Contracts Rules

Contract Defined

• A promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty 

Hybrid Transaction and its tests

Definition: A transaction that has goods and a non-goods element

• Test 1: The Predominant Purpose Test (majority)

  • looks at the major part sold (use dollar amounts) to determine the element to use and the law it applies

    • ex: Pay $67 for a haircut (service). Then pay $2 for hair gel (goods).  Haircut costs more. Apply Common law. 

• Test 2: The Gravamen of the Complaint Test (minority)

  • What part of the transaction gave rise to the legal problem

    • Ex: The hairdresser uses the hair gel during my haircut, and it burnt my hair off. The hair gel is the source of action. Apply UCC § 2-105(1)

Goods § 2-105(1)

• Tangible goods: movable at the time of identification (you can physically pick it up and move it); includes specially manufactured goods 

• Unborn animals and growing crops (eventually they will be tangible)

• Attached to reality (things that can be severed from reality, like moving a mobile home) 

• Intangible items (not goods): real property such as land, money, investments, and securities, cause of action 

Merchants § 2-104(1)

• Person who deals with goods of the kind: regular business, specific types of goods

• Holds himself out: advertises, presents himself 

• Particular knowledge or skill: must regularly deal with goods to get this 

• Employs agent or broker with knowledge or skill 

Mutual Assent

• manifestation of mutual assent to an exchange of an offer or proposal by one party followed by an acceptance by the other party or parties

Manifestation of Mutual Assent

• requires that each party either make a promise or begin to render a performance

Intention to be Legally Bound

• objective intention that a promise be legally binding is essential to the formation of a contract, but a manifestation of intention that a promise shouldn’t affect legal relations bc if it does, it might prevent contract formation 

Necessity that Manifestations Have Reference to Each Other

• in a bargain, each party manifests assent with reference to the manifestation of the other 

Lucy v. Zehmer

1. Intoxication is a contract defense. 

2. No Instant Retraction because contracts are a “steel jaw”

3. Both parties' outward expressions matter for a manifestation of mutual assent

Master of the Offer

• The manifested intention of the offeror determines the person or persons in whom is created a power of acceptance.

•  An offer may create a power of acceptance in a specified person or in one or more of a specified group or class of persons, acting separately or together, or in anyone or everyone who makes a specified promise or renders a specified performance.

Offeree

• The person to whom the offer is made (who has the power of acceptance and who may decide to accept or not)

The Offer definition

• is the manifestation of willingness to enter a bargain, so made to justify another person in understanding that his assent to the bargain is invited and to conclude it 

Certainty Of The Offer

•  Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted to form a contract unless the terms of the contract are reasonably certain 

• The terms of a contract are reasonably certain if they provide a basis for determining whether a breach occurred and for giving an appropriate remedy. 

• 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 as an acceptance.

Joseph Martin Jr., Delicatessen Inc. v. Schumacher

• For a party to enforce a promise, it must be sufficiently specific so that what was promised can be ascertained. Definiteness as to material terms is of the very essence in contract law. An agreement to agree, in which a material term is left for future negotiations, is unenforceable.

Advertisements Are Generally Not Offers

• Advertisements of goods by display, sign, handbill, newspaper,r etc. are not ordinarily intended or understood as offers to sell (see Mesros and Leonard) 

• It is possible to make an offer by an advertisement directed to the general public, but there must be some language of commitment or some invitation to take action without further communication (see Leafowitz) 

Invitations to Make a Deal/Solitiction for Offers: Mesaros v. United States

• Issue: Was the advertisement an offer

• Holding: No. The materials that were mailed to the plaintiffs were advertisements that constituted “invitations to deal.”  They were solicitations, but they created no power of acceptance. Instead, the order form is the offer (from the plaintiffs), and the mint is then free to accept or reject it.

Advertisements are Offers when the language is: Lefkowitz v. Great Minn. Surplus Store

• Issue: Was the newspaper advertisement definite enough to constitute an offer?

• Rule: Must be Clear, Definitive, Spcieic/explicit terms = an enforceable contract 

Reasonable Person with Ads: Leonard v. PepsiCo: 

• Rules: manifestation of willingenss to enter a bargain and Master of the offer

• Court’s Reasoning: Reasonable Person Standard: 

1. No objective, reasonable person would understand the commercial as offering a Harrier jet. 

2. Whether a contract exists depends on the objective reasonableness of the alleged offeree’s belief that the advertisement or solicitation was intended as an offer.

Adequacy of Consideration:

•  The court cares if an exchange took place, not the value of the exchange 

Formation of a Contract

• requires a bargain in which there is a manifestation of mutual assent to the exchange and consideration 

Consideration

1.  To constitute consideration, a performance or a return promise must be bargained for.

2.  A performance or return 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: 

   1. An act other than a promise, or

   2. A forbearance, or 

      1. Forbearance means: One party gives up a legal right 

   3. The creation, modification, or destruction of a legal relation

Forbearance as exchange: Hamer v. Sidway

• Outcome: Yes. Nephew Willie gave up his ability to engage in certain behaviors that he was entitled to do; legally, this was enough to be consideration. 

• Rule: In general, a waiver of any legal right at the request of another party is a sufficient consideration for a promise. 

Not: Moral Obligations, Trailing Promises/Past Consideration - Mills v. Wyman

• Rule: A moral obligation is not sufficient consideration to create a promise.

  •  Trailing Promise Scenario:  Promises made after value has already been delivered. Generally speaking, past consideration does not create a contract. 

• Holding: No binding contract exists. The nursing services were expended in the past, and there was no promise to pay them until later.  This is past consideration, which can’t support a contract.

Not an offer: Gratuitous Promises/ Conditional Gifts* - note exception - 

Congregation Kadimah Toras-Moshe v. Deleo

• Rule: 

1. Contract requires consideration (benefit to promisor/detriment to promisee) 

2. A hope or expectation, even though well-founded, is not equivalent to either a legal detriment or reliance. 

• Court Rationale: 

  • Consideration: 

1. Gratuitous Pledge 

2. No indication of how money would be used. 

3.  Congregation wasn’t required to do anything in return for the promise. 

• Reliance: 

1. Allocating something in the budget is insufficient to find reliance or an enforceable obligation. 

Exception: Gratuitous Promises/Conditonal gifts can be binding if consideration was present - King v. Trustees of Boston University

• Rules: To enforce a charitable pledge, a party must establish that there was a promise to give some property to a charitable institution and that the promise is supported by consideration or reliance

• Court Rationale: 

  • BU undertook indexing of the papers and made them available to researchers. 

  • Convocation was held to commemorate receipt of papers. MLK attended and spoke. 

  •  Actual benefit to the promisor or actual loss or disadvantage to the promisee is required.

Possible defense for no consideration - Promissory Estoppel

1. A promise 

2. Reasonable expression of inducing act or forbearance

3. Actual reliance 

4. Injustice can only be avoided by enforcement of promise 

5. Party must have clean hands (acted fairly and honestly) - needs clean hands to even do PE  

6. Damages put the party in the position they were in before the promise was made 

PE: Feinberg v Pfeiffer Corp.

• Issue: Whether promise of lifetime pension is a gratuitous gift, a valid contract, or something else.

• Rule: Promissory estoppel can be a consideration substitute 

PE: East Providence Credit Union v. Geremia

Rule:  Courts look for consideration first. If they can't find it, promissory estoppel may be a fallback option.

PE: Elvin Associates v. Franklin

• Rule: Promissory estoppel isn't limited to cases involving missing consideration. It can be applied to cases when there is missing assent to specific terms.

PE: Cosgrove v. Bartolotta

• Issue: 

1.  Whether provision of legal work and readiness to make a loan in response to a promise for a share in business ownership is “reliance” necessary to support a promissory estoppel claim.

2. Whether a jury is permitted to award damages for reliance, unjust enrichment, and misrepresentation?

• Rule:

1. Apply the four-part PE test  

2. These non-contractual remedies are alternative, not cumulative. Aggrieved party must choose!

PE: Hoffman v. Red Owl Stores, Inc.

• Issues: Whether Wisconsin should adopt promissory estoppel, Restatement (Second) of Contracts, § 90.  Whether the facts support a PE claim. What damages are appropriate

• Holding: Yes. Wisconsin adopts promissory estoppel. 

  •  Do facts support PE claim (apply the elements)? Yes. 

  • How do we measure reliance damages?

  • How do we get the Hoffmans back to the pre-promise condition?

• Possible Damages: 

  • Sale of bakery: $2,000

  • Option on Chilton lot? $1,000

  • Moving family to Neenah? $140

  • House rental/moving expenses in Chilton? $125

  • Lost Profits/Sale of Store (new trial): $16,730

  • Owning a Red Owl Grocery Store: Priceless

PE: Ypsilanti v. General Motors Corp.

• Trial Court: 

Is there a valid contract? No.

Promissory estoppel? Sure. “There would be a gross inequity and patent unfairness if GM, having lulled the people of the Ypsilanti area into giving up millions of tax dollars which they so desperately need to educate their children and provide basic government services, is allowed to simply decide to desert 4500 workers and their families because it thinks it can make these same cars a little cheaper somewhere else.

• Appellate Court: 

  • Is there a valid contract? Still no. 

  • Promissory estoppel? Also, no! “Promissory estoppel requires an actual, clear, definite promise.” There was no promise; rather, “hyperbole and puffery” (statements like ”we’re partners” or “we look forward to working together”)

  • For there to be a valid contract, there needs to be a clear and definite promise to apply PE.

PE (handbooks): Meyer v. Christie

• Issue: Did Security Savings’ privacy statement either create a contract or a cause of action under promissory estoppel when confidential information was released?

• Holding: Yes. The privacy policy was part of the bargained-for 

exchange.

PE (handbook): McDonald v. Mobil Coal Producing, Inc.

• Issue:

1. Whether the handbook constituted an enforceable contract between the mine operator and McDonald. 

2. Whether promises in the handbook are enforceable despite no contract existing. 

• Initial Hearing Outcome:

1. No. Mobil disclaimed a contract in the handbook. 

2. Possibly, yes. These issues need to be determined at trial

• Re-hearing outcome: Disclaimers must be conspicuous to be effective against employees.  Remanded tothe  trial court to determine whether disclaimer language was conspicuous

PE (handbook): James Baird Co. v. Gimbel Brothers

1. James Baird: A subcontractor’s price quote is merely a revocable offer and cannot be enforced without formal acceptance. The offeror can withdraw it at any time before the offeree actually communicates acceptance, even if the general contractor has already relied on that price to submit a winning bid for a larger project.

• Traditional View: Enforceable K required

PE (handbook): Drennan v. Star Paving Co.

1. Drennan: Defendant made a promise which they should have reasonably expected to induce Plaintiff to submit a bid. Injustice can only be avoided by enforcing it.  

• Modern View: Reliance as alternative basis for liability

Acceptance in Contracts

• 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. 

• Acceptance by performance requires: at least part of what the offer requests be performed or tendered, and it includes acceptance by a performance that operates as a return promise. 

• Acceptance by promise requires: the offeree complete every act essential to making the promise. 

Time for Acceptance to take place

 - unless provided otherwise by Master of the offeror - 

• An acceptance made in a manner invited by an offer is operative and completes the manifestation of mutual assent as soon as the offeror’s possession is put out. It does not matter if the acceptance ever reaches the offeror, BUT 

• An acceptance under an option contract is not operative until received by the offeror.

Acceptance by Slience

1. When an offeree fails to reply to an offer, their silence and inactivity = an acceptance  in the following cases only: 

   1. The offeree uses the benefit of the services knowing that when they use it, they must pay the offeror 

   2. The offeror has stated or given the offeree reason to understand that assent can be manifested by silence and → when the offeree remains silent → the offeree intends to accept the offer. 

   3. Because an offeree and offeror have previous dealings… it is reasonable that the offeree should notify the offeror if he does not intend to accept 

2.  An offeree who does any action that is inconsistent with the offeror’s ownership (cannot use their property and claim they did not know their act was inconvenient)  is bound to follow the offered terms unless the terms are unreasonable.

Mailbox Rule or Deposited Acceptance Rule

1. Acceptance is effective upon dispatch. 

2. If the acceptance is properly addressed and paid for, the acceptance is effective even if the mail is lost or not delivered.

   1. This puts the risk of lost communications on the offeror

   2. As master of the offer, the offeror can change the default rule

Morrison v. Thoelke:

• Holding: The contract was formed upon mailing the acceptance. Revocation was not possible.

• Court Reasoning: The mailbox rule isn’t premised on “loss of control”—we agree that a sender can recall their USPS letter.  

Rather, the rule is based on: 

• Necessity of drawing a line when K is complete. 

• We don’t want to allow revocation after unqualified assent.

• There is a meeting of minds upon the instant of posting assent.

Reward/Lost Dog Cases

• If a person chooses to make extravagant promises of this kind, he probably does so because it pays him to make them.

•  If he had made them → the extravagance of the promises is no reason in law why they should not bind him 

•  P must know about the offer before acting; then D performs based on knowledge of the reward. If P learns of a reward after performance, that does not count.

Carlill v. Carbolic Smoke Ball Company

• Rule: D makes an extravagant promise to make money. The promise should not bind D because of its extravagant nature.

Telephone Acceptance

• Acceptance given by telephone or other medium of substantially instantaneous two-way communication is governed by the principles applicable to acceptances where the parties are in the presence of each other.

Performance as Acceptance

1. An offer may invite or require acceptance to be made by; 

   1. an affirmative answer in words or 

   2. by performing or refraining from performing a specified act

   3. or may empower the offeree to select terms in his acceptance.

2. Unless otherwise indicated by the language or the circumstances → an offer invites acceptance in any manner and by any medium reasonable in the circumstances.

Rule 32

1. In case of doubt, an offer is interpreted as inviting the offeree to accept either by 

1. Promising to perform what the offer requests or 

2. By rendering the performance as the offeree chooses

Ellenson v. Megadeth, Inc.

• Rule: As master of the offer, the offeror can condition acceptance upon whatever terms they deem fit. Late acceptance cannot result in a contract because there is no longer an offer to accept. The offeror must accept the offeree’s counteroffer. Any reasonable and usual mode of communication may be used to accept an offer unless a specific mode is prescribed.

Brackenbury v. Hodgkin

• Rule: In a unilateral K, the only acceptance required is performance on the K. There’s no need for the promisee to accept in words or with a reciprocal promise.

• Holding: Brackenbury's accepted the offer by moving to Hodgkin’s farm and entering upon performance.

Bilateral Contracts

• a contract where both parties exchange promises to perform a specific action. 

Unilateral Contracts

• 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.

• 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 Termination. An offeree’s power of acceptance may be terminated four ways, by:

1. Rejection or counter-offer by the offeree or (Mirror Image Rule)

• 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 counteroffer 

Offer Termination. An offeree’s power of acceptance may be terminated four ways, by:

2. Lapse of Time or

• Father Time terminates the power of acceptance:

  • Offeror might include definite deadline for acceptance 

  • Offeree might revoke offer after long delay  

• How long is an offer at risk of acceptance if the offer is indefinite as to time

  • If no time is specified in the offer, then it is assumed that the offer has a reasonable time to accept 

Offer Termination. An offeree’s power of acceptance may be terminated four ways, by:

3. Revocation by the offeror, or

• An offeror may revoke an offer any time before it is accepted (unless the offer is irrevocable, such as an option contract).

Offer Termination. An offeree’s power of acceptance may be terminated four ways, by:

4. Death or incapacity of either the offeror or offeree

Dickinson v. Dodds

• Outcome: Dickson missed the train on this deal…The offeror can revoke the offer at any time before the offeree accepts.

• Rule: Once the person to whom the offer was made knows the property has been sold to someone else, it is too late for him to accept his offer. A person is not bound to keep an offer open without consideration.

Revocation by Indirect Communication

• 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

Protection Against Revocation: Option Contract

1. An option contract is a promise which meets the requirements for the formation of a contract and limits the promisor’s power to revoke an offer 

Binding as an Option

1. Is in writing and signed by the offeror

   1. Recites a purported consideration for the making of the offer

   2. Proposes an exchange on fair terms within a reasonable time OR

2. Is made irrevocable by statute 

2. An offer which the offeror should reasonably expect to 

   1. Induce action or forbearance of a substantial character on the part of the offeree before acceptance 

   2. Which does induce such action or forbearance → binding option contract to avoid injustice 

Firm Offers UCC §2-205 [Merchant selling goods only]: (Protection against Revocation of the Offer)

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. Still, any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.

• Checklist: 

1. An offer by a merchant to buy or sell goods

2. Offer signed in writing 

3. Offer terms assure P it will be held open and is not revocable 

4. No consideration 

5. Left open during the time stated in the offer, but no period of acceptance can exceed 3 months. 

6. The offeror must separately sign any term of assurance on a form from the offeree. 

Boilerplate

• Repeated use of dense legalese in contracts.

• Standardized, pre-written text and routine legal clauses that remain largely identical across many different agreements

Adhesion Contract

• Agreements offered on a take-it-or-leave-it basis. 

• No Negotiation: The person signing the agreement cannot change or remove any words.

• Unequal Power: One side, usually a large business, makes all the rules. The other side, like a customer or employee, has little to no leverage.

• All or Nothing: You must accept the entire document or refuse the service entirely. 

Offsite Terms

• Terms that are part of standardized adhesion contracts but are not stated in the document itself. 

• Ex: Airlines do this by referencing Contracts of Carriage (not printed on ticket).

Shrink-Wrap License

•  a legal contract included inside a product's packaging – traditionally physical software boxes –where a user agrees to the terms simply by opening the package or using the product. Often held to be binding.

• Ex: You buy a secure home camera in a sealed box. You open the box and set up the app on your phone. A screen pops up with terms of service. You must click "I Agree" to use the camera. 

Browse-Wrap Agreement

• A browse-wrap agreement is an online contract where a website or app assumes a user accepts its terms simply by browsing or using the site, without requiring any physical click or checkmark. Generally, not binding on users.

• Ex:

Click-Wrap Agreement

• User must click “I agree.” Generally seen as binding /enforceable.​

• Ex: 

Rolling Contracts

• A "pay now, terms later" rolling contract is a standard-form agreement where you pay for a product or service before seeing all the legal terms, which are provided later (such as inside the product packaging or via a digital link), with the option to return it if you disagree. You won’t receive the complete terms and conditions until you receive the product or open its packaging. They typically include a return policy—failure to return the product may be deemed as acceptance. 

Pro CD, INC. v. Zeidenburg

• Issue: Whether buyers of computer software like Zeidenberg are legally bound by the terms of shrinkwrap licenses.

• Holding: Shrinkwrap licenses are enforceable unless their terms are objectionable on grounds applicable to contracts in general (example: violate rule of positive law, unconscionability).  There is only one form in our case, so UCC 2-207 is irrelevant.

Hill v. Gateway

•  Issue: Whether the terms inside a computer box delivered to a consumer form part of a valid, binding contract?  Sure!

• Rule: Terms inside a box of software bind consumers who use the software after an opportunity to read the terms and to reject them by returning the product.

Klocek  v. Gateway

• Court’s ruling: The K was formed when P purchased the computer. Because P was a non-merchant, the additional or different terms (including the arbitration provision) in the Standard Terms are not part of the K. Under 2-207(1), Gateway never made the contract conditional upon acceptance of terms. Under 2-207(2), the customers were not merchants; and merely keeping the computer past the five days was not enough to show that there was assent to the terms. (i.e., assent by silence).

Carnival Cruise Lines, Inc. v. Shute

• Issue: Whether the 9th Circuit correctly refused to enforce a forum-selection clause contained in cruise line tickets.

• Outcome: Forum selection clauses in form contracts are prima facie valid. Form contracts are valid even though they lack negotiation. 

• Dissent: What are we doing here?!  Traditionally, courts have viewed adhesion contracts with heightened scrutiny. There is no manifestation of mutual assent in these contracts. Also, courts traditionally have been skeptical of provisions that seek to limit where a cause of action can be brought on public policy grounds.

Shute decision

1. Forum selection clauses

2. Many arbitration clauses (Cf. California state law)

3. If terms are written in “good faith,” and not depriving parties of substantive rights​

4.  So long as they do not take consumer by surprise​

5. No one expects the Spanish Inquisition.”

No or Red Flags (know these)

1. No signature or “click” – lack of assent​

2. No one saw the terms (browsewrap)​

3. Attempt to waive negligence or gross 

4. negligence is likely unenforceable; tort law trumps contract.​

5. Onerous terms may be unconscionable.​

6. High damages or damages that are too low may be invalid as against remedies rules.​

7. Contra proferentem. All terms are construed against the drafter

Online contracting

• The internet and modern technology pose special problems for identifying which promises should be enforced and finding mutual assent to contract.  It’s not always easy to find objective evidence (outward expression) of intent to embrace the bargain and endorse an agreement’s terms

Specht v. Netscape Communications Corp.

• Issue: Whether plaintiffs, by acting on defendants’ invitation to download free software made available on defendants’ webpage, agreed to be bound by the software’s license terms (which include an arbitration clause) even though Ps could not have learned of the existence of that clause unless they had scrolled down to a screen located below the download button.

• Rule: A consumer clicking on a download button does not communicate assent to contractual terms if the offer did not make clear to the consumer that clicking on the download button would signify assent to those terms. 

  • Inquiry Notice: Every person who has actual notice of circumstances sufficient to put a prudent man upon inquiry as to a particular fact, has constructive notice of the fact itself in all cases in which, by prosecuting such inquiry, he might have learned such fact.

• Holding: The arbitration clause is unenforceable. 

  • “A reasonably prudent Internet user in circumstances such as these would not have known or learned of the existence of the license terms before responding to defendants’ invitation to download the free software, and that defendants therefore did not provide reasonable notice of the license terms

FTEJA v. Facebook

• Hyperlinked Terms of Use was sufficient notice in a case involving forum selection

Berkson v. Gogo LLC

• Terms of use unenforceable absent evidence that reasonably prudent users would have notice of them;  Enforceable when users are encouraged by site design to see them. Unenforceable if link is obscured, buried, unlikely to be seen

Battle of the forms: Common Law Rules

1. Mirror Image Rule: The acceptance must mirror the original offer without any changes, additions, or modifications. Any change to the terms turns the acceptance into a rejection and a new counter-offer.

2. Last Shot Rule: What happens if forms don’t match but the parties perform anyway? The final form or counteroffer sent between parties before performance begins governs the contract.

UCC §2-207

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

• Broken down: 

  • Definite: no ambiguity

  • Reasonable time: timely acceptance

  • Additional or different terms (really emphasized in class)

    • Additional: adds extra

    • Different: adds conflict 

  • “Unless acceptance is expressly made conditional on assent to the additional or different terms”

    • Offeror can make certain terms for acceptance conditional 

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: 

   1. The offer expressly limits acceptance to the terms of the offer

   2. They materially alter it

   3. Notification of objection to them has already been given or is given within a reasonable time after notice of them is received. 

3. 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, together with any supplementary terms incorporated under any other provisions of this Act. 

• Broken down: here look at the writing of the parties plus supplementary terms (like gap fillers) in factual situations.

Gap Filler: Price (§ 2-305)

• If the parties left the price term open (or knocked out conflicting price terms), the gap-filler is a reasonable price at the time for delivery. This can be determined by market value, a standard pricing formula, or reference to objective benchmarks.

Gap Filler: Place of Delivery (§ 2-308)

Gap Filler: Time for Shipment or Delivery (§ 2-309)

Gap Filler: Time and Manner of Payment (§ 2-310)

Gap Filler: Assortment / Options (§ 2-311):

Luna Innovations, Inc., v. Verner Science, Inc.

• Key Takeaway: Under battle of forms, it can be easy to determine that a contract was formed or not formed, but much more difficult to discern its terms. This is especially true where the parties’ intent is unclear from the ambiguous terms. 

Step-Saver Data Systems v. Wyse

• Issue: This case turns on whether TSL’s disclaimer of its warranties on the software box top was effective.

• Rule: UCC 2-207 governs this dispute. When the parties’ conduct establishes a K, but the parties have failed to adopt a particular writing expressly as the terms of their agreement, and the writings exchanged by the parties do not agree, UCC 2-207 determines the terms of the K. 

•  Holding: TSL did not clearly express that acceptance was “expressly conditional” upon acceptance of the additional terms, and therefore, the box-top license is not part of the deal.  We hold that the contract was sufficiently definite without the terms provided by the box-top license. 

Types of Warranty:

1. Express Warranty

1. Statement expressly given by seller.​

   1. Ex: "We guarantee all furniture against defects in construction for one year."

Types of Warranty:

2. Implied Warranty of Merchantability UCC § 2-314.

• Automatic, unwritten legal guarantee that a product will work and is fit for its ordinary purpose when bought from a merchant.

• Ex: New Refrigerator: You buy a new fridge from an appliance store, and it fails to keep food cold. This breaches the warranty because it cannot perform its basic, everyday job.

Types of Warranty:

3. Implied warranty of Fitness for a Particular Purpose: UCC § 2-315

• An unwritten legal guarantee under UCC § 2-315 that a product will work for a specific, non-ordinary use when you rely on a seller's expertise to choose it.

• Ex: at Home Depot, a merchant recommends goggles that will keep paint out of your eyes. You paint and get paint in your eyes while wearing the goggles. You can be injured and can sue because a merchant told you this. A merchant under 2-204 specializes in a good of a kind that they have specialized knowledge of, so this would not count if a Target worker told you to buy them. 

Unconscionable Contract Or Clause §2-302

1. If the court, as a matter of law, finds the contract or any clause of the contract to have been unconscionable at the time it was made, the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result 

2. When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable, the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determinatio

Remedies: Breach of Contract

• Usual remedy for breach of contract is money damages, not an order to perform.

• Expectation Damages: Give aggrieved party the benefit of the bargain.

Remedies: Specific Performance

• Equitable remedy.

• Extraordinary remedy that a court only grants in narrow circumstances when money damages would be inadequate.

• Goal is to make the plaintiff or defendant whole again 

Remedies: Reliance Damages

• Remedy often utilized when it is infeasible to prove expectation damages with reasonable certainty. 

• Puts the aggrieved party in the economic position it occupied before the promise was made

Resisitution

• Protects against unjust enrichment. 

• Measured by the value of the benefit conferred on the promisor by the aggrieved