Fall Contracts Flashcards

Elements of a Contract

Elements of a Contract

offer, acceptance, consideration

"Meeting of the minds" - manifestation of mutual assent

where assent is measured by an objective, "reasonable person" standard

Lucy v. Zehmer

Lucy wanted to buy Zehmer's farm and he offered again one night while the two were drinking. Zehmer wrote an agreement on a check which Lucy insisted his wife be included in and made to sign it. Zehmer had his wife sign it but told her it was all a joke.

Rule: The objective, outward expression of a party's intent to be bound in an agreement, as opposed to that party's subjective mental assent to the agreement, is all that matters when determining the existence of a valid and enforceable contract.

Duty to read

in the absence of fraud, one who signs n agreement is bound by its terms whether he read and understood it or not, or whether he can read or not

Morales v. Sun Constructors, Inc.

a Spanish speaking welder signed an employment agreement with a demand for arbitration in it. He signed it after an orientation that was given in English but where a bilingual applicant spoke to him.

Rule: an acceptance of a contract is measured by the accepting party's outward expressions of assent

role of subjective evidence and the objective test

subjective evidence is not always irrelevant and inadmissible. it can sometimes be helpful in understanding the meaning of an objective manifestation. but it is only relevant and persuasive to the extent that it is credible and compatible with the other behavior

SR International Business Insurance Co. v. World Trade Center Properties

when negotiating the insurance money following 9/11 there was a disagreement over what an "occurrence" meant under the policy. During one of the trials, witnesses were permitted to testify regarding their subjective intent during contract negotiations.

Rule: a contracting party's subjective understanding may be relevant to ongoing negotiations and provide insight into the party's objective actions . not to be used to determine an ambiguous contract provision but may be relevant among all the circumstances.

Objective manifestation of intent

words;
actions;
how a reasonable person would interpret your actions;
outwardly observable by other party

Clickwrap

User must click to signify assent to terms before using site or completing purchase. Generally enforceable.

Sign-in or Hybrid Terms

Terms presented to a customer upon signing up for account or website; assent is indicated by signing in or registering for the account. May be enforceable.

Browsewrap

Terms are available through a link, but user may not be required to take affirmative steps to indicate assent. Least enforceable.

Nguyen v. Barnes and Noble

Nguyen bought an HP tablet from the bookstore fire sale but the next day they cancelled his order and he sued. B&N said that he was bound by the terms of use that is on each page of their website and accessible by hyperlink.

Rule: A website user lacks sufficient notice to a company's terms of use if, despite the presence of conspicuous hyperlinks to the terms of use, the website neither provides notice to users nor prompts users to affirmatively demonstrate assent.

Feldman v. Google

an attorney purchased ad space from Google. The clicks ran up and he argued that the agreement was unenforceable because he did not receive notice of the terms. the agreement contained boldface type instructing users to read the terms and conditions which were displayed

Rule: A "clickwrap" internet agreement will be enforced if it sufficiently provides the user reasonable notice of the agreement's applicable terms and conditions.

Meyer v. Uber Technologies, Inc.

plaintiff alleged Uber was price fixing then Uber moved for arbitration. Uber showed how its terms of service were very obvious.

Rule: A smartphone app user has reasonably conspicuous notice of the app's terms of service if a reasonably prudent user would have known about the terms and the conduct that would be required to assent to them. in this case a reasonably prudent person is a smartphone user

Kolodjiej v. Mason

While interviewing about a case an attorney was trying to refute the prosecution's case for a murder trial and said that he challenged anyone to try and make the trip in time and that he would pay them 1 mil if they could. A law student did it and then filed suit for the money.

Rule: An enforceable contract requires mutual assent by both parties to agree to perform an act or forbearance with a full understanding of the terms of the agreement.

Offer

a firm proposal to enter into a contract. If you accept we are entering into a contract.
The restatement: 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

Fletcher-Harlee Corp. v. Pote Concrete Contractors, Inc.

The defendant submitted a subcontractor bid to the plaintiff that stipulated it was for quotation purposes only and was not an offer. The plaintiff used it, and then the defendant increased the quote. Plaintiff sued for BOC.

Rule: An offer and an acceptance are required to form a contract. A communication responding to an offer and materially differing from the terms of the offer is a counter-offer.

Babcock & Wilcox Co. v. Hitachi America, Ltd.

P contracted with D for the design and supply of a Selective Catalytic Reduction System that P installed. Later the P had trouble with it and claimed that it did not conform to performance guarantees and warranties. The dispute is over whether the price quotation given by the D was an offer or if the Purchase Order by the P was the offer.

Rule: An offer is a communication that signifies both a willingness to contract and that acceptance is all that is required to enter into the contract.In order to be an offer, a price quotation must be sufficiently detailed and include items such as a description of the product, price, quantity, and terms of payment.

Advertisements as Offers

Advertisements and challenges are generally not offers, but they may be under the right conditions. We look to the content, circumstances, and conduct of the parties to determine intent.

An advertisement is not usually considered an offer unless it is clear, definite, and explicit.

Leonard v. Pepsico, Inc.

Pepsi did a promotional event where people could redeem pepsi points for prizes. they put out a commercial for some of the prizes and in the commercial there was a harrier jet which someone tried to buy with their pepsi points.

Rule: A consumer's agreement to the terms of an advertisement that was intended to be humorous does not create a valid and enforceable contract. This is different from Zehmer in that this was obviously a joke. Uses reasonable person standard.

Lefkowitz v. Great Minneapolis Surplus Store

Advertisement listed rabbit furs for a $1.00. First come, first serve.

Rule: An advertisement constitutes a binding offer if it is clear, definite, and explicit, and leaves nothing open for negotiation.

Harris v. Time, Inc.

boy received an envelope in the mail from Time, Inc. offering a free calculator watch "just for opening [the] envelope." but inside, it said a subscription was required. Time refused to give the watch.
Rule: An advertisement may constitute a unilateral offer if it calls for the performance of a specific act without further communication and leaves nothing for further negotiation.

Sateriale v. R.J. Reynolds Tobacco Company

Camel Cash program allowed customers to save up and redeem merchandise. They informed customers the program was ending in March but stopped giving items in October. Participants were unable to use their certificates.

Rule: An advertisement constitutes an offer when the advertiser, in clear and positive terms, promised to render performance in exchange for something, and the recipient of the advertisement reasonably might have concluded that by acting in accordance with the request a contract would be formed.

Acceptance

a manifestation of assent to the terms thereof made by the offeree in a maner invited or required by the offet

must meed both the substantive (assenting to terms) and procedural (in proper time and manner) aspects of the offer

general principles of acceptance

- must be communicated to the offeror and takes effect only when that communication is legally completes.
- must be in compliance with any instructions in the offer relating to the manner and method of acceptance
- must not vary the terms of the contract proposed in the offer
-must occur while the offer is still in effect, before it has lapsed or been revoked

Forms of Acceptance Invited - Restatement

(1) an offer may invite or require acceptance to be made by an affirmative answer in words, or by performing or refraining from performing a specified act, or may empower the offeree to make a selection of 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

Mailbox Rule

governs non instantaneous communication of acceptance. where the mail is an expressly or impliedly authorized or reasonable medium of acceptance, a properly stamped and addresses acceptance takes effect when deposited in the mail. This holds only for acceptances and not for revocation

Trinity Homes, LLC v. Fang

Plaintiff's real estate agent allegedly attempted to accept the Fangs' offer to sell the real estate by faxing the acceptance to the Fangs' agent. The fax machine didn't give a confirmation. Shortly after they tried to withdraw their offer. Plaintiffs claimed their acceptance was valid

Rule: If acceptance of an offer is made by an electronic communication that is not a substantially instantaneous, two-way communication, the acceptance will continue to be governed by the mailbox rule.

Mirror Image Rule (Acceptance)

All of the terms in the acceptance must match all of the terms in the offer

Roth v. Malson

D put a piece of property up for sale and the p offered to buy with escrow to close within 30 days of acceptance. P executed a standard form counter-offer changing the price but leaving the rest. To accept the P needed to sign a blank line titled "acceptance," but he signed the spot labeled "counter to the counter offer" and put the price and the escrow date. D rejected.

Rule: a response to an offer must be absolute and unqualified in order to be an acceptance.

Lapse of an offer

Offer may expire on a specified date
Offer ends and can no longer be accepted
If no expiry date is specified, then it remains open for a reasonable time
Reasonable time depends on the circumstances of the case

Revocation of an offer

Offeror is free to revoke at any time before acceptance; must be communicated to the offeree

Received notice of revocation from the offeror (direct revocation) Or; must have reliably learned in some other way (indirect revocation)

Has the power to revoke even if it stated it will be kept open for a specific time

Hendricks v. Behee

Behee offered to purchase property from the smiths and paid deposit to escrow agent. Behee withdrew the offer before the transaction closed and claimed return of his deposit. Smiths claimed breach of K and tried to take the 5k as damages. Escrow agent was unsure and called an interpleader action against the Smiths and Behee.

Rule: An offeror may revoke an offer at any time before the offeree has communicated acceptance to the offeror or the offeror's agent.

Dickinson v Dodds

Dodds had an agreement to sell his property to Dickinson and gave him a signed doc that said he agree to sell with a PS that said the offer would be left over until Friday 9am. Next day Dickinson heard the property might be sold to Allen and he left a written acceptance at the place he was staying which was apparently not delivered to him. The next morning Dickinson met Dodds and gave him a written acceptance which he refused to sign because he already sold the property

Two principles
You have to have consideration for an offer to have to be held open
You can have an indirect communication of revocation

Silence as Acceptance

- silence is deemed a rejection
- Nothing can be put in an offer that compels an offeree to respond to avoid being bound

Exceptions to Silence Being a Rejection

Silence may be acceptance when the parties have a relationship where it would be reasonable for the offeree to notify the offeror of intent not to accept
Or; if the offeree takes advantage of services offered with the reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation
Or; where property is involved, it the offeree acts toward the property in a manner inconsistent with the offeror's ownership

Restatement § 69 Acceptance by Silence or Exercise of Dominion

(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 exception of compensation
(b) where the offeror has state or given the offeree 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 intent to accept
(2) an offeree who does any act inconsistent with the offerors ownership of offered property is bound in accordance with the offered terms unless they are manifestly unreasonable. But if the act is wrongful against the offeror it is an acceptance only if ratified by him

Pride v. Lewis

Lewis made an offer to purchase the house from the Prides. The first offer was rejected. The second K was sent already signed by Mr. Lewis and the realtor but not Mrs. Lewis. This K was signed by the Prides but they changed the closing date which they initialed but Mr. and Mrs. Lewis did not. The Prides were prepared to close on the scheduled date but no one showed up. Nothing was communicated to the realtor because Lewis could not reach him he thought someone would contact him.

Rule: Under contract law, silence or inaction generally does not constitute an acceptance of an offer.

Bilateral Contract

at acceptance a contract is formed under which both parties have made promises to be performed at a future date

Unilateral Contract

the offeree's performance is complete at the point of the contract formation and only the offeror's performance remains outstanding when the contract is created. Most common kind offer calling for a unilateral K is an offer of a reward for performing some action

Acceptance of Unilateral Contracts

In unilateral contracts, acceptance occurs upon performance, and on terms reasonably understood by the parties. Offeree need not communicate the acceptance to the offeror. Acceptance of offers by acts that cannot be accomplished instantaneously are governed by Restatement §45 or Restatement §62

Restatement §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 it 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

Restatement §62 - Effect of Performance by Offeree Where Offer Invites Either Performance or Promise

(1) where an offer invited an offeree to choose between acceptance by promise and acceptance by performance, the tender or beginning of the invited performance or a tender of a beginning of it is an acceptance by performance
(2) such an acceptance operates as a promise to render complete performance

Carill v. Carbolic Smoke Ball Co

D's were vendors of "The Carbolic Smoke Ball." They took out an ad saying the would give 100 pounds to anyone who contracted a disease taken by the cold after using the ball twice a day for two weeks. The P bought one of the balls and used it as directed and contracted influenza.

Rule: In unilateral contracts, acceptance occurs upon performance, and on terms reasonably understood by the parties

Wayment v. Schneider Automotive Group L.L.C.

Pro golfer made a hole-in-one at a charity golf tournament with a hole-in-one contest. When they learned he was a professional golfer, they refused to give him the car.

Rule: With a unilateral contract, performance of the act constitutes acceptance of the offer and results in a binding agreement. The existence of an implied-in-fact contract, which is a fact question, looks to parties' objective manifestations of intent.

Rolling Contracts

the contract that is formed over a period of time following the initial or preliminary manifestation of agreement

ProCD, INC. v. Zeidenberg

Plaintiff developed an electronic database that consisted of information compiled from telephone directories. The program was contained in unboxed CD-ROM discs. every box stated that the software was subject to restrictions contained in the license enclosed in the box. Manual was included in the box and also appeared on the user screen every time the software ran.
Defendant bought the consumer package but ignored the license restriction and formed a company that resold the information.

Rule: Shrinkwrap licenses included within a product's packaging are enforceable unless their terms are objectionable on grounds applicable to contracts in general, such as violating a positive rule of law or being unconscionable.

Restatement § 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, (meaning giving something up like the nephew and hammer V sidway) or
(c) the creation, modification, or destruction of a legal relation. (entering into some kind of agreement, breaking up some kind of agreement)

Hamer v. Sidway

Uncle offers nephew money if he refrains from drinking, swearing, gambling, etc. until he was 21. The nephew honored the promise and the uncle agreed to hold onto the money for him but died before he paid him. The executor of the will rejected the claim.

Rule: court uses benefit detriment theory. That is, unless there is a benefit to the promisor or a detriment to the promise, there is no consideration.

The Distinction Between "Bargained for" Exchanges and Gratuitous Promises

There is no consideration to support the promise to make the gift . The promise he does not contribute anything and the parties have not agreed to an exchange. Does not mean that the donor always can rescind a gift freely

Congregation Kadimah Toras-Moshe v. DeLeo

Synagogue commenced action to to fulfill the oral promise of the decedent to give the congregation $25,000. The decedent suffered a prolonged illness and was visited by the congregation's rabbi. He made several oral promises to give the congregation 25k, which they planned to use to build a library in his name. The man died without a will.

Rule: An oral promise for a charitable gift is generally not enforceable in the absence of consideration or reliance on the promise. There was no legal benefit or detriment applicable to either the Congregation or the man. Nor is there any evidence that the Congregation's plan to name the library after the man-induced the man to make or renew his promise.

Pennsy Supply, Inc. v. American Ash Recycling Corp.

Pennsy was subtracted for the paving of driveways and a parking lot. The contract required Pennsy to use certain base aggregates. American Ash offered it at no cost
The pavement ended up cracking and needed appropriate disposal of the hazardous material. American Ash refused to do it

Rule: having company pick up pavement material for free may rise to the level of consideration if it is proven through discovery that defendant offered the material for free because it wanted material removed from its property. (bargain theory)

Carlisle v. T&R Excavating, Inc.

husband's offer to do work for wife's company for free because he was a "nice guy" not sufficient; wife's payment for materials at cost not was condition of promise, but not consideration for it. Past performance does not count as consideration

Kessler v. National Presto Industries

Plaintiff was canning Pickles with a friend using a pressure cooker manufactured by the defendant when it exploded and caused numerous injuries. She met a representative of her friends homeowners insurance company and at that meeting she signed a document entitled release of all claims for the valuable consideration of $750.

Rule: Court will not look at consideration adequacy unless it is grossly inadequate

Preexisting Duties

A person who promises to take on a new obligation suffers illegal detriment. If bargained for the promise to take on that obligation can serve as consideration
A pre-existing legal duty cannot serve as consideration for a contract

Restatement § 73. Performance of Legal Duty

Performance of a legal duty owed to a promissory which is neither doubtful nor the subject of honest dispute is not consideration; But a similar performance is consideration if it differs from what was required by the duty in a way that which reflects more than a pretense of bargain

White v. Village of Homewood

Angela White (plaintiff) sought to become a firefighter and paramedic for the Homewood Fire Department. In order to become a firefighter and paramedic, applicants were required to perform a physical-agility test. White signed an exculpatory agreement releasing Homewood from any claims that might arise out of the physical-agility test.

Rule: A pre-existing legal duty is not sufficient consideration for a binding contract.

Alaska Packers Ass'n v. Domenico

Salmon packing company sends fisherman to go to Alaska. When they get there the fishermen decide to unionize and say they won't work anymore unless they are paid more
The Association gives in and pays the extra money. The fishing season happens and the fishermen come back and they decide not to pay them the increased amount.

Rule: If parties enter a new agreement under which one party agrees to do no more than he was already obligated to do under an existing contract, the new agreement is unenforceable for lack of consideration. There are circumstances under which there may be a modification but in this case there is not

Settlement Agreements as Consideration

Settlement agreements are generally enforceable contracts
The consideration for them is the right they are giving up (agreement not to sue someone)

Holt v. Holt

Three men got into a disagreement over the execution of their mother's will. The mother executed a codicil leaving nothing to one of them. They agreed to probate the will and not the codicil. There was confusion over the shares and the two brothers

Rule: Settlement of legal claims and defenses may be consideration as long as party is giving up a claim or defense that may be reasonably found to exist by the trier of fact. there must be a bona fide dispute as to the validity of the will in question

Illusory Promises

promises in which, although the promisor appeared to make a promise, he actually has not assumed any real legal detriment because, for example, he retains the right to change his mind at any time. As a result, the promisor typically cannot enforce an illusory contract against a promisee.

Wood v. Lucy, Lady Duff-Gordon

Defendant is a fashion designer who hired P to help her turn her name into money. He was to have the right with her approval to place her endorsements on the designs of others. In return she was to have 1/2 all profits and revenues from contracts he might make.

Rule: In cases where the parties make no express promises to perform, courts must decide whether consideration exists. Courts may read a duty to perform into a contract based on the economics of the agreement, and therefore find consideration.

Promissory Estoppel

Another way of finding consideration

Restatement § 90 - Promissory Estoppel

(1) a promise which the promisor should reasonably expect to induce action or forbearance (could be giving up a right or doing something) 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 (you might not get the same remedies for promissory estoppel as you would a breach of k claim)
(2) a charitable subscription or a marriage settlement is binding under subsection (1) w/o proof that the promise induced action or forbearance

Elements of Promissory Estoppel (restatement)

1. A promise
2. Promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person
3. Which does induce action or forbearance on the part of the promise or a third person
4. Promise must be enforced to avoid injustice

Conrad v. Fields

Appellant encouraged respondent to go to law school but she had medical bills and school bills to pay still so he offered to pay for her tuition; she quit her job to go to law school. He stopped making payments due to an IRS audit and said they would be delayed until the matter was straightened out

3 part test:
- A clear and definite promise
- The promisor intended to induce reliance by the promisee and the promisee relied to the promisee's detriment and
- The promise must be enforced to prevent justice

Thomas v. Archer

Woman and her husband were told that the wife would need to be medivacked to another facility since she was going into premature labor
They told the doctor they would need to get the transfer preauthorized beforehand and the doctor told them not to worry about it, that she would contact them and if there was an issue the hospital would pay it

4 elements:

1) The action induced amounts to a substantial change of position
2) It was either actually foreseen or reasonably foreseeable by the promisor
3) An actual promise was made and itself induced the action or forbearance in reliance thereon
4) Enforcement is necessary in the interest of justice

Promissory Estoppel in Commercial Contexts

•reasonableness of reliance may come down to factors such as:
•Sophistication of the parties
•Exact nature of the promises made - were they actual promises, or just "expressions of optimism and determination?"
•Whether promises were conditional

Hoffman v. Red Owl StoresHoffman v. Red Owl Stores

The Hoffmans owned a bakery and they contacted red owl about the possibility of obtaining a red owl franchise. They string along Mr. Hoffman for awhile until eventually the negotiations break off and Mr. Hoffman loses a lot of money.

With promissory estoppel damages, typically we look at reliance damages

Garwood packaging, inc. V. Allan & Co.

Garwood reached out to Allen to invest, Allen agreed to invest but then decided not to and the deal collapsed after Garwood had put down money towards the future deal.

The essence of the doctrine of promissory estoppel is not that the plaintiff have reasonably relied on the defendant's promise but that he have reasonably relied on it being a promise in the sense of a legal commitment and not a mere prediction or aspiration or bit of puffery

Restatement § 30

A claim of unjust enrichment for benefits conferred on the recipient by the claimant's unrequested intervention is available only to the extent that:
A) liability in restitution replaces a money obligation or spares the recipient a necessary expense
B) the recipient obtains a benefit in money; or
C) relief may be granted to the claimant by specific restitution

Two elements of unjust enrichment

- One party must have been enriched by obtaining property, services, or some other economic benefit from the other and
- The circumstances must be such that it would be unjust for the beneficiary to keep the benefit of that enrichment without paying or compensating the other for the benefit

Two bases for the conclusion that enrichment is not unjust

1) Where the benefit is intended to be gratuitous
2) Where the benefit was unjustifiably imposed

Martin v. Little, Brown & co.

James Martin sent a letter to Little, Brown & Co. in which he told Little that portions of one of its books, How to Buy Stocks, had been plagiarized by another book. The information from Martin was unsolicited by Little, and compensation for the information was never requested or discussed.

Rule: Volunteers have no right to restitution for a claim of unjust enrichment.

Feingold v. Puccello

Puccello was in accident, recommended to Feingold to go to court, Feingold wanted 50-50 split, never actually entered a formal agreement, Feingold still went and did work, Puccello after hearing price decided to find another attorney, Feingold sued for unjust enrichment

Rule: to recover under quantum meruit one party must convey a tangible benefit to another. there was no unjust enrichment here because he didn't even use the work

Officious Intermeddler Doctrine

Impose an unasked for benefit on the recipient under circumstances that did not justify the imposition

The barrier to an officious intermeddler's recovery is not the express or implied intent to act gratuitously, but that the intermeddler imposed an unasked-for benefit on the recipient under circumstances that did not justify the imposition

A person is not an officious intermeddler if

the recipient accepts the benefit, reasonably understanding that it not conferred with gratuitous intent; or
there is a good justification for conferring the benefit without asking first (ex. to avert harm in an emergency)

Birchwood Land Co. v. Krizan

She buys an empty lot and does nothing to it for 30 years
Then comes in Birchwood who buys the property all around it and develops it which then increases the value of Krizan's property

Rule: A claimant cannot recover restitution for incidental benefits another receives from improvements made in the claimant's own interest.

Moral Obligation doctrine

- A person, acting without gratuitous intent, confers a benefit on another,
- The recipient should have paid for the benefit, and my have had a legal obligation to pay for it at some point, but did not;
- Therefore, the recipient has been unjustly enriched
- The person who conferred the benefit did not or could not sue to enforce the original obligation to pay; and
- At some later time, the recipient makes a new promise to pay for the benefit that could not otherwise be compelled by legal action

Restatement § 86 - Promise for Benefit Received (aka the "Material Benefit Rule")

(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 subsection (1)
(a) if the promisee conferred the benefit as a gift for the other reasons the promisor has not been unjustly enriched or (b) to the extent that its value is disproportionate to the benefit

Alaska Fur Gallery Inc. v. Tok Hwang

Defendant subleased the property to the plaintiff for three summer terms. P sought to exercise the purchase option and hired an appraiser to valued the leasehold which was appraised. Plaintiff said the appraisal was obtained as a basis for negotiating the purchase price but the defendant refused to negotiate the price and the parties never reached an agreement

Rule: An option to purchase in a sublease is unenforceable if it fails to contain either a purchase price or a method for determining the purchase price.

Baer v. Chase

Chase was a television writer who created, produced, and directed The Sopranos, a television show. Baer was a former New Jersey prosecutor. Before the script for The Sopranos was completed, Baer met Chase through a mutual friend and offered ideas for a television show about the New Jersey Mafia.

Rule: A contract must be sufficiently definite so that the performance required of each party can be ascertained with reasonable certainty.

Statute of Frauds

Most contracts do not have to be in writing to be legally enforceable
Certain types of contracts are required by law to be evidence by a writing. A defense based on the statute of frauds is often raised right at the beginning of a case by means of a motion to dismiss or an application for summary judgment.

Statute of Frauds requirements

evidenced by any writing, signed by or on behalf of the party to be charges with
(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

Six types of transactions covered by the original statue of frauds

- Sale or transfer of an interest in land;
- contracts that cannot be performed within a year from the time of their execution;
- contracts for the sale of goods; - - contracts to answer for the debt or obligation of another;
- contracts of executors or administrators to answer for the duty of their decedents; and
- contracts made on consideration of marriage

St. Johns Holdings, LLC v. Two Electronics LLC

Brokers communicated through email and texts.

Rule: An email with an attached unsigned letter of intent containing the final terms of an agreement combined with a text message containing the signature of one of the party's agents may constitute a writing sufficient under the statute of frauds to create an enforceable contract for the sale of land

One Year Provision

can the k, according to its terms as written, be performed within one year. The court does not care about: Whether it will be performed within one year The probability of it being performed within one year Whether parties can complete performance in one year by acting outside of the K's stated terms

Holloway v. Bucher

Appellant entered into an oral agreement with appellee where appellant agreed to a loan.
Loan was advanced in two installments. It required a monthly until she sold her existing home and then it would increase. Appellee made the payments until she sold her home and applied the profit from the sale to the balance of the loan and then started making monthly payments. Appellee lost her job. Appellee thought the rest of the loan was forgiven. Appellant insisted it was temporary

Rule: An oral contract for a loan that is silent on the right to prepay the obligation is an agreement that cannot be completed within one year and thus is unenforceable under the statute of frauds and not subject to the doctrine of partial performance.

Statute of Frauds and Promissory Estoppel

Promissory estoppel is another exception to a statute of frauds. Promissory estoppel is most often allowed as an exception to a statute of frauds in contracts involving the sale or transfer of land, contracts that can't be completed within one year, and contracts that involve a promise to act as a guarantor or surety.

Privity

Legal relationship with someone
A contractual relationship

Third Party Beneficiary

Not in privity
Can be decided that they are a beneficiary of the contract
Question becomes whether they are an intended or incidental beneficiary

Restatement §302 - Intended and incidental beneficiaries

Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either
1) The performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary or
2) The circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance

Restatement §304 - Creation of duty to beneficiary

A promise in a contract creates a duty in the promisor to any intended beneficiary to perform the promise, and the intended beneficiary may enforce the duty

Taylor v. Honda Motorcars, Inc.

Husband buys car for a wife and it accidentally gets the tag of a stolen vehicle so his wife and daughter were pulled over. They filed suits individually and on behalf of their daughter claiming that motorcars breached the lease agreement.

Only an intended third party beneficiary has enforceable rights under a contract to which he is not a party. To be an intended beneficiary there must be evidence that the K was intended to directly benefit that party

Oliveiro v. Transdev Services, Inc.

San Fran started a program to provide transportation to disabled persons. They entered an agreement with transport corporation Transdev to administer all aspects of the program. They would provide the program via subcontracts with transportation service providers such as the Yellow Cab Cooperative. Oliveiro alleges that Transdev breached its obligations under the agreement.

Different from the Taylor case in that it was not necessarily that the promisee needed to intend but that they needed to know there would be a benefit

Statute of Frauds - Application to sale of goods

General Rule:
Ks for the sale of goods with a. value over $500 must be in writing, with sufficient terms to evidence that a K was entered into, and signed by the party against whom the K is being enforced

Exceptions to Statute of Frauds to Sale of Goods

Merchant exception: an agreement between two merchants may still be valid if a writing is sent to the person denying the K within a reasonable time after the agreement is made, and the party receiving the writing does not repudiate it within 10 days of receipt

Specially manufactured goods exception: an agreement for sale of goods that much be specially manufactured for the buyer, which cannot be sold to others, and on which the seller has already made substantial progress may still be enforceable without a writing

Pleading or testimony exception: if the party, against whom the K is being enforced admits in a pleading or testimony that the K exists, the K is enforceable as admitted

Payment made exception: a K for which payment has already been received and accepted is enforceable

Modification

General rule is that you can modify a contract but the modification must have all the elements of a contract (consideration, offer, acceptance, etc..)
You can't discharge or modify an agreement that had a third party beneficiary if the agreement says you can't
If the contract does not bar it then the promisee retains the power to discharge or modify the duty
But if someone has relied on the agreement then it cannot be modified

Assignment

when an assignor wants to give their right to an assignee and at that point the obligor has to perform for the assignee

Restatement §317

Contractual right can be assigned unless (default rules subject to contracting around)
If the assignment changes the obligor's contractual obligations (materially changing chance of obtaining performance)
If the assignment is forbidden by statute
If the assignment is precluded by contract