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o Issue: Whether a newspaper’s breach of its reporter’s promise or anonymity to a news source is legally enforceable.
o Holding: No, a reporters promise of anonymity is given as a moral commitment, which alone cannot support a contract. To impose a contract theory on this arrangement puts an unwarranted legal rigidity on a special ethical relationship, precluding necessary consideration of factors underlying that relationship.
o Issue: whether a reporter’s promise made to an informant to not publish information until the information was verified constituted a valid contract?Holding: No, a reporter’s alleged promise not to publish information was a moral obligation, not a contractual requirement which does not give rise to express or implied contractual duties and there is no contractual relationship.
o Holding: No, although the court held that a valid contract existed and that defendants breached that contract, plaintiff was not entitled to summary judgment or an award of specific performance due to the under hardship that an award of specific performance would cause. Plaintiff entitled to the reimbursement for costs associated with the breach, and was allowed to submit an accounting of those expenses.
Specially manufactured goods
The unborn young of animalsGrowing crops
Information, electronic transfer of information that is not incorporated into a tangible product.
If the transaction applies to goods the UCC applies, if purely to services, UCC does not apply. This distinction is often in contention in court.
o Issue: Whether the trial court erred in denying an aviation company’s motions to dismiss an estate’s claims for breach of express and implied warranties under the UCC in relation to a contract to perform annual inspection of an aircraft on the basis that under the predominant factor test the mixed transaction between the parties was not governed under the UCC.
o Holding: Yes, because the transaction between the parties was predominantly a contract for service, with the sale for goods incidentally involved, it is not subject to the warranty provisions of Article 2 of the UCC, and the trial court erred in denying the aviation company’s motions to dismiss.
If the sale of goods is the more significant aspect of the transaction, and the non-sale component is incidental to the sale, Article 2 applies. However, if the sale for goods is ancillary, and the other component is predominant, Article 2 does not apply and the transaction is governed by common law.
Under this test the court does not attempt the classify the contract as a whole one way or the other, but applies Article 2 if the controversy in question relates to the sales component, and applies common law if the issue arises out of the service component.
A person that deals in goods of the kind or otherwise holds itself out by occupation as having knowledge or skill peculiar to the practices or goods involved in the transaction or to which the knowledge or skill may be attributed by the person’s employment of an agent or broker or other intermediary that holds itself out by occupation as having the knowledge or skill.
States that have not enacted the revised versions of article 1 and 2 hold that if the party is a merchant they must be honest in fact AND observe reasonable commercial standards of fair dealing in the trade.
the buyer must:
o have acquired the goods in good faith in the ordinary course
o from a person who sells goods of that kind, and
o must not know that the sale violates the rights of another person.
Issue: Whether the trial court was proper in allowing the subjective testimony of a party to supplement the objective evidence of what was said by the parties during the contract negotiations.
Yes, it is proper to allow a party to provide this subjective testimony of his own sense of the state of negotiations, so long as the jury is not misled into treating this testimony, in its context, as something more than evidence bearing on the behavior and the perceptions of the parties to the negotiations.
When deciding whether or not to let the evidence in if:
o The contract isn't clear AND/OR
o It will mislead the jury (confuse the jury eg. Testimony says the opposite of what the contract said)
o Then you WOULDN’T let the evidence in
o Issue: Whether the trial court committed clear error by compelling a party to arbitrate his dispute pursuant to an arbitration clause contained within a contract that he failed to read.
o Holding: No, because a party has the affirmative duty to read the contract to which it is a party, the trial court did not commit clear error, and was proper in compelling the parties to arbitration.
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. Restatement of Contracts 2d § 24
o A contract for sale of goods may be made in any manner sufficient to show agreement, including offer and acceptance, conduct by both parties which recognizes the existence of a contract, the interaction of electronic agents and the interaction of an electronic agent and an individual.
o An agreement sufficient to constitute a contract for sale may be found even if the moment of its making is undetermined.
o Even though one or more terms are left open, a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.
o Issue: Whether the district court was correct in granting a subcontractor’s motion to dismiss a breach of contract claim filed by a general contractor who purported to accept the subcontractor’s bid as a firm offer when the text of the bid indicated that it was not.
o Holding: Yes, although the subcontractor may have exhausted any goodwill by bucking industry custom, the district court was correct in dismissing general contractor’s claim for breach of contract when the language of the communication was so plain as to indicate that a contract would not be formed.
o People v. Braithwaithe 162 Misc. 613, N.Y.S.2d 284
o Issue: Whether the evidence in a tape recorded conversation between a suspected drug dealer and a confidential informant constituted a valid offer to sell a controlled substance.
o Holding: No, the evidence contained in the taped conversation was simply too insufficient as to show that Defendant had any intent or ability to deliver the controlled substance to the informant.Lefkowitz v. Great Minneapolis Surplus Store, 251 Minn. 188, 86 N.W.2d 689 (1957)
Lefkowitz v. Great Minneapolis Surplus Store, 251 Minn. 188, 86 N.W.2d 689 (1957)
o Issue: Whether an advertisement placed in a newspaper offering fur coats for a special discount to the first customers that arrive at defendant’s store can constitute a valid offer?
o Holding: Yes, while the general convention is that advertisements should not be construed as offers, and advertisement could be an offer if, when interpreted in context, it would lead a reasonable prospective buyer to understand that an offer was intended.
o Issue: Whether an advertisement for a free calculator watch contained within a magazine’s mass mailing to potential subscribers aimed at enticing them to establish subscriptions with the magazine constituted a valid offer.
o Holding: Yes, citing the Lefkowitz case, the court held that when a advertisement calls for the performance of a specific act without further communication and leaves nothing for further negotiation, it can constitute a valid offer.
Leonard v. Pepsico Inc., 88 F. Supp. 2d 116 (S.D.N.Y. 1999)
Leonard v. Pepsico Inc., 88 F. Supp. 2d 116 (S.D.N.Y. 1999)
o Issue: Whether a television commercial featuring certain specific products that could be redeemed under a contest, combined with the intentional facetious inclusion of a military jet as a possible redeemable product actually constituted an offer to award the jet.
Leonard v. Pepsico Inc., 88 F. Supp. 2d 116 (S.D.N.Y. 1999) (Holding)
o No. It is well-established that advertisements and order forms are mere notices and solicitations for offer which create not power of acceptance in the recipient. No objective person could reasonably have concluded that the commercial in this case actually offered consumers a military jet.
o Restatement, Second §30. Form of Acceptance Invited
§ (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.
o Restatement, Second §35. Duration of the Offeree’s Power of Acceptance
§ (1) An offer gives to the offeree a continuing power to complete the manifestation of mutual assent by acceptance of the offer.
§ (2) A contract cannot be created by acceptance of an offer after the power of acceptance has been terminated in one of the ways listed in §36.
o UCC 2-206(1)(a). Offer and Acceptance in Formation of Contract(1) Unless otherwise unambiguously indicated by the language or circumstances:
(1) Unless otherwise unambiguously indicated by the language or circumstances:
(a) An offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances.
Yes. When a contract is written in clear and unambiguous terms, it is not subject to interpretation or construction; rather, the intent of the parties must be determined from the contents of the contract, and the contract must be enforced according to its terms.
Whether or not the trial court was correct in determining that the buyer’s signature on the “counter to counteroffer” section of a form real estate contract, and insertion of language in the “changes/amendments” section of the contract did not constitute a valid acceptance of seller’s counter offer, even though buyer intended to create a binding contract?
Yes, the trial court was proper in concluding that no contract was formed because buyer’s “counter to counteroffer” was a qualified acceptance of defendant’s counteroffer, and a valid acceptance must be absolute and unqualified. A qualified acceptance is a new offer.
· An acceptance takes effect when it is communicated to the offeror
· This is problematic when acceptances cannot be communicated instantaneously such as in the mail.
The Mailbox Rule
· Mailbox rule ONLY applies to acceptances and USPS not to FED-EX or UPS
· Where the mail is an expressly or impliedly authorized medium of acceptance, a properly addressed acceptance takes effect when deposited in the mail.
Issue: Whether the acceptance of a special education teacher’s offer to resign her employment by the superintendent of schools, which was mailed prior to the teacher’s attempted revocation of her resignation, was valid under the mailbox rule.
Holding: Yes, since the offer did not specify a mode of acceptance, using the mail was reasonable and impliedly authorized under the circumstances, and as such, the acceptance take effect upon mailing.
Issue: Whether a premium payment that was mailed by the insured prior to the expiration of an offer by the insurance company to extend insurance coverage under a lapsed policy, but received after the expiration of the offer was valid acceptance under the mailbox rule.
Holding: Yes, by authorizing the use of the mail as a means of paying premiums, the insurance company also constituted the postal authorities as its agent, and thus the mailbox rule dictates that a valid acceptance took effect with the insured placed is premium payment in the al, which was prior to the expiration of the offer.
Issue: Whether a person giving information leading to the arrest of a murderer without any knowledge that a reward has been offered for such information by a non-governmental organization is entitled to collect the reward?
Holding: No, at least so far as private rewards are concerned, there can be not contract unless the claimant when giving the desired information knew of the offer of the reward, and acted with the intention of accepting such offer, since it is impossible for an offeree to accept an offer unless she knows of its existence.
Silence as Acceptance
· The usual rule is that failure to respond is considered rejection.
· Because it would not be good public policy to enable an offeror to make an offer in a way that forces the offeree to respond in order to escape being bound to a contract, the general rule is that if an offeree fails to respond to an offer before it expires, this inaction is a rejection.
o Restatement, Second §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 a reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation.
o Restatement, Second §69. Acceptance by silence or exercise of dominion Part 2
(c) Where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept.
§ (2) An offeree who does any act inconsistent with the offeror’s ownership of offered property is bound in accordance with the offered terms unless the are manifestly unreasonable. But if the act is wrongful as against the offeror, it is an acceptance only if ratified by him.
Ways in which an offeree’s power of acceptance may be terminated
· Lapse of the offer
o As mentioned prior, if no duration is specified in a contract, it is deemed to be left open for a reasonable time.
· The death or mental disability of the offeror
o The offer can be revoked at any time before acceptance. The revocation only becomes effective when it is communicated to the offeree. Either he must have received notice of revocation from the offeror (direct revocation) or she must have reliably learned in some other way that the offer is no longer open for acceptance (indirect revocation).
Yes, the question of whether an acceptance of an offer was done in a reasonably timely manner is a question of fact, and not an appropriate question to decide when determining a motion for summary judgment. Accordingly, the trial court erred.
Issue: Did the lower court err in holding that Behee in a real estate transaction effectively revoked his offer to purchase real estate from the prospective seller when the revocation was communicated to the seller’s agent prior to the buyer being notified that the sellers had accepted his offer?
Yes, because the offer was not supported by consideration, an offeror may revoke his offer at any time before acceptance and communication of that fact to him, and there is not contract until acceptance of an offer is communicated to the offeror,
Issue: Did the lower court err in holding that and offer to sell real estate had been accepted before any formal notice of withdrawal of that offer had been given to the buyer, thus creating a binding contract?
Holding: No, because there was not consideration given by the buyer to keep the property unsold, the offeror/seller could withdraw the offer at any time prior to acceptance, and no formal retraction was required. Accordingly, since the buyer was aware that the seller had changed his mind and had revoked his offer to sell before there aw any acceptance by the buyer, the trial court erred in deciding that a contract had been formed.
Carlill v. Carbolic Smoke Ball Co., 1 Q.B. 256 (1892)
Issue: Whether the trial court was correct in holding that an advertisement in a newspaper offering a reward for any consumer who purchases and utilizes manufacturer’s product and then still contracts influenza created a binding contract with a consumer who accepted the advertisement’s offer by performance.
Carlill v. Carbolic Smoke Ball Co., 1 Q.B. 256 (1892) (Holding)
Holding: Yes, the trial court was correct in determining that this advertisement constituted an offer to anybody who performed the conditions named in the advertisements, and any consumer who performed such conditions effectively accepted the offer, thus creating a binding contract and entitling them to the reward listed in the advertisement.
· Unless the offer clearly requires acceptance to be only by performance, it can be accepted either by performance or promise.
· Conversely, unless the offer clearly requires acceptance only by promise, it can be accepted by either promise or performance.
· Unless a method of acceptance is un-ambigously prescribed as exclusive, the offeree may accept by any means that is considered reasonable.
Shipment as Acceptance of an Offer to Buy Goods
· UCC 2-206(1)(b) and (2). Offer and Acceptance in Formation of Contract
(1) Unless otherwise unambiguously indicated by the language or circumstances.
Shipment as Acceptance of an Offer to Buy Goods pt. 2
(b) An order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or nonconforming goods, but the shipment of nonconforming goods is not an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.
Shipment as Acceptance of an Offer to Buy Goods pt. 3
(2) If the beginning of a requested performance is a reasonable mode of acceptance, an offeror that is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.
Communication of Acceptance by Performance
(1) Where an offer invites an offeree to accept by rendering a performance, no notification is necessary to make such an acceptance effective unless the offer requests such a notification.
(2) If an offeree who accepts by rendering a performance has reason to know that an offeror has no adequate means of learning of the performance with reasonable promptness and certainity, the contractual duty of the offeror is discharged unless.
(a) the offeree exercises reasonable diligence to notify the offeror of acceptance, or
(b) the offeror learns of the performance within a reasonable time, or
(c) the offer indicated that notification of acceptance is not required.
Restatement, Second §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 is 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, Second §62. Effect of performance by Offeree where offer invites either performance or promise.
(1) Where an offer invites 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.
(a) the offer expressly limits acceptance to the terms of the offer;
(b) they materially (argue both sides of the issue on the exam) alter it; or
(c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
o Issue: Whether the trial court erred in awarding judgment in favor of motorists injured in an automobile accident and against the estate of a deceased motorist who caused the accident where extensive settlement negotiations had occurred and an oral agreement had been reached, but the parties failed to memorialized those negotiations and oral agreement into a written contract prior to the expiration of the statute of limitations.
Einhorn v. Mergatroyd Prodcutions, 426 F. Supp. 2d 189 (2006)
Issue: Whether a reasonable trier of fact could conclude that a communication laying out some but not all of the material terms of a contract could constitute an offer that invites acceptance by performance.
Issue: Whether the trial court erred in entering an order of specific enforcement of a letter of intent in a proposed real estate transaction, when the LOI contemplated the drafting and executing of a subsequent standard from real estate contract, which was never accepted.
Arbitron, Inc. v. Tralyn Broadcasting, Inc., 400 F.3d 130 (2005)
Issue: Whether the trial court erred in holding that under New York law, two parties entering into a licensing agreement for radio ratings and data may not authorized one party to adjust the price of that data unilaterally at some point in the future.
Keys to understanding indefinite agreements
· A contract is a final binding agreement between the parties, and an agreement to agree is not a contract.
· The question of whether a manifestation agreement qualifies as a final contract, or is merely an “agreement to agree”, is a matter of interpretation, which requires an examination of the language used by the parties in that particular context.
· An important consideration in deciding whether a binding contract was formed is the extent to which the parties have settled all the terms, or at least the material terms of their relationship.
· There are some instance where a party may agree to be bound to a contract even where a material term is left open, but there must be sufficient evidence that both parties…
§ A writing or record
§ A signature
§ Sufficient content to evidence a contract
Restatement, Second §131. General Requisites of a Memorandum
o Unless additional requirements are prescribed by the particular statute, a contract within the statute of frauds is enforceable if it is evidenced by any writing, signed by or on behalf of the party to be charged, which
(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.
How to apply the statue of frauds Part 1
Is the contract subject to the statue of frauds?
If no, the contract need not be in writing to enforceable. Stop here
If yes, ask question two
Is there a signed writing in a form sufficient to satisfy the statute?
If yes, the contract is enforceable
If no, the contract is not enforceable unless the third question can be answered affirmatively.
Is there a recognized exception to the statute of frauds that will allow enforcement of this contract even though it is subject to the statue and there is not writing sufficient to comply with it?
Six Types of Contracts Covered by the Traditional Statute of Frauds
o Contracts to answer for the debt or obligation of another.
o Contracts of executors of administrators to answer for the duty of the decedents.
o Contracts made upon consideration of marriage.
o Contracts for the sale of land or the transfer of an interest in land
o Contracts that cannot be performed within a year of execution
o Contracts for the sale of goods for the price of $5,000.00 (revised) or more, or $500 (pre-revised).
§ Issue: Whether a seller in a prospective real estate transaction can be held liable under a real estate contract even though the seller never signed the actual real estate contract, but executed other documents related to the transaction.
C.R. Klewin Inc. v. Flagship Properties, Inc., 600 A.2d 772 (1991)
Whether the applicant showed a likelihood of prevailing on the merits when the case goes to trial on the issue of whether in a contract of emails between the seller and the buyer satisfy the statute of frauds?
Bazak International Corp. V. Tarrant Apparel Group, 378 F. Supp. 2d 377 (2005)
Yes, significant issue of material fact existed precluding summary judgment in this case since the email could constitute a writing “in confirmation” under the merchant’s exception to the Statute of Frauds. To survive summary judgment, the writing need only be sufficient to indicate that a contract for sale has been made, and it is not required to precisely set forth every material term of the contract.
(1) Except as stated in Subsection (2), the formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration.
(2) Whether or not there is a bargain a contract may be formed under special rules applicable to formal contracts or under the rules stated in §§82-94.
· (1) To constitute consideration, a performance or a return promise must be bargained for. DEFINITION OF CONSIDERATION FOR EXAM
· (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 promise in exchange for that promise.
· (3) The performance my consist of
o (a) an act other than a promise or
o (b) a forbearance, or
o (c) The creation, modification, or destruction of a legal relation.
· (4) The performance or return promise may be given to the promisor or to some other person. It may be given by the promise or by some other person.
Congregation Kamdimah Toras-Moshe v. DeLeo, 405 Mass. 365 (1989)
Issue: Whether the trial court erred in granting summary judgment in favor of the estate of a decedent, holding that the decedent’s oral promise to provide $25,000 to a congregation upon his death where the congregation was not required to do or give up anything was an unenforceable contract?
No, the trial correct was correct to grant summary judgment in favor of the estate since the promise in this case was entirely unsupported by consideration or reliance.
Issue: Whether the promise from an uncle to a nephew to pay the nephew $5,000.00 if he would refrain from various vices until he turned 21 was an enforceable contract supported by adequate consideration?
Yes, consideration means not so much that one party is profiting as that the other abandons some legal right in the present, or limits his legal freedom of action in the future, as an inducement for the promise of the first. In this case, the nephew restricted his lawful freedom of action within certain prescribed limits upon the faith of his uncle’s agreement, and thus adequate…
Issue: Whether the manufacturer of a pressure cooker that exploded and injured a consumer was a third party beneficiary of a broadly worded release that the consumer executed in favor of an unaffiliated insurance company and its policy holder, including the consideration provided for in the release.
Yes, the general rule of contract law is that courts will not inquire into the adequacy of the consideration in a contract, unless the consideration is so “grossly inadequate” as to shock the conscience of the court. Although $750.00 may not be sufficient to cover the consumer’s medical bills in this case, it is not so grossly inadequate as to “shock the conscience of the court.” Therefore, the court will neither inquire into the adequacy of consideration.
Issue: Whether the participation by a contestant in a gambling promotion can constitute adequate consideration that would support the formation of an enforceable contract against a casino providing the promotion.
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