Does party entering into agreement have authority to do so? 
I.	Contract 
A.	Two Types	4
1.	Unilateral. Promise for performance.	4
a.	Classical doctrine. A and C in performance; requirement of notice; effective upon deposit	4
Bishop v. Eaton.	4
b.	UCC 2-206(2). notification of acceptance (performance) within reasonable time 	4
2.	Bilateral.  Promise for Promise.	4

B.	Elements
1.	Offer	4
R2d § 24. assent will conclude bargain
a.	Preliminary Negotiations. R2d § 26. not O when further manifestation of assent. Lonergan v. Scolnick.	4
b.	Master of the Offer. R2d § 60. Offeror sets terms re A.	4
c.	Certainty R2d § 33. terms reasonably certain. basis for determining breach and remedy.	4
d.	Revocation.
(1)	Classical doctrine 	5
Revocation effective upon receipt from reliable source. Henthorn v. Fraser.	5
Offer fully revocable until accepted. Petterson v. Pattberg.	5
R2d § 43. Indirect Communication of Offeror’s revocation. Normile v. Miller.	5
R2d § 36. Power of Acceptance terminated by non-occurrence of condition.	5
(2)	Limitations on Revocability.	5
R2d § 45.  Part Perf. of Uni K is C for option K. depends on what Offeror wants for Perf.	5
R2d § 87. Option K if separate C.	5
87(2). embodies Drennan. PE which O’r expects before A as C for Option K.	5
UCC §2-205. Firm Offer. merchant. goods. signed writing. no more than 3 mos. 
	if on form must be separately signed.	6
Mid-South Packers, Inc. v. Shoney’s. series of separate Ks. original O irrev. only 3 mos.	6
UCC §2-103. goods movable at time of K.	6
UCC §2-105. merchant deals in goods or by occupation holds self out as knowledge/skill.	6
N.Y.Gen.Oblig.Law §5-1109. not goods. expressly irrevocable but no C. reasonable time.	6

2.	Acceptance	7
R2d §50. manifestation of assent to O by performance or promise.
a.	Manifestation of Assent	7
(1)	Signature and Unilateral Mistake. Absent fraud, duress or mutual mistake . . .
Ray v. Eurice Bros. extensive negotiations. repeat players. St. Landry Loan v. Avie. illiterate.
(2)	R2d § 69. Silence or Exercise of Dominion	7
(3)	R2d § 27. Assent effective though written memorial intended. factors to determine if K concluded.	7
(4)	UCC §2-204. conduct by both parties shows K, though moment of A undetermined.	8 
(5)	UCC §2-206. any reasonable mode of A. notification of performance in Uni K.	8
b.	Mailbox rule 	8
R2d §63. A effective upon deposit except Option K upon receipt. Henthorn v. Fraser.	8
c.	Battle of the Forms - Conflicting Terms in A	8
(1)	Common law doctrine
Mirror image rule 	8
R2d § 58. promise or performance must comply with O.	8
R2d § 59. A conditional on assent to add’l or diff. terms is not A but C-O.	9
R2d § 39. C-O is substituted bargain; terminates power of A. Normile v. Miller.	9
Last shot rule. Series of C-Os with substantial conditions in boilerplate. Poel v. Brunswick.	9
(2)	UCC §2-207(1). First Shot Rule. A even if add’l or diff. terms unless expressly made cond’l 
	on assent, then C-O.	9
UCC §2-207(2) btwn. merchants terms go into K unless O express limited, materially alter, object.	9
UCC §2-207(3) Knockout Rule. when Performance, K only agreed terms and gap-fillers.	9
Brown Machine v. Hercules. indemnification clause material, no express assent so no K.	10
Dale Horning  v. Falconer Glass. limitation of remedy clause was hardship, no surprise. 	10
UCC §1-205 course of dealing and usage of trade used to evaluate surprise. 
UCC §2-715 Buyer’s Incidental and Consequential Damages from Seller’s breach 	10
UCC §2-719 Contractual Modification or Limitation of Remedy.	11

3.	Consideration	11
Gratuitous Promise or gift which requires no consideration is not enforceable.
a.	Benefit-Detriment test. disjunctive. Hamer v. Sidway. (not required under R2d § 79)	11
b.	Bargained-for Exchange. R2d §71. Baehr v. Penn-o-Tex.	11
c.	Adequacy of Consideration. R2d §79. Batsakis v. Demotsis.	11
	R2d §77 Illusory Promise. not C if alternatives reserved. Mid-South Packers, Inc. v. Shoney’s.	11
d.	Past services do not constitute consideration. Plowman v. Indian Refining.	12
e.	Condition to a gift does not constitute consideration. Plowman v. Indian Refining..	12
f.	Motive or Moral obligation is not legally enforceable consideration. Plowman v. Indian Refining.	12
	However, parties’ secret ulterior motives do not nullify C. R2d § 81	12

4.	Statute of Frauds 	12
1.	Types of Contracts Covered
UCC §2-201 Statute of Frauds	12
(1)	goods. $500 or more. writing. signed by D. only quantity necessary. Cohn v. Fisher. check OK.	12
(2)	merchants confirmation OK unless written objection w/in 10 days	13
(3)	(a)  K enforceable if specially manufactured goods and substantial beginning. 	13
Chambers Steel Engraving Corp. v. Tambrands.
(b)	D admits K. Cohn v. Fisher.	13
(c)	partial performance. payment made/accepted or goods rec’d/accepted (§2-606). Cohn v. Fisher.	13
Winternitz v. Summit Hills. analogy to §2-201(c)(3) not available for money damages 
as for equity. instead, tort claim of malicious interference with contract.
•	§1-203 and §1-205 usage of trade evidence rejected by court though should give meaning to and supplement terms of contract
R2d § 110	Classes of Contracts Covered	14
2.	Requirements of Signed Writing – Restatement 2d – liberal view	14
R2d § 131. subject matter. indicates K made or offered by D. reasonable certainty as to essential terms.	14
R2d § 132 several writings relating to same trans. Crabtree v. Elizabeth Arden.	14
R2d § 133 signed writing for any purpose, or memorialization after the fact	14
R2d § 134 signature may be any symbol, company letterhead, authorized agent 
3.	Exception for Reliance
R2d § 139. PE  remedy despite failure of Statute of Frauds. McIntosh v. Murphy.	15

C.	Terms of Agreement
1.	Missing Material Terms	15
a.	Classical doctrine - Agreements to Agree unenforceable. Walker v. Keith.	15
R2d §33 Certainty. terms must be reasonably certain. basis for determining breach and remedy.	16
b.	UCC – Open terms not necessarily fatal	16
UCC §2-204(3). missing terms not fatal if parties intend K and reasonably certain basis for remedy. 
Pennsylvania Co. v. Wilmington Trust Co. (by analogy)	16
UCC §2-306 Requirements Contract. quantity term by output or needs. Mid-South Packers v. Shoney’s.
UCC §2-305 Open Price Term. reasonable price fixed unless intend not to be bound if not fixed. 	17
UCC §1-203 Obligation of Good Faith UCC §2-103(b). honesty. reasonable commercial standards 
of fair dealing.

2.	Principles of Interpretation	18
Modified Objectivist (R2d §§ 201-204) 	18
Reasonable meaning will govern but evidence of intent will overcome objective meaning.
R2d § 201. Interpreted in favor of innocent unsuspecting party. No agreement, no meeting of minds, no K.	18
R2d § 202 Rules in Aid of Interpretation. all circumstances and principal purpose of K. all writings 
	taken together. generally prevailing or technical meaning. course of performance. 
R2d § 203 Studs. of Interpretation. lawful meaning. express terms  course of performance  	18
	course of dealing  usage of trade. specific over general. negotiated over standard.
Prof. Patterson’s Maxims of Interpretations. 	19
UCC §1-205 Course of Dealing and Usage of Trade to give meaning to, supplement or qualify terms. 
	express terms control. Frigaliment Importing Co. v. B.N.S. International Sales Corp.	19
UCC §2-208 Course of Performance when repeated dealings.
	19
3.	Satisfaction of Conditions	20
R2d § 228. satisfaction of the obligor as a condition. reasonable person. Morin Building Products v. 	20
	Baystone Construction
R2d § 229. excuse of condition to avoid forfeiture. Morin Building Products v. Baystone Construction.	20
R2d § 211(3) reasonable expectations doctrine. unreasonable term not included. 	20
C & J Fertilizer v. Allied Mutual Insurance

C.	Remedy. Benefit of the Bargain. specific performance. expectation damages. reliance damages.	20

D.	Policies/Purpose of Contracts. certainty. vigilance. seriousness of trans. documentary evidence. 	20
economic efficiency. fairness in event of mutual mistake. discourage opportunistic behavior.

II.	Pure Restitution.  performance/C, but no O or A.	21
Classical doctrine –  no contract so no remedy. gratuitous relationships. Glenn v. Savage	21
Modern – 3 types
1.	Restit. § 116  Emergencies involving life and health. In re Estate of Crisan.	21
2.	Restit. § 117  Emergencies involving property. 	21
3.	Unjust Enrichment. benefit. appreciation/knowledge. acceptance/retention. Watts v. Watts.	21
Remedy. equity - amount of benefit.	21

III.	Promissory Restitution. promise to compensate made after services rendered.	22
Classical doctrine – past services. moral obligation – no recovery. Mills v. Wyman.	22
Modern Theory
1.	Strained Contract – Material Benefit supports later promise, imply prior request. Webb v. McGowin.	22
2.	R2d § 86. promise for benefit received binding to prevent injustice except if gift or value disproportionate.	22
Remedy. equity - amount of benefit.	22

IV.	Promissory Estoppel. change in position due to reliance on D’s Promise	
Classical doctrine. condition to a gift. Kirksey v. Kirksey.	23
PE only for donative promises, no commercial dealings. should use K. Baird v. Gimbel.	23
Modern Theory
1.	Strained Contract – future detrimental reliance as C. Allegheny College.	23
2.	R2d § 90. Promise Reasonably Inducing Action or Forbearance. Katz v. Danny Dare.	23
Universal Computer v. Medical Services. reasonableness of reliance on agent.	23
Remedy. reliance damages – status quo ante, not expectation. out of pocket expenditures due to Promise.  	23
Policies/Purpose of Promissory Estoppel. charitable contributions. not likely in commercial or commodities trans.	23

Authority question superimposed over all types of claims against corporate entities. In corporate cases, parties entering into contract as agents of other parties must have authority for corporation to be held liable.
•	Actual authority is real authority; principal leads agent to believe agent has authority.
•	Apparent authority is not real; words or actions of principal leads third party to believe agent has authority; still generates liability

I.	Contract 
Offer + Acceptance + Consideration [+ Statute of Frauds]
A.	Two Types 	
1.	Unilateral
a.	Common law doctrine
•	Bishop v. Eaton (1894)
•	Both acceptance and consideration are found in performance.  If no performance, no legal obligation is formed.  Neither party bound.
•	Offeree has further duty (condition subsequent) to provide notice of performance, otherwise Offeror has no means of finding out when obligation due.
•	Notice of performance effective upon deposit.
b.	UCC 2-206(2) Offer and Acceptance in Formation of Contract
Where the beginning of a requested performance is a reasonable mode of acceptance an Offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.
2.	Bilateral
Exchange of Promise for a Promise. Both parties bound.
•	Bias in common law and Restatement is to find bilateral contract, unless very clear that parties intended unilateral contract.  When parties need to be able to plan and expend resources over course of many months, expectation that transaction is more likely to be bilateral because neither party would just want other to walk away.
•	Conditional bilateral contract secures unilateral contract with Promise to perform and Offeror’s obligation due only on performance of a condition subsequent

B.	Elements
1.	Offer	
Defined in Rest. 2d Contracts § 24. 
Offer is a manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.

a.	Preliminary Negotiations do not constitute an Offer.
Rest. 2d Contracts § 26.
A manifestation of willingness to enter into a bargain is not an Offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent.
•	Lonergan v. Scolnick (1954)
•	Form letter describing single plot of land not an Offer because may occasion multiple “Acceptances”; land is unique, unlike widgets. Some further manifestation of assent by “Offeror” was necessary.

b.	Offeror is Master of the Offer – Rest. 2d Contracts § 60
Acceptance of Offer Which States Place, Time, or Manner of Acceptance
If an offer prescribes the place, time or manner of acceptance its terms in this respect must be complied with in order to create a contract. If an offer merely suggests a permitted place, time or manner or acceptance, another method of acceptance is not precluded.
•	Offeror is lower-cost risk bearer
•	Offeror can set additional terms for Acceptance to avoid risk 

c.	Certainty Rest. 2d Contracts §33 
(1)	Even though manifestation of intention is intended to be understood as an Offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain.
(2)	The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.
(3)	The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an Offer or an Acceptance.

d.	Revocability
(1)	Classical Contract Doctrine
Revocation effective upon receipt from reliable source.
•	Henthorn v. Fraser (1892)
•	Revocation of Offer received before Acceptance but after Acceptance mailed Revocation crossing Acceptance in the Mail.
•	Offeror must be considered as continuously making Offer until he has brought it to the knowledge of the person to whom it was made that it was withdrawn.
Offer fully revocable until accepted.
•	Petterson v. Pattberg (1928)
•	Offeree comes to pay off mortgage but Offeror has already sold mortgage, effectively revoked before performance completed. 
•	§ 45 seeks to correct this kind of injustice.

R2d § 43. Indirect Communication of Revocation. 
An offeree’s power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect.
•	Normile v. Miller.	

R2d § 36. Methods of Termination of the Power of Acceptance.
(1)	An offeree’s power of acceptance may be terminated by
(a)	rejection or counter-offer by the offeree, or
(b)	lapse of time, or
(c)	revocation by the offeror, or
(d)	death or incapacity of the offeror or offeree.
(2)	In addition, an offeree’s power of acceptance is terminated by the non-occurrence of any condition of acceptance under the terms of the offer.	

(2)	Revocability - Limitations on:
(i)	for Unilateral K
Rest. 2d Contracts § 45 
Option Contract Created by Part Performance or Tender
(1)	Where an Offer invites an Offeree to accept by rendering a performance and does not invite a promissory Acceptance, an option contract is created when the Offeree tenders or begins the invited performance or tenders a beginning of it. 
(2)	The Offeror’s duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the Offer.

•	Offer held open if some consideration has been received. Depends on when court finds beginning of performance, and what kind of performance Offeror wants/expects.
•	Decision not to revoke Offer (creating an option) has value – not given away without consideration.
•	Courts not bound to follow Restatement, do not like to imply Option. More common defense is to find Bilateral Contract.

(ii)	Rest. 2d Contracts § 87 Option Contract
(1)	An Offer is binding as an option contract if it
(a)	is in writing and signed by the Offeror, recites a purported consideration for the making of the Offer, and proposes an exchange on fair terms within a reasonable time; or
(b)	is made irrevocable by statute.
(2)	An Offer which the Offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the Offeree before Acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice.

•	Drennan (1958)
Rest. 2d §87(2) embodies court’s use of Promissory Estoppel theory to establish option contract and hold offer open.  Reasonable reliance that results in foreseeable change in position constitutes separate consideration for option contract. Promise made with knowledge and intent that other party would act on Promise before Acceptance.

(iii)	Firm Offer
•	Purpose of Firm Offer: facilitates planning; encourages and speeds acceptance; allows merchants not to create option K or renegotiate

UCC §2-205 - sale of goods
An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months [Comment 3: unless supported by consideration]; but any such term of assurance on a form supplied by the Offeree must by separately signed by the Offeror.

UCC §2-105(1) - goods
Goods means all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities and things in action.

		UCC §2-104(1) merchant
Merchant  means a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill.

N.Y. Gen. Oblig. Law §5-1109 - transactions other than sale of goods
	Except as otherwise provided in § 2-205 of the UCC with respect to an offer by a merchant to buy or sell goods, when an offer to enter into a contract is made in a writing signed by the offeror, or by his agent, which states that the offer is irrevocable during a period set forth or until a time fixed, the offer shall not be revocable during such period or until such time because of the absence of consideration for the assurance of irrevocability.  When such a writing states that the offer is irrevocable but does not state any period of time of irrevocability, it shall be construed to state that the offer is irrevocable for a reasonable time.

•	Mid-South Packers, Inc. v. Shoney’s (1985)
•	Court found no requirements contract under §2-306 because no obligation from Shoney’s to purchase exclusively from Mid-South
•	Mid-South’s proposal was firm offer under §2-205. Each purchase order from Shoney’s constituted acceptance and separate contract for the amount stated by Shoney’s at price required by Mid-South, including price increase after offer became revocable after 3 months had passed.
•	Shoney’s orders and payments at new price were manifestation of acceptance that induced performance by Mid-South and so could not be withdrawn later.

2.	
Acceptance
Defined in Rest. 2d Contracts §50
(1)	Acceptance of an offer is a manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer.
(2)	Acceptance by performance requires that at least part of what the offer requests be performed or tendered and includes acceptance by a performance which operates as a return promise.
(3)	Acceptance by a promise requires that the offeree complete every act essential to the making of the promise.

a.	Manifestation of Assent
(1)	Signature and Unilateral Mistake
signature only one manifestation, not always necessary; commencement of operations would indicate papers purely ministerial; depends on industry-standard practice
•	Absent fraud, duress or mutual mistake, one having the capacity to understand a written document who reads and signs it, or without reading it or having it read to him, signs it, is bound by his signature in law
•	Ray v. Eurice Bros.
•	Series of negotiations, exchange of drafts particular to transaction
•	Style of doing business different from Ray (informal handshake deal vs. painstaking detail)
•	Eurices presumed to be more sophisticated b/c repeat players, experienced, easier to bear costs over number of contracts, build certain amount of liability exposure into contracts - deterrence
•	St. Landry Loan v. Avie
•	Bank had already performed so Skinner held to perform
•	Banks pick and chose loan customers based on credit requirements
•	Would raise transactions costs to place burden on bank to explain K to Skinner
•	Bank has to be aware of illiteracy in order for burden to be shifted
•	Illiteracy at issue, not simply lack of sophistication

(2)	Acceptance by Silence or Exercise of Dominion
Rest. 2d Contracts § 69
(1) Where an offeree fails to reply to an offer, his silence and inaction operate as an acceptance in the following cases only:
(a)	Where an offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation.
(b)	Where the offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive intends to accept the offer.
(c)	Where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept.
(2)	An offeree who does any act inconsistent with the offeror’s ownership of offered property is bound in accordance with the offered terms unless they are manifestly unreasonable. But if the act is wrongful as against the offeror it is an acceptance only if ratified by him.

(3)	Rest. 2d §27 Existence of Contract Where Written Memorial is Contemplated
Manifestations of assent that are in themselves sufficient to conclude a contract will not be prevented from so operating by the fact that the parties also manifest an intention to prepare and adopt a written memorial thereof; but the circumstances may show that the agreements are preliminary negotiations.
Comment c: Among the circumstances which may be helpful in determining whether a contract has been concluded are the following: 
•	the extent to which express agreement has been reached on all the terms to be included, 
•	whether the contract is of a type usually put in writing, 
•	whether it needs a formal writing for its full expression, 
•	whether it has few or many details, 
•	whether the amount involved is large or small, 
•	whether if is a common or unusual contract, 
•	whether a standard form of contract is widely used in similar transactions, and
•	whether either party takes any action in preparation for performance during the negotiations.

(4)	UCC §2-204 Formation in General
(1)	A contract for sale of goods may be made in any manner sufficient to show agreement [Comment: oral, written or otherwise], including conduct by both parties which recognizes the existence of such a contract. [but if falls under Statute of Frauds, needs signed writing]
(2)	An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined. [Comment: actions of parties indicate binding obligation has been undertaken]

(5)	UCC 2-206 Offer and Acceptance in Formation of Contract
(1)	Unless otherwise unambiguously indicated by the language or circumstances
(a)	an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances;
(b)	an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods, but such a shipment of non-conforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.
(2) 	Where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.

b.	Mailbox rule 
Rest. 2d Contracts §63
Unless the offer provides otherwise, 
(a)	an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree’s possession, without regard to whether it ever reaches the offeror; but
(b)	an acceptance under an option contract is not operative until received by the offeror.
•	Henthorn v. Fraser (1892)
•	Mode of communication of Acceptance does not have to match mode of communication of Offer.
•	Where circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the Acceptance of an Offer, the Acceptance is complete as soon as it is posted.

Acceptance effective upon deposit placed in mode of communication reasonably expected to reach Offeror.
•	Issue: what is reliable mode of communication today?
•	Burden of loss here placed on Offeror because, as master of Offer, could have set additional terms re Acceptance and avoided risk.
•	Closes deal more quickly

c.	Battle of the Forms
Buyer’s and Seller’s forms do not agree, and do not constitute K unless performance.  
If there is performance, find acceptance (UCC §2-204 and Rest. 2d § 69(2)).

Purpose of Forms
•	lower transaction costs – limit number of terms that need to be determined and agreed to
•	documentary evidence – clarification of terms
•	recordkeeping/internal control for audit and inventory
•	discipline of sales force and standardize closing deals through unvarying set of terms dictated by company

(1)	Classical doctrine
(i)	Mirror image rule 

Rest. 2d Contracts §58
Necessity of Acceptance Complying with Terms of Offer
An acceptance must comply with the requirements of the offer as to the promise to be made or the performance to be rendered.

Rest. 2d Contracts §59
Purported Acceptance which Adds Qualifications
A reply to an Offer which purports to accept it but is conditional on the Offeror’s assent to terms additional to or different from those Offered is not an Acceptance but is a Counter-Offer.

Counter-Offer – Rest. 2d Contracts § 39
(1)	A counter-offer is an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer.
(2)	An offeree’s power of acceptance is terminated by his making of a counter-offer, unless the offeror has manifested a contrary intention or unless the counter-offer manifests a contrary intention of the offeree.
		
•	Normile v. Miller (1985)
Acceptance must mirror Offer; if not, constitutes counter-Offer which rejects and terminates original Offer. Original Offer then no longer has any legal force, so Offeror not stuck in option situation.

(ii)	Last shot rule 
•	Additional terms must be material to constitute new offer; otherwise just repeat of prior offer.
•	Acceptance by performance allowed last document (counter-offer) to govern transaction.
•	Common-law courts normally favored Seller, and found Buyer’s Purchase Order constituted Offer and Seller’s Order Acknowledgment Form constituted Counter-Offer which allowed Seller to revoke at any time until goods received and accepted by Buyer and to rely on its Counter-Offer to govern transaction and so transfer risk onto Buyer

•	Poel v. Brunswick (NY, 1915)
•	Court found that (Buyer) Brunswick’s additional provision that offer was conditional upon receipt of order being promptly acknowledged by (Seller) Poel was substantial condition, and Brunswick was not bound until (Seller) Poel had signified assent to terms in Offer 
•	Because offer was made subject to additional provision “it is not for the court to say that it is immaterial.” Boilerplate has meaning to company, because there was a conscious decision to include in form at some point in time.

(2)	UCC §2-207 Additional Terms in Acceptance of Confirmation (“First Shot Rule” in response to Mirror Image and Last Shot Rules)

(1)	A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

(2)	The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:

(a)	the offer expressly limits acceptance to the terms of the offer;
(b)	they materially alter it [Comment 4:  surprise or hardship test. examples: negation of standard warranties; Comment 5: not force majeure, or limitation of remedy in reasonable manner]; or
(c)	notification of objection to them has already been given or is given within a reasonable time after notice of them is received. [Comment 6:  If no answer received within reasonable time, then fair and commercially sound to assume their inclusion has been assented to. Where clauses conflict, each party assumed to object to conflicting clause and clauses do not become part of contract.]

(3)	“Knockout rule”:  Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree [Comment 6: where clauses conflict, each party assumed to object to conflicting clause and clauses do not become part of contract, per sub (2)], together with any supplementary terms incorporated under any other provisions of this Act.
 
•	Brown Machine v. Hercules (MI, 1989)
Offer and acceptance(s) followed by performance: Contract exists, but what are its terms?
•	Hercules purchase order, with blue box boilerplate expressly limited acceptance to terms of offer, constituted Offer.
•	Brown Machine’s acceptance including additional indemnification clause did not make acceptance expressly conditional to additional terms §2-207(1), so indemnification clause not included and Hercules’ offer was accepted.
•	Hercules’ letter expressing assent to all manufacture specs. except one did not constitute assent to additional terms in Brown Machine’s acceptance, because indemnification clause would materially alter agreement (§2-207(2)(b)) in that it would shift all of the risk onto other party. Value of clause reflected in price of goods under contract, acts like insurance with premiums factored into (or out of) price.
•	Court looks for express assent to additional terms to avoid return to last shot rule.

•	Dale Horning  v. Falconer Glass (S.D.Ind., 1990)
Oral agreement followed by confirmation (UCC drafters chose to grant confirms, which are often superfluous, legal status of acceptance/counter-offer; better to view confirmation not as counter-offer but as acceptance with additional terms).
•	Falconer’s confirm of phone agreement included limitation of remedy clause (permitted under §2-719) limiting consequential damages (defined under §2-715) incurred by AGM arising from penalties and finished building costs due to Falconer’s defective glass. 
•	Court noted that limitation of remedy clause in acceptance was “not underlined, bold-faced, or set forth in capital letters.”
•	In evaluating element of “surprise,” court invokes course of dealing and usage of trade. §2-207 implies objective test, assumes parties do not read additional terms so are not subjectively aware. Custom of commercial glass industry for supplier to help buyer pay consequential damages when due to supplier’s defective product, but Court found no surprise in supplier’s attempt to limit damages. If not customary, law usually places burden on party seeking to make a change.
•	Despite fact that permitted under §2-719, Court found hardship in Falconer’s attempt to limit AGM’s right to damages. Shift in liability should be negotiated, would materially alter agreement.
•	Court goes to town on boilerplate:  Merely inserting boilerplate provisions into standard forms is not the end-all way to deal with the UCC.  Despite UCC’s rejection of mirror-image rule, the best and in some instances the only way to get a preferable term into a contract is to actually propose the term and reach a meeting of the minds on the issue. . . Contrary to popular belief, §2-207 does not always condone nor justify the battle of the forms.
•	What if surprise and no hardship? Highly unlikely that court would award damages only for surprise.

UCC §2-715 Buyer’s Incidental and Consequential Damages (unless limited in contract)
(1)	Incidental damages resulting from the seller’s breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonably expense incident to the delay or other breach.
(2)	Consequential damages resulting from the seller’s breach include
(a)	any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and
(b)	injury to person or property proximately resulting from any breach of warranty. 

UCC §2-719 Contractual Modification or Limitation of Remedy 
(1)	Subject to the provisions of subsections (2) and (3) of this section and of the preceding section on liquidation and limitation of damages,
(a)	the agreement may provide for remedies in addition to or in substitution for those provided in this Article and may limits or alter the measure of damages recoverable under this Article, as by limiting the buyer’s remedies to return of the goods and repayment of the price or to repair and replacement of non-conforming goods or parts; and
(b)	resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy. 
(2)	Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this Act.
(3)	Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable.  Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not.

3.	Consideration
Not every Promise is legally enforceable; purely gratuitous Promise or gift which requires no consideration is not enforceable.

a.	Benefit-Detriment test 
To be legally enforceable, a Promise must confer benefit upon the Promisor or detriment upon the Promisee.
•	Hamer v. Sidway (1891)
•	uncle Promises nephew $5000 if nephew stops smoking, drinking gambling until age 21; court found legally enforceable obligation because nephew’s forbearance of rights was sufficient detriment
•	difficult when family members are parties; so close to gift transaction
b.	Bargained-for Exchange 
Rest. 2d Contracts §71
(1)	To constitute consideration, a performance or a return Promise must be bargained for.
(2)	A performance or return Promise is bargained for if it is sought by the Promisor in exchange for his Promise and is given by the Promisee in exchange for that Promise.
(3)	The performance may consist of 
(a)	an act other than a promise, or
(b)	a forbearance, or
(c)	the creation, modification, or destruction of a legal relation.
(4)  The performance or return promise may be given to the promisor or to some other person.  It may be given by the promisee or by some other person.
•	Baehr v. Penn-o-Tex (1960)
•	Baehr claimed that its forbearance from bringing suit constituted consideration in return for P’s Promise to pay rent as assignee of leases
•	court found no consideration because parties did not negotiate for implied consideration
c.	Adequacy of Consideration
Rest. 2d Contracts §79
If the requirement of consideration is met, there is no additional requirement of 
(a)	a gain, advantage, or benefit to the Promisor or a loss, disadvantage, or detriment to the Promisee; or 
[However, courts usually still apply Benefit-Detriment test to find consideration.]
(b)	equivalence in the values exchanged; or
(c)	“mutuality of obligation.”
•	Batsakis v. Demotsis (1949)
•	Not for court to evaluate adequacy of consideration, does not have to be fair or equivalent, as long as some form of consideration is present and bargained for by parties. 
•	To do so would violate autonomy of parties and destroy predictability of whether contract would be enforceable.
•	However, gross inadequacy may be indication of fraud, misrepresentation or duress.

Rest. 2d Contracts §77 Illusory Promise
A promise or apparent promise is not consideration if by its terms the promisor or purported promisor reserves a choice of alternative performances unless
(a)	each of the alternative performances would have been consideration if it alone had been bargained for; or
(b)	one of the alternative performances would have been consideration and there is or appears to the parties to be a substantial possibility that before the promisor exercises his choice events may eliminate the alternatives which would not have been consideration.
•	Mid-South Packers, Inc. v. Shoney’s (1985)
Common law viewed Requirements K as illusory promise (Rest. 2d § 77), not mutual obligation (see Comment 2), too indefinite.

d.	Past services do not constitute consideration 
•	Plowman v. Indian Refining (1937)
Court found no consideration in employees’ long and faithful services in the past for present pension payments.

e.	Condition to a gift does not constitute consideration
•	Plowman v. Indian Refining (1937)
Court found no consideration in requiring employees to come to office to pick up pension checks. Like asking tramp to walk around corner to pick up a free coat – not price of gift.

f.	Motive or Moral obligation is not legally enforceable consideration
•	Plowman v. Indian Refining (1937)
Court found no consideration in company’s desire to provide for welfare of employees.
Unlike Monge, where moral obligation existed in framework of agreement but not in substance of agreement.
Issue: whose morality would govern?

However, parties’ secret motives for entering into contract do not nullify bargained-for consideration.
Rest. 2d Contracts §81
Consideration as Motive or Inducing Cause
(1)	The fact that what is bargained for does not of itself induce the making of Promise does not prevent it from being consideration of the Promise.
(2)	The fact that a Promise does not of itself induce a performance or return Promise does not prevent the performance or return Promise from being consideration for the Promise.

4.	Statute of Frauds 
Additional element of enforceability required for certain types of contracts.
Statute of Frauds claim is a defense against finding enforceable contract.
Purpose:
•	Procedural rather than substantive inquiry into enforceability – easier for courts to make
•	Evidentiary weight of signed writing – more likely that parties intended to enter into contract
•	Cautionary function of legal formalities
•	Protect less sophisticated parties; enforced only against party with greater knowledge and bargaining power

Analysis:
•	Does Statute of Frauds apply to this type of contract?
•	If so, is there a signed writing that satisfies Statute of Frauds?

1.	Type of Contracts Covered
UCC §2-201 Formal Requirements; Statute of Frauds
(1)	Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker.  [Comment 6: It need not be signed by both parties but is not sufficient against one who has not signed it. From time of contracting each party should be aware that other’s signing is important.]  A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing. [Comment 1: required writing need not include all material terms, only afford a basis for believing that oral evidence rests on real transaction; only term which must appear is quantity term which need not be accurately stated but recovery limited to amount stated; price, time and place of payment or delivery, general quality, or any warranties all may be omitted. Price term can be supplied from price list or “market” price and valuations; if price consists of goods quantity term must be stated.]
•	Cohn v. Fisher (1972) check constitutes sufficient memorandum

(2)	Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know  its contents, it satisfies the requirements of subsection (1) against such party unless written notice of objection to its contents is given within 10 days after it is received. [Comment 3: between merchants, failure to answer takes away SoF defense from party who fails to answer; burden of persuading jury that contract was in fact made orally prior to written confirmation still rests with party seeking to enforce contract]
(3)	A contract which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable
(a)	if the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller’s business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement; or
•	Chambers Steel Engraving Corp. v. Tambrands (1990)
•	court did not enforce contract for manufacture and sale of 20 to 30 embossing machines because manufacture of single prototype not “substantial beginning of performance” 
•	ideal outcome would be to compensate for prototype, but under UCC all-or-nothing

(b)	if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted; or
[Comment 7: If the making of a contract is admitted in court, by written pleading or oral statement, no additional writing is necessary. Contract is not conclusively established; admission is only evidential against party against whom contract is sought to be enforced.]
•	Cohn v. Fisher (1972)
admission of contract upholds enforceability

(c)	with respect to goods for which payment has been made and accepted or which have been received and accepted (§2-606) [Comment 2: partial performance as substitute for signed writing can validate contract only for those goods accepted or paid for; constitutes unambiguous overt admission by both parties that contract exists; part performance by buyer requires delivery of something acceptable to seller as performance.]
•	Winternitz v. Summit Hills
analogy to §2-201(c)(3) part performance exception to Statute of Frauds not available because plaintiff seeking money damages not equitable relief (e.g., injunction “you must [not] do this”), awarded only when monetary damages deemed inadequate
•	Cohn v. Fisher (1972)
payment and acceptance of check constitutes partial performance; normally limited to extent goods have been paid except when partial payment single, indivisible good

[Comment 4: Failure to satisfy requirements does not render contract void for all purposes (e.g., does not make party receiving goods a trespasser or defends third person who wrongfully induces party to refuse to perform oral contract), but merely prevents enforcement in favor of a party to contract.]

•	Winternitz v. Summit Hills
•	analogy to §2-201(c)(3) part performance exception to Statute of Frauds not available here because plaintiff seeking money damages not equitable relief (e.g., injunction “you must [not] do this”), awarded only when monetary damages deemed inadequate
•	lease renewal for two years with option of renew; draft lease never signed by rent payments (part performance) were begun; lessee’s contract with new buyers of his business contingent on enforcing lease
•	commercial lease – tenants are not fungible so landlord can refuse assignment of lease
•	Court uses tort claim of malicious interference with contract to provide relief, available when other contract derivative of breached contract; in modern business world virtually all contracts have effect on other contracts; court aggressive here in its view of malice

Rest. 2d § 110 Classes of Contracts Covered
(1)	The following classes of contracts are subject to a statute, commonly called the Statute of Frauds, forbidding enforcement unless there is a written memorandum or an applicable exception:
(a)	a contract of an executor or administrator to answer for a duty of his decedent (the executor-administrator provision):
(b)	a contract to answer for the duty of another (the suretyship provision);
(c)	a contract made upon consideration of marriage (the marriage provision);
(d)	a contract for the sale of an interest in land (the land contract provision);
(e)	a contract t hat is not to be performed within one year from the making thereof (the one-year provision).
(2)	The following classes of contracts, which were traditionally subject to the Statute of Frauds, are now governed by Statute of Frauds provisions of the Uniform Commercial Code:
(a)	a contract for the sale of goods for the price of $500 or more (UCC §2-201);
(b)	a contract for the sale of securities (UCC §8-319);
(c)	a contract for the sale of personal property not otherwise covered, to the extent of enforcement by way of action or defense beyond $5,000 in amount or value of remedy (UCC §1-206).
(3)	In addition the Uniform Commercial Code requires a writing signed by the debtor for an agreement which creates or provides for a security interest in personal property or fixtures not in the possession of the secured party. 
(4)	Statutes in most states provide that no acknowledgment or promise is sufficient evidence of a new or continuing contract to take a case out of the operation of a statute of limitations unless made in some writing signed by the party to be charged, but that the statute does not alter the effect of any payment of principal or interest.
(5)	In many states other classes of contracts are subject to a requirement of a writing.

2.	Requirements of Signed Writing - Restatement 2d – liberal view
•	§ 132 several writings may be combined as long as one is signed and all relate to same transaction
•	§ 133 signed writing may have been made for any purpose, not necessarily manifestation of assent to contract
•	§ 133 signed writing may be purely a memorialization made after the fact

Rest. 2d § 131 General Requisites of a Memorandum
Unless additional requirements are prescribed by the particular statute, a contract within the Statute of Frauds is enforceable if it is evidenced by any writing, signed by or on behalf of the party to be charged, which
(a)	reasonably identifies the subject matter of the contract,
(b)	is sufficient to indicate that a contract with respect thereto has been made between the parties or offered by the signer to the other party, and
(c)	states with reasonable certainty the essential terms of the unperformed promises in the contract.

Rest. 2d § 132 Several Writings
The memorandum may consist of several writings if one of the writings is signed and the writings in the circumstances clearly indicate that they relate to the same transaction.
•	Crabtree v. Elizabeth Arden (NY 1953)
breach of contract within one year not the same as performance within one year for purposes of Statute of Frauds
signature requirement - only party against whom Statute of Frauds asserted must have signed – nonmutual obligation
Court concerned that Statute of Frauds applied in narrow way, form over substance, would prevent meritorious claims, so adopts liberal Restatement view allowing several writings (§ 132) to be read together

Rest. 2d § 133 Memorandum Not Made as Such
Except in the case of a writing evidencing a contract upon consideration of marriage, the Statute may be satisfied by a signed writing not made as a memorandum of a contract.

Rest. 2d § 134 Signature
The signature to a memorandum may be any symbol made or adopted with an intention, actual or apparent, to authenticate the writing as that of the signer.
•	examples: company letterhead; signature of authorized agent for principal

Rest. 2d § 139 Enforcement by Virtue of Action in Reliance
(1)	A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce the action or forbearance is enforceable notwithstanding the Statute of Frauds if injustice can be avoided only by enforcement of the promise. The remedy granted for breach is to be limited as justice requires.
(2)	In determining whether injustice can be avoided only by enforcement of the promise, the following circumstances are significant:
(a)	the availability and adequacy of other remedies, particularly cancellation and restitution;
(b)	the definite and substantial character of the action or forbearance in relation to the remedy sought;
(c)	the extent to which the action or forbearance corroborates evidence of the making and terms of the promise, or the making and terms are otherwise established by clear and convincing evidence;
(d)	the reasonableness of the action or forbearance;
(e)	the extent to which the action or forbearance was foreseeable by the promisor.

•	McIntosh v. Murphy
promissory estoppel (§139) used to provide some remedy for failure to satisfy Statute of Frauds; broader than part performance, not limited to land
remedy under promissory estoppel limited as justice requires (not entire contract but only reliance interest), so court has great deal of discretion in determining extent of reliance
court ignores Statute of Frauds one-year completion provision and instead creates whole alternative theory where Statute of Frauds presents overly formalistic barrier to legitimate claims, thereby eliminates Statute of Frauds as bar to recovery except for purely executory contract – any time there is some performance can use promissory estoppel to enforce

C.	Terms of Agreement

1.	Missing Material Terms
a.	Common law doctrine
Agreements to Agree are unenforceable, unless parties agree to some method to calculate term.
•	Walker v. Keith (KY, 1964)
•	Option to extend 10-year lease with monthly rental to be determined upon renewal based on “comparable business conditions”; not dealt with under UCC §2-204(3) because real estate very different from goods
•	Court refuses to uphold agreement to agree because parties never agreed how rent would be determined so court cannot fix term by stepping in when parties themselves failed to set term; otherwise court would be making an agreement rather than finding one to enforce.
Why parties might Agree to Agree, or make Letter of Intent:
•	Lower transaction costs – option to renew allows most terms to be carried over to save cost of renegotiating entire contract though cannot agree on certain term at present
•	Preserve flexibility in the event of adverse market movement
•	Cultivate relationship – option to renew adds value to present contract
•	Obtain some level of commitment (Letter of Intent) before going forward with expensive and time-consuming negotiations, but may want to get out of deal later if can’t agree on rest of terms, or change mind after due diligence. 
(Current practice is not to use Letters of Intent or to make them extremely detailed because substantial risk that they will be enforceable, and would prefer upfront costs over risk of being bound later when do not want to be.)

Why a Court might enforce:
•	Protect interests of lessee due to structural disparity in bargaining relationship. Renewal option is for benefit of lessee who is less able to relocate and make new contract
•	Parties intended to come to later agreement, not enter into unenforceable deal. There must be some purpose to clause (bargaining chip).
•	Courts don’t like to intrude into bargain by writing clause out of contract.

Rest. 2d Contracts §33 Certainty
(1)	Even though manifestation of intention is intended to be understood as an Offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain.
(2)	The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.
(3)	The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an Offer or an Acceptance.

b.	UCC – Open terms not necessarily fatal

UCC §2-204 (3)  Formation in General
Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract [Comment: The more terms the parties leave open, the less likely it is that they have intended to conclude a binding agreement, but their actions may be frequently conclusive on the matter despite the omissions.] and there is a reasonably certain basis for giving an appropriate remedy [Comment: Test is not certainty as to what parties were to do nor as to the exact amount of damages. Rather, commercial standards on the point of indefiniteness are to be applied, with the Act making provisions for missing terms.].
•	Pennsylvania Co. v. Wilmington Trust Co. (DE, 1960)
•	Court applies UCC §2-204(3) by analogy because excludes investment securities
•	Court allows a substantial amount of indefiniteness (how TPW would continue to be operated as independent company) and upholds parties’ intention to be bound

UCC §2-306 Requirements Contract
(1)	A term which measures the quantity by the output of the seller or the requirements of the buyer means that such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded.
(2)	A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale.
Official Comments
1. 	commercial background and intent read into language of agreement; demands good faith performance
2. 	not too indefinite . . . actual good faith output or requirements
mutual obligation . . . party who will determine quantity is required to operate his plant or conduct his business in good faith and according to commercial standards of fair dealing in the trade . . . reasonably foreseeable figure.
3.	if estimate agreed upon, no quantity unreasonably disproportionate allowed
4. 	if enterprise sold and contract assumed, continue under normal operation
5. 	if exclusive, implied obligation to use reasonable diligence as well as good faith in performance, expansion of market or promotion of product

•	Mid-South Packers, Inc. v. Shoney’s (1985)
•	Court found no requirements contract under UCC §2-306 because no obligation from Shoney’s to purchase exclusively from Mid-South, therefore no consideration.
•	Common law viewed Requirements K as illusory promise (Rest. 2d § 77), not mutual obligation (see Comment 2), too indefinite.
Seller runs risk that Buyer will go out of business but preferable to losing business to other Seller.  Market fluctuations allocated over time for both parties.

UCC §2-305 Open Price Term
(1)	The parties if they so intend [Comment 2: question for trier of fact] can conclude a contract for sale even though the price is not settled. [Comment 1: rejects common-law formulas that “an agreement to agree is unenforceable” and “indefiniteness” based on dominant intention of the parties to have the deal continue to be binding upon both; usually “reasonably certain basis for granting an appropriate remedy for breach” so does not fail for indefiniteness under §2-204(3)] In such a case the price is a reasonable price at the time for delivery if
(a)	nothing is said as to price; or
(b)	the price is left to be agreed by the parties and they fail to agree; or 
(c)	the price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and it is not so set or recorded. [Comment 4: if no market standard, particular person’s judgment may be essential condition]
(2)	A price to be fixed by the seller or by the buyer means a price for him to fix in good faith. [Comment 3: in observance of reasonable commercial standards of fair dealing in the trade if the party is a merchant]
(3)	When a price left to be fixed otherwise than by agreement of the parties fails to be fixed through fault of one party the other may at his option treat the contract as cancelled or himself fix a reasonable price.
(4)	Where, however, the parties intend not to be bound unless the price be fixed or agreed and it is not fixed or agreed there is no contract. [Comment 6: purpose is to give effect to agreement which has been made, conditioned by requirement of good faith] In such a case the buyer must return any goods already received or if unable so to do must pay their reasonable value at time of delivery and the seller must return any portion of the price paid on account.

UCC §1-203 Obligation of Good Faith
Every contract of duty within this Act imposes an obligation of good faith in its performance or enforcement.
UCC §2-103(b) “Good faith” in the case of a merchant means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.

2.	Principles of Interpretation

Theories
1.	Subjective – Intent regardless of words or conduct
Each party entitled to exercise individual will as to what that party intended. If no meeting of the minds, then mutual mistake, therefore no contract. 
Policy - free will, autonomy.
Practical Effect – more difficult to enforce agreements
2.	Objective – Words or conduct regardless of intent
Reasonable person’s understanding of actual exchange of words, objective manifestation of assent. 
Policy - fairness (unfair to allow parties to escape meaning); efficiency (keep transaction costs down by holding parties to reasonable meaning)

3.	Modified Objectivist (Rest. 2d §§ 201-204)
Reasonable meaning will govern but evidence of intent will overcome objective meaning.

Rest. 2d § 201 Whose Meaning Prevails
(1)	Where the parties have attached the same meaning to a promise or agreement or a term thereof, it is interpreted in accordance with that meaning.
(2)	Where the parties have attached different meanings to a promise or agreement or a term thereof, it is interpreted in accordance with the meaning attached by one of them if at the time the agreement was made
(a)	that party did not know of any different meaning attached by the other, and the other knew the meaning attached by the first party; or
(b)	that party had no reason to know of any different meaning attached by the other, and the other had reason to know the meaning attached by the first party.
(3)	Except as stated in this Section, neither party is bound by the meaning attached by the other, even though the result may be a failure of mutual assent.

Rest. 2d § 202 Rules in Aid of Interpretation
(1)	Words and other conduct are interpreted in the light of all the circumstances, and if the principal purpose of the parties is ascertainable it is given great weight.
(2)	A writing is interpreted as a whole, and all writings that are part of the same transaction are interpreted together.
(3)	Unless a different intention is manifested,
(a)	where language has a generally prevailing meaning, it is interpreted in accordance with that meaning;
(b)	technical terms and words of art are given their technical meaning when used in a transaction within their technical field.
(4)	Where an agreement involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection is given great weight in the interpretation of the agreement.
(5)	Wherever reasonable, the manifestations of intention of the parties to a promise or agreement are interpreted as consistent with each other and with any relevant course of performance, course of dealing, or usage of trade.

Rest. 2d § 203 Standards of Preference in Interpretation
In the interpretation of a promise or agreement or a term thereof, the following standards of preference are generally applicable:
(a)	an interpretation which gives a reasonable, lawful, and effective meaning to all the terms is preferred to an interpretation which leaves a part unreasonable, unlawful, or of no effect;
(b)	express terms  course of performance  course of dealing  usage of trade
(c)	specific terms and exact terms are given greater weight than general language;
(d)	separately negotiated or added terms are given greater weight than standardized terms or other terms not separately negotiated.

Prof. Patterson’s Maxims of Interpretation:
1.	Noscitur a sociis. Series of words read together; word affected by immediate context.
2.	Ejusdem generis. Specific term defines limits on more general term. Rest. 2d § 203(c)
3.	Expressio unius exclusio alterius. Specific term excludes other more general terms not specifically included (why contracts often state “including but not limited to”) Rest. 2d § 203(c)
4.	Ut magis valeat quam pereat. Interpretation that validates contract is preferable to one that invalidates contract. Rest. 2d § 203(a)
5.	Omnia praesumuntur contra proferentem. Ambiguity construed against drafter.
•	Joyner v. Adams (1987)
6.	Interpret contract as a whole. Term read consistently throughout documents in combined contract. Rest. 2d 202(2)
7.	“Purpose of the parties.” Principal apparent purpose given great weight in determining meaning of manifestation of intent. Rest. 2d § 202(1)
8.	Specific provision is exception to a general one. Rest. 2d § 203(c)
9.	Handwritten or typed provisions control printed provisions. Rest. 2d § 203(d)
10.	Public interest preferred.

UCC §1-205 Course of Dealing and Usage of Trade
(1)	A course of dealing is a sequence of previous conduct between the parties [Comment 2: literally, before the agreement] to a particular transaction which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.
(2)	A usage of trade is any practice or method of dealing having such regularity of observance [Comment 7: universality not required] in a place, vocation or trade as to justify an expectation that it will be observed with respect to the transaction in question.  The existence and scope of such a usage are to be proved as facts.  If it is established that such a usage is embodied in a written trade code or similar writing the interpretation of the writing is for the court. [Comment 3: intended to fill in points which parties have not considered and in fact agreed upon; yield to contrary agreement of the parties; framework of common understanding which hold only when there is no such understanding.]
(3)	A course of dealing between parties and any usage of trade in the vocation or trade in which they are engaged or of which they are or should be aware give particular meaning to and supplement or qualify terms of an agreement. [Comment 1: Meaning of agreement to be determined by language used by them and by their action, interpreted in light of commercial practices. Background for interpretation set by commercial context, which may explain and supplement even the language of a formal or final writing.]
(4)	The express terms of an agreement and an applicable course of dealing or usage of trade shall be construed wherever reasonable as consistent with each other; but when such construction is unreasonable express terms control both course of dealing and usage of trade and course of dealing controls usage of trade.
(5)	An applicable usage of trade in the place where any part of performance is to occur shall be used in interpreting the agreement as to that part of the performance.
(6)	Evidence of a relevant usage of trade offered by one party is not admissible unless and until he has given the other party such notice as the court finds sufficient to prevent unfair surprise to the latter.

•	Frigaliment Importing Co. v. B.N.S. International Sales Corp. (1960)
•	Court found a contract because there was performance, acceptance. Parties in dispute as to meaning of “chicken.”
•	Court looks to trade usage, but evidence conflicting and has to be proven to a fact.

UCC §2-208 Course of Performance of Practical Construction
(1)	Where the contract for sale involves repeated occasions for performance [Comment 4: not single occasion of conduct] by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection shall be relevant to determine the meaning of the agreement.[Comment 1: Parties themselves know best what they meant by their words of agreement, and their action under that agreement is the best indication of what that meaning was.]
(2)	The express terms of the agreement and any such course of performance, as well as any course of dealing and usage of trade, shall be construed whenever reasonable as consistent with each other; but when such construction is unreasonable, express terms shall control course of performance and course of performance shall control both course of dealing and usage of trade (Section 1-205).

3.	Satisfaction of Conditions
Rest. 2d § 228 Satisfaction of the Obligor as a Condition 
When it is a condition of an obligor’s duty that he be satisfied with respect to the obligee’s performance or with respect to something else, and it is practicable to determine whether a reasonable person in the position of the obligor would be satisfied, an interpretation is preferred under which the condition occurs if such a reasonable person in the position of the obligor would be satisfied.
•	Morin Building Products v. Baystone Construction (1983)
Court affirms application of objective standard to satisfaction clause in contract re mill finish siding on factory building.

Rest. 2d § 229 Excuse of a Condition to Avoid Forfeiture
To the extent that the non-occurrence of a condition would cause disproportionate forfeiture, a court may excuse the non-occurrence of that condition  unless its occurrence was a material part of the agreed exchange.
•	Morin Building Products v. Baystone Construction (1983)
Court excuses artistic satisfaction of GM re mill finish siding on factory building because construction of building already finished.

Rest. 2d § 211(3) Standardized Agreements
Where the other party has reason to believe that the party manifesting such assent would not do so if he knew that the writing contained a particular term, the term is not part of the agreement.
Comment: Reason to believe may be inferred from the fact that term:
•	is bizarre or oppressive
•	eliminates dominant purpose of contract
•	eviscerates non-standard terms

•	C & J Fertilizer v. Allied Mutual Insurance (1975)
•	Court applies doctrine of reasonable expectations to insurance coverage of burglary with no external signs of break-in, because intention of parties to cover any burglary that is not an inside job.
•	Doctrine applies to adhesion contracts, but only is party truly has no alternative to entering into that contract. Also applies when terms of agreement frustrate reasonable expectations of party.

C.	Remedy in Contract claim is Benefit of the Bargain, amount necessary to put Plaintiff in position she would have been in had contract been performed.
1.	Specific performance under terms of contract
equitable relief (“you must [not] do this under terms of contract”); compulsion, so courts loathe to award; prefer money damages, less intrusive
2.	Expectation damages in amount that P expected to realize from due performance of contract at issue, reflecting opportunity costs
3.	Reliance damages in amount necessary to restore P to position prior to breach, to extent to which D has been enriched by, or P injured by, P’s actions in reliance on D’s commitment to perform. 

D.	Policies/Purpose of Contracts
1.	Certainty of commercial dealings (Reliance on action, prevent loss incurred by other party performing with assumption that K exists without reciprocal performance)
2.	Vigilance in buyer/seller, adversarial relationship (Law places burden on party who has misunderstanding)
3.	Seriousness of transactions (Legal consequences attach to behavior even if unaware)
4.	Need for documentary evidence/Objectivity (fault is not addressable by K system; no punishment for bad acts or motives for breach, only piece of paper; selective memory, not always deceit, may be at issue so not a moral problem)
5.	Assumption that parties have capacity (adults of ordinary intelligence) to enter into legally binding agreements
6.	Lower transactions costs (otherwise transactions would be too costly, require exchanges of collateral, barrier to entry of newcomers)
7.	If mutual mistake, prevent one party from receiving windfall if enforced when favorable to that party
8.	Discourage opportunistic behavior obligations/benefits change over time, cannot enforce only when favorable to one party

II.	
Pure Restitution

Unlike Contract, performance/consideration is present, but no Offer or Acceptance. Greatest deviation from Contract model – toughest claim to make.

A.	Classical Contract Doctrine
•	Glenn v. Savage (1887)
•	No recovery for saving lumber that fell into river. No Offer or Acceptance, so no contract.
•	To be liable, party must have requested services or Offered to pay.  Not at all clear that owner of wood would have wanted wood to be saved.
•	Court concerned about commercializing gratuitous relationships, turning emotions into quid pro quo – “sordid avarice”

B.	Modern Theory - 3 Types
4.	Rest. Restitution § 116  Emergencies involving life and health
A person who has supplied things or services to another, although acting without the other’s knowledge or consent, is entitled to restitution therefor from the other if:
(a)	he acted unofficiously and with intent to charge therefor, and
(b)	the things or services were necessary to prevent the other from suffering serious bodily harm or pain, and 
(c)	the person supplying them had no reason to know that the other would not consent to receiving them, if mentally competent, and
(d)	it was impossible for the other to give consent or, because of extreme youth or mental impairment, the other’s consent would have been immaterial.

•	In re Estate of Crisan (1961)
•	adopts Rest. Restitution § 116
•	recipient of benefits unable to provide manifestation of assent
•	law implies obligation; assumes that, if parties had opportunity to bargain, D would have requested services from that particular P on those particular terms 

5.	Rest. Restitution § 117  Emergencies involving property
A person who, although acting without the other’s knowledge or consent, has preserved things belonging to another from damage or destruction, is entitled to restitution for services rendered or expenditures incurred therein, if:
(a)	he was in lawful possession or custody of the things or he lawfully took possession thereof, and the services or expenses were not made necessary by his breach of duty to the other, and 
(b)	it was reasonably necessary that the services should be rendered or the expenditures incurred before it was possible to communicate with the owner by reasonable means, and
(c)	he had no reason to believe that the owner did not desire him so to act, and
(d)	he intended to charge for such services or to retain the things as his own if the identity of the owner were not discovered or if the owner should disclaim, and
(e)	the things have been accepted by the owner. 

•	opportunity cost theory – “intended to charge for such services”
considers what party would normally be doing if not providing services
•	requires that party be sort of person with whom you would have bargained, if you would have bargained

6.	Unjust Enrichment
•	Watts v. Watts (WI, 1987)
3 elements
(1)	Benefit conferred
(2)	Appreciation or knowledge of benefit
(3)	Acceptance and retention of benefit under circumstances making it inequitable to retain the benefit.

C.	Remedy is grounded in equity - damages in amount to which other party has been benefited; unjust for one party to retain all benefits without compensating other party.

III.	
Promissory Restitution
Promise made after the fact to provide compensation for services rendered.

A.	Classical Contract Doctrine
•	Mills v. Wyman (1825 )
•	No recovery because D father has no duty to compensate P for taking care of D’s son.  
•	Past services do not constitute consideration for present Promise. 
•	Moral obligation not legally enforceable, unless based on prior legal obligation rendered unenforceable only as a matter of law (i.e., for technical reasons, not voluntarily) such as debt by minor, statute of limitation, debt of bankrupt.

	Promise to Pay Indebtedness; Effect on Statute of Limitations
	Rest. 2d Contracts § 82 
(1)	A Promise to pay all or part of an antecedent contractual or quasi-contractual indebtedness owed by the Promisor is binding if the indebtedness is still enforceable or would be except for the effect of a statute of limitations.

	Promise to Pay Indebtedness Discharged in Bankruptcy
	Rest. 2d Contracts § 83 
(1)  An express Promise to pay all or part of an indebtedness of the Promisor, discharged or dischargeable in bankruptcy proceedings begun before the Promise is made, is binding.

B.	Modern Theory
3.	Strained Contract – Material Benefit Rule (before § 86)
•	Webb v. McGowin (1936)
•	Court finds D’s subsequent express Promise to support P for rest of life legally enforceable when P had been severely injured after jumping off second floor of mill holding onto cinder block to save D employer
•	Based on benefit/detriment analysis of consideration - materiality of benefit conferred. Court found benefit sufficiently material to support later Promise related back to imply previous request at time at which services provided; life and limb have measurable pecuniary value. 
•	Promise becomes recognition (manifestation of assent) by Promisor of obligation and creates assumption that services would have been requested; Promise as evidence to fit model of § 117 emergency services.
•	Benefit received by Promisor, not third party.
•	Time elapsed between services and Promise – evidence that Promise not spontaneous outburst of emotion.
•	Some payments (8 years) were made – voluntary assumption of obligation more likely to be continued by court. 
•	Cf. Harrington v. Taylor

4.	Rest. 2d Contracts § 86 Promise for Benefit Received 
 (1)  A Promise made in recognition of a benefit previously received by the Promisor from the Promisee is binding to the extent necessary to prevent injustice.
(2)	A Promise is not binding under (1)
(a)	if the Promisee conferred the benefit as a gift or for other reasons the Promisor has not been unjustly enriched; or
(b)	to the extent that its value is disproportionate to the benefit.

C.	Remedy is grounded in equity - damages in amount to which other party has been benefited; unjust for one party to retain all benefits without compensating other party.

IV.	
Promissory Estoppel
P changes position in reliance on D’s Promise so D estopped from denying Promise.  Also used to make Offers irrevocable.

A.	Classical Contract Doctrine
•	Kirksey v. Kirksey (AL, 1845)
•	Court denied P’s request for transfer of real property from male to female; found condition to a gift rather than bargained-for exchange
•	intra-family dispute difficult to address out of commercial context

B.	Modern Theory
a.	Strained Contract as basis for Promissory Estoppel
•	Allegheny College (1927)
•	Thaumatrope - Cardozo blends contract doctrine and promissory estoppel theory to enforce charitable contribution to college 
•	no contract because no mutual obligation - college could have returned partial payment ($1000 received of $5000 pledged) without liability
•	no promissory estoppel claim because no present detrimental reliance
•	uses future detrimental reliance (obligation of college to use money for designated purpose of creating scholarship) to create present legally cognizable detriment upon receipt of payment – weak consideration because no obligation to incur this future detrimental reliance
•	policy underlying decision: to encourage charitable contributions - if not enforced, would discourage planning charity activities because too risky

b.	Promise Reasonably Inducing Action or Forbearance
Rest. 2d Contracts § 90
(1)	A Promise which the Promisor should reasonably expect to induce action or forbearance on the part of the Promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the Promise.  The remedy granted for breach may be limited as justice requires.
(2)	A charitable subscription or a marriage settlement is binding under (1) without proof that the Promise induced action or forbearance.

•	Katz v. Danny Dare (1980)
•	Promissory Estoppel different from Contract claim because detrimental reliance test different from detriment test for consideration.
•	Katz’s retirement in reliance on promise of pension was not a matter of giving up something to which he was legally entitled (due to employment-at-will doctrine), but rather acting on a Promise to his detriment.
•	Universal Computer v. Medical Services (1980)
•	Reasonableness of reliance turns on agency question – actual v. apparent authority of Gebert!

C.	Remedy is reliance damages – status quo ante - reimbursement for out of pocket expenditures made in reliance upon Promise.  Puts P in position before D made Promise, not in position had D fully performed. Contract remedy therefore higher than remedy available for Promissory Estoppel

D.	Policies/Purpose of Promissory Estoppel
1.	Enforce charitable contributions
2.	Not as likely to be used in commercial context – would expect to see more calculated risks, use of contract rules.  Also, with commodities, less likely to find reliance because many sources and options so loss less likely to occur.
3.	Limit Revocability of Offer – constitutes consideration for option contract Rest. 2d §87(2) 
4.	enforces sub-contractor bids when relied upon by general contractor in main bid
•	Baird v. Gimbel (1933)
•	No bilateral contract because no Acceptance – terms of Offer required Acceptance only after main contract awarded
•	No unilateral contract because use of SC bid in GC contract not performance requested, nor was it consideration for option; use in GC bid did not obligate GC to use SC (warehouse full of linoleum even if didn’t win contract)
•	Court doesn’t use Promissory Estoppel because believes useful only in donative Promises – unilateral obligation. In commercial setting, parties should be making mutual obligations. 
•	Fairness to Sub-contractors
•	Drennan (1958)
•	Court uses Promissory Estoppel because reasonable reliance that results in foreseeable change in position; Promise made with knowledge and intent that other party would act on Promise
•	Analogy to § 45 Option - Subsidiary Promise implied to hold Offer open if bid is used – use of bid like partial performance, while requested performance is use of services after Main Contract awarded
•	No contract because use of bid neither consideration for option nor Acceptance
•	Limitations on use of Promissory Estoppel:
(1)	timely Acceptance by GC of SC’s bid
(2)	not enforceable if GC aware of mistake in SC’s bid so not reasonable reliance
(3)	SC expressly states that bid is revocable
(4)	mere estimates rather than firm bids
•	Issue: Fair to place risk of loss on Sub-Contractor?
Court protects General Contractor and ultimate Customer – preserves ability of General contractor to get best price for Customer. If Sub-Contractor not bound, loss ultimately borne by Customer if General Contractor has to revise bid.