Contracts Outline – Fall 1998
Professor Amy Adler

Table of Contents

ENFORCEABILITY

A.	Benefit/Detriment Theory of Consideration…………………………………………..1

B.	Bargain Theory of Exchange………………………………………………………….2

C.	Promissory Estoppel…………………………………………………………………..4

D.	Formalism……………………………………………………………………………..5

E.	Moral Consideration…………………………………………………………………..8

F.	Remedies……………………………………………………………………………..10

FORMATION & INTERPRETATION

A.	Subjective & Objective Theories of Assent………………………………………….11
1. 	Objective Approach to Contracts……………………………………….11
2. 	Issues of Public Policy………………………………………………….12
3. 	Ambiguity of Language…………………………………………………13

B.	Express & Implied Contracts…………………………………………………………14
1. 	Family Cases: Express v. Implied-in-Fact………………………………15
2. 	Family Cases: Public Policy Issues……………………………………...16
3. 	Implied-in-Fact Contracts: Freedom Not To Contract…………………..17
4. 	Quasi-Contracts………………………………………………………….17

C.	Firm Offers……………………………………………………………………………19
	
D.	Indefiniteness………………………………………………………………………….20
1. 	Offer v. Invitation to Make an Offer……………………………………..21
2. 	Filling in Gaps……………………………………………………………22

E.	Technicalities of Assent……………………………………………………………….23
1. 	Unilateral v. Bilateral: Acceptance Through Performance………………24
2. 	Silence as Acceptance……………………………………………………24
3. 	Mailbox Rule……………………………………………………………..25
4. 	Common Law Mirror Image Rule………………………………………..25
5. 	UCC Mirror Image Rule………………………………………………….26

F. 	Statute of Frauds……………………………………………………………………………28

Contracts Outline – Fall 1998
Professor Amy Adler

5 Elements of Contracts:
1. 	Enforceability
2. 	Formation
3. 	Interpretation
4. 	Performance Breach & Excuse
5. 	Remedies

Enforceability

A.	Benefit/Detriment Theory of Consideration
•	 = cause, motive, price or impelling influence which induces a party to enter into a K
•	a promise that has  becomes a legally binding & enforceable K
•	ben/det theory of  = benefit to one party OR loss/detriment suffered by other party

Hamer v. Sidway (C483)  [J/]
Facts	*  if Jr. doesn’t drink/smoke/gamble, uncle will give him $5,000 at age 21
	*   = person who acquired claim from Jr.;   = executor of uncle’s estate
Issue	*  Was there  for the original agreement?

•	 argues Jr. suffered no detriment since he benefited by giving up harmful activities
•	ct disagrees that there was a benefit to uncle; but holds that it is sufficient that Jr. sacrificed in giving up a legal right (to drink etc.)
•	 also argues that promise required to be written (per Statute of Frauds); ct agrees but says that uncle waived this defense by writing letter saying Jr. was entitled to $

Siegel v. Spear (C285)  [J/]
Facts	*   purchased furniture from  via mortgage w/ monthly payments
*  ’s creditman agreed to insure furniture and store it for summer for 
*  furniture destroyed in warehouse fire and  had not insured ’s belongings
Issue	*  (1) was there  for alleged agreement w/ creditman for insurance
	*  (2) did creditman have authority to make such a K

•	ct says creditman’s authority to contract not raised in lower ct t/f not an issue here
•	ct says there was  for two reasons combined: 
(1) 	bailment (goods handed over to ); Rutgers v. Lucet (p286); and
(2) 	partial performance ( began performance t/f obligated to complete); Hammond v. Hussey (p287)
•	ct distinguishes case from Thorne v. Deas (p286) cited by  because Siegel is misfeasance (began performance but didn’t finish) while Thorne is nonfeasance (failure to perform) which goes to issue of partial performance;. also no bailment in Thorne
•	ct cannot seem to say that  relied on  to his detriment since might require overruling Thorne v. Deas (t/f distinguishes w/ issue of bailment)
•	similar to Hamer v. Sidway in detriment (Jr. gave up right to smoke while Siegel forebore right to self-insure) yet different in terms of (1) context (business v. family); (2) Siegel had more to lose; (3) Siegel was not changing behavior while Jr. was; and (4) reciprocal nature of promises
•	’s reliance on ’s promise seems more reasonable since both had something to lose (both parties are still co-owners of furniture)

B.	Bargain Theory of Exchange
Mutual agreement to exchange promises or to exchange a promise for a performance or to exchange performances.  Eclipses benefit/detriment theory.

Restatement (Second) of Contracts  71 (FY104) – requirement of exchange
1.	to constitute , a performance or return promise must be bargained for
2.	performance or return promise is bargained for if sought by promisor in exchange for his promise and given by promisee in exchange for that promise
3.	performance may consist of act other than promise, forbearance, or change to legal relationship
4.	may be given to promisor or 3rd person by promisee or 3rd person

to summarize:
(a) an act forbearance or change to a legal relationship OR a return promise
(b) 	sought after by promisor in exchange for his promise AND
(c) 	given by promisee in exchange for the promise

Restatement (Second) of Contracts  79 (FY105)
•	if requirement for  is met, no other criteria necessary e.g. (a) benefit/detriment, (b) equivalence in values exchanage, or (c) :mutuality of obligation
•	idea that court won’t delve too deeply into fairness debate
•	Adam Smith idea of every man for himself

Reasons to not enforce gratuitous promises?  (C 470)
1. 	opens up floodgates for litigation
2. 	policy to be wary and not to become reliant
3. 	to allow for default in situations of fraud
4. 	people sometimes give impulsively
5. 	idea that sometimes there’s a good reason to break a promise

Williston’s Benevolent Man (C472)
•	“If you go around the corner to the shop, you may purchase a coat on my credit.”
•	does the short walk the tramp must take to get the coat constitute ?
•	the walk was a condition of the promise, but it’s a gratuitous promise since the walk is not the price of the promise
•	when in doubt, ask what is a reasonable construction of what the promisor was after? e.g. was the walk to the corner something he was after, or was it incidental?

Kirksey v. Kirksey (C473)  [J/]
Facts	*   writes to  widowed sister-in-law saying he will give  & kids a place to live
	*   provided home for 2 yrs then moved to shabby place then evicts altogther
Issue	*  was there  for ’s promise or was it gratuitous?

•	ct says ’s promise was gratuitous
•	’s loss (inconvenience of move & loss of community) was a condition of receiving the gift, but  was not bargaining w/ her
•	classic bargain theory result

Forward v. Armstead (C475)  [J/]
Facts	*  ’s father induces  to move to Alabama by offering a plantation
	*   works land but father dies w/o deeding land t/f  sues  executor
Issue	*  was there  for promise to deed land?

•	ct holds that no  since no bargain (same as Kirksey)
•	express language to witness, but no express promise to son
•	more appealing case for arguing bargain since (1) father benefited from arrangement and (2)  made improvements to land but could not recoup investment of labor
•	yet, at same time, we don’t know father’s true intention and must believe ’s word (of father’s promise) t/f more room for fraud
•	Holmes quote (C474-75) re: underlying bargain theory of  is idea of autonomous decision making t/f reliance concept would contravene promisor’s right not to be bound since threatens individual will

Ricketts v. Scothorn (C491)  [J/]
Facts	*  ’s grandfather says her will give her $ if she stops working t/f she quits job
	*  one year later,  takes job w/ consent of grandfather
	*   sues  executor for remainder of $ due her
Issue	*  was there  for execution of note?

•	ct says no  since ’s right to $ was not dependent on her quitting her job
•	however, ct says grandfather made representations that forced  to change her situation for the worse t/f doctrine of equitable estoppel (hold to word for reasons of equity) – but no real injustice was done here
•	did  rely to her detriment?  she gave up some earnings, but benefit was that she didn’t have to work – most significant since she’s not relying now that has new job
•	differs from Forward since clear statement from deceased donor
•	differs from Kirksey since decided under different theories
•	reasonable person standard when assessing whether promise = reliance for promisee
•	charitable subscriptions and marriage contracts are exceptions – binding w/o 

C.	Promissory Estoppel
A promise which promisor should reasonably expect to induce action or forbearance by promisee, and which does induce such reliance, and such promise is binding if injustice can be avoided only by enforcement of the promise.  Restatement  90 (FY108).  Elements:
1.	promise made
2.	promisor should reasonably expect reliance by promisee
3.	promise does in fact induce reliance
4.	enforcement required to avoid injustice

Lusk-Harbison-Jones, Inc. v. Universal Credit Co. (C289)  [J/]
Facts	*   creditor sues  auto dealer for balance due on cars destroyed in fire
	*  written agreement specified that title to cars was held by , and that
	*   would hold cars for  at sole risk as to all loss or injury
*  pamphlet & agents had specified that  would insure cars (but  did not)
Issue	*  can a prior written agreement be voided by subsequent oral modification?
	*  and would that modification require  to be valid?

•	ct holds that oral agreement was valid and in effect t/f  is liable for loss
•	 asserts that statements of agents were not valid b/c oral statement would modify prior written agreement and b/c such a modification would be w/o 
•	ct says oral contract is valid and there was  under new 90 of Restatement re: promissory estoppel
•	cars had not market value t/f was there really reliance and an injustice?

Stilk v. Myrick (C651)  [J/]
Facts	*   ship crew negotiate w/  captain for extra wages after 2 sailors desert ship
	*  upon safe return to port,  refuses to pay
Issue	*  was there  for the bargain?

•	ct says no  since sailors had a pre-existing duty t/f can’t give in exchange for a promise something they’ve already given (their services) – Restatement  73 (FY105) re: performance of a legal duty is not  unless a similar performance differs from what was required by the duty in a way which reflects pretense of bargain
•	ct also states that desertion by 2 sailors constitutes an emergency t/f bolsters 1st argument (although ship in port at time bargain struck t/f this seems questionable)
•	question of interpretation of original deal e.g. perhaps remaining sailors were taking on new or additional responsibilities when others deserted t/f the promise is not in exchange for services already given
•	policy issue – taking bargaining power away from labor

Feinberg v. Pfeiffer Co. (C308)  [J/]
Facts	*   offered pension by  employer to thank her for hard work
	*  several yrs after ’s retirement, new company president stops payments
	*   had “employment at will” rather than contract
Issue	*  was there  for offer of pension to ?

•	timing of promise matters since made after all her years of work t/f not bargaining to perform work in return for pension (past  is no )
•	ct says no  but sufficient evidence that  relied to her detriment since relied on promise to support self after retirement, and minimal chance to regain good employment at age 63 and now that she has cancer
•	issue of autonomy of original promisor – he wanted to be bound by his promise

D.	Formalism
•	consideration and seal

Fuller on Consideration and Form (C706)
•	 has both a “formal” and a “substantive” aspect
•	formal: objection to enforcement relates not to the content and effect of the promise but to the manner in which it is made
•	substantive: objection relates to significance of promise, not merely how it was made
•	concern can be addressed by formality or ceremony (e.g. seal)

Peppercorn Theory of Consideration (C706)
•	anything, no matter how small, can constitute 
•	don’t want to scrutinize people’s motivations since place different values on things

Ames on Specialty (C723)
•	specialty = some formal thing, usually a seal, on a document that makes it enforceable
•	the specialty is the contract t/f if lost or burned, tough luck

Warren v. Lynch (C725)  [J/]
Facts	*   signs letter in Virginia payable in NY w/ “L.S” instead of his seal
*   sues for enforcement. 
Issue	*  is “L.S.” a valid seal to make K enforceable?

•	question of law to be resolved since K written in VA (where scrawl = seal) but written that payable in NY (where actual seal required)
•	under choice of law rules, ct says NY rule applies t/f K not enforceable
•	wax seal shows seriousness of bargain, prevents fraud, & assures consistency

Goulet v. Goulet (C730)  [J/]
Facts	*   wife promises not to sue  husband for car crash that injured her
	*  written promise offers  of $1 and ’s seal
Issue	*  is $1 adequate ?

•	$1 is not  since it appears to be a sham bargain
•	however, a seal in the state of Maine =  t/f the seal trumps the $1

Pillans and Rose v. Van Mierop and Hopkins (C744)  [J/]    [ENGLAND]
Facts	*  White owes $ to Clifford
	*  W wants P&R to pay C but P&R want assurance W is good for the $
	*  V&H agree to cover W’s debts
	*  when P&R try to collect, V&H won’t pay since W has failed
Issue	*  is P&R’s promise to cover W’s debts to V&H an enforceable K?

•	stands for proposition (put forth by Mansfield) that  doesn’t matter when promise is in writing and in a business setting (not generally followed in K law however)
•	in commercial cases, want of  is not a valid objection to upholding K since no such thing as gratuitous promises among merchants
•	also, the fact that promise was in writing means it satisfies the need for evidence (same as if W had written a check to P&R on bank of V&H)
•	writing as formality – prevents uncertainty and obscurity

Duncan Kennedy on Form and Substance (FCL245)
•	difference btwn rules & standards – standard refers directly to underlying policy or rationale (clearly substantive) while rule is where application for decision maker is purely mechanical (no policy to consider)
•	advantage of rules is that they (1) restrain judges since no room for discretion and (2) provide certainty for people making Ks
•	danger of rules being over and under inclusive t/f results in enforcing promises that ought not to be or vice versa
•	standards are not stable and are open to interpretation
•	formal rules sometimes create an uneven playing field by rewarding people who know the rules e.g. lawyers while injurious to those w/o legal advice t/f disparities
•	judges covertly apply standards in order to interpret rule to achieve outcome they want
•	Kennedy argues against formalism in law

Patricia Williams on Formalism (FCL249)
•	flexibility to be formal or informal depending on who you are can be useful
•	white male uses informality to play down his position of power while she plays up her formal knowledge to counteract perception of black female as untrustworthy
•	simpler language and free legal services can equalize even when disempowered groups don’t have formal knowledge

Lon Fuller on Formal vs. Substantive (handout): tries to separate out function of 
•	there is value in the nature of exchange

Formal:
1.	evidentiary – a promise was made
2.	cautionary – to check against inconsiderate promises (stop & think)
3.	channeling – offers a medium for channeling intentions (serves the judge in case of controversy and serves parties since reinforces that parties want to be bound)

Substantive:
1.	autonomy – individuals have power to contract; some matters best left to private will (e.g. exchange of goods)
2.	reliance – reliance to one’s detriment
3.	unjust enrichment – someone gave something up while other gained or kept something (loss to A and inappropriate gain to B); a subset of reliance

gratuitous promise  (enforceable under R90, but NOT R71)
•	no 
•	two kinds: (1) reliance and (2) unjust enrichment (aggravated case of reliance) 
•	substantive – retaining autonomy not an issue here; understanding notion that exchange is good but viewing autonomy to make a bargain as more valuable
•	formal – no “natural formality” e.g. could have been a tentative expression of intention

contractual archetype – the ½ completed bargain  (enforceable under R71 AND R90)
•	A and B make bargain, A delivers goods but B doesn’t pay
•	most compelling since bargain AND reliance
•	formal – delivery of goods = natural formality that satisfies all 3 areas of form
•	substantive – A relied, unjust enrichment for B, autonomy issue

executory exchange  (enforceable under R71, but NOT R90)
•	neither A nor B has executed their end of the bargain
•	fully enforceable since no distinction btwn this and ½ completed deal, but less compelling in terms of enforcement since no natural formality (turning over of goods), no unjust enrichment, no reliance
•	all that’s left to compel enforcement is idea that this = exchange, not a gift

DeCicco v. Schweizer (C494)  [J/]
Facts	*   promises annual $ payments to daughter’s fiance conditional on marriage
	*   stopped paying after 10 yrs
	*   is person to whom daughter sold rights to payments under contract
Issue	*  was father’s promise a gratuitous one?

•	to find K, Cardozo has to overcome pre-existing legal duty and bargain vs. promise
•	even though contract was executed btwn  and fiance , Cardozo wants you to think ’s promise was made to the fiance AND the daughter by saying that promise was intended to affect the conduct of both
•	no  since engaged t/f planning to marry anyway t/f marriage was fulfillment of a pre-existing duty
•	HOWEVER, if K is w/ both fiance AND daughter, BOTH are giving up right to rescind t/f negates pre-existing legal duty rule
•	Cardozo construes as a bargain since if outcome of promise is to induce them to go through w/ marriage in spite of doubts, reliance and detriment can be inferred from mere fact of performance
•	also points to policy issue of marriage as special class of K t/f marriage itself is 

Allegheny College v. National Chautauqua County Bank (C501)  [J/]
Facts	*  Johnston pledged $5,000 for scholarship named after her
	*  Johnston said $ due upon her death, but paid $1,000 while still alive
	*  Johnston rescinds promise prior to her death
	*  after her death,  college sues  Johnston estate for balance due
Issue	*  was there  for Johnston’s promise?

•	Cardozo concludes (that ONLY reasonable interpretation is that) by implication, when J gave $1,000 payment, the return promise to her was to establish memorial fund in her name (in return for pledge)
•	if college doesn’t get remaining $, it cannot make good on scholarship and the plan conceived by donor will be “mutilated and distorted” (e.g. we’re doing this for donor)
•	C’s argument hinges on partial payment otherwise no implied acceptance of promise
•	C says no need to resort to promissory estoppel since resolved on 
•	knocks  for a loop, but doesn’t say we should get rid of it – C says classical doctrine of  and its rigor has been defaced over the years
•	perhaps prom. est. is another way in which  has been challenged t/f Cardozo trying to say  is not as rigid and strict as we thought and it can therefore be used here
•	Cardozo wants a just result but having trouble being faithful to precedent
•	subversive nature of what Cardozo’s saying – perhaps broader social shift t/f less attention to indiv. will and more to social welfare & responsibility
•	charitable subscription exception to rule of  motivated by public policy

E.	Moral Consideration
•	Lord Mansfield and fellow judges came close to identifying  with moral obligation
•	Refuted with argument that if moral  replaces , it would annihilate notion of  since the mere giving of a promise creates a moral obligation to fulfill it
•	Has been used to overcome idea that past  is no  at all (rule often regarded as socially undesirable)
•	Fuller doesn’t believe in enforcing moral  while Posner does
•	Restatement (Second) 86 dispenses with term moral  and instead links promise to compensate for a benefit received to idea of unjust enrichment – promise is binding to the extent necessary to prevent injustice – exception if (1) promise is a gift or no unjust enrichment, or (2) to the extent that its value is disproportionate to the benefit

Mills v. Wyman (C523)  [J/]
Facts	*   nursed ’s dying grown son
	*  after son’s death,  said he would compensate  but later changes mind
Issue	*  was there  for ’s promise?

•	promise made after the fact and no bargaining took place
•	idea that ct enforces legal, not moral rules
•	ct feels that outcome is unjust, but obligated to follow the law
•	ct uses “slippery slope” argument e.g. how to decide what is a sufficiently moral 

C_____ v. W______ (C527)  [J/]
Facts	*   mother sues  father for enforcement of child support agreement
Issue	*  is there  for the agreement?

•	 could make moral argument that  has obligation
•	 also has strong case based on formalism since written promise + partial performance
•	ct says no  since no common law or statutory requirement in TX obligating a father to support his illegitimate child
•	ct’s  doctrine = benefit/detriment theory  (bargaining is not an issue)
•	 was already legally obligated to care for child t/f benefit was to HER b/c of promise (whereas for , benefit should be to HIM and detriment to HER)

Webb v. McGowin (C539)  [J/]
Facts	*   mill worker suffered grave injury by saving boss from injury/death
	*  out of gratitude, boss offers to pay bi-weekly fee to  for remainder of ’s life
	*  when boss dies,  executors stopped payments and  sues for reinstatement
Issue	*  was there  for boss’ promise to ?

•	subsequent promise to pay is sometimes valid when past material benefit to the person of the promisor (also suggestion that if promisee is injured, that bolsters)
•	obvious benefit to promisor and obvious detriment to promisee
•	clearly ct stretches facts to make it sound like a bargain ( paying for svcs rendered)
•	since no duty to rescue in tort, K is only way to achieve justice (by enforcing gratuitous promise)
•	in terms of evidence, clear that promisor meant to keep promise (as opposed to Mills)
•	Mills and CvW say legal duty necessary 1st, but here also find  if benefit to promisor

Gillingham v. Brown (C512)  [J/]
Facts	*   promisee said he gave $5 to  promisor to get rid of her
	*   says $5 was a payment on a debt
*   says payment t/f revives debt that had expired under statute of limitations
Issue	*  does payment make  liable to pay remainder of note at once or by installment?

•	partial payment is considered acceptable replacement for required written promise to revive an expired debt (Mass. Statute)
•	ct says no  necessary since moral  is issue here
•	by acknowledging that debt exists,  creates cause of action for lender to collect
•	promise barred by statute of limitations, but solution of paying in installments rather than lump sum is moral solution
•	1st promise provides  but 2nd promise is the one that’s enforced w/ prom. est. (even though 2nd promise had no  alone)
•	circumvents idea that past  is no 

F.	Remedies
•	compensation means more than just returning $ you promised – it means paying expectation damages for benefit person would have enjoyed if promise had been performed
•	specific performance = making person perform his/her end of the bargain (rare)
•	Holmes (C1064) says we want to support enterprise and t/f encourage economic activity t/f until fulfillment occurs, promisor can break promise as long as he compensates promisee – this view lacks a MORAL component (morally neutral)
•	Harriman (C1065) says there is a moral obligation to perform on a promise and compensation for breaking is secondary; breaking K is morally blameworthy

Acme Mills & Elevator Co. v. Johnson (C1061)  [J/]
Facts	*   promised to deliver wheat to  mill @ $1.03/bushel but failed to do so
	*   claimed it was b/c he’d heard a rumor that  was in trouble & couldn’t pay
	*   made a better deal by reselling wheat @ $1.16/bushel
Issue	*  did  violate K?  and if so, how to compensate?

•	 wants $80 for sacks they supplied  plus damages consisting of ’s profits (difference btwn what he made by breaking K and what he would have made if had kept it) --  may not have lost financially, but upset that  broke promise and profited
•	ct says proper measure is difference btwn K price and market price
•	idea is that both parties benefited since  made bigger profit and  didn’t overpay for wheat from  (this is based on assumption that  can get wheat it needs elsewhere)
•	problems w/ outcome: (1) policy concern that makes Ks uncertain, (2) shouldn’t buyer be able to opt out of deal as seller did if prices fluctuate? (3)  resold property that belonged to  since deal stipulated it belonged to  upon threshing t/f “efficient breach” or theft

Formation and Interpretation of Contracts

A.	Subjective and Objective Theories of Assent
•	how do you make a K?  was there offer & acceptance?  mutual assent?  what is a reasonable construction of what was agreed to?
•	NB: “meeting of minds” theory has since been discredited

Restatement (Second) of Contracts  17 (FY98) – requirement of a bargain
•	K requires manifestation of mutual assent to the exchange, and a consideration
•	“manifestation” emphasizes exterior t/f objective standard
•	manifestation is necessary but not necessarily sufficient
•	policy issues: purely obj. standard has potential for exploitation, takes away element of autonomy, assumption that there’s one reasonable way to interpret people’s behavior

Restatement (Second) of Contracts  20 (FY98) – effect of misunderstanding
1.	no manifestation of mutual assent if parties attach materially diff. meanings:
•	(a) neither knows or has reason to know other’s meaning
•	(b) both know or has reason to know other’s meaning
2.	manifestation works w/ meaning attached by one of the parties if:
•	(a) that party doesn’t know of diff. meaning attached by other, or other knows meaning attached by first party (SUBJ.)
•	(b) that party has no reason to know of diff. meaning attached by other, and other has reason to know of meaning attached by first party (OBJ.)
3.	a mixture of objective and subjective depending on facts of case

1.	Objective Approach to Contracts

Davis v. General Foods Corp. (C121)  [J/]
Facts	*   sent letter to  food co. asking if interested in her idea
	*   responds that will look at it w/ compensation if any at ’s discretion
	*   sends idea, then claims  used her recipe w/o compensating her
Issue	*  was there a K?

•	 appears to make K and promissory estoppel claim (unjust enrichment of )
•	ct says no K exists b/c parties hadn’t gotten past negotiations, no definite terms
•	 did not assent or express desire to enter into K w/ 
•	 did not rely, but rather trusted
•	ct takes objective approach to  -- not reasonable for  to believe K existed

The Mabley & Carew Co. v. Borden (C124)  [J/]
Facts	*   had K from  sister’s employer saying $ paid to  if ’s sister died
	*  after death,  wouldn’t pay out to 
Issue	*  was there a valid K?

•	ct says that  was bargaining for sister’s performance (for her to continue working)
•	problem is clause about “no legal obligation” – ct says this relates only to worker who signed K, doesn’t apply to beneficiary after worker’s death
•	differs from Davis case: (1) this K has specificity, elements of formality, (2) here letter to worker is bait t/f inconsistent to deny that bargain exists, (3) perhaps greater obligation in employer-employee relationship as opposed to stranger-stranger
•	both Borden and Davis use objective approach to K – reasonable person standard

Anderson v. Backlund (C129)  [J/]
Facts	*   landowner sued  tenant for backrent &  files counterclaim on K
	*   purchased cattle after  said “there will be plenty of water”
	*  no water t/f ’s cattle died
Issue	*  was there an offer and an acceptance?

•	ct uses objective standard – what is a reasonable way to understand the exchange (not, how did  interpret it)?  what does obj. mean?  to whom?
•	could argue that  acted in reliance on “promise” (but was there really a promise?)
•	ct says too indefinite, more like advice than a bargain

Sullivan v. O’Connor (C131)  [J/]
Facts	*  ’s nose job turned out bad so she sued  doctor under tort and K
Issue	*  is it possible to contract with a doctor for a specific medical result?

•	ct seems to suggest need for guidelines e.g. proof that promise was made
•	public policy concern e.g. con artists, not good doctors, are the ones who make these kinds of unreasonable promises t/f need to enforce promise in order to keep doctors from making unreasonable claims
•	damages based on what hand was before and what it was supposed to be, NOT what it was and what it is now (Hawkins. v. McGee)  [reliance v. expectancy damages]
•	therapeutic value in doctor optimism yet could be construed by patient as promise
•	idea that doctors cannot K for specific outcome
•	objective analysis

2.	Issues of Public Policy

Shaheen v. Knight (C137)  [J/]
Facts	*   contracted w/  doctor for vasectomy 
	*  ’s wife had a baby t/f  sued  for breach of K
Issue	*  is it possible to contract with a doctor for a “cure”?

•	K exists, but to allow damages would be against public policy
•	 argues that damages on K to sterilize man who wife may have child w/o harm to her violates public policy (Restatement  178)
•	ct puts forth tough standard for determining a K as in violation of public policy
•	ct holds there’s no implied warranty of cure but you can have freedom of K to contract beyond that if doctor promises results
•	ct’s argument against damages is that purpose of marriage = procreation t/f how can damages be awarded when birth & raising child is a benefit, not a detriment
•	public policy cases speak both to assent and enforceability

Baby M Case (handout)
Facts	*  Sterns paid MBW $10,000 to be artificially inseminated w/ Mr. S’s sperm
	*  after birth, MBW to renounce parental rights so Mrs. S could adopt
Issue	*  are surrogacy Ks legal?

•	NJ Superior Ct. holds that surrogacy Ks don’t fall under adoption laws t/f no statutory regulation prohibiting it and payment was in exchange for svcs not baby t/f rules for specific performance by MBW
•	NJ Supreme Ct. reverses and says surrogacy evades adoption laws which express public policy that baby sellling is wrong and degrading to women
•	issue of paternalism e.g.  didn’t know what she was doing t/f invalid assent
•	freedom to K but some Ks that cannot be made for public policy reasons

3.	Ambiguity of Language
•	meeting of the minds v. objective approach
•	evolution:  meeting of the minds  objective approach  Restatement 20 (obj & subj) 

Raffles v. Wichelhaus (C869)  [J/]
Facts	*   to purchase from  specified amt of cotton from ship Peerless at specified $
	*  however 2 ships Peerless and  refuses to buy since says not what he agreed to
Issue	*  was there an acceptance if parties thought they agreed to different terms?

•	ct says K void since two parties though something different
•	subjective since open to interpretation – no meeting of minds
•	idea that minds must meet perfectly
•	under R 20(1)(a), both parties had diff. meanings, but meanings were not materially different e.g. cotton on both boats was the same 
•	contrast w/ Kyle v. Kavanagh (C870) where both parties referred to land on Prospect St but two Prospect Sts. in the town and each referring to different one t/f no meeting of minds and materially different meanings attached by each

Frigalement Importing v. B.N.S. International Sales (C872)  [J/]
Facts	*  K for sale of chickens at $.33/lb
	*   buyer thought broiler chx while  seller thought stewing chx
	*  stewing selling at .30/lb at time but broilers at .37/lb
	*  t/f  sues for breach of warranty
Issue	*  was there a valid acceptance if parties believed they agreed to diff terms?

•	J. Friendly concluded parties acted in good faith on what they believed were terms
•	making of K depends not on meeting of minds re: intentions (whether parties thought same thing) but on external signs (whether parties said the same thing) 
•	or can argue should have been a meeting of the minds t/f letting loss lie (arguably a more obj. approach
•	ct looks at broad meaning of “chicken” in trade (broad=stewing, narrow=broiler)
•	 wins on burden of proof theory –  did not prove chx was used in narrow sense
•	under R 20(2)(b), seller had no reason to know of different meaning, but buyer had reason to know meaning of seller

Dadourian Export Corp. v. United States (C872)  [J/]
Facts	*   US advertised to sell cargo nets made of Manila rope (w/ disclaimer in ad)
	*  ’s bid accepted but he refused to buy when discovered nets weren’t cargo
*   sued for recovery of down payment
Issue	*  did there need to be agreement by parties for K to be binding?

•	J. Friendly changes mind – maybe should be under Raffles b/c of “not unjustifiable change of position” (perhaps more subj. view?)
•	diff btwn Raffles & Frigalement is that buyer accepted merchandise in Frigalement
•	diff in undoing a done deal (chickens) vs. enforcing a deal not yet done (Peerless)
•	 could not recover based on disclaimer & his own failure to inspect before bidding

Armstrong v. M’Ghee (C128)  [J/]
Facts	*   believes his horse to be lame and sells to  for 5
	*   takes horse home,  later says “just joking” and wants horse back
	*   refuses, horses later dies
Issue	*  was the K of sale valid?

•	ct doesn’t look at whether  knew what  knew, but what reasonable person would have thought based on what  outwardly manifested (obj. standard)
•	 would have to show “outwardly” that he knew  was joking for K to be undone
•	Fuller analysis: all formalities in place t/f good reason to enforce

B.	Express and Implied Contracts
•	express = intent of parties is explicit through actual words either written or spoken
•	implied-in-fact = K resting upon intentions of the parties to be bound; differs from express K only in that evidence of existence is circumstantial (e.g. implicit in nature of parties or exchange, etc.)
•	implied-in-law or quasi = fictions of law adopted to enforce legal duties where no proper K exists; for bringing about justice w/o reference to intentions of the parties
•	see UCC  1-205 re: course of dealing and usage of trade (implied in fact)
•	see also UCC 2-204(1) re: K can be made in any manner to show agreement, including conduct (statutory codification of implied-in-fact K)

Young and Ashburnham’s Case (C146)  [J/]
Facts	*   innkeeper’s estate sues  for free-loading lodging/meals at inn
Issue	*  was there a K binding  to pay innkeeper?

•	ct says K never existed t/f no cause of action on debt
•	why didn’t ct say K was implied-in-fact?  (1) problem of definiteness, (2) n/a as remedy at time, (3) ct unwilling to hold wealthy elected official accountable

1.	Family Cases: Express v. Implied-In-Fact

Hertzog v. Hertzog (C147)  [J/]
Facts	*   sues  father’s estate for wages for working father’s farm
Issue	*  was there an implied K that son was to be paid for labor?

•	ct says there was no implied K – express language by father to witness, but no express agreement or K (even tho  may have deserved compensation)
•	policy issue of not wanting to explain ’s behavior w/ K but rather w/ family love
•	policy issues supporting holding for  incl (1) familial relationship, (2) deceased cannot testify as to his true intentions, (3) how calculate damages, and (4) why allow weak/lazy to benefit when should have left and gone out on own if needed wages

Barnet’s Estate (C152)  [J/]
Facts	*   worked at husband’s business & makes claim to wages from  estate
Issue	*  was there a K btwn  and husband for compensation?

•	ct denies claim since ’s labor was part of partnership to improve mutual well-being
•	ct says must be express K when recovering from an estate (implied never valid here)

Cropsey v. Sweeney (C153)  [J/]
Facts	*  deceased married  when already married t/f got divorce and remarried 
	*  re-marriage was still illegal since cannot remarry if divorced for adultery
	*  not entitled to estate,  sued  estate for wages for domestic svc to decedent
Issue	*  did  and husband have a K to compensate for domestic svcs rendered?

•	ct makes social assumptions – svcs of wife for husband not motivated by $ (respect for wife’s role in marriage requires that)
•	ct says parties did not intend to be in K for svcs rendered
•	no consideration of issue of justice

Balfour v. Balfour (C116)  [J/]  [ENGLAND]
Facts	*   husband promises monthly allowance to  wife while they are apart
	*   sues for breach of express K
Issue	*  was there an express K for  to support ?

•	different presumption w/ family agreements (as opposed to business) -- ct takes subjective approach t/f says private agreement and ct shouldn’t get involved
•	express K but ct says parties did not intend agreement to be enforceable
•	ct says upholding K would open floodgates to resolve all martial squabbles in ct
•	decision not to intervene leaves upper hand w/ person in power (man, generally)
•	on one hand, should ct intervene in marital relationship and abridge autonomy of individual, yet isn’t K supposed to be about facilitating private agreements?
•	aberration – not the standard in U.S.

2.	Family Cases: Public Policy Issues

Shaw v. Shaw (C154)  [J/]
Facts	*   discovers she was not legally married since “husband” lied re: being widower
	*   sues husband’s estate for breach of contract
Issue	*  was there an implied-in-fact K?

•	ct implies a K (implicit in situation that he was fit for marriage)
•	different from Cropsey & others since sues for breach rather than wages

Hewitt v.  Hewitt (C155)  [J/]
Facts	*   “husband” said no need for formality of marriage
	*  after  leaves  “wife” and kids, she wants half of assets
Issue	*  was there a K (express or implied)?

•	two public policy concerns:  (1) meritricious spouse (prostitute) argument rejected by ct since relationship was by all standards respectable and traditional and not based solely on sex; and (2) statute that abolishes common-law marriage rejected by ct since ct feels enforcing K would encourage rather than discourage marriage
•	ct says  states c/a based upon express oral contract t/f entitled to relief
•	overturned by state supreme ct for policy reasons
•	cites Marvin v. Marvin which established that K acceptable if there is  and not based upon meritricious relationship

Clare Dalton article (handout)
•	family relationships are private, yet idea that marriage is a public status
•	does sex contaminate agreement?
•	tension btwn manifestation and intent
•	contraction in perception of women: angel v. whore
•	bargaining power: men are the one’s who retain it if ct refuses to get involved

3.	Implied-In-Fact Contracts: Freedom Not To Contract

Rose and Frank Co. v. J.R. Crompton, Ltd. (handout)  [J/]  [ENGLAND]
Facts	*  parties set forth K but clause states that not legally binding
	*   terminates w/o notice but after accepting goods;  sues for damages
Issue	*  was there a binding K in spite of Honourable Pledge Clause?

•	House of Lords says not enforceable due to clause, HOWEVER once order is placed and filled, clause does not apply and K is legally binding (enf. based on acceptance)
•	ct looked at intentions of parties and says factual presumption that parties intend to be bound in business relationships (altho not in personal relationships e.g. Balfour)
•	overcomes default position due to (1) presumption, (2) K language, (3) clause
•	sort of a UCC 2-204(1) or 2-207(3) situation – K based on conduct

Hurley v. Eddingfield (C56)  [J/]
Facts	*  dying man send for  doctor (ongoing relationship w/  + sends $ too)
	*   refuses to treat t/f man dies and family sues for refusal to treat
Issue	*  is there an implied promise based on past experience?

•	tort action for wrongful death due to refusal to K
•	if viewed as isolated incident, no promise (implied or express)
•	autonomy issue (ability to not enter into K) – personal liberty overrides morality

4.	Quasi-Contracts
•	 “wholly undescriptive;” not having to do w/ consent
•	right to recover if (1) person offered right of refusal beforehand or (2) duty performed was required by law
•	exception to right to recover: (1) benefit incurred officiously (by intermeddler), (2) benefit incurred gratuitously, or (3) recovery is not measurable

Gardener Hypos

1.	Neighbor mows your lawn w/o asking permission, then wants to be paid
•	transaction cost of asking 1st & negotiating price are low t/f no recovery w/o K

2.	You are lying unconscious while neighbor mows lawn
•	trans cost high since neighbor could not negotiate w/ unconscious person
•	diff btwn doctor aiding unconscious since most people would K for medical care if they could, but not so for lawn care t/f no recovery

3.	Neighbor surprises by mowing your lawn, then presents you w/ a bill
•	“officious intermeddler” (volunteer gardener) t/f no recovery

4.	Neighbor honestly & mistakenly mows lawn thinking it belongs to someone else
•	I was unjustly enriched, but did not request t/f must I pay?  
•	I can’t return benefit that was bestowed in this case -- what if I can’t afford it?

5.	Same as #4 but I’m at home watching, then refuse saying I thought it was a gift
•	neighbor could argue that was “implied in fact” since I observed w/o comment t/f manifesting some kind of assent

Cotnam v. Wisdom (C163)  [J/]
Facts	*  s doctors aid unconscious man thrown from street car but he dies
	*  s sue man’s estate for compensation for svcs rendered
Issue	*  are s entitled to compensation even though  never had opportunity to assent?

•	s claim they conferred a benefit upon  even though they cannot guarantee outcome (benefit = treatment, not result)
•	problem is that one party = unconscious t/f no mutual manifestation of assent
•	ct enforces K for reasons of sensibleness and humaneness, altho acknowledges that no K exists (want to encourage doctors to aid those in need)
•	cannot get to whether individual intended K but can make assumption based on what reasonable person would want
•	why not admit evidence of ability to pay? this is not a real K t/f cannot look into contemplation of parties to fulfill expectations (we’re only looking for a remedy)
•	supports Hurley since both say no duty on doctors to render aid, yet Cotnam encourages doctors to do so thru incentive of compensation

Noble v. Williams (C76)  [J/]
Facts	*  s hired by  school board to teach, but no supplies provided
	*  s bought supplies and sued to recover expenditures
Issue	*  was there a quasi-K since could not do job w/o purchasing supplies?

•	ct refused recovery to s since had other options e.g. sue under employment K or pursue writ of mandamus (“forced hand”)
•	idea that no man can by his own volition make another his debtor
•	Posner would say we don’t reward s since could have easily gone out and gotten K

Sommers v. Putnam Board of Education (C168)  [J/]
Facts	*   lives 4.5 mi from school t/f demands school bd to pay for transport for kids
	*  school bd fails to do so t/f  sends a bill to bd at end of year
Issue	*  is there a quasi-K?

•	 concedes that no K was made, but alleges  failed in legal obligation
•	ct says quasi-K based on benefit  bestowed to  (perfor’d duty  was obliged to do)
•	test to meet for recovery: (1) grave public concern, (2) refusal to fulfill duty, and (3) “proper person” must intervene
•	here,  asked  before intervening while not the case in Noble

C.	Firm Offers
•	firm offer = offer + promise to keep offer open (e.g. a conditional promise)
•	UCC 2-205 = a written offer to buy/sell is not revocable, for lack of , during the time period stated or if no time is stated, for a reasonable period of time, BUT the period of irrevocability may not exceed 3 months BUT any assurance on the offeree’s form must also be signed by the offeror
•	use of “merchant” narrows UCC as does fact that covers only goods (no svcs/land)
•	to enforce, common law requires  while UCC allows signed writing instead
•	difference btwn offer and invitation to make an offer is that an offer leaves nothing left to negotiate e.g. only thing offeree can say is “I accept”
•	no enforcement if no  for subsidiary promise (to keep open) – if no , it = option K
•	option K = firm offer w/  (created bilaterally altho see Restatement 45 where unilateral can become option K when partial performance occurs)

Dickinson v. Dodds (C316)  [J/]
Facts	*   offers to sell house w/ offer to be “left over” until Fri. @ 9 am
	*   tries to accept by deadline but after  knows  sold to someone else
Issue	*  was  obligated to keep offer open until deadline?

•	offer expires Fri. but does that mean it’s guaranteed available until then?
•	ct says no obligation on  to be bound – it’s a naked promise w/ no  to keep open
•	how could  make it not a naked promise?  (1) formality (e.g. wax) might be enough or (2) could sell option to buy land t/f  for offer
•	why would  want irrevocable offer?  (1) time to get more info before accepting, (2) market might fluctuate & price drop or value of land change (seller could also benefit by locking in price in case it drops)

James Baird Co. v. Gimbel Bros. (C323)  [J/]
Facts	*   genl contractor takes bid from  sub-con for job w/ Dept. of Highways
	*   underestimated cost for bid but later withdrew and substituted w/ correction
	*   received correction AFTER had submitted bid to Dept. of Highways
Issue	*  is  bound to incorrect bid?

•	no option K here – no promise to keep offer open and no 
•	putting in bids does not = acceptance (for , acceptance must be after bids)
•	’s argument: (1)  relied on ’s bid in creating own bid since could not revoke, (2)  argues acceptance occured when  submitted bid to Dept.
•	J. Learned Hand says acceptance occurs when  reports back to  that bid accepted by Dept. (language of offers can be interpreted this way)
•	promissory estoppel issue: (1) promise/offer distinction, (2) J. Hand being a little harsh with prom est? (3) offer = conditional promise but can become promise if fulfilled
•	J. Hand sees as an offer, not a promise or an option (option means one party bound to keep an offer open while other thinks about it) b/c (1)  didn’t mean to subject self to one-sided offer, and (2) not reasonable to see that  would have made into an option K and thus put self at risk

Drennan v. Star Paving Co. (C326)  [J/]
Facts	*   genl con accepts  sub-con’s bid by phone
	*   mistakenly makes bid too low
	*   stops by to tell  that job was awarded, then  tell  about mistake
Issue	*  is  bound by bid?

•	outcome different from Baird case – ct says no , no acceptance t/f no promise but implies subsidiary promise w/  (partial performance) and uses promissory estoppel to enforce
•	what was relied on was not an offer but rather a promise to keep offer open
•	ct says  wanted  to rely on him so that bid was viewed favorably & accepted t/f  induced reliance
•	prom est requires a promise – where do we find one?  ct says there is an implied-in-fact subsidiary promise to keep offer open
•	ct says sub’s mistake t/f his burden to bear loss
•	on obj. theory,  had no reason to know that  had made a mistake
•	on subj. theory, no meeting of minds on price agreed to
•	look at language – not looking for acceptance; once awarded, it became a K
•	here, revocation occurred too late for genl to get out of job, whereas in Baird there was still time for genl to revoke bid or not accept job (also Baird had explicit statement re: revocation which was harder to overcome w/ prom est)
•	Drennan is the generally accepted rule now – key difference from Baird is ct’s willingness to imply subsidiary promise and t/f use prom est (circular reasoning)

D.	Indefiniteness
•	tensions underlying it: (1) autonomy v. fairness, and (2) interpretation v. rewriting
•	autonomy:  how far should a ct go in construing K if parties didn’t intend one; intent vs. what parties are reasonably entitled to
•	Cardozo: not at liberty to construct when job is to construe
•	should be clear, definite, leave nothing open to negotiation, thus acceptance = K

UCC 2-204 (FY28) – formation in general
1.	K can be made in any manner to show agreement, including conduct (statutory codification of implied-in-fact K)
2.	K can be found even if the moment of its making is undetermined
3.	even if terms are left open for indefiniteness, K does not fail if parties intended a K and if there is reasonable basis for assessing remedy

UCC 2-305 (FY34) – open price term
1.	if they want, parties can create K w/o settling on price t/f price is reasonable price at time of delivery if (a) no price determined, (b) parties fail to agree, or (c) price is agreed to be set by some 3rd person market or standard and is not done so
2.	price to be fixed in good faith
3.	if price not fixed due to fault of one party, other party can treat K as canceled or can fix a reasonable price
4.	if parties intend not to be bound unless price is fixed and doesn’t happen, no K (buyer must return any goods to seller or compensate)

1.	Offer v. Invitation to Make an Offer

Lefkowitz v. Great Minneapolis Surplus Store (C183)  [J/]
Facts:	*   refused to sell to  a fur it had advertised in newspaper
Issue	*  is ad an offer or an option to bid on an offer?  (’s acceptance = K or offer?)

•	ct says it was an offer rather than an invitation to make an offer since price was firm t/f nothing left to negotiate
•	offeror can revoke anytime up until acceptance (which occurs when  shows up and presents his $1 per the ad)
•	what about “Furs $1” sign that clerk says no more left – lacks definiteness (didn’t state # avail. as did other ad) and specificity (e.g. “1st come, 1st served” implies 1st person gets item)
•	ct says cannot assess value on items labeled “worth to $100”, whereas on stole it is identified as worth $139.50
•	(1) must find thing was meant as an offer (t/f only thing needed is acceptance), and (2) sufficient definiteness so ct can see what = breach and can assess remedy
•	exception to the general rule due to specific facts of case

Jenkins Towel Service v. Fidelity-Philadelphia Trust (C186)  [J/]
Facts	*   said bids accepted & agreement of sale rendered to highest acceptable bidder
	*   makes an offer while Esso makes offer for same amt but w/ other conditions
	*   selected Esso and  sued for specific performance
Issue	*  was ’s letter an offer or an invitation to make an offer?

•	ct holds that letter = an offer thus Esso’s bid was conditional and t/f not an acceptance
•	Esso’s bid = a counter-offer t/f ’s bid was the only acceptance
•	dissent says letter = an invitation to offer and  can determine if bids = acceptable ($ amt minimum does not define acceptable, rather more subjective)
•	majority says  drafted letter t/f if it was ambiguous, it should be interpreted against them and to benefit of  -- contra-preferential rule which increases efficiency by putting burden on party best able to avoid ambiguity

2.	Filling in Gaps

Wood v. Lucy, Lady Duff-Gordon (C451)  [J/]
Facts	*   has exclusive rights to sell ’s designs and they split profits
	*   sells her own stuff and keeps profits t/f  sues
Issue	*  was there a K?

•	 says she was at mercy of  who must expend effort or no profit t/f  hasn’t necessarily bound himself to do anything t/f no 
•	Cardozo says you can imply that  will perform or else he won’t make any $ for himself (makes business sense) – K makes no sense if you don’t imply this duty

Sun Printing v. Remington Paper (C216)  [J/]
Facts	*  parties made deal w/ price fixed from Sept to Dec
	*  after Dec, parties would decide again on $/period (ceiling based on Canadian)
	*   wants to keep buying but  refuses to sell
Issue	*  is  obligated to sell to ?

•	Cardozo says K = too indefinite since no price or time term (combination of two unfixed terms t/f simply an agreement to agree)
•	dissent says parties intended to make a bargain and ideas included:
1.	month by month using Canadian Export price; adjust on 15th
2.	compel reason & fair dealing t/f make parties agree or help them to do so
3.	one year Canadian Export price – choose on 12/15 and keep all year
4.	“contract price”
•	parties = silent re: whether Canadian price fluctuated and  has burden of showing in pleadings that it did  (dissent says should assume otherwise)
•	Cardozo says it’s not ct’s duty to create K, only interpret
•	Cardozo says an option K would be unfair, yet how can you construe as an option when total amount is set in original K?
•	relevant that K drawn up on ’s form (t/f if vague, read in favor of )
•	Cardozo essentially says that  was a jerk, but need stability & predictability – if we construe for fairness, we take away freedom and knowledge that K is constant
•	reasons why Cardozo, the K maker, now willing to break a K (see N96-97) – incl that doesn’t want to construe K that will leave one party at mercy of another and will not assume that’s what parties would have wanted t/f must imply in Lucy but not here
•	UCC 2-204(3) – K doesn’t necc. Fail for indefiniteness if parties intended K & remedy exists plus UCC 2-305 re: open prices (open to both readings)

Fairmount Glass Works v. Crunden-Martin Woodenware (C193)  [J/]
Facts	*  exchange of letters:  requests price,  replies w/ quote for immed acceptance
	*   then places order per quote but  says out of stock t/f cannot fill
Issue	*  was there an offer and an acceptance?

•	ct interprets quote as an offer – phrase “immediate acceptance” makes it an offer even tho contradicts word “quote” in telegram
•	“quote” might imply conditional acceptance t/f  reserving right to withdraw
•	issue of “first quality goods” t/f  says acceptance varied terms of offer t/f not acceptance but ct says not substantial alteration
•	 also argues 10 car loads = vague, but ct looks to custom to say specific enough

E.	Technicalities of Assent

UCC 2-206 (FY28) – offer and acceptance in form of K
1.	unless otherwise unambiguously indicated by language or circumstances: (a) an offer to make a K invites acceptance in any manner and by any medium reasonable; (b) an order or offer to buy goods invites acceptance by promise to ship or by shipment unless seller “seasonably” notifies buyer that shipment is only an accomodation to buyer
2.	where beginning performance is reasonable mode of acceptance, offeror who is not notified in reasonable period of time can view offer as having lapsed before acceptance
•	becomes bilateral upon performance t/f offeror cannot revoke

Restatement (Second) of Contracts 45 (FY101) – option K created by part. perf.
1.	when offer invites acceptance by performance, an option K is created when offeree begins invited performance
2.	offeror’s duty of performance under any option K created under (1) is conditional on completion or tender of the invited performance in accordance w/ terms of offer
•	gives offeree chance to complete but does not make into bilateral K t/f only person bound by K is offeror -- solves problem of danger of reliance by promisee

Restatement (Second) of Contracts 32 (FY99) re: in case of doubt, offer interpreted as inviting offeree to accept either by promising to perform or rendering performance, as offeree chooses

•	problem area unique to unilateral Ks is partial performance:
•	offeror could revoke prior to acceptance when offeree had only partially performed e.g. Carbolic revokes after customer had used smokeball for 2 wks
•	R45 says it’s t/f an option K and offeror has to keep offer open while cust performs
•	also perhaps interpret as implied K e.g. promise was made upon first use of smokeball t/f completion not necessary to indicate acceptance (turns into bilateral promise)

1.	Unilateral v. Bilateral: Acceptance Through Performance
•	does the offer look for performance (unilateral - only way to accept offer) or the promise of performance (bilateral)?
•	bilateral = exchange of promises
•	unilateral = exchange promise for performance (only 1 party holds enforceable right)

Carlill v. Carbolic Smoke Ball (C373)  [J/]
Facts	*  ’s ad promises $100 to anyone who uses ball 3x daily & gets sick
	*   uses and gets flu t/f seeks her reward
Issue	*  was there an offer and an assent?

•	ct determines offer legitimate since ad points to $ in bank as reassurance (definiteness)
•	ct says there is  based on  benefiting from sales and  suffering detriment of inconvenience of using smokeball 3x daily
•	ct says implicit that  accepted offer by performing conditions (conditional offer in form of unilateral promise)
•	rejects ’s claim that  must communicate acceptance since would be inconvenient and impractical – in case of doubt if promise or performance will do, offeree can choose (R31 of original Restatement or UCC 2-206)

2.	Silence As Acceptance
•	universal rule is that silence does not = acceptance altho today 69(b) would enforce K
•	protects offerees from having Ks foisted on them

Restatement (Second) of Contracts 69 (FY104) – acceptance by silence
1.	when offeree fails to reply to offer, his silence equals acceptance only when:
a. 	offeree uses offered svcs w/ reasonable opportunity to reject them and reason to know they were offered w/ expectation of compensation
b. 	offeror has led offeree to believe that OK to manifest acceptance thru silence
c. 	b/c of past dealings, it’s reasonable that offeree should notify offeror if does not intend to accept
2.	offeree who acts inconsistently w/ offeror’s ownership of property is bound by terms unless manifestly unreasonable; but if act wrongs offeror, it is acceptance only if OK’d by him

Prescott v. Jones (C238)  [J/]
Facts	*   insurance co. said to  unless we hear to contrary, will renew fire policy
	*   did not respond but when bldg burnt down,  did not honor policy
Issue	*  was there acceptance of offer to renew?

•	silence cannot = acceptance
•	even if  had paid premium (he did not), ct would have said he needed to communicate his acceptance to 
•	why do we not want silence to = acceptance?  (1) obligations can be foisted on people t/f rule protects offerees from having Ks imposed against will, and (2) should fault lie w/ offeror since it drafted “K” to begin w/ and said silence = acceptance
•	can’t use estoppel since no promise (only an offer)

National Union Fire Insurance v. Joseph Ehrlich (C241)  [J/]
Facts	*   insurer sues to collect premium accrued during period of non-payment
	*   had policy (accepted thru silence) but later says he hadn’t wanted it
Issue	*  does silence = acceptance?

•	ct says silence can = acceptance due to previous ongoing relationship w/ 
•	ct says if fire had occurred,  would have said policy was enforceable (altho Prescott would have said otherwise)
•	policy was “retained” t/f almost like a use (compare to newspaper case)

Austin v. Burge (C242)  [J/]
Facts	*   publisher sent newspaper to  even tho had written to request cancellation
	*   sues for payment of subscription
Issue	*  does acceptance of unsolicited goods equal acceptance of K?

•	ct says once accepted and read,  must pay -- look at R 69(1)(a)
•	ct said  should have left papers at P.O. or returned to sender
•	concerns: (1) deliberate, unfair sales tactics yet (2) customer fraud

Cole-McIntyre-Norfleet Co. v. Holloway (C244)  [J/]
Facts	*  ’s salesman takes order from  retailer
*  parties have repeated contact but salesman makes no mention of order
*  when  follows up, salesman says order was rejected
Issue	*  does unreasonable delay by salesman constitute acceptance?

•	ct says it’s reasonable to assume silence = assent b/c of ongoing relationship t/f outside of rule about foisting K on a party;  see R 69(1)(c)
•	ct less focused on intent of  than on reasonableness of ’s assumption (fairness)

3.	Mailbox Rule  (C349)
•	everything in K (except acceptance) is only effective when received
•	acceptance, however, is effective upon dispatch
•	confusion e.g. in Cushing v. Thomson when documents cross in mail

4.	Common Law Mirror Image Rule
•	offeree must mirror back terms of offer to offeror in acceptance
•	common law generally treats acceptance that differs from offer as rejection of offer and proposal of counter-offer
•	criticisms of rule: (1) arbitrary, (2) encourages battle of forms, (3) enables loophole to be exploited, (4) strikes down agreements that parties intended

Langellier v. Schaefer (C247)  [J/]
Facts	*   wants to grade road on his property
	*   writes to  to invite to join proposal, or sell his property to 
	*   responds w/ numerous conditions on offer
Issue	*  is ’s response an acceptance or a counter-offer?

•	ct says no K since imposed new conditions t/f counter-offer
•	competing policies in mirror-image rule e.g. (1) bound to terms offeror did not want vs. overly rigid & formalistic and (2) fairness issues on both sides

Butler v. Foley (C250)  [J/]
Facts	*  series of telegrams re: purchasing shares of stock
	*  #1 = offer, #2 = counter-offer since changed terms, #3 =  mirrors & accepts
	*   had already sold to other buyer t/f  had to buy elsewhere at higher price
	*   claims telegraph co. made error in omitting word “subject” t/f conditional
Issue	*  was #3 a valid acceptance?

•	telegraph rule puts burden on offeror’s choice --  made choice of telegram as means of communication t/f ’s problem if telegram co. made error
•	under mirror image rule, #2 was an offer and #3 was an acceptance
•	if word subject had been included, outcome would be different since would have been conditional or subject to availability

United States v. Braunstein (C253)  [J/]
Facts	*   US announced that accepting bids on raisins
	*   made bid and  wrote back accepting offer but mirror back w/ error
	*  no activity, then  writes to clarify error
	*   never withdrew offer & never paid t/f  sold raisins at a loss
Issue	*  was there a valid acceptance?

•	 argues that no acceptance due to error by  t/f it was a counter-offer e.g. botched acceptance letter rejects original offer and acts as counter-offer
•	 says  knew it was a mistake since obvious
•	ct says offeree may not snap up offer that on its face is too good to be true

5.	UCC Mirror Image Rule

UCC 2-207 (FY29) – additional terms in acceptance or confirmation
1.	definite & reasonable acceptance or written confirmation sent w/in reasonable period of time = acceptance even tho states additional or different terms as those offered or agreed upon, unless acceptance is expressly made conditional on assent to additional or different terms
2.	additional terms to be construed as proposals for additions to the K and become part of K (btwn merchants) unless: (a) offer expressly limits acceptance to terms of offer, (b) they materially alter it; or (c) notification of objection to them already given or given w/in reasonable time after notice received
3.	conduct by both parties can establish a K even tho writings do not – in such cases, terms of the K consist of terms on which both agree together w/ any gap fillers (knockout rule)

2-207 summary	1.  can have K w/ varying terms
2. 	what to do w/ varying terms
3. 	what to do when no K formed under (1) but conduct forms K

Look at (1), if K go to (2), if no K go to (3)

Also see Restatement 58 (acceptance must comply w/ terms of offer) and 59 (reply to offer which is conditional on offeror’s asssent to additional or different terms is not an acceptance but a counter-offer) (FY103) 

Roto-Lith, Ltd. v. F.P. Bartlett & Co. (C260)  [J/]
Facts	*   sold emulsion to 
	*   says on form “no warranties” and if you don’t agree, notify  at once
	*   sues when merchandise defective
Issue	*  was there a valid acceptance or did additional terms make it a counter-offer?

•	under common law, disclaimer would have made it a rejection and counter-offer which  accepted (implied-in-fact) based on accepting goods and using them
•	common law Last Shot Doctrine says whoever fired last shot in battle of forms had the last word on terms of K
•	UCC 2-204(1) is consistent w/ common law e.g. Rose & Frank where handing over goods creates implied-in-fact K
•	UCC 2-207 written to overcome some problems w/ Last Shot and Mirror Image common law rules
•	using UCC 2-207(1), ct gets same result as common law Mirror Image Rule 
•	disclaimer is a material alteration in terms and t/f counter-offer, not acceptance
•	ct’s reading of (1) renders (2) redundant b/c any material alteration is necessarily a “necessary condition” under (1) t/f how can you address (2) if (1) makes K invalid – ct doesn’t consider (3) at all
•	’s subsequent acceptance of goods = acceptance of new terms t/f binding
•	logic that material alteration falls into (1) is flawed & suggests that you can still have a K if material alteration of terms
•	appropriate reading would have been that it was an acceptance plus proposal that no warranty apply

Air Products v. Fairbanks Morse (C265)  [J/]
Facts	*   Air Prod ordered motors from  Fairbanks
	*  motors defective, but  had already accepted goods
	*  ’s acknowledgment had disclaimer & said notify w/in 10 days or b4 shipment
Issue	*  Did ’s silence = acceptance of new terms?

•	under 2-207(1), legally binding K exists even though terms have changed – differs from Roto-Lith since RL ct said materially altered t/f no K whereas here K exists and material alteration discussed under (2)
•	ct then looks to 2-207(2) re: was K expressly conditional
•	 argues that new term was additional but can use UCC gap fillers to imply a warranty t/f terms seem implicit t/f different conflicting terms t/f (2) is n/a
•	ct says that terms materially alter the K t/f not binding part of agreement, esp in light of comment 4 that changes to warranties are material alterations
•	additional/different confusion probably the result of sloppy drafting of UCC

F.	Statute of Frauds (C753)
•	some kinds of Ks must be written down to be enforceable, although don’t need to be signed by both parties and doesn’t need to be comprehensive
•	Ks that fall w/in the statute:
1.	Marriage
2.	Year (cannot be completed w/in a year)
3.	Land
4.	Executor (executor liable for debts of estate)
5.	Goods (over $500)
6.	Suretyship (one liable for debt of another)
•	purposes: formality, cautionary, evidentiary, prevents fraud (Lon Fuller argument)
•	Farnsworth suggests purposes no longer served esp fraud prevention

Bader v. Hiscox (C770)  [J/]
Facts	*   had been seduced & impregnated by ’s son
	*   agreed to drop charges if son married her and  gave her land
	*   accepted and dropped charges but  refused to give land
Issue	*  does K fall w/in statute of frauds?

•	ct holds for  and says bargain is not w/in Statute of Frauds
•	got around marriage issue since marriage was only incidental – bargain was for release of son from criminal charges, not for marriage
•	also issue of land – Iowa statute has exception to S of F when part of purchase price already paid t/f doesn’t apply since  paid her price of dropping the charges
•	idea that it’s unfair to use statute to protect fraud rather than prevent it
•	issue of suretyship also doesn’t apply since father’s own undertaking, not assumption of son’s debt

Doyle v. Dixon (C773)  [J/]
Facts	*   sold grocery to  and orally agreed not to go into business for 5 yrs
	*   does so and  sues
Issue	*  does K fall w/in statute of frauds?

•	oral agreement is binding and not w/in Statute of Frauds since could have been completed w/in a year if  had died
•	if Seinfeld agrees to perform on Letterman x-mas show in ’99, is IS w/in statute since cannot be performed w/in a year
•	if artist hired to complete a piece of art by 2000, it is NOT w/in statute since artist could complete early and be done w/in a year
•	any K that can be completed when promisee dies (any promise of forbearance) is NOT w/in statute since can be completed w/in a year if person dies w/in a year