Contracts I - Cunningham

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Chpt 1-Remedies
Overall questions: what kinds of promises will we enforce? What about almost promises?
What should the remedy be? e careful not to overcompensate!
"! #$pectancy and other interests
i! "n %eneral the %oal of contracts is to achieve the most economic %ood! &ometimes
breaches are efficient and should be encoura%ed
ii! #$pectancy or reliance dama%es?
1! 'awkins v (c%ee- )atient suin% dr! for non performance of a promise to make his
hand %ood or perfect! *r! ar%ues that it was not a promise+ but court finds that it
was an inducement
a! #$pectancy - Court awards difference in value between what was actually
performed and what was supposed to be performed+ ie between deformed
hand he %ot and %ood hand he was promised!
,! &ullivan v o-connor - patient suin% a doctornose .ob mess up case!
a! /eed clear instructions for medical contracts cases+ otherwise its .ust
malpractice!
b! #$pectancy it too harsh in cases where there0s no ne%li%ence! 1se reliance!
2! Courts prefer to use e$pectancy dama%es because reliance is hard to measure! "n
%eneral e$pectancy measures dama%es as if the contract had been completed!
Reliance measures as if the contract were never made! Restitution is rarely used!
a! 3avors the party that was breached a%ainst if you usually put them in as
%ood a position as if the contract had been completed!
b! Reliance isn0t as economically efficient and risks bein% punitive!
iii! "s it the difference in value or the cost of completion?
1! 4roves v .ohn wunder- owner suin% contractor for cost of completion for %radin%
he did not finish when he took the %ravel off of his land!
a! cost of completion- minority rule!
b! *ifferent from peevyhouse bc the re%radin% was a central part of the
contract!
,! )eevyhouse- owner suin% contractor for cost of completion for not fillin% in
minin% holes on their homestead!
a! would rather under compensate than over compensate!
b! *ifference in value - ma.ority rule!
iv! Contract 5 market differential is the measure of dama%es
1! 6cme (ills- mill and farmer made an a%reement! 3armer didn-t deliver! ut the
mill bou%ht wheat for cheaper and farmer %ot a better price for his wheat!
a! 7he dama%e is the contract 5 market differential+ which is ne%ative in this
case+ so no dama%es are awarded
i! 4ot restitution for the sacks!
b! 8aurin v decoralis- house seller removed the %ravel on the property before
new tenant came
i! *ama%es here are not diminution of value of the property bc the
property-s value was not based on %ravel! 7he dama%es should be
the profit from the %ravel but not the work put in!
c! Courts don0t use punitive dama%es in %eneral 9restatement 2::; unless
there was a tort committed that would allow for dama%es!
""! 8imitations on e$pectancy
i! *ama%es must be miti%ated if repudiation is clear and certain
1! Rockin%ham county v! luten brid%e-county commission commissioned brid%e and
then revoked! ut the contractor finished it! &ued for cost of completin% the
brid%e
a! *ama%es from breach have to me miti%ated as much as possible!
b! 8ein%an%-reacher still has to pay for dama%es that can0t be avoided!
c! <earsa%e- "f all costs are fi$ed then all costs are awarded
,! )arker v twentieth century fo$- parker offered a role with a lot of control in a
musical! Replaced with a western with no control!
a! 6n employee has to accept employment to miti%ate dama%es+ but the work
has to be comparable or substantially similar!
b! illeter- don0t have to take a .ob if its for less money+ but if you do take the
.ob+ it waives the ri%ht to sue for the difference because it-s a new offer
and new contract!
ii! uyers and sellers dama%es under the ucc
1! (issouri furnace v cochran- contract for coke at 1!,=! seller breaches because of a
coke shorta%e and buyer enters into contract for >!==!
a! *ama%es are based on the difference in market price for each delivery date
and the contract price!
i! Overruled by the 1CC ,-?1, ; @7he buyer may recover from the
seller as dama%esthe difference between the cost of cover and the
contract price to%ether with any incidental or consequential
dama%es as hereinafter defined 9&ection ,-?1:;+ but less e$penses
saved in consequence of the seller-s [email protected]
1! 6s lon% as the actions are reasonable at the time its done
then the breachin% seller is obli%ated for dama%es! "e in a
risin% market!
b! Reliance coopera%e- buyer sued seller for non delivery of staves! Court
held that bc the contract performance date was dec 2=+ the buyer was not
obli%ated to miti%ate under anticipatory repudiation before that date!
uyer entitled to full dama%es
i! 6nticipatory repudiation doctrine is to held the in.ured party and
should be interpretted that way!
ii! uyers can cover by seekin% a new contract+ but are not required
to!
iii! 8ook at 1CC ,-A1=
,! Remedies availabe to buyers when seller breaches:
a! Wait commercially reasonable time
b! Cancel contract and %et remedy and cover losses with new contract
c! &uspend performance
2! 6nticipatory repudiation
a! &uit can be brou%ht before the date of performance+ but does not have to
be
i! 6llowed to wait for performance for a @reasonable [email protected]
ii! 1CC encoura%es coverin% and in.ured party self help!
>! /eri v retail marine- buyer sues seller for his deposit on a boat+ seller counter sues
for lost profits! 8ost volume seller!
a! 1se ucc ?=B not ?1B
b! c seller0s business is e$pandable9infinite capacity to meet demand; then
he should %et lost profit+ cost of stora%e+ and the rest of the deposit %oes
back to the buyer!
c! 6nalysis starts with ,-?=2 in this case
i! can either resell ,-?=A or
ii! recover dama%es ,-?=B
iii! Consequential dama%es and foreseeability
1! *ama%es should only be %iven when they are reasonably foreseeable or foreseen
and arise naturally out of the breach
a! 7here are special dama%e and natural or %eneral dama%es
i! 4eneral- /o special communication for %eneral dama%es!
ii! &pecial- 6rise from special or unique circumstances! 3or recovery
the seller must have knowled%e and the consequences have to be
communicated at the time of formation!
b! 'adley v ba$endale- mill needed shaft repaired to keep workin% and told
that to deliver company! *elivery company promised ne$t day delivery
but did not perform! (ill sued for lost work
i! 7hese dama%es were not foreseeable
c! 8amkins- farmer could not recover for lost crop when his headli%ht for his
tractor was not delivered! 7he dama%e was too remote!
d! Cictoria laundry- could recover when new washin% machine was : months
late for normal business and they specified they wanted it asap+ but not for
the specially lucrative contracts
e! 'ector martineD- the harm doesn0t have to be the most foreseeable+ it .ust
has to a foreseeable harm!
,! )romisor is at informational disadvanta%e for what0s at stake! "t has to be
particularly laid out and communicated
iv! 8imitations on #$pectancy:94oal is compensation;
1! 6voidability 9miti%ation;
,! 3oreseeability 9as we saw in hadley;
2! Certainty-don0t want over compensation!
v! #motional distress is not a reasonably foreseen dama%e in contracts
1! Calentine v %en am credit- employee was fired and she sued for emotional distress
from loss of .ob security!
a! 7his is not a contract claim+ otherwise every breach would have emotional
distress
i! #$ceptions for marria%e and loss of personal liberty or cases
dealin% with death
b! #mployment at will is the rule
,! 'ancock- emotional distress not relevant in contracts where the terms of the
contract cover the breach 9ie a housin% contract;
vi! 1ncertainty and lost profits-the value should be calculated as relates to the in.ured party
not the cost of the breacher0s performance
1! 3reund v washin%ton sq press- professor contracted to have his book published!
7he publishin% house breached and didn0t publish! )rofessor sou%ht specific
performance+ but that is not %iven unless money dama%es won0t do!
a! )rofessor didn0t actually lose anythin% e$cept some time! /ominal
dama%es only!
b! *ama%es are based on natrual and probable consequences of breach to the
plaintiff+ not what the defaultin% party saved!
c! Reliance could0ve been awarded!
d! 3era shoppin% mall case- "n order to recover on future profits+ there has to
be some certainty as to how muc they would be
i! Where in.ury is found+ recovery is not precluded for lack of precise
proof!
"""! Reliance and restitution alternatives
i! Reliance-Can0t seek e$pectancy and reliance dama%es bc that would overcompensate!
Where its too hard to determine e$pectancy+ reliance is used!
1! Chica%o colliseum v dempsey- chica%o coliseum contracts with dempsey for him
to fi%ht there and nowhere else! 'e repudiates and breaks an in.unction a%ainst
him and fi%hts somewhere else!
a! can0t recover for pre contractual reliance before desmpsey si%ned!
*empsey is unique and difficult to %et so there was no %uarantee that he
would si%n with them!
b! Can collect for variable costs 9ie subcontractor or architect; after he si%ned
contract related to .ust this fi%ht+ but not for fi$ed costs!
c! 7his case is the rule+ but there are some e$ceptions
i! &ecurity stove-reliance makes sense with a carrier 9delivery
company; so covered pre contractual costs because the breach
made the eneterprise value!
ii! 6n%lia tv- reasonable that company would incur pre-contractual
e$penses! Reed isn0t unique+ so he0s liable! 'e should know they0ve
e$pended stuff!
,! 8osin% contracts- 8! 6lbert and son vs! armston% rubber! reliance dama%es are
reduced by the loss that the buyer would0ve incurred on the contract!
a! &eller has to prove the buyer0s loss!
2! Can0t have relieance if you0re the breachin% party!
ii! Restitution
1! /o reliance or e$pectancy where the contract is void because it falls under statute
of frauds unless the breachin% party has benefitted from activity under the
contract!
a! Can collect restitution+ even where the contract is void for statute of fraud!
,! oone v coe- land owner orally contracted for farmer to come work his land!
3armer came but there was no barn up or materials for a house furnished!
a! 7he land owner did not receive any benefit from the part of the contract
that was performed! &o no recovery
2! 1& v al%ernon blair- steel subcontractor does not receive the cranes he needs from
the contractor and breaches to miti%ate his losses!
a! 'e can recover for the work done already and should not be punished for
his miti%atin% breach!
b! 7he standard is reasonable value of work already performed
c! Euantum meruit- collect for market price! /on breachin% party sues then
the recovery %oes on market price of what the work was worth+ which
could be more than the contract price! ut if the subcontractor breaches
then they are capped at the contract price!
>! Can recover under oral contract for work performed in %ood faith because its not
the contraact that0s bein% enforced+ but prevention of un.ust enrichment!
:! <earns- buyer and a seller+ seller fi$ed up the house for the buyer in an u%ly way
at sellers0 request!
a! Recovered for cost of what they did that buyer asked for! Can0t recover for
what it cost to fi$ for the u%liness for a new buyer!
b! "f its somethin% the breachin% party asks for you+ you can recover even if
you don0t %et the benefit!
iii! )laintiff in default
1! ritton v 7urner- worker contracted to work for 1, months! 8eft after F!: months!
Old rule was that he could not receive any compensation bc he didn0t finish the
contract!
a! /ew rule- employer pays for work that he received minus costs incurred
from the breach
b! Old rule punished partial performance more than total breach+ which didn0t
make sense!
c! Recovery is value received minus the harm to the employer!
d! 6 miti%ation to this rule is 7hach+ where one who breaches shouldn0t be
favored over the other party!
,! )inches v swedish evan%elical- contractor messed up on specs for the church!
Church wanted specific performance or the cost of remedy which would have
ne%ated any profits
a! Can either use cost of completion or dimunition in value! When cost of
completion is too hi%h+ use dimunition!
b! #ven if the contractor hasn0t substantially performed then they0re entitled
to work performed
c! Without partial recovery+ partial performance would be punished more
than breach!
2! <elly v hance- abandonment of work in bad faith precludes recovery
"C! &tipulated remedies-liquidation dama%es or penalties
i! Cines v orchard hill- buyer puts down deposit on a house and breaches! 7he deposit was
in the contract as liquidated dama%es but buyer seeks to recover bc the house was sold for
more than double A years later!
1! 7he time to measure the harm was at breach 9not A years later;! "f seller could0ve
sold for more at the time of breach then the buyer is entitled to that difference
back! uyer has to establish what the seller0s dama%es are!
,! *eposit was stipulated as liquidated dama%es and 1=G is normal in real estate
because its hard to prove dama%es!
a! 7he rule is that buyer can %et back a deposit minus the loss to the seller!
Real esttate is the e$ception to this!
2! *eleon+ purchaser had paid for most of a house but was always late! &eller was
fed up and sold to someone else! *on0t usually return this money+ e$cept that it
would create such an unfair situation if it wasn0t returned!
a! "f you breach you can0t recover reliance+ as in the architect!
ii! City of rye v public services ins! Co! - contractor contracts with city to build apt
buildin%s! 7he contractor %oes over deadline and doesn0t pay the ,==H a day penalty
stipulated in contract!
1! 7he court upholds this because the liquidated dama%e clause is disproportionate to
any loss the city actually incurred! "t was solely punitive!
,! ,-?1B reco%niDes dama%es if theyr0e reasonable with respect to anticipated harm
or the actual dama%es! 6nd the restatement only reco%niDes anticipated harm!
2! horn- partners who a%reed not to sue each other! One breaches! where dama%es
are hard to measure+ the court will uphold a liquidation clause!
>! (uldoon- widow stipulated 1=H day penalty if her husband0s memorial wasn0t
finished on time! Court holds that there was no harm to her from the delay so she
can0t collect!
iii! courts encoura%e liquidated dama%es clauses that are reasonable because they reduce
liti%ation
1! &ometimes courts will increase liq dama%es bc too little would be seen as
arbitrary and punitive+ while the ri%ht amount is .ust!
iv! 3retwell v protection alarm- alarm company that stipulated a limit to its dama%es and
liability 9and encoura%ed customers to %et insuarnce;! 3retwell0s are broken into and
alarm co! didn0t follow correct protocol!
1! /ot allowed to recover bc offerrors can put clauses in contracts limitin% their
dama%es as lon% as they0re clear and understood by offeree!
C! #quitable remedies- specific performance and in.unctions
i! 1niqueness and adequacy of remedy
1! (anchester dairy v hayward!- farmer breaches in contract with dairy coop!
ori%inal stipulated dama%es were :H a head of cow+ but they seek specific
performance
a! Court holds that specific performance is too cumbersome but an in.unction
preventin% other sales would be appropriate!
i! "n this case :H a head doesn0t cover the actual cost of the breach bc
it-s a cooperative so one breach weakens the whole!
,! Can Wa%ner adv v sIm corp- lessee had lease to a very unique billboard in nyc!
8essor bou%ht the buildin% and wanted to revoke its contract! 7here was an
ar%ument over the interpretation of a clause as to whether only a seller could
breach or if a new tenantJbuyer could breachK
a! Ruled that even when somethin% is unique specific performance isn0t
awarded unless its value can0t be assessed!
i! "n this case it could be assessed!
b! Curtice bros! - court awards an in.unction a%ainst a farmer who had
contracted to sell his whole tomato crop to a canner and then breached!
7he canner is in a unique situation bc it needs to run at full performance
for A weeks!
i! "n.unction is appropriate because the canner had many suppliers
and this one dropped out! 7hat makes the factory drop below the
feasability line so then that one breacher ruins the whole cannin%
facility! 7he in.unction forced the farmer to sell to this canner if he
wanted to sell at all!
c! &ometimes specific performance is impossible and spec performance
won0t be used when its not unique 9paloukos;
2! 8aclede %as co! v amoco- amoco had contract with a %as supplier to %ive %as!
6moco had no power of cancellation! *urin% the oil embar%o they cut supplies
and raised prices! 6moco breached claimin% lack of mutuality!
a! Lust bc one party can0t %et out+ doesn0t make it a void contract! 7here was
an end to the contract in that all the units would eventually have natural
%as!
b! 6moco is providin% a unique service in that it %ave a lon% term propane
contract!
c! oth parties don0t need the potential to be sub.ected to specific
performance for it to be a valid remedy!
d! #$pectation interest was uncertain because there0s no quantity specified!
ii! )ersonal service contracts and non competes
1! 3itDpatrick v (ichael- caretaker sued bc she was promised hu%e inheritance if she
cared for man and his now deceased wife! 'e kicked her out and that inheritance
was part of her pay!
a! 7his was in equity court so it only deals with specific performance or not
b! Can0t do specific performance with personal service contracts bc it would
create an unpleasant situation
c! Court also has not way to enforce this!
d! #quity will not enforce a ne%ative covenant where it could not enforce a
positive one! 1nless it would create new dama%es+ like a defendant breach
with a non compete clause!
,! *allas cowboys case- definition of unique is broad! "f there0s no one else available
to do the same .ob at the same level then he is unique!
2! )in%ley- specific performance not %iven when breachin% a lon% term contract for
employment does not prevent employer from findin% a replacement
a! five other musicians in town who could play+ so he was not unique
>! 3ullerton and data mana%ement- non competes are enforceable but they have to be
pared down to a point where they make sense and our fair!
a! /on compete clauses that protect a le%itimate business interest will be
enforced for a reasonable amount of time!
b! 7he bar%ainin% position between employeesJemployers isn0t always fair! 2
different ways of fi$in% them:
i! 1nconscionable+ throw them out
ii! Reasonable alteration
iii! #ditin% them
iii! Ludicial capability
1! /orthern deleware indus dev v ew bliss co! - steel maker wants specific
performance to force the contractor buildin% his mill to hire more workers! 7he
contract contemplated this but there was nothin% specific
a! Courts will not intervene and order specific perfromance for buildin%
contracts unless there0s a public interest or unique circumstance
,! 7yson0s corner case- specific performace was %iven for a contract where a dept
store was promised %ood terms in e$chan%e for support for Donin% problems! c it
was in a new suburban locaiton it was too hard to measure dama%es!
2! "n %rayson+ the court ordered the finishin% of a buildin% despite the fact that the
contractor could not %et fundin%! &ettled for dama%es!
a! 7he court had to enforce arbitration result because it was in the contract
that arbitration was how thin%s would be resolved!
Chapter ,- %rounds for enforcin% promises
1! 7heories of liability
a! #$press actual contract-focuses on a bar%ain and consideration! )atient and dr discuss a deal! *r
performs the procedure+ patient is obli%ated to pay
b! "mplied in fact contract-actual contract+ but not e$pressed e$plicitly! ut its available in the
facts+ which allows for the inference! /ormal course of dealin%s
i! patient comes in + patient complaims+ dr %ives some advice! /o fee or a%reement
discussed! 3rom the verbal e$chan%e+ there0s clearly a bar%ain! "ts an actual contract+ .ust
not e$press!
ii! all of the remedies are available for both of these
c! "mplied in law contract-when the bar%ain isn0t e$press or inferable! 6rise from impulse of un.ust
enrichment!
i! dr %oes to lunch+ unconscious person is on the sidewalk! *r! adminsters service! 7his is
what dr does! 6nd we imply from social norms that unconscious person wants help and
that its normal to pay!
ii! /othin% e$plicit+ and no facts to infer from! ut perhaps there was a matter of request!
iii! 8ookin% to make sure it wasn0t a volunteer and that there was a benefit conferred!
iv! #$pectancy and reliance don0t work here!
1! Or restitution
a! quantum meruit+ value of benefit conferred 9is a form of restitution;!
d! )romissory estoppel-it-s a promise that we stop someone from denyin%! Mou0ve induced
someone to rely on your promise+ so we stop them from denyin% and %ive a remedy if that0s the
only way to prevent in.ustice!
i! reliance dama%es
ii! not that different from bar%ain for e$chan%e 9e$press contract;! #$cept that there0s no
consideration
1! /eed to distin%uish %ifts from bar%ains 9hamer v sidway and fischer v union trust;
,! 3ormality and bar%ain theory of consideration
a! 7he more a%reements that are made the more we have to enforce!
i! /ot all promises are enforced+ like those that are .okes or if there0s a %ood reason not to
enforce!
ii! )romises are assumed enforceable unless there is a reason not to!
iii! Only enforce promises that involve bar%ains+ ie consideration
b! 3orm and consideration
i! Con%re%ation kadimah toras moshe v deleo- dyin% man made a promise to a syna%o%ue
to %ive money and they would name some thin% after him! 'e died without writin% a
check and now the syna%o%ue is suin% the estate!
1! 6n oral promise for a charitable subscription without consideration is not
enforceable!
ii! 'amer v! &idway- nephew promises uncle to abstain from drinkin%+ smokin% and
swearin% until he0s ,1! nephew complies+ but uncle holds money with interest until later!
1ncle dies!
1! consideration can be a %ain to one party or a loss to another or the abandonment
of a le%al ri%ht
,! 7he nephew0s %ivin% up his ri%ht to those habits is consideration!
a! We enforce trades 9hamer;
2! #arle- a nephew who promised to come to aunt0s funeral in e$chan%e for :== %ave
consideration in his promise!
a! )romise for a promise is consideration
>! Whitten- it is not consideration when one party slips in somethin% they0ll abstain
from+ but its not what the other party wanted!
a! Consideration must be bar%ained for
iii! 3ischer v 1nion 7rust- father promises dau%hter title to land! *au%hter .okin%ly %ives
father one dollar as consideration! 6fter his death+ the banks confiscated some of the land
to pay the rest of the mort%a%e off!
1! When the consideration is so much smaller than the value of the thin% 9 a dollar in
this case; you have to look at whether or not it-s a .oke!
a! 6ffection is not consideration nor is a nominal amount!
b! We don0t enforce %ifts or .okes 9fischer;
iv! atsakis v demotsis- durin% wartime promisee wants to %et out of %reece! )romisor %ives
her equivalent of ,:H in e$chan%e for her promise to pay ,===H after the war!
1! Court held that .ust bc consideration is small+ doesn0t make it void! 7his was
wartime so she was payin% for the ability to %et this money at all!
a! We enforce hard bar%ains9batsakis;
,! #mbola-insane %uy who0s friend %ave him the money to try to reclaim his %old
mine! 7he friend was entitled to the 1=+=== promised bc thou%h the consideration
was small+ the risk of %ettin% nothin% was bi%+ makin% it valid! 8ike an
investment!
2! 1nliquidated claims
a! *uncan v black - seller settled dispute over a cotton allotment 9, years after buyin% land= with a
buyer with a 1:== note! &eller then refused to pay the note! 'e was suin% to %et the 1:== value
of the note
i! Consideration can0t be the forebearance of pursuin% an invlaid claim and the cotton
allotment wasn0t valid!
1! When consideration is %ivin% up a claim+ it can be valid if claim was valid
9duncan;
ii! &ettlement and postponment 9military colle%e; of a claim are both vaid consideration!
>! (ere volunteers cannot collect for performance!
a! (artin v! little+brown and co!- a %uy found that d0s book was pla%iarised! Offered to point it out
and even send in hi%hli%hted copies of the book! Company said+ yeah send it then pursued the
claim but would not pay him!
i! 6 contract requires the specification of terms and a bar%ain and consideration! 7his had
none of that!
ii! 'e also seeks to recover under quasi contract or contract in law! 7his prevents un.ust
enrichment at the e$pense of another! ut there has to be proof that offeree wanted this
thin% done
1! there0s no proof that the company wanted him to do this
iii! Colunteer can0t impose contractual liability+ no bar%ain+ not even a promise 9martin;
b! Collins- cow boardin% case! 6n implied in law contract 9or quasi contract; e$isted bc the boarder
wrote to the owner that his cow was bein% held at a certain price every day! 6nd the owner
accepted with silence!
c! &eaview ass0n- implied in fact contract e$ists when offeree knows about the services and benefits
from them even without action!
i! #$pectancy interest is what0s protected
ii! 7his is also implied in law+ but focus on implied in fact!
:! )romises %round in the past
a! 8ook to see if there0s a restitution interest! "s there any benefit to the promisor? "f yes+ they pay!
"f not they don0t
b! (ills v! Wyman- son is sick at see and pl nurses him to help! 3ather promises to pay after the son
dies!
i! &omethin% must be %ained from a promise for it to be enforced!
ii! 7here is no consideration here! 7he care had already been %iven! Only moral obli%ation
requires him to pay nurse!
1! /urse could0ve sued deceased0s estate if he0d had somethin%+ because a benefit
would0ve been conferred!
c! Webb v mc%owin- webb saved mc%owin0s life and mc%owin promised him 1:H every two weeks
for the rest of his life!
i! 6n event in the past can be %rounds for consideration
1! "n this case webb could0ve %otten restitution on the spot and by relinquishin% that
claim it was consideration!
,! 7his is restitution interest
ii! where the promisee takes care of improves or preserves promisor0s property without his
request+ the subsequent a%reement is enou%h consideration bc of material benefit
received!
1! (oral obli%ation is enou%h+ where a material benefit was received!
,! enefit to promissor or in.ury to promisee is sufficient consideration!
2! 6%reement to pay after and acceptance by mc%owin shows that service was not
free!
iii! 'arrin%ton- man saves a husband from his wife0s a$ blow! 'ere there is no enforceable
contract bc this did not occur at work and there was no intent to char%e 9see &&11>;
1! 7here is no unust enrichment here bc he was not at work and he couldn0t normally
%et paid for that!
iv! #dson- man du% a well for d0s tenant! * promised to pay after seein% the well! * ar%ued
that this promise wasn-t enforceable bc it was %round on a past action!
1! 7here was nothin% %ratuitous or voluntary in the act and it clearly benefited the d!
v! (uir- courts will enforce a moral obli%ation! #ven thou%h the contract was void under
statute of frauds and the written part of the contract was too late!
1! "f a contract that would be barred under statute of frauds or statute of limitations
but the promisee promises to keep his promise+ then its enforceable
vi! "n re schoenkermann- a promissory note can overcome the usual assumption that
household services are rendered %ratuitously!
A! )romissory estoppel or reliance on a promise
a! Ori%ins+ relations to consideration
i! <irksey v kirksey- man invited his brother0s widow and children onto his land! &he
travelled and lived there for two years but he kicked her off!
1! Reliance is not enou%h to enforce a %ratuitous promise! 7his is before promissory
estoppel+ but could be used!
a! 'as to be detriment to promisee
,! Rickets v scotthorn- 4randdau%hter quit her .ob at her %randfathers offer to
support her! reliance plus a promise is enou%h to enforce a contract!
a! 7here was a detriment here! )romise of a detriment isn0t enou%h+ but
actual detriment is!
b! 4randdau%hter quit .ob! 7he %randfather wanted her to do this enou%h
that he entered into an a%reement!
c! )romissory estoppel is used here
2! )rescott- silence is not enou%h for acceptance! 7he letter sayin% that the insurance
company would renew if they didn0t hear anythin% isn0t definite enou%h! )l had to
do somethin%+ like pay premiums or send some acknowled%ment!
a! 7his is different from cow boardin%- lar%e benefit for cow boardin% for >=
days! 'ere there0s no direct benefit conferred! 7here would0ve been if the
premiums had been paid!
ii! )romissory estoppel means preventin% a party from withdrawin% a promise if the
promisee has relied on that promise!
1! 7here is an actual promise here+ and the only way to make .ustice is to enforce!
iii! 6lle%heny colle%e v chataqua bank-dyin% woman promises money to a colle%e! &he %ives
1=== of it and colle%e says it will %ive it to scholarships for ministry students! &he dies!
1! "mplied bilateral contract
,! *onative promises are enforceable! 6ssumption of the duty is bindin%! "mplied
duty to perpetuate the name of the colle%e
2! 6 promise in condition to name somethin% after someone is enforceable! 7he
1=== came with an implied promise to promote the name!
>! "mportant to distin%uish between detriments that occur with the promise and
detriments that are the motivation for the promise! Only the latter are enforceable!
:! 7his is different than promissory estoppel! )rom estop wouldn0t have worked
because there was no reliance here! 7his is the ny circuit and it doesn0t reco%niDe
prom estop! &o they manufacture consideration!
b! Relation to consideration and the role of reliance!
i! #ast providence credit v %eremia - promisee0s take out a loan on the car with car as
collateral and promise to pay insurance or have the bank pay it and the insurance plus
interest will be added to their loan! )romisee0s stop insurance payment+ bank says it will
take them over and doesn0t+ car accident!
1! 6 promise to pay interest on an additional loan can be consideration!
,! 7here was no actual reliance here! 7he borrowers were not capable of makin% the
payment+ so they had no choice+ so no reliance!
2! )romissory estoppel 2 part test:
a! Was the promise reasonably e$pected to induce action
b! Was the action induced
c! Can in.ustice be avoided only by enforcement
ii! "I" holdin%- court used implied promise for a charitable hospital subscription! 7he court
tried to show reliance+ but the work would0ve continued without that contribution!
1! 'eld that there was a request or invitation to continue its work and that this is a
unilateral contract and will be enforced!
a! @Continue your [email protected] is enou%h for consideration
iii! &alsbury- this is a decision that contradicts deleo and the courts are split! Court enforces
charitable subscription to new colle%e based on restatement &&F= and nothin% else!
1! 1se public policy %oals!
,! 7his case was overturned! /ot automatic enforcement of charitable donations!
Consideration and reliance aren0t required+ but they have to be thou%ht about
iv! 1se in equity and part performance
1! &eavy v drake- son was livin% on land and had invested money in it!
a! &tatute of frauds prevents enforcement of oral contracts re%ardin% land
e$cept when there has been partial performance or reliance
b! &eems that this is an implied in fact contract!
c! )rom estoppel in the employment conte$t
i! 3orrer v! &ears- employee for sears quits and starts farm! &ears asks him to come back for
permanent employment in e$chan%e for %ivin% up the farm! 'e %ives up the farm and
takes a loss and sears fires him three months later
1! c employment at will is the prevailin% doctrine unless specified otherwise sears
fulfilled their side of the contract!
a! 4ivin% up the farm was consideration+ and forrer relied+ but prom estop
isn0t used because sears fulfilled their part of the promise!
,! 'unter- the situation is different in a case with a fla%%er where she was never
%iven the new employment after quittin% her .ob!
a! "nducin% someone to quit their .ob is %rounds for prom estop!
2! &tearns v emery waterhouse- sears employee left his comfortable .ob in e$chan%e
for an oral promise for employment to a%e :: at FF+===! he was demoted after two
years and then fired!
a! 7his promise falls under stat of frauds so prom estop can0t be used!
b! Mou can use promis estop for reliance on employee0s promise+ but not on
employer0s bc its too easy for an employee to lie!
c! 4oldstick- promissory estoppel with employment will ruin employment at
will!
d! 6pproaches to dama%es
i! 4oodman v! *icker- franchisor relies on emerson0s promise of awardin% a franchise!
'ires salesmen etc+ and then the radios never come!
1! )romissory estoppel is used bc re%ardless of what the terms of the written
a%reement were+ the franchisor obviously said thin%s that induced reliance!
a! 7his reliance should be recovered for+ but the lost profits+ or e$pectancy+
shouldn0t be because you can0t show what they would be! Otherwise they0d
be recoverable as well because promissory estop is a contract!
ii! 6merican nat0l bank- a %uy si%ned somethin% sayin% he0d received cars and promised not
to attack the validity of the contract! "t allowed seller to assi%n the ri%hts to third party+
which it did! )l is suin%+ but d claims that he never %ot the car!
1! #stoppel in pais means you can0t say that somethin% you said earlier+ wasn0t really
true!
,! 7his is an issue of fact here as to whether pl relied on the statements in the
contract about the contract0s validity! "f they did then the d is estopped from
presentin% that as defense bc the promise was relied on by the bank?
iii! d0ullise - cupo - hinted at rehirin% this woman+ and they didn0t! .ust because someone
ne%li%ently misrepresented themselves doesn0t mean its prom estop! &he should0ve sued
in tort!
iv! 3ried v fisher - fisher had been in a co-lease with fried! 7he lease was si%ned over to brill
and his son and fisher moved and opened a restaurant! When brill breached+ fried sued
fisher!
1! "t is clear that fisher relied on the promise+ so there is promissory estoppel here!
v! (ahban v m%m- clause in lease allowin% termination by either side if the premises were
dama%ed! 1= weeks 6fter a fire+ m%m mailed a letter settin% up new construction plans! A
weeks later they terminated!
1! "mplication that there was no termination and reliance on that were enou%h to
prevent termination
e! Reliance on contract ad.ustments
i! 8evine v blumenthal- lessees tell lessor that they can0t afford the increase in rent that0s
part of the lease! 8essor a%rees to hold off! 8essees skip out on last month0s rent!
1! 7here is no promissory estoppel here because there is no consideration for the
second+ oral promise!
?! "llusory promises
a! Retained discretion-there needs to be some sort of commitment for their to be a contract!
b! 6 promise that is too indefinite for enforcement under bar%ain theory
i! *avis v %eneral foods- woman offers to send recipe to %eneral foods! 7hey a%ree to look
at it but say that even if they use it compensation isn0t %uaranteed! 7hey use it and don0t
compensate!
1! 6 promise that is broad and doesn0t offer any consideration for the promise is not
enforceable
ii! /at nal service stations v wolf- %as station si%ns a contract that if they buy %as from wolf
then they %et a one centJ%allon discount!
1! #ach purchase was its own contract so it doesn0t violate statute of frauds! "t was at
will
,! (utuallity is not a rule in contracts! 6 contract that binds only one side is an
acceptable contract! Once the service station made a purchase+ the wholesaler was
required by the contract to %ive the discount!
2! /o obli%ation to buy+ but if you do+ there0s no obli%ation to sell! "f you do sell+ you
have to %ive a discount!
iii! Oberin% v swain roach lumber- family a%reed with lumber company that if the lumber
company bou%ht a tract of their land at auction+ the family would buy it back and the
company could keep lumber ri%hts! 3amily refused to buy the land
1! Consideration and performance can be the same thin%!
,! 8umber company0s purchase of the land created a bindin% contract!
iv! 4urfein v! werbelevsky- %lass buyer who wanted his %lass shipped within three months
and it never came! uyer could cancel anytime before shipment
1! "f there is a period of time when the buyer would be bound+ but had not yet
received the %lass then that is consideration and there is a contract!
a! 7he time after shipment but before receipt qualified!
c! 8imits on discretion
i! Wood v lucy+ lady duff-%ordon- pl %ot e$clusive ri%hts to lady0s desi%ns in e$chan%e lady
would %et half of profits!
1! "f it looks like a contract its %oin% to be treated that way!
,! "f action on the sales a%ent0s part is implied clearly in the contract 9ie lady0s
payments depended on it; then that is enou%h to be consideration and form a
contract!
ii! Omni %roup v seatlle first- clarks si%ned earnest money a%reement with omni to sell to
omni on the condition that omni %et a feasibility study and it comes out ok!
1! 6 promise for a promise is valid consideration unless the promise is unreasonable
or absurd or illusory!
,! Omni was bound to purchase unless the feasibility report came out bad! 'as to act
in %ood faith!
iii! 8ima locomotive v nat0l steel- nat0l steel promised to provide all of lima0s steel needs
every month! uyer claimed it was void for lack of mutuality bc the amount could0ve
been indefinite!
1! When a supplier is sellin% in the normal course of business+ the normal
requirements of that business will determine what a reasonable amount it every
month!
iv! 3eld v henry s levy- bread maker promised to sell all of its bread crumbs to feld! &eller
stopped makin% bread crumbs bc it wasn0t economical and buyer wouldn0t a%ree to price
increase!
1! 1CC requires %ood faith in output e$clusivity contracts!
a! &eller must do everythin% in its capability to fulfill the contract!
,! Where there0s an escape clause built into the contract+ the seller can0t breach
unless it will destroy his business!
v! Cornswet v amana- franchisor and franchisee had a%reement for ? years with obli%ation
of 1= days notice of termination for any or no reason! 3ranchisor terminated and
franchisee sues!
1! Court holds that the 1= day clause was le%al and therefore not unconscionable so
it was upheld!


Chapter 2- contract formation- Offer+ acceptance+ consideration!
1! (utual 6ssent
a! Contracts are decided based on the ob.ective intent of the parties! Courts also look at the
sub.ective intent and hear testimony on that+ but mostly base decisions on ob.ectivism
b! Ob.ective or sub.ective view of contract formation+ manifested intent!
i! #mbry v! har%adine-mckittrick- employee asked for renewal of contract and was brushed
off! #i%ht days after the 1 year contract e$pired+ embry went into the president and
threatened to quit if he didn0t %et an e$tention! )resident told him not to worry and keep
workin%!
1! Mou can find a contract where one party didn0t intend it if there are si%nals that
induce promisee to believe there was a contract!
a! Contracts are based on words and actions+ not intent!
ii! <abil development v mi%not- helicopter provider met with contractor for 1&3& and
discussed details of the service kabil wanted! <abil then used their estimates in a bid to
1&3&! )rovider backed out+ and Contractor had to pay more for services elsewhere!
1! communications and overt acts of the parties can form a contract re%ardless of
either party0s une$pressed intentions!
a! 'owever+ intentions can be relevant and should be admitted to help
the.ury understand the parties0 actions! ut manifestation controls
iii! /ew york trust co! v island oil- a scam case with oil!
1! 7he standard for interpretin% statements is what a normally constituted person
would have understood them to mean when used in their actual settin%!
iv! Robbins v! lynch- only disclosed or communicated intent counts!
c! "ntention
i! (cdonald v mobil coal- employee relies on employee handbook statements re%ardin%
employee discipline! 'is supervisor also tells him not to worry! Company fires mcdonald
because employment is at will
1! )romises in an employee handbook are bindin% unless there is a very clear
disclaimer that says that the company can chan%e policy at any time!
a! &ayin% its not a contract is not enou%h!
b! Lury question as to whether a reasonable person would think it was a
contract and would0ve relied onit!
,! 7he handbook bar%ained the ri%hts in it for not formin% a union!
a! Court wants to prevent companies lurin% employees with handbook
statements and then not keepin% their word!
ii! <ari v %eneral motors- employee handbook made it clear that the severance plan
discussed in it was .ust for information and details should be worked out with
supervisors!
1! 6 clear statement and disclaimer that somethin% is not a contract 9and the fact that
there0s no consideration %iven by employee; is %ood enou%h to prevent contract
formin%!
iii! )ine river v mettile- a chan%e in a handbook constitutes an offer and employees stayin%
on the .ob constitutes acceptance of that offer!
d! "nvitation or offer?
i! (oulton v! <ershaw- salt wholesaler sends out a notice to potential buyers statin% a price
for salt by the car load! uyer placed order+ but seller withdrew the offer!
1! 6 letter promotin% business is not the same as an offer
a! 6n offer has to include details+ most importantly the amount sold
b! 'as to be clear how a breach would be remedied!
c! "f an offer has an obvious limit+ ie the entire %rape harvest of an orchard+
then it is an offer!
ii! 8efkowitD- an advertisement was an offer bc it was for a limited item!
1! 4eneral rule is that advertisements are not offers!
e! Certainty
i! Loseph martin deli v schumacher- lessee e$ercised option in lease to renew which stated
that lessor and lessee would a%ree on an emount! 7hey didn0t a%ree and lessee sues for
specific performance at lower rent and lessor for eviction!
1! 6%reement to a%ree is not enforceable if a material term is left out! "f they had
specified what they would use to measure the value it would be enforceable
a! "f a%reements aren0t specific then courts will be imposin% themselves
where they don0t belon%! (ust clearly be a contract!
b! "n %oods+ if a course of dealin% has been established+ then a similar clause
will be enforced!
ii! &outhwest en%ine co! v martin- one indefinite term+ even for payment will not void a
contract if everythin% else is clear!
f! 8etters of intent
i! #mpro mf%! v ball co!- #mpro wanted to buy ball0s assets! &i%ned letter of intent+ that
required empro shareholder approval and %ave empro other escape hatches! all pulled
out bc of promissory note conditions and empro sues!
1! 6 letter of intent is not a contract unless everythin% is laid out and a%reed upon
and the contract serves only to memorialiDe that!
a! 7here were too many escape clauses in this contract for it to be bindin%! "f
the conditions were small like obtainin% a lease then it would be valid!
b! "ntent is ob.ective
,! )arties have to be free to ne%otiate and not be bound until they ob.ectively intend
to!
a! Reliance measures can sometimes be recovered+ but not here!
ii! illin%s v willby- subcontractor ne%otiations conducted by letter! 7here was a contract
because all of the terms had clearly been laid out+ it .ust needed to be formaliDed and
si%ned!
%! (isunderstandin%
i! Raffles v wichelhaus- cotton speculator thouh%t he bou%ht cotton on an oct ship called
the peerless! &eller thou%ht it was the december ship!
1! When there is a %ood faith misunderstsandin% between the parties the only fair
rulin% is that there was never a contract!
,! 7his is a case of what seemed to be @a meetin% of the [email protected] but was only
discovered later not to be!
ii! 3lower city paintin% v %umina- subcontractor who thou%ht paintin% meant interiors only
and char%ed more for e$teriors! Contractor fired him!
1! 7here was a misunderstandin% here+ so have to use reasonable standard! 3irst the
court uses industry standard+ but flowers was a new painter!
a! 7he court views it from flowers0 view and decides there0s no contract!
iii! *ickey v! hurd- buyer wanted seller0s land and seller %ave him until .uly 1B! buyer said
he0s respond by the date! Clearly the buyer thou%ht response was all that was needed!
&eller wanted down payment by the 1Bth!
1! (isunderstandin%s happen when there0s no communication about an issue!
a! "f one party tells another that they interpret a clause a certain way+ then
the other party can0t i%nore that interpretation!
,! Offer
a! 6n offer has one le%al consequence+ it %ives the offeree the power of acceptance
i! "f the power is e$ercised+ contract formed!
ii! Offeror has power over what is offered+ in some way to whom it is offered+ and master
over what is seekin% in return!
b! <nowled%e and (aster of the offer
i! Cobau%h v klick lewis- %olf tournament player saw a si%n that said he0d win a new car if
he hit a hole in one! 'e succeeded+ and car dealership wouldn0t deliver bc the contest had
been for a different tournament!
1! 6 mistake of not withdrawin% an offer does not void the offer!
,! 7here was consideration because the offerror %ot advertisin% and the %olfer didn0t
have to hit the ball and he did- another consideration!
2! Ob.ectively the offer was still %ood and there was no way the %olfer could know
that it wasn0t!
>! 4loverv! Lewish war vets-7he offeree has to act with the intention of acceptin% the
offer!
ii! Caldwell v! cline- a letter be%ins an offer from the time it is received since offers e$ist to
be accepted+ so it doesn0t e$ist until there0s power or possibility to accept!
iii! 7e$tron v frohlich- when there0s no time specified for acceptance the court will allow a
.ury to decide on a @reasonable [email protected] for how lon% the offer is open!
iv! 6llied &teel v 3ord motor- ford bou%ht a second round of equip from allied and had new
clause puttin% responsibility for any ne%li%ence on allied! "t specified that the only way of
acceptin% was by returnin% the contract! ut work be%an and an accident occurred before
the contract was returned
1! #ven if a method of acceptance is stated+ it is not the only method of acceptance
unless that is e$plicitly stated!
,! e%innin% work on a pro.ect is acceptance by partial performance! 3ord was
bound+ so allied was bound!
a! 7he terms of the new contract were known before performance be%an+
makin% allied bound!
2! )anhandle pipe line v smith- the stran%er the specified form of acceptance+ the
more e$plicit the lan%ua%e has to be
c! )romise or act?
i! *avis v .acoby- niece and husband promise to come take care of sick aunt and uncle and
uncle promises his estate in return! 1ncle kills himself but niece comes anyway and takes
care of aunt!
1! Contracts are seen as bilateral whenever possible 9ie two promises;
,! Communications could0ve indicated that the uncle sou%ht performance or a return
promise+ but court errs on the side of earlier enforcement!
2! Court looks for outward intent+ and it seems that ensurin% his wife0s care was the
%oal+ and a return promise ensured that!
ii! Lordan v! dobbins- offeror0s death does cancel this unilateral contract when an offer is
revocable at any time+ like in this case with an offer to pay someone else0s debt!
d! 7ermination of the power of acceptance
i! )etterson v pattber%- lender offered borrower a discount on his mort%a%e if he paid it off
early by a specific date! orrower came on time to pay it off and lender told him that he0d
already sold the rest of the mort%a%e to some one else and withdrew the offer!
1! 6 unilateral offer can be withdrawn up to the point of tender of payment+ which
would be performance!
a! Court disa%rees+ and some hold it has to be cash in the hand+ and others
hold you only need to announcement at the door that he is here to pay the
mort%a%e!
2! )recontractual obli%ations
a! Options contracts
i! Offerree creates an obli%ation in the offerror by be%innin% the performance of an options
contract!
1! 7he oferror isn0t obli%ated to do anythin% but not revoke until offerree performs
completley!
,! Oferree can complete that performance and then there0s a contract!
ii! 1sually someone who makes an offer can revoke it if its before acceptance 9startin% the
act;!
iii! Often there0s a bar%ain for keepin% an offer open for a period of time! 7his is common+
but the window isn0t %uaranteed without consideration 9dickinson;!
1! *on0t have to pay the consideration+ .ust have to recite it!
iv! *ickinson v dodds- &eller offered land to buyer and %ave him two days to decide! 7here
was no consideration for that option to buy! uyer learned that seller had sold durin%
those two days and told seller he wanted to buy!
1! Once a buyer learns that a unilateral contract has been withdrawn he can0t try to
force acceptance!
,! Offerror can sell the property to someone else+ and ori%inal offeree cannot ar%ue
that there was really a contract because there was nothin% bar%ained in e$chan%e
for that promise to keep the window open! 4ratuitous promise!
a! need for @[email protected] to allow a%reements to be off the table from
other potential offerrees for whatever period the parties wanted!
v! 7homason v escher- seller offered land for its timber in e$chan%e for A===!
consideration for the window was 1H! &eller0s then withdrew the offer!
1! Option can0t be withdrawn before payment because the offeree tendered the
payment 9thouh% he didn0t acutally pay; before the time ran out!
,! 'owever+ without the seal+ the 1H would have to be delivered and be serious
consideration!
a! (arsh v! lott- nominal consideration is enou%h for an options contract as
lon% as the terms of the actual contract are reasonable!
b! &mith v! wheeler- even mentionin% that the offeree will e$chan%e one
dollar for the option+ but not actually payin% it is enou%h to keep an
options contract open!
b! 3irm Offers
i! Lames aird co! v %imbel bros0 - linoleum subcontractor sends a litter to contractors
biddin% for a bi% .ob! 7he price is off by half! aird uses that price+ sub withdraws and
baird wins contract with that low price!
1! 4eneral rule that if an offer is accepted after it is withdrawn+ then it doesn0t count
applies here!
a! 1sin% the sub0s bid in its bid does not constitute acceptance because the
contractor could0ve made an options contract!
b! 'and doesn0t deal well with whether or not there was consideratoin! y
usin% the sub0s bid+ the contractor did somethin% it didn0t have to do+ and
that is what the sub is tryin% to %et him to do! Really should be reliance
dama%e
,! ecause the contractor would not have been bound at this point+ the subcontractor
is also not bound so no reliance dama%es! 6lways look for both parties bein%
bound!
ii! *rennan v &tar )avin%!- subcontractor submitted a bid for pavin% to contractor!
Contractor attached his name to that part of the .ob and submitted the bid! 4ot the
contract and sub withdrew his bid!
1! 7here is not bindin% bilateral contract here and no options contract!
a! ut there is reliance and the only way to avoid in.ustice it do bind them
b! 7his is promissory estoppel
,! (a.or difference between baird and drennan is that in baird contractor was not
bound by usin% the bid+ so the subcontractor was not bound either! "n drennan+
the contractor could not %o out and ne%otiate a better deal with someone else if it
%ot the contract! 7he sub and the contractor were bound and the contractor relied
on that!
iii! #a Coronis v m %ordon construction- contractor used steel subcontractor0s bid and was
awarded the contract! 7wo weeks after the award+ contractor still hadn0t accepted the offer
and sub withdrew it!
1! 1se drennan promissory estop and not ,-,=:! ,-,=: requires a firm writin% layin%
out the terms! 7his was not the case here+ but drennan facts could apply!
iv! *rennan vs! aird- when contracts are quiet on acceptance you %et drennan!
1! "n baird+ the sub tried to tailor his terms+ tryin% to %et the sub to accept in a way
other than .ust usin% the bid! Contractor had to accept it afterward!
,! *rennan- when subs are silent he0s tryin% to %et the %eneral to use that bid! 'e0s
inducin% reliance!
a! "t-s a limited subsidiary promise that the offerror won0t revoke until the
%eneral has had the chance to use it within a reasonable amount of time
b! &tarts to resemble an options contract+ but its not! 7he %eneral is restricted
as well!
i! 7he %eneral cannot use that bid to seek better deals! &o its not a
typical options contract! 'es not free to do what he0d like!
>! 6cceptance
a! *eviant 6cceptance Rule aka (irror "ma%e RuleN Counteroffers
i! 8ivin%ston v! evans- the common law rule- seller offered land for 1B== and the buyer
counter offered! &eller responded that he can0t reduce! uyer tried to accept at 1B== but
seller had sold to someone else!
1! 6 counter offer is a revocation of the offer! 'owever+ that revocation depends on
what the buyer responds! "f the buyer responds by leavin% the deal open+ the it is
still open to that buyer!
a! 7his seller left the deal open with his lan%ua%e!
b! "f he0d simply said no+ the deal would0ve been revoked!
ii! "daho power v westin%house - uyer suin% seller for breach of warranty for a volta%e
re%ulator that went bust! &eller claims that its a%reement to sell limited liability!
1! 1se ,!,=?+ not common law mirror ima%e rule
,! 1nless specifically stated+ additional terms are not assumed to be necessary to
close the deal!
2! Ca%ue terms won0t be enforced
>! 1CC encoura%es courts to step in to resolve these terms conflict!
b! &hrinkwrap licenses
i! )rocd v Deidenber%- offeror had proprietary software and the license or contract was
inside the bo$! 'ad to accept it for the software to install! Offeree took the information
from the software to sell to companies+ and claimed that because he didn0t know of the
terms when he bou%ht the software+ they weren0t bindin%!
1! &hrinkwrap licenses are bindin% because offeree can choose not to accept and
return the software!
a! 7he packa%e mentioned a license a%reement inside!
b! 7he time of acceptance is not purchase+ but installation+ after he0s had time
to inspect it!
c! 7here are many thin%s purchased where the full terms are only known
later+ like insurance or tickets!
ii! 'ills v %ateway- computer that could be returned within 2= days required arbitration!
'ills didn0t return it within the 2= days!
1! 7here doesn0t have to be notice of a bindin% contract on the bo$ if buyer is
notified at the time of purchase!
,! y not returnin% within 2= days+ buyer accepts!
c! (ailbo$ rule
i! (orrison v! thoelke- buyers si%ned a contract and sent it to the sellers+ who si%ned it and
sent it back! While it was in the mail they called to revoke it!
1! Contracts are formed when they are si%ned and put in the mailbo$+ not when they
are received!
a! enables offerees to choose between choices of offers and be comfortable
when they accept!
i! 7he offeror is the master of the offer+ so he can specify that
acceptance is by receipt and not by sendin% if that0s what he wants!
Otherwise its assumed by sendin%!









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