Barbri Outline

1. What is a Contract?
1. §1 – “A contract is a promise or set of promises for that breach of which the law
gives remedy, or the performance of which the law in some way recognizes as a
duty.”
2. Mutual assent + Consideration = Contract formation
3. Types of Contracts
i. As to Formation §17 “the formation of a contract requires a bargain in
which there is a manifestation of mutual assent to the exchange and a
consideration”
1. Express – formed by language, written, or oral.
2. Implied – Formed my manifestation other than oral or written (by
conduct). Think of ordering at a restaurant and pointing to the
menu to order.
ii. As to Acceptance
1. Bilateral Contracts – An exchange for a mutual promise.
2. Unilateral Contracts – Acceptance by performance.
a. Offeror clearly states that completion of performance os the
only manner of acceptance
b. An offer to the public – reward offer etc.
iii. Creation of Contract
1. Was there Mutual Assent?
2. Was there Consideration?
3. Are any Defenses to the creation of the contract?
2. Mutual Assent
1. The Objective Theory of Contract (Ray)
i. Requires a manifestation of mutual assent. A manifestation of mutual
assent is derived from the words or actions of the parties involved.
ii. §22 – Mutual assent = offer by one party and acceptance by the other.
2. Mutual Assent Uncertain UCC 2-204(2)
i. if it is unclear which communication is the offer and which is the
acceptance BUT the parties act as if there is a contract – the contract is
binding.
3. Offer: (Lonergan)
Creates a power of acceptance in the offeree and a corresponding liability on the part of
the offeror.
1. §24 “An offer is the manifestation of willingness to enter into a bargain, so made
as to justify another person in understanding that his assent to that bargain is
invited and will conclude it.”
2. Questions to ask:
i. Was there an expression of a promise, undertaking, or commitment to
enter into a contract? (intent to enter into the contract)
ii. Were there certainty and definiteness in the essential terms?
iii. Was there communication of the above to the offeree?
3. Ads are not offers (Lonergan),
i. Ads are not offers UNLESS (Izadi)
1. The language of the ad can be construed as containing a promise,
the terms are certain and definite, and the offeree(s) is clearly
identified.
2. Ads that are misleading (bait and switch), or
3. Ads that invite immediate acceptance

4. Bilateral Offer – An offer inviting acceptance by promising to perform (requires

mutual assent)
i. K formed when parties exchange promises of future performance.

5. Unilateral Offer (Cook) §32 – An offer that invites acceptance by rendering the
performance
i. K
6. Termination of Offer
i. Death: of either party *prior to the creation of the contract*
ii. Time: Reasonable time has lapsed
iii. Revocation: unambiguous indication, conduct, or language that clearly
retracts the offer, before the offeree accepts, taking the power of
acceptance away from the offeree.
1. Revocation – the offeree has to KNOW that the offer has been
revoked.
a. Direct – the offeror directly tells the offeree that they are
terminating the offer.
b. Indirect – reliable third party “agent” indicating that the
offeror is no longer willing to contract with the offeree.
i. The revocation is generally effective when received
by the offeree § 68* did not learn this section*
 2. Exceptions to revocation (limiting the power to revoke)
a. Option Contracts – (offer + separate consideration paid to
hold that offer open for a certain amount of time) an offeree
gives consideration for the promise that the offeror will not
revoke the offer.
b. Merchant’s Firm Offer under UCC §2-205
i. 3-month time limit
ii. Offer to buy or sell goods
iii. A signed written promise to hold that offer open
iv. The party making the signed written promise to
keep the offer open MUST be a merchant.
c. Detrimental Reliance §87
i. Think of contracting and subcontracting
ii. The General contractor accepts the offer of the
subcontractor for a bid.
1. The general contractor relied on the
subcontractor when making bid to biz
2. Subcontractor cannot revoke.
iii. Performance began under Unilateral Contract
offers (Brooklyn Bridge hypo) §45,87,90
1. Once the performance has begun, it
suspends the offerors ability to revoke.
2. The offeror has to give reasonable time to
complete the performance.
3. Offeree is not bound.
7. Termination by Offeree (Bilateral Contracts) (Normile)
i. Rejection
1. Express §36 a statement by the offeree that they do not intent to
accept the offer.
ii. Counteroffer as Rejection §39
a. Kills the OG offer
b. Conditional acceptance (I accept IF, BUT, SO LONG AS
etc. you do this)
c. Additional terms (Common law) – new offer (mirror image
violation)
i. Rejection / counteroffer
ii. Treated diff under UCC 2-207 for sale of goods
2. Distinguish – mere inquiry
 3. Effective when received
4. Rejection of Option §37*
iii. Lapse of Time
1. Must accept within specified or reasonable time
2. Look to when offer is received by Offeree

8. Termination by Operation of the Law

i. Destruction of Subject matter §36

4. The Acceptance §50 – A manifestation of assent to the terms thereof made by the
offeree in a manner invited or required by the offer

1. Offeror is the master of the offer.

2. Common Law
i. Mirror image rule under the Common Law – acceptance must mirror the
terms of the offer exactly.
3. Contracts governed by the UCC (Sale of Goods)
4. Acceptance of Offer for Unilateral Contracts
i. Most JDX – offer to form a unilateral contact is not accepted until
performance is complete. Complete performance = Acceptance of offer &
Contract.
5. Acceptance of Offer for Bilateral Contacts
i. Generally, must be communicated.
1. Exceptions – waiver in offer
a. If an offer provides that acceptance does not need to be
communicated than none is required.
ii. May be accepted by either a promise to preform or by the beginning of
performance.
iii. The offeror is the master of the offer and may require and act to signify
acceptance.
6. Bilateral Contracts formed by Performance
i. Common law
1. When no contract has been formed but both parties start to
preform, the last communication sent party who performed is
considered a counteroffer and the performance is acceptance of
said counteroffer.
ii. UCC Sale of Goods 2-207(3)
 1. There is a contract if both parties perform.
7. Acceptance of Offer for Unilateral Contacts
i. Accepted only by full/ complete performance
ii. Offeree is not required to notify the offeror that they have begun
performance.
8. Acceptance of Offer for UCC (sale of goods)
i. Offeree is to notify the offeror at the beginning of performance
1. UCC 2-206(2)
ii. Offer to by goods for current or prompt shipment is considered as inviting
acceptance by either a promise to ship or by current or prompt shipment.
iii. Qualified Acceptance “Battle of the Forms”
1. Hybrid Contract
a. A contract that deals with the sale of goods and services
i. To determine if the contract is primarily for the sale
of goods, in which case the UCC would apply, use
Princess Cruises test
1. Language of the contract?
2. Nature of the business of the supplier
3. Intrinsic worth of the materials
4. Nature of the dispute
2. “Boilerplate”
a. The non negotiated part of the K, non-negotiated terms.
Included in standardized forms used by parties.
b. It is potentially part of the K but since it is not negotiated,
parties often overlook it (don’t read it).
3. Battle of the forms
a. Often two commercial parties, both w/ lawyer that come up
w/ standard forms for them to enter into contracts
i. Each party has its own forms, often opposed to one
another (buyer v. seller)
ii. But no one is reading them... at least not the
boilerplate
b. If buyer send his form and seller send his form back...
i. In common law there is a counteroffer. = “Last shot
result”
1. Acceptance and the K is established once
the parties start performing after the
counteroffer
 4. Additional Terms by offeree
5. Different Terms by offeree
6. Acceptance is expressly made conditional (both)
7. Contracts involving a nonmerchant (Common Law)
8. Contracts between merchants (UCC 2-207)
a. Additional terms are usually included unless:
i. They materially alter OG offer
ii. The offer expressly limits acceptance
iii. Offeror has already objected within a reasonable
time.
b. Different Terms UCC 2-207 is silent on this
i. Treated as Additional terms – follow same test as
additional
ii. Knockout rule
1. Conflicting terms are taken out and the
remaining contract stands.
2. Any gaps are then filled by UCC
iii. Last shot?
9. Counteroffer § 39 (Normile) – “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.”

10. Mailbox Rule § 63

i. Acceptance – the moment the mail is dispatched, unless:
1. The offer stipulates that acceptance by mail is not effective until it
has been received
2. An option contract is involved (effective upon receipt §63)
ii. Revocation – Most states
1. Effective upon receipt
2. If the offeree dispatches the acceptance before the revocation have
been received – the contract has been formed

5. Consideration – grounds to make the contract enforceable - only the presence of the
valuable consideration on both sides of the bargain will make an executory bilateral
contract fully enforceable from the moment of formation.
1. Elements, as defined, requiring:
i. There must be a bargained-for exchange between the parties, and;
 ii. It must constitute a benefit to the promisor OR a detriment to the promisee
2. Act of Forbearance by Promisee
i. If the promisor’s motive was to induce the detriment, it will be treated as
consideration:
ii. If the motive was no more than to state a condition of a promise to make a
gift, NO CONSIDERATION.
3. “Past” or “Moral” Consideration
i. General Rule – No Consideration
1. Exceptions
a. Debt Barred by a Technical Defense (Bankruptcy Hypo) if
they had a past obligation then the only way to enforce
would be if the Promisee makes a new promise in writing
or has been partially preformed.
b. Moral Benefit Rule (Webb – the case you briefed)
i. If it is based on a material benefit that was
previously conferred by the promisee on the
promissor, AND
ii. If the promisee did not intend to confer the benefit
as a gift
4. Legal Value – Courts do not inquire into the adequacy of consideration unless;
i. Token Consideration
1. Something entirely devoid of value
ii. Sham Consideration
1. Consideration for $1
iii. Possibility of Value
1.
5. Legal Detriment to Promise
i. Legal detriment to the promisee
1. Uncle promises nephew $5 to refrain from drinking etc. – is a
detriment because the nephew didn’t have to stop drinking etc
ii. Legal Benefit to the promisor
1. Was the forbearance or performance of an act by the promisee
which the promisor was not legally entitled1 to expect or demand,
but which confers a benefit on the promisor.
6. Preexisting Legal Duty – Not Consideration
7. Promissory Estoppel
8. Detrimental Reliance
6. Defenses
i. Mutual Mistake as to existing facts (Absent of mutual assent)
1. Mistake concerns basic assumption on which the contract is made
2. Mistake has a material effect on the agrees-upon exchange
3. The party seeking avoidance did not assume the risk of the
mistake.
ii. Unilateral Mistake – Does not prevent formation of contract unless
1. The non-mistaken party knew or had reason to know of the
mistake.
iii. Misunderstanding – Ambiguous Contract Language
1. Neither/Both party aware of ambiguity – no contract
2. One party aware of ambiguity – contract
a. Contract is enforced by the meaning of the party who was
NOT aware of ambiguity.
iv. Statute of Frauds – Contracts which must be in writing and signed by the
party sought to be bound. MY LEGS – what is within the scope
1. M – Marriage (think prenuptial agreements)
a. Contracts in consideration of Marriage.
2. Y – Performance not within a Year
a. Must have Effective date
b. Contracts not within SOF
i. Lifetime contracts
ii. Right to terminate w/in on year
iii. Possibility w/in one year
3. L – interest in Land (sale of land / lease)
4. E – Executor or Admin Promises Personally to pay estate debts
5. G – Sale of Goods over $500 or more
a. UCC does not fill in price – no gap fillers for this
b. When writing is NOT required
i. Specially Manufactured Goods
1. Seller has to have made a substantial
beginning in manufacturing the goods
ii. Admission in Pleadings in Court
iii. Payment or Delivery of Goods
iv. Between merchants, if one party, within a
reasonable time after an oral agreement has been
made, sends to the other party a written
 confirmation of the understanding that is sufficient
under the Statute of Frauds to bind the sender, it
will also bind the recipient if:
1. he has reason to know of the confirmation’s
contents; and
2. he does not object to it in writing within 10
days of receipt. UCC §2-201(2)
6. S – Suretyship Promises
7. Writing requirement §131 – the writing must
a. Reasonably identify the subject matter of the contract
b. Indicate that a contract has been made between the parties
c. State with reasonable certainty the essential terms of the
unperformed promises
8. Electronic Records satisfies writing requirement
9. Must contain essential terms of agreement
a. i.e. for a sale of land – must include a description of the
land and the price.
10. Situations when which the contract is removed from SOF
a. Land Sale Contracts
i. If a seller conveys to the buyer (i.e., fully performs),
he can enforce the buyer’s oral promise to pay.
Likewise, the buyer may seek to specifically
enforce an oral land sale contract under the doctrine
of part performance. Part performance that
unequivocally indicates that the parties have
contracted for the sale of land takes the contract out
of the Statute of Frauds. What constitutes sufficient
part performance varies among jurisdictions. Most
require at least two of the following:
1. payment (in whole or in part),
2. possession, and/or
3. valuable improvements.
7. Determining the terms of The Contract
1. General Rules of Contract Construction
i. Construed as a Whole
ii. Ordinary Meaning of Words
iii. Inconsistency between Provisions
iv. Preference to Construe Contracts as Valid and Enforceable
 v. Ambiguities Construed Against Party Preparing Contract
vi. Course of Performance
vii. Course of Dealings
viii. Usage of Trade
ix. Priorities of Conflicting Rules
2. Parol Evidence Rule
i. Purpose
3. UCC Provisions on Interpreting Contracts