Ks Outline (Final)
Ks Outline (Final)
Ks Outline (Final)
Ks Case Database
Statute of Frauds
Crabtree (Signed and unsigned writings together satisfy SoF, R2D 132)
Alaska Democratic Party (Promissory estoppel in spite of not satisfying SoF,
R2D 139)
Offer and Acceptance
Ray (Unilateral mistake is insufficient to invalidate agreement)
Lonergan (Generally, ads are not offers, they are requests for offers)
Izadi (Car dealership’s ad is an offer)
Normile (Buying a house; “Qualified acceptance” is new offer)
Petterson (Strict interpretation of offer and acceptance in unilateral K)
Cook (Offeror bound by substantial performance by offeree)
Consideration
Hamer (Uncle and nephew; consideration by foregoing a legal right)
Allegheny College (Donation to college; court found consideration, promoted
idea of promissory estoppel)
Pennsy Supply (Promise and consideration induce each other)
Dougherty (Aunt and nephew; recital of value not consideration)
Batsakis (Mere inadequacy of consideration will not void a K, R2D 79)
Plowman (Past action, moral obligation are not consideration; going to office
is a condition on a gift)
Promissory Estoppel
James Baird (Late acceptance; no PE where offer for exchange)
Drennan (PE basically extended to pre-acceptance reliance)
Berryman (No option K b/c no consideration; narrow PE rule)
Pop’s Cones (PE extended to pre-offer reliance, R2D 90)
Kirksey (Widow relied on promise, but no PE rule)
Greiner (Son relied on mother’s promise for interest in her land)
Wright (PE enforces promise where not biological father)
Katz (PE used to enforce pension)
Restitution/Unjust Enrichment/Quasi-K
Credit Bureau Enterprises, Inc. (Committed man must pay restitution, Rstmt
of Restitution 116)
Watts (Facts sufficient for unjust enrichment or other claims; good opinion!)
Promissory Restitution
Mills (No K to pay for past care of son; only moral obligation)
Webb (Man saved coworker’s life; K to continue paying man, R2D 86)
Principles of K Interpretation
Joyner (Ct uses meaning of “innocent” party; similar to R2D 201)
Parol Evidence Rule
Thompson (Log sale; completely integrated, so no parol evidence)
Taylor (Bad faith insurer; PE may be used to clear up ambiguities)
Sherrod (Dirt-moving contractor; PE can’t show fraud directly contradicting
written K)
Nanakuli (Evidence of trade usage and past course dealings will be admitted)
Implied Terms and the Obligation of Good Faith
Wood (Endorsement deal; implied promise to make reasonable efforts, R2D
205)
Locke (Entertainment K dispute)
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Ks Outline
K Proper
What is a K?
K: An enforceable promise.
• Unilateral K: A promise in exchange for a performance.
• Bilateral K: A promise in exchange for a promise.
Statute of Frauds:
• There are 3 threshold Qs:
1. Is the K at issue one of the types to which the SoF applies so that a signed
memorandum is required for enforcement? IF no, THEN no SoF
analysis is called. IF yes, THEN…
2. Is the SoF satisfied? That is, is there some sort of writing of its terms
signed by the party to be charged sufficient to meet the SoF
requirements? IF yes, THEN the case may go forward. IF no,
THEN…
3. Are there other factors in the case, such as performance or reliance by the
Pl, which might invoke an exception to the statutory bar? In other words,
can the Pl still be successful in getting K enforcement?
• R2D 110 (Rules, pg. 188).
1. The following classes of Ks are subject to the SoF, forbidding enforcement
UNLESS there is a written memorandum or an applicable exception:
1. A K of an executor or administrator to answer for a duty of his
decedent (the executor-administrator provision);
2. A K to answer for the duty of another (the suretyship provision);
3. A K made upon consideration of marriage (the marriage provision);
4. A K for the sale of an interest in land (the land K provision); and,
5. A K that is not to be performed within one year from the making
thereof (the one-year provision).
• R2D 131. General Requisites of a Memorandum.
1. Unless add’l requirements are prescribed by the particular statute, a K
w/in the SoF is enforceable if it is evidenced by any writing, signed by or
on behalf of the party to be charged, which:
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Mutual Assent:
• R2D 24. Offer Defined.
○ An offer is 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.
• R2D 50. Acceptance of Offer Defined; Acceptance by Performance;
Acceptance by Promise.
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○ The “offer” in the paper was not an offer but an invitation for an offer.
“There can be no K unless the minds of the parties have met and mutually
agreed upon some specific thing.”
○ Generally, ads are not offers; rather, they are considered requests for
offers.
○ “If from a promise, or manifestation of intention, or from the
circumstances existing at the time, the person to whom the promise or
manifestation is addressed knows or has reason to know that the person
making it does not intend it as an expression of his fixed purpose until he
has given a further expression of assent, he has not made an offer.”
○ There was not an offer because the letters did not communicate an
“expression or fixed purpose to make a definite offer and was
sufficient to inform the Pl that some further expression of assent
on the part of the Df was necessary.”
• Izadi, pg. 38—Bait-and-switch car ad—IF a reasonable person would
interpret an ad as an offer AND it is actually viewed as an offer by the
purported offeree, THEN it constitutes an offer.
○ EXCEPTION—Although ads are not usually offers, this ad was held to be an
actionable offer as a referendum on bait-and-switch advertising
tactics. This is a classic example of a ct extending K proper to fit new
circumstances.
• Normile, pg. 44—“You snooze, you lose.”—IF an offeree renders a “qualified
acceptance” of an offer, THEN the original offer is terminated AND the
qualified acceptance constitutes a counteroffer proposed for the
original offeror to accept or reject.
○ Changing the terms of the original offer (and then signing it) transforms
the offer into a counteroffer, which then must be accepted anew.
○ Option Ks in the original offer will not necessarily be imputed to
the counteroffer.
○ What terminates an offer or the offeree's power to accept?
Generally, offers can be revoked anytime prior to acceptance.
“Generally, notice of the offeror's revocation must be
communicated to the offeree to effectively terminate the offeree's
power to accept the offer.” However this communication may
be indirect, and it is enough the offeree receives the info.
(Normile)
• An offer is revoked indirectly if:
○ The offeror takes action clearly inconsistent with the
continued intent to enter a K; and,
○ The offeree obtains reliable information of this action.
Passage of time may also terminate offeree's power to accept.
Rejection of the Offer—When an offer is rejected cts have
considered that the offer no longer exists. (Normile)
The offeror’s death terminates the offer.
A counteroffer is considered a rejection of an offer and terminates
the offeree's power to accept the original offer.
If the initial buyer doesn't manifest acceptance of the initial offer or
of a subsequent counteroffer, and the seller sells the prop to
another party, then the sale of the prop to the other party serves as
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Promissory Estoppel:
• R2D 90. Promise Reasonably Inducing Action or Forbearance.
1. A promise which the promissor should reasonably expect to induce action
or forbearance on the part of the promisee or a third person and which
does induce such action or forbearance is binding if injustice can be
avoided only by enforcement of the promise. The remedy granted for
breach may be limited as justice requires.
2. A charitable subscription or a marriage settlement is binding under
Subsection (1) without proof that the promise induced action or
forbearance.
• Scope of Promissory Estoppel:
1. Donative/Gratuitous Promises:
• James Baird, pg. 109–A K’or who relies on an offer that is later
retracted—…
○ CLASSICAL RULE– Promissory estoppel must be based on a
promise, and an offer is not a promise; therefore, relying to
their detriment is not grounds for recovery.
2. Pre-Acceptance Reliance:
• Drennan, pg. 112–Similar K bidding process, but twenty years after
the fact.—IF there is reasonable reliance by an offeree
resulting in foreseeable prejudicial change in position, THEN
there is an implied subsidiary promise not to revoke an
offer for a bilateral K, UNLESS the offer expressly provides
for revocability OR the offeree shops around for a better
offer OR the offeror made a bona fide mistake that the
offeree should have realized was a mistake.
○ MODERN RULE–When someone makes an offer in a bilateral
K, there is a subsidiary implied promise not to revoke
the offer when there has been reliance. The
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Principles of K Interpretation:
• THE SUBJECTIVE THEORY OF K INTERPRETATION interpreted Ks on what
was in the mind of the parties—If the parties attributed materially different
meanings to the contractual language, no K was formed since there was no
“meeting of the minds.” MODERN THEORY rejects THE SUBJECTIVE THEORY.
• Cts often state that the “plain meaning” of the language of the K should govern
and that extrinsic evidence is admissible only if the ct concludes that the K is
ambiguous. Most cts will not admit extrinsic evidence of meaning unless the ct
first concludes that the agreement is ambiguous on its face.
• OBJECTIVE THEORY: Words and conduct should be interpreted in accordance
with the standard of a reasonable person familiar with the circumstances, rather
than in accordance with the subjective intent of either of the parties.
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• Patent ambiguity can be seen on the face of the writing (as in disagreements
over the syntactic structure of a sentence); latent ambiguity arises only from
context in which a term is used.
• Classical cts want to ensure that written agreements will be reliable, while
modern cts are willing to a certain extent to sacrifice this benefit in order to
protect the underdog.
• Integration:
1. Completely Integrated K: A K that contains, within its four corners, the
entire agreement b/t the parties.
a. Only evidence that explains the K terms is admissible.
2. Partially Integrated K: A K in which only a certain part of the transaction is
embodied in writing and the remainder is left in parol. This type of K may
be supplemented with parol evidence that is consistent with the
agreement but may not be contradicted by extrinsic (i.e., parol) evidence.
a. All evidence except that which contradicts the K terms is
admissible.
• CLASSICAL APPROACH:
1. Classical cts look only to the “four corners of the K” to determine
whether it was completely or partially integrated. The presence of
a merger clause would conclusively establish that writing was completely
integrated.
2. Classical cts would generally only admit evidence to explain term if the
term was ambiguous on its face, or patently ambiguous.
3. Classical cts would only admit evidence of collateral agreement if
it dealt w/ a subject distinct from that to which the writing
related.
• MODERN APPROACH:
1. To determine whether K was completely or partially integrated,
modern cts look not only to terms of writing but also consider
evidence of all facts and circumstances surrounding the execution
of the K. The presence of a merger clause would not conclusively
establish that writing was integrated.
2. The following factors would be considered in determining whether
parties intended the writing to be integrated:
a. The subject matter of transaction (the more complex the
transaction, the greater the likelihood of integration);
b. The length of negotiations;
c. The adequacy of time to make the writing conform to oral
agreement;
d. The business experience of the parties;
e. The participation in the negotiations by an attorney or other
experienced K negotiators;
f. The bargaining situation (the more one-sided the situation, the less
likely the agreement should be treated as integrated);
g. The degree of standardization of the writing;
h. The presence of an integration clause; and,
i. The type of transaction (whether the transaction is of a type
typically concluded by integrated writing).
• Thompson, pg. 385—Pl and Df K for logs. P sues to get payment. D claims there
was a verbal warranty for the quality of the logs.—IF a written K expresses
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faith (advance notice of price increase). Just b/c Df's management has changed
doesn't mean that that Df no longer obligated to abide by K.—…
1. Trade usage and past course dealings b/t K’ing parties may establish
terms not specifically enumerated in the K, so long as no conflict is
created w/ the written terms.
• Korobkin’s PER Analysis:
1. If you have a situation in which someone is offering evidence, do you have
evidence to which the parol evidence even applies?
2. If you do have that kind of evidence, do you have the kind of writing to
which the parol evidence rule applies?
3. Do you have an integrated writing? Is it partial or complete?
a. If you do have an integrated writing, you apply the PER.
○ If you have a complete integration, anything contradictory
or supplementing the writing is inadmissible.
○ If you have a partial integration, contradictory evidence is
inadmissible, but evidence of consistent add’l terms is
admissible.
b. There is a thing called a merger clause, which basically says that
“any other oral Ks are not relevant here.” Thus, if the ct is applying
a CLASSICAL APPROACH, the existence of a merger clause means
that we have complete integration. However, if you are following
the MODERN APPROACH, the merger clause is important, but it’s
not conclusive.
4. Are there exceptions? Yes, of course. (See above)
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that she had improved when really she did not. Df had ex-instructor
convince her to drop suit and they would offer past due commissions. Df
persuaded Pl not to seek counsel.—…
R2D 168-69—Assertions of opinions can be the basis for
misrepresentation. If these opinions can be justifiably relied
upon, and they are not in accord with the facts, they can be called a
misrepresentation.
○ Park 100, pg. 580—…—
First Rule: DUTY TO READ RULE: Both parties are required to know
the terms of the agreement they are signing, and they cannot avoid
their obligations for failure to read it.
Second Rule: Two different versions of exceptions to the DUTY TO
READ RULE:
• IF party A employs misrepresentation to induce
another party B’s obligation under an agreement,
THEN party A cannot bind party B to the terms of the
agreement.
• IF the guarantor has been induced to enter the K of
guaranty by fraudulent misrepresentations or
concealment on the part of the guarantee, THEN the K
of guaranty cannot be enforced by the guarantor.
Third Rule: IF there was (1) a material misrepresentation of
fact by one party AND (2) it was made with knowledge or
reckless ignorance of the falsity of the statement AND (3) it
was relied upon by the other party AND (4) it proximately
caused the injury to the relying party, THEN there is fraud.
• Nondisclosure:
○ A party’s non-disclosure of a fact known to him/her is an assertion (for
misrepresentation purposes) in the following cases only:
Where disclosure of the fact is necessary to prevent a previous
assertion from being mistakenly relied upon;
Where he knows that disclosure of the fact would correct a mistake
of the other party about a basic assumption, and if non-disclosure
amounts to a failure to act in good faith;
Where he knows that disclosure of the fact would correct a mistake
of the other party as to the contents or effect of a writing; or,
Where the other person is entitled to know the fact because of a
relationship of trust and confidence between them (i.e., a fiduciary
relationship).
○ Factors to consider in deciding whether fairness requires disclosure of
material information:
Difference in intelligence of the parties;
Relationship b/t the parties;
The manner in which the information is acquired. Information
acquired through deliberate and costly investigation might not have
to be disclosed (because it creates an incentive to investigate);
The nature of the fact not disclosed. In Ks to sell property, there
is usually a duty to disclose an intrinsic defect not discoverable by
reasonable care;
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Changed Circumstances:
• Impracticability:
○ Increased cost alone does not excuse performance UNLESS the rise
in cost alters the essential nature of the performance;
○ A rise or collapse in the market is not sufficient (though if the
market collapses completely, there will usually be an impossibility
defense);
○ A severe shortage of raw materials or supplies due to a contingency such
as war, embargo, local crop failure, or unforeseen shutdown of major
sources of supply, which either causes a marked increase in cost or
altogether prevents the seller from securing the supplies
necessary to his performance will usually constitute impracticability;
○ Where the K provides for an exclusive means of performance, the
impracticability of that means may release the promisor from his duty.
Where the performance is set out in unqualified terms, the promisor may
be required to perform by alternate means even though those means are
more expensive;
○ The claimed impracticability must arise from an unforeseen
contingency and without fault of the party seeking to avoid the K;
○ The nonoccurence of the contingency must be a basic assumption of the
K; and,
○ The parties must not have explicitly or implicitly allocated the risk that the
contingency might occur. Assumption of risk may be determined by
examining:
The extent to which the parties allocated other risks;
The circumstances surrounding the K, including trade usage;
The purpose of the K; and
Force majeure clauses may make a determination of
impracticability easier by pointing to who bears the risk.
• Impracticability may only be used to avoid enforcement (rescind) of the
K.
• Impracticability involves a case where a change of circumstances not
specifically provided for in the agreement occurs after the agreement is
made.
• Impossibility: R2D 262-64
○ A situation where there are specific goods, unique to the K, are destroyed,
making fulfillment impossible. The main case is Taylor, in which the K to
hire a music hall was held to be frustrated, by the destruction of the music
hall by fire.
• Impracticability: R2D 261, 66
○ The first response to this, as an excuse, should be: C’mon! After all, a K
allocates the risk of performance. This excuse is seldom raised, and
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accepted even less. The Q is, what would a case have to look like in order
to allow you to prevail with impracticability. (See pg. 697)
○ Karl Wendt, pg. 687–Pl and Df had dealer sales and service agreement. Df
suffering severe financial losses sold farm equipment to Case. Case didn't
offer Pl a Case franchise.—…
Impracticability must be based on way more than a simple
downturn in the market.
• Frustration of Purpose: R2D 265, 66: If in the case of a supervening event,
after K formation, the purpose of the K is frustrated, a K may also be considered
void.
○ The main case is Krell, in which a Krell’s flat is rented to view the king’s
coronation, but the coronation is cancelled, and the flat no longer has any
value.—IF a deal loses all value to a party, because of an
unanticipated change in purposes, THEN the K is voidable.
• Modification:
○ GENERAL RULE: Performance of a legal duty owed to a promisor which is
neither doubtful nor the subject of honest dispute is not consideration.
○ R2D 89. Modification of an Executory K. A promise modifying a duty
under K not fully performed on either side is binding:
If the modification is fair and equitable in view of circumstances not
anticipated when the K was made;
To the extent that justice requires enforcement in view of material
change of position in reliance on the promise; or,
To the extent provided by statute.
○ Alaska Packers’ Assn, pg. 715–Fishermen agreed to work in Alaska fishing
for $50/day. Once there, they threatened to not work unless their wages
were raised to $100/day. The court held that the one-sided modification
was unenforceable because there was no consideration for the promise to
pay the add’l amount. Pre-existing obligations or legal duties do not
constitute consideration.—IF party A agrees to give add’l
consideration to party B for B’s performances of the exact
services that B was already under K to render, THEN the new
promise is without consideration. Two “narrowings” of this rule:
IF the parties agree to modify their K, so that each party is
giving the other party some add’l consideration, THEN K.
The new K has the old terms, plus add’l consideration from
both parties.
IF both parties agree to voluntarily rescind their promises
and create a new K, THEN K. The new K can be completely
different from the old.
The rationale for the PRE-EXISTING DUTY RULE is that the ct is
worried about the potential for extortion in allowing one
party to induce the other party’s reliance up to the last
possible moment.
A modification of a K must have fresh consideration.
R2D 73—PRE-EXISTING DUTY RULE—Merely promising to perform
an existing (contractual) obligation will not serve as valid
consideration for add’l return compensation from the other party.
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