Contracts Attack

Bargain Formation – Consideration

A bargain is an agreement to exchange promises, a promise for a performance, or performances. It requires real value and a legal obligation for both parties.

Gratuitous Formation – Consideration

A gratuitous promise is a promise made without expecting anything in return. It lacks consideration and is generally unenforceable because contract law enforces bargains, not gifts.

Consideration Formation – Consideration

Consideration is a bargained-for exchange where each party gives or promises something of legal value (§71). It must be real, not nominal, illusory, or past, and can include performance, a return promise, or forbearance of a legal right.

Conditional Promise Formation – Consideration

A conditional promise involves performance that functions as both consideration and a condition. A condition may govern timing, manner, or scope, but is not automatically consideration unless it reflects a true bargain.

Illusory Promise Formation – Consideration

A promise is illusory if performance is entirely within the promisor’s discretion or impossible. To avoid being illusory, there must be real value and mutual obligation. In exclusivity contracts, courts imply a duty of reasonable or best efforts.

Mutual Assent Formation – Mutual Assent

Mutual assent is voluntary agreement by both parties to enter a contract, usually through offer and acceptance (§22). Assent is judged objectively, not by subjective intent.

Offer Formation – Mutual Assent

manifestation of willingness to enter a bargain such that the offeree reasonably believes acceptance will conclude the deal (§24). Terms must be reasonably certain (§33).

Acceptance Formation – Mutual Assent

Acceptance is a manifestation of assent to the offer in the manner invited by the offeror (§50). Under common law, acceptance must mirror the offer exactly (Mirror Image Rule). Silence is generally not acceptance, and the offeree must know of the offer.

Termination of Power of Acceptance Formation – Mutual Assent

An offeree’s power of acceptance ends by rejection, counteroffer, lapse of time, revocation, or death/incapacity (§36). Under the Mailbox Rule, acceptance is effective when sent, while revocations and rejections are effective when received.

Statute of Frauds (SOF) - Affirmative Defenses

The SOF requires certain contracts to be evidenced by a signed writing. It applies to Marriage, Year, Land, Executor, Guarantor, and Sale of Goods over $500 (MYLEGS). The writing must be signed by party to be charged, subject matter, essential terms, and indicate a contract exists.

Infancy - Affirmative Defenses

Contracts entered into by a minor are voidable at the minor’s election before or within a reasonable time after reaching majority (§14). Necessaries are an exception.

Incapacity - Affirmative Defenses

A contract is voidable if a party lacked mental capacity (§15). Capacity is tested by either the Cognitive Test (inability to understand the transaction) or the Affective Test (inability to act reasonably, and the other party knew or should have known).

Duress - Affirmative Defenses

Duress makes a contract voidable if assent was induced by an improper threat that left no reasonable alternative (§175). Improper threats include crimes, torts, bad-faith lawsuits, or bad-faith breaches of duty.

Misrepresentation - Affirmative Defenses

Misrepresentation is an assertion not in accord with facts (§164). A contract is voidable if there is a fraudulent or material misrepresentation, actual misrepresentation, and justified reliance. Nondisclosure may qualify if the fact was material and uniquely known to the seller.

Unconscionability - Affirmative Defenses

Unconscionability allows courts to refuse enforcement of contracts that shock the conscience. It requires procedural unconscionability (unfair bargaining process) and substantive unconscionability (oppressive terms) on a sliding scale.

Public Policy - Affirmative Defenses

A contract may be unenforceable if it violates public policy. Courts look to statutes, common law, and public welfare considerations. Restraint not greater than necessary, Not unduly harsh and oppressive, Reasonable public policy

Standard Form Contracts (Adhesion) - Interpretation

Standard form contracts are take-it-or-leave-it agreements drafted by one party. Courts scrutinize them closely and construe ambiguities against the drafter. Lack of general notice may defeat enforcement; lack of specific notice usually does not due to the duty to read.

Battle of the Forms (UCC §2-207) - Interpretation

UCC §2-207 allows contract formation despite additional or different terms in acceptance. Between merchants, additional terms become part of the contract unless they materially alter it, are objected to, or are prohibited by the offer.

Parol Evidence Rule (PER) - Interpretation

The PER bars evidence of any prior or simultaneous agreements in fully integrated writing. If partially integrated, only contradictory terms are excluded. PER does not apply to defenses, interpretation, or later agreements.

Interpretation – Hierarchy of Evidence - Interpretation

Courts interpret contracts using this hierarchy: Express Terms → Course of Performance → Course of Dealing → Usage of Trade. Textualists rely on plain meaning; contextualists consider extrinsic evidence more freely.

Good Faith & Fair Dealing - Interpretation

Every contract includes an implied duty of good faith and fair dealing. It is breached when a party deprives the other of expected benefits or exercises discretion arbitrarily or exploitative..

Conditions (Definition & Types) - Conditions & Excuses

A condition is an uncertain event that must occur before performance is due. Types include precedent vs. subsequent, express vs. constructive, ordinary vs. promissory, and simultaneous vs. sequential.

Substantial Performance / Material Breach - Conditions & Excuses

Substantial performance means the breach is immaterial and performance is still required, subject to damages. A material breach excuses the other party’s performance. Under the UCC, buyers have a right to perfect tender.

Excuse of Conditions - Conditions & Excuses

Courts may excuse conditions through prevention, waiver, divisibility, or restitution to prevent unjust enrichment.

Mutual Mistake - Excuse of Non-Performance

A contract is voidable if both parties were mistaken about a basic assumption, the mistake was material, and the adversely affected party did not bear the risk (§152).

Unilateral Mistake - Excuse of Non-Performance

A unilateral mistake makes a contract voidable if the mistake is material, the party did not bear the risk, and enforcement would be unconscionable or the other party knew or caused the mistake (§153).

Impracticability - Excuse of Non-Performance

Performance is excused if an unforeseen event makes performance impracticable, the event’s non-occurrence was a basic assumption, and the party seeking relief is not at fault.

Frustration of Purpose - Excuse of Non-Performance

A contract is discharged when an unforeseen event substantially frustrates the primary purpose of the contract, the non-occurrence was a basic assumption, and the party seeking relief is not at fault.

Punitive Damages - Remedies

Punitive damages are generally unavailable in contract law unless the breach also constitutes an independent tort such as fraud or malice.

Specific Performance - Remedies

Specific performance is an equitable remedy ordered when damages are inadequate (§359). Courts consider difficulty of valuation, uniqueness of the subject matter, and collectability of damages (§360).

Expectation Damages - Remedies

Expectation damages aim to put the non-breaching party in the position they would have been in had the contract been performed. Formula: loss in value + incidental/consequential losses − costs avoided.

Mitigation - Remedies

The non-breaching party must make reasonable efforts to reduce damages without undue risk, burden, or humiliation (§350). Lost volume sellers are not required to mitigate if they could have completed both transactions.

Foreseeability - Remedies

Damages are limited to losses foreseeable at the time of contracting, either in the ordinary course or due to special circumstances known to the breaching party (§351).

Reasonable Certainty - Remedies

Damages must be proven with reasonable certainty and cannot be speculative (§352).

Stipulated Damages - Remedies

enforceable if they reasonably approximate anticipated or actual loss and damages were difficult to estimate (§356). Penalties are unenforceable.

Promissory Estoppel

A promise is enforceable without consideration if it reasonably induces reliance, does induce reliance, and enforcement is necessary to avoid injustice (§90).

Pre-Contractual Negotiations Liability

An offer becomes irrevocable once performance begins in a unilateral contract (§45). Reliance may also create an option contract under §87.

Quasi-Contract / Unjust Enrichment

Restitution allows recovery when one party confers a benefit on another without a contract and no payment would be unjust.