Contracts Outline NYU Fall 2004, Professor Barry Friedman Chapter 1 What Promise Ought We Enforce.............................................................. 8 1. Why we enforce promise......................................................................................... 8 1.1. Moral claim (Foundational) ........................................................................ 8 1.2. Efficiency / Mutual exchange: we can not exchange things simultaneously.............................................................................................. 8 1.3. Reliance: somebody relies on the promise and changes his plan............. 8 1.4. Will theory: somebody makes the promise means he wants the promise to be enforced. .............................................................................................. 8 1.5. Benefits unjustly retained............................................................................ 8 2. Promise with good consideration........................................................................... 8 2.1. Bargain for exchange is the test of good consideration ............................ 8 2.2. Past consideration is no good consideration.............................................. 9 2.3. Moral promise could be enforced under material benefit rule................ 9 2.4. Illusory promise is no good consideration ................................................. 9 2.5. Conditional promise could be good consideration.................................. 10 2.6. Good consideration could be implied....................................................... 10 3. Promise promisee relies on (Promissory estoppel)............................................. 10 3.1. Mere gratuity could be enforceable if it caused the detriment of the promisee...................................................................................................... 10 3.2. Reliance test (RK 90-1).............................................................................. 11 3.3. More liberalization under 2nd restatement .............................................. 11 3.4. Reliance damage should be compensated................................................ 11 4. Unjust enrichment (Restitution) .......................................................................... 11 4.1. Elements of restitution............................................................................... 11 4.2. The claimant must expect the enriching party would pay ..................... 12 4.3. Restitution amount..................................................................................... 12 4.4. Restitution could exist in martial relationship........................................ 13 5. Miscelleneous ......................................................................................................... 13 1 5.1. Promise to pay indebtedness is enforceable even if run out of statue of limitation (RK 82) ...................................................................................... 13 5.2. A charitable subscription or a marriage settlement is binding without consideration (RK 90-2) ............................................................................ 13 5.3. Covenant does not matter......................................................................... 13 Chapter 2 Formation of Contracts ............................................................................. 14 1. Mutual assent ......................................................................................................... 14 1.1. Subjective theory........................................................................................ 14 1.2. Objective theory ......................................................................................... 14 1.3. Contract in jest is enforceable................................................................... 14 1.4. Latent ambiguity and ambivalent assent make no contract .................. 14 1.5. Complete contingent contract v. Relational contract ............................. 15 2. Offer .......................................................................................................... 15 2.1. Offer is the last stop but one to reach a contract .................................... 15 2.2. Offer is a promise conditioned on acceptance......................................... 15 2.3. Offer is the manifestation of willingness to enter into a bargain (RK 24) ................................................................................................................ 15 2.4. Ad is generally deemed invitation to deals with some exceptions ......... 15 2.5. Offer needs to be reasonably certain........................................................ 16 2.6. The moment of reaching assent could be undetermined (RK 22-2, UCC 2-204-2)........................................................................................................ 16 3. Acceptance .......................................................................................................... 16 3.1. Offeree can accept by promise or by performance, if not required by offeror (RK 30, UCC 2-206-1)................................................................... 16 3.2. Acceptance by promise (RK 56) ............................................................... 16 3.3. Acceptance by performance (RK 54) ....................................................... 17 3.4. Silence generally can not constitute acceptance with some exceptions (RK 69)........................................................................................................ 17 4. The requirement of definiteness........................................................................... 17 4.1. The material terms need to be certain in the offer................................. 17 4.2. Indefiniteness in the contract could be filled in by the court................. 18 2 4.3. The quantity must be certain.................................................................... 18 4.4. The contractual price could be uncertain................................................ 18 5. Terminate the offer................................................................................................ 18 5.1. Rejection (RK 38)....................................................................................... 18 5.2. Counter-offer is rejection (RK 39) ........................................................... 19 5.3. Lapse of time (RK 41)................................................................................ 19 5.4. Revocation................................................................................................... 20 6. Firm offer (Option contract) ................................................................................ 20 6.1. Offer is a promise conditioned on acceptance......................................... 20 6.2. Option contract is binding with good consideration (Dickinson) (RK 25) ................................................................................................................ 20 6.3. In firm offer with no consideration, the offeror generally can revoke at any time before acceptance (Dickinson)................................................... 20 6.4. Exception under RK 87 (recital of purported consideration)................ 20 6.5. Exception under UCC 2-205 (firm offer with no consideration) ........... 21 6.6. Exception under reliance (option contract with no consideration) ....... 21 6.7. Remedy for revoking firm offer................................................................ 22 6.8. Relationship between firm offer and lapse of time ................................. 23 7. Battle of forms under UCC 2-207 ........................................................................ 23 7.1. Common law makes last form before performance to be contract ....... 23 7.2. Acceptance with additional or different terms makes the contract unless they materially change the assent (UCC 2-207-1)................................... 23 7.3. The different (inconsistent from the terms in offer) terms should be knocked out and filled by gap fillers (Northrop) (Proposed UCC 2-207).. ................................................................................................................ 23 7.4. The additional (not different) terms are proposals (UCC 2-207-2)....... 23 7.5. Between merchants, the proposed additional (not different) terms becomes parts of the binding contract unless they materially changed the assent (UCC 2-207-2)........................................................................... 23 7.6. If all the provisions do not work, conduct by parties can make a contract for sale (UCC 2-207-3)................................................................ 24 7.7. Buy now-Notice later contract.................................................................. 25 3 8. Statute of frauds .................................................................................................... 28 8.1. Statute of frauds are rules that require some contracts in writing (RK 110) .............................................................................................................. 28 8.2. Purpose of the writing requirement is to prevent fraud or perjury of contracts never in fact made (RK 131 comment c)................................. 28 8.3. Coverage of statute of frauds (RK 110) ................................................... 28 8.4. Writing requirement under statute of frauds (RK 131, UCC 2-201-1) 28 8.5. Written confirmation between merchants