K is formed upon completion of performance Acceptance of offer for unilateral contract 1. *not accepted until
performance completed* Acceptance of bilateral contract unless an offer specifically provides otherwise, it will be construed as an offer to enter into bilateral K and may be accepted by either a promise or by the beginning of performance. acceptance must be communicated unless offer provides that acceptance need not be communicated if prior dealing or trade practices make it commercially reasonable for offeror to consider silence as acceptance, the court may so find. if recipient of services knows or should have known that the services were being rendered w/ expectation of payment and by word, could have prevented the mistake, recipient may be held to have accepted the offer if she fails to speak Acceptance of offer to buy goods for current or prompt shipment construed as inviting acceptance either by a promise to ship or by current or prompt shipment of conforming or nonconforming goods common law insists on an absolute and unequivocal acceptance of each and every term of the offer. any different or additional term in the acceptance make the response a rejection and counteroffer Acceptance under Article 2: Shipment of nonconforming goods constitutes acceptance creating a bilateral contract as well as a simultaneous breach of K unless seller seasonably notifies buyer that the shipment is offered only as an accommodation. B is not required to accept accommodation goods. if rejected, S is not in breach and may reclaim the accommodation goods b/c tender ≠ acceptance of B's original offer BUT if party accepts offer by promising to ship, then shipment of nonconforming goods = breach because accommodation is not possible Battle of the forms provision in general Article 2 abolished mirror image rule; additional / different terms in acceptance ≠ rejection; rather = effective acceptance UNLESS acceptance expressly conditional on assent to additional / different terms. Whether additional or different terms become part of the K depends on whether both parties are merchants Battle of the Forms: Additional / different terms included in resulting contract 1. K involving a nonmerchant = terms of offer govern unless offeror expressly agrees battle of the forms vs. no mutual assent watch for different price, quantity, or quality terms b/c generally indicate no meeting of the minds treated as rejection of the offer, essentially a counteroffer but counteroffer cannot be accepted by performance; if parties ship goods or accept goods after a conditional acceptance, a contract is formed by parties' conduct and the new terms aren't included acceptance by mail or similar means creates a contract at the moment of dispatch, provided that the mail is properly addressed and stamped UNLESS: offeree sends rejection and then sends acceptance whichever arrives first is effective offeree sends acceptance and then rejection mailbox rule applies and the acceptance is effective unless the rejection arrives first and offeror detrimentally relies on it elements of consideration 1. there must be a bargained for exchange between the parties; and requires that the promise induce the detriment and the detriment induce the promise. there is no bargain (and no consideration) when one party gives a gift to another act or forbearance by promisee must be of benefit to the promisor the benefit need not be economic; gratification of influencing the mind sufficient past or moral consideration a promise given in exchange for something already done / obligated to be done ≠ valid consideration b/c doesn't satisfy bargain requirement exceptions to past / moral consideration rule 1. a new promise is made in writing Consideration; legal value element in general, courts don't inquire into the adequacy of consideration. But something entirely devoid of value (token consideration) is insufficient. an insignificant sum recited in contract (sham consideration) also insufficient if not paid. legal detriment results if the promisee does something she is not legally obligated to do or refrains from doing something she has a legal right to do. forbearance or performance of an act that the promisor was not legally entitled to demand or expect preexisting legal duty ≠ consideration EXCEPTIONS: a good faith agreement modification needs no consideration to be binding Consideration; mutuality requirement illusory promises ≠ valid consideration. A promise to choose one of several alternative means of performance is illusory unless every alternative involves legal detriment to the promisor. the promise will not be found illusory if: consideration is not necessary if the facts indicate the promisor should be estopped from not performing. A promise is enforceable if necessary to prevent injustice if: 1. Mutual mistake Under a modern trend, some courts will enforce a promise if: includes situations in which the promisee performed an unrequested act during an emergency. A contract entered into between an infant and an adult is __________. voidable by the infant but binding on the adult What is the Statute of Frauds? A statute requiring that certain types of agreements must be evidenced by a writing signed by the party sought to be bound In a contract for a sale of goods priced at $500 or more, if the goods are _________ or __________, the contract will be enforced even if there is no writing Received and accepted; paid for If goods are either received and accepted or paid for, the contract is enforceable without a writing. However, the contract is not enforceable beyond the quantity of goods accepted or paid for. Thus, if only some of the goods called for in the oral contract are accepted or paid for, the contract is only partially enforceable. A contract for specially manufactured goods, i.e., goods that are to be specially manufactured for the buyer and are not suitable for sale to others by the seller in the ordinary course of his business, can sometimes be enforceable without a writing, but only under circumstances where the seller has reasonably indicated that the goods are for the buyer and made a substantial beginning in their manufacture or committed for their purchase before notice of a repudiation was received. There is no exception to the Statute of Frauds for unique goods. When both parties entering into a contract are mistaken about an existing fact relating to the agreement, __________. the contract is voidable if the mistake concerns a basic assumption upon which the contract was made At common law, the Statute of Frauds requires _____________ signed by ____________. a writing reflecting the material terms of the contract; the party to be held liable In determining whether a service contract is subject to the SoF, one should look to the _______: A seller who __________ can enforce an oral contract for the sale of real property. conveys the property to the buyer A writing is not required to enforce a contract that would otherwise be covered by the Statute of Frauds if: The party against whom enforcement is sought admits to the contract in court The Statute of Frauds requires that certain contracts be evidenced by a writing signed by the parties sought to be bound. However, if the party against whom enforcement is sought admits in pleadings, testimony, or otherwise in court that the contract was made, the contract is enforceable without a writing (but in such a case the contract is not enforced beyond the quantity of goods admitted). UCC: Specially manufactured goods exception to SoF A contract for specially manufactured goods, i.e., goods that are to be specially manufactured for the buyer and are not suitable for sale to others by the seller in the ordinary course of his business, can sometimes be enforceable without a writing, but only under circumstances where the seller has reasonably indicated that the goods are for the buyer and made a substantial beginning in their manufacture or committed for their purchase before notice of a repudiation was received. What contract is considered void, rather than voidable? a contract for illegal consideration Mutual mistake can be a defense to the formation of a contract if: The mistake concerns a basic assumption on which the contract is made In a contract for a sale of goods priced at $500 or more, if the goods are _________ or __________, the contract will be enforced even if there is no writing. Received and accepted; paid for The confirmatory memo rule applies __________. Only if both parties to the agreement are merchants The Statute of Frauds requires that contracts for the sale of goods for a price of $500 or more be evidenced by a writing signed by the parties sought to be bound. The confirmatory memo rule is an exception, which allows a contract to be enforceable without a writing signed by the party to be bound, in this case the recipient of the confirmatory memo. Under the confirmatory memo rule, in contracts between merchants, if one party, within a reasonable time after an oral agreement has been made, sends to the other party a written confirmation of the understanding that is sufficient under the Statute of Frauds to bind the sender, it will also bind the recipient if he has reason to know of the confirmation's contents and does not object to it in writing within 10 days of receipt. When two merchants enter into an oral contract for the sale of goods and one party sends to the other party a signed, written confirmation of the agreement, it: Binds both the sender and recipient, provided the recipient had reason to know of its contents and did not object in writing within 10 days of receipt what is the effect of a novation on the liability of the original obligor for performance under the contract? the novation discharges the original obligor's liability What do you mean by contract of sale?(1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner and another. (2) A contract of sale may be absolute or conditional.
When a contract provides for the sale of goods subject to the buyer's approval?When a contract provides for the sale of goods subject to the buyer's approval, the transaction is a sale on return. Most goods sold by reputable merchants can be returned for a variety of reasons unless the sale is clearly identified as final or the circumstances of the return are unreasonable.
What can be the subject matter of the contract of sale?—(1) The goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or future goods. (2) There may be a contract for the sale of goods the acquisition of which by the seller depends upon a contingency which may or may not happen.
What are the required elements of the statute in other words for a contract for the sale of goods of $500 or more to be enforceable what is required?At this point, you should be able to explain and apply the statute of frauds under § 2-201, in particular that: (i) it applies to contracts for the sale of goods of $500 or more; (ii) when applicable, it requires a writing signed by the party against whom enforcement is sought; and (iii) the writing is sufficient to ...
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The specifically manufactured goods rule states that a contract for the sale of __________.
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