Hypos/UCC
A says to B, “I offer to sell you my car for $50,000.” B responds, “OK, you’ve got a deal.” At time time, A’s car is worth $85,000.
At trial, B brings a witness, C. C testifies that A’s statement was made in a serious tone of voice and that A was known to be in financial distress.
Is the court likely to conclude that A made an offer?
Yes
Helpful:
B’s witness
Known financial distress
Language of offer
tone
Unhelpful
50 v 85
Restatement Second of Contracts § 90
Promise Reasonably Inducing Action or Forbearance
Adams and Franklin agree that A will sell F 1,000 widgets. They sign a written k that both intend to be a full and final expression of their agreement. The next day, the parties orally agree that the price to F will increase from $1 to $2. A ships the widgets and bills F $2,000. F refuses to pay and A seeks to offer evidence of their oral agreement. Will F be able to exclude evidence re the oral modification?
A. Integrated? Yes. Completely? Probably (but how do we prove they intended it to be full and final expression?) Barred? No.
A. Can admit evidence. The PER only bars prior or contemporarenous parol that contradicts or supplements. Here, A wants to admit a “subsequent” oral modification.
What are the six exceptions to the PER? (Hint: we are covering one of them next semester)
1.Explanatory evidence
2.Subsequent agreements
3.Oral condition precedent [next semester]
4.Fraud, etc. [Sherrodd, Inc. v. Morrison-Knudsen Co.]
5.Scrivener’s error
6.Collateral Agreement
Adams and Franklin sign a written contract for the sale of 1,000 widgets. During the course of negotiations, there was some disagreement about the price of the widgets. This is reflected in the document, which says the price to be paid is one thousand dollars ($1100). The contract is signed and has a merger clause. Is there an ambiguous term in the contract? If so, is it patent or latent?
Yes, patent
What are the critical facts and holding in Mills v. Wyman and how do they compare to the facts and holding in Webb v. McGowin?
Webb v. McGowin is the minority rule (middle ground b/w classical contract and pure restitution):
material benefit (restitution) + subsequent promise (contract) = obligation (consideration)
Webb—badly cripped—after diverting 75lb wooden block from hitting McGowin (his boss). McGowin promises to pay him for the rest of his life (and does for 8+ years). After McGowin dies, his estate soon cuts off the payments. Court finds that McGowin impliedly requested that Webb save him and thus consideration is present (This is, of course, BS. It is moral consideration + material benefit, which some jurisdictions still don’t allow.)
Mills v. Wyman
Is there a contract obligating D to pay P for comforting his son prior to his death?
•AFTER all expenses incurred (2/24) D promised to pay P for expenses incurred to care for this family member who had ‘long left his father’s family.’
express promise that (ii) voluntarily resuscitates a preexisting obligation can be binding. e.g. an antecedent debt
Applies traditional K formation principles and finds consideration missing (all services were past services)
Was there anything besides moral obligation at issue here?
A. No, so plaintiff loses.
What are the 2 steps informing the court's approach to modern PER cases? How does that compare with the considerations under the classic framework?
Modern:
(1) Consider the purpose for which PE is offered and admit evidence that is offered in favor of a reasonable interpretation.
•Consider EVEN IF not clearly ambiguous.
(2) finalize understanding of k
•Do not exclude any evidence about the meaning of the language if that language is “reasonably susceptible” to the proffered interpretation.
Traditional: The court looks at the "four corners" of the contract first to establish if the K is complete "on its face." Contemporaneous parol evidence is inadmissible to contradict or vary the terms of a valid, written instrument that is complete on its face. Any writing is presumed complete based on the writing itself (Thompson) which directly contradicts Restmnt. 210 (A writing cannot be used to prove its own completeness)
What is the 3 step PER framework? (Hint: There is a sub-question you could technically count as a fourth step)
•Is the agreement integrated (a final expression of the parties’ intent)?
–If so, fully or partially?
•Why is the evidence being offered?
•Do any exceptions apply?
E.C. Styberg
Whether, under the UCC, the parties formed a contract for the sale of I-Brakes? Price quotations are usually an invitation for an offer, not an offer to form binding contract. No K. Parties did not settle on a quantity term. And they had conduct inconsistent with their past dealings.
Brown Machine
H’s PO expressly limited acceptance to the terms of its offer, the additional terms fail to become part of the contract between the parties. See. 2-207(2)(a).
•Although it could become a term of the contract, it would only become so if H expressly so agreed and H did not.
•Rule: 2-207(2): Additional terms are part of the contract between merchants unless: (a) offer expressly invokes mirror image rule; (b) additional terms materially alter offer; or (c) objection to additional terms is made within a reasonable time.
Q. Are H and BM both merchants? Do they deal in goods of the kind? Other aspects of definition?
A. BM deals in goods of the kind (they are a manufacturer) and H probably doesn’t. However, H could fit under second part of definition.
•See also comments to def. of merchant.
NB: Court finds that the indemnification provision was “clearly a material alteration”
•File that tidbit away!
BM’s order acknowledgement asked for a timely response whether the specs and T&C were acceptable. H only said specs are acceptable and said nothing about T&C. Thus T&C were not expressly assented to.
Explain why the ad in Izadi may be an offer, while the ad in Leondard v. PepsiCo is not.
•Communications addressed to lots of people (particularly when there is a limited number of items for sale) are usually classified as invitations to receive offers.
•General view is that price quotes and general public advertisements are invitations to the recipient to make an offer but are NOT offers themselves.
Izadi
Reading the offer in context, a reasonable person would be justified in disregarding the “superfine print and apparent qualification as to the value of the trade-in, as contradictory to the far more prominent thrust of the advertisement to the effect that $3000 will be allowed for any trade-in on any Ford.” Court merely holds that Izadi “states a cause of action” for breach of contract. Merely finds Ps claims are plausible. No more than that.
Leonard v. PepsiCo
What are the majority/minority rules and two issues in Sherrod, Inc. v. Morrison-Knudson Co.? How does the court hold on them? (Hint: It's lowkey two and a half issues)
Issues:
#1: Does PER bar introduction of fraudulent oral misrepresentations (amount of dirt)? Even if normally barred, does an exception apply?
#2: Does PER bar parol evidence of side deal (to increase compensation beyond contract terms)?
Rule(s):
Minority rule: Where alleged fraud does not relate directly to the subject of the contract, evidence of an alleged oral promise can be admitted.
•But where alleged fraud is directly contradicted by the written agreement, evidence cannot be admitted.
Majority rule: Even where the alleged fraud is directly contradicted in the writing, evidence is still admissible.
Holding?
H: Both are barred. PER bars parol evidence when unrelated to
subject matter of the contract (fraud in the inducement), not
when oral promise directly contradicts contract terms.
Completely integrated- Contradicts - No exception applies
Why?
R: Unreasonable to rely on fraudulent statements because contradicted by contract.
R: Same reason. Subcontract provided that no changes are valid unless in writing and signed by parties. Since subcontract directly contradicts claimed side deal, P loses.
Q. Why doesn’t the side deal fall under the subsequent agreement exception?
A. p.431 [contemporaneous verbal rep?]
Q. Why does the dissent disagree?
D: When defrauding party is in superior bargaining position, it can lie to defrauded party AND get defrauded party to sign contract relieving that party of liability.
Here, P had already begun working on project before it realized the amount of earth to be moved was double expected price.
What is stipulated under UCC 2-207?
(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.
(2) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless: (a) the offer expressly limits acceptance to the terms of the offer; (b) they materially 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.
(3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. Terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act
ABC Co. makes a written offer to XYZ Inc. to buy 100 widgets* from XYZ a month for the next year, with payment due 30 days after each delivery.
•XYZ responds immediately, writing “We accept your offer.” XYZ’s response adds, “All overdue invoices will be charged interest at 8% per day.” 8% is standard in the industry.
•ABC makes no response.
•XYZ ships the widgets and ABC accepts them.
Is there a Contract?
Yes
Would there have been if the Common law applied to this transaction?
How does Hamer v. Sidway differ from other consideration cases?
It was decided under the benefit-detriment theory, not bargained-for exchange
Johnny and Vernon open a tutoring business. They enter into a written K that’s 2 paragraphs long and prepared during a 1-hour meeting. The K states each will receive 50% of the net profits and will devote at least 30 hours/week to the venture. Both consider the K a final expression of their deal.
Johnny sues Vernon because Vernon only worked 20 hours for the last two months. Vernon wants to admit evidence that Johnny orally promised that Vernon could work only 20 hours/week while Vernon find new daycare for his infant son.
Is Vernon’s testimony excludable?
A. No.
Integrated? Yes. Completely? Unknown. Barred? Yes.
•Short length of writing, handwritten, drafted in 1 hour all suggest partial.
•P.409 But court finds nothing facially “informal and incomplete” about the writing.
•In any case, it’s a prior or contemporaneous oral agreement that would contradict the express term of an at least partially integrated K.
•Turning 30 into 20 seems like neither interpretation nor supplementing.
How can a plaintiff receive restitution under Rstmnt. 116?
(1) acted inofficiously and intended to charge the recipient;
(2) acted so as to prevent serious bodily harm or pain;
(3) acted with no reason to believe the recipient would not have consented, if mentally competent; and
(4) acted when it was impossible for the recipient to give consent or, because of mental impairment or extreme youth, the recipient’s consent would have been immaterial.
What are the three issues in Nanakuli and how does the court rule on them? What is the associated rule under the UCC?
UCC 1-303(e)(1)
“… the express terms of an agreement and any applicable course of performance, course of dealing, or usage of trade must be construed whenever reasonable as consistent with each other. If such construction is unreasonable:
(1) Express terms prevail over course of performance, course of dealing, and usage of trade; …”
Four issues:
1.Was Shell bound to follow local trade usage?
2.Were Shell’s 2 instances of price protection waivers or a course of performance?
3.Is it plausible that the express contract term regarding Shell’s posted price at delivery was consistent with a trade usage and Shell’s course of performance?
4.Put differently, was Shell obligated, as a matter of good faith, to provide price protection since that practice was universal in that trade/location?
Nanakuli-
To admit evidence of trade usage, must establish:
1.Usage exists
2.It binds the party against whom it’s being offered
3.Not excluded by PER
a.NB: some courts have struggled with how to apply the PER to TU, CoD, and CoP and do not admit if it appears to contradict the terms.
CoP = how post-formation K performance tells us about what the parties understood the contract to mean.
•Waiver means the parties understood no obligation to price protect but do so anyway
•CoP means Nanakuli had K right to price protection
•2 instances + 100% of instances + subsequent bargaining = good CoP evidence
•
Court seems to require a complete reversal to prove a conflict and that seems fairly extreme.
• But also aligns with idea that CoP and TU are equally part of the contract as if they’d been written there.
NB: HAVE to know what cases say and why they say it.
What cases would you use to support an argument they have not formed a K under Common Law?
Gene owns a food truck emporium. He sells new and used food trucks, helps customize trucks for customers and even provides consulting services for people starting their own food truck businesses. Marisol came into Gene’s store, expressing an interest about purchasing a (used) food truck. After substantial discussion, Gene sent Marisol a signed document entitled “Truck Sale and Consulting Services Agreement.” It contained all of the essential terms required to form a contract for the purchase of a used food truck, related items necessary to the business, and 100 hours of consulting services. The total price was $150,000. The Agreement was itemized; most notably, the truck was valued at $50,000, the consulting work at $40,000, and everything else at $60,000. The Agreement stated that it was irrevocable for ten days. One week later, Gene emailed Marisol to tell her the offer was no longer available. The following day (eight days after Gene sent the Agreement), Marisol nevertheless sent Gene an email that read, “I accept your offer, but $40,000 for the consulting work is too steep. Let’s call it $35,000. Thanks!”
A: Longergan, Normile
mirror image rule + termination are major differences from UCC
What do Rstmnts. 201 and 202 provide, and which case is associated with those Restatements where the court ruled against the plaintiff? Hint: this case was decided by the Ct. of Appeals in Erica's home state :)
A: Joyner v. Adams
Rstmnt. 201: Whose meaning prevails?
1) Where the parties have attached the same meaning to a promise or agreement or a term thereof, it is interpreted in accordance with that meaning.
(2) Where the parties have attached different meanings to a promise or agreement or a term thereof, it is interpreted in accordance with the meaning attached by one of them if at the time the agreement was made
(a) that party did not know of any different meaning attached by the other, and the other knew the meaning attached by the first party; or
(b) that party had no reason to know of any different meaning attached by the other, and the other had reason to know the meaning attached by the first party.
(3) Except as stated in this Section, neither party is bound by the meaning attached by the other, even though the result may be a failure of mutual assent.
Rstmnt 202: Rules in aid of interpretation
(1) Words and other conduct are interpreted in the light of all the circumstances, and if the principal purpose of the parties is ascertainable it is given great weight.
(2) A writing is interpreted as a whole, and all writings that are part of the same transaction are interpreted together.
(3) Unless a different intention is manifested,
(a) where language has a generally prevailing meaning, it is interpreted in accordance with that meaning;
(b) technical terms and words of art are given their technical meaning when used in a transaction within their technical field.
(4) Where an agreement involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection is given great weight in the interpretation of the agreement.
(5) Wherever reasonable, the manifestations of intention of the parties to a promise or agreement are interpreted as consistent with each other and with any relevant course of performance, course of dealing, or usage of trade.
Double or nothing mystery question!
Break out the sections of the course and list within those sections as many cases as you can recall related to that topic.