RULE STATEMENTS

 Acceptance by completed performance: If indicated by the offer, acceptance by completed performance is valid when
the performance is completed, creating a unilateral contract.
 Acceptance by Silence: See outline according to scenario.
 Acceptance by Starting Performance: If indicated by the offer, acceptance by implied promise by starting performance is
valid if it is not just preparation and the promise is to complete performance, creating a bi-lateral contract.
 Acceptance: An acceptance is assent to the terms of the offer. Once completed, a contract is formed.
 Adhesion Contract: A contract (1) offered by a party with superior bargaining power (2) on a take-it-or-leave-it-basis
 Ads: Ads can be an offer only if the offeree is specified.
 Anticipatory Repudiation: A contract cannot be breached before the time of performance falls due. However, if, before
performance is due, a party makes it clear by unequivocal words or unambiguous voluntary conduct that they will not
perform as promised, or will materially breach the contract when the time for performance arrives, they repudiate in
anticipation of performance. A party that received anticipatory repudiation may treat it immediately as a total breach,
urge retraction for a reasonable time, or for a reasonable time, just go along as though there had been no repudiation
 Applicable Law: Article 2 of the UCC applies to contracts for the sales of movable goods. The common law applies to all
contracts that are not for the sale of movable goods.
 Assent in Consumer Contracts—Reasonable Notice: A standard contract term is adopted as part of a consumer contract
if the consumer manifests assent to the transaction after receiving: (1) a reasonable notice of the standard contract term
and of the intent to include the term as part of the consumer contract and (2) a reasonable opportunity to review this
standard contract term
 Avoidability: Damages are not available for work which could have been avoided without undue risk, burden, or
humiliation. The injured party is not precluded from recovery to the extent he has made reasonable but unsuccessful
efforts to avoid loss.
 Big 3: Under the UCC, “Big 3” evidence (Course of Performance, Course of Dealings, Usage of Trade) can be used to
supplement, qualify, or explain a contract writing, even if the writing is a complete integration.
 Black Letter Exceptions: When there is a promise to pay for [(1) a pre-existing debt after the statute of limitations / (2)
medical care given by a professional / (3) one’s legal duty performed by a person in an emergency], it is enforceable
without a promissory restitution analysis.
 Breach Factors: (1) Extent to which nonbreaching party deprived of reasonably expected benefits (most important); (2)
Adequacy of damages (less important); (3) Risk of forfeiture; (4) Likelihood of Cure; (5) Breaching party’s good faith
(important); (6) Nonbreaching party’s good faith (probably also important)
 California Rule for Interpretation: Extrinsic evidence of party intent is admissible to interpret an ambiguous completely
integrated writing. The court should consider all credible evidence of party intention, including extrinsic evidence. If
deemed ambiguous (reasonably susceptible to more than one meaning) the court may use extrinsic evidence to resolve
ambiguity.
 Complete Integration: Adopted writing that is a final expression of all terms of the agreement
 Concurrent Conditions: If performances are due simultaneously, each party must “render or tender” (actually perform or
offer to perform with manifested present ability to do so)w to activate the other party’s duty
 Condition: An event that must occur in order for a party’s performance to become due.
 Consequential Damages: Losses or injuries suffered by the victim of a breach going beyond the mere loss in value of the
promised performance (direct damages) and resulting from the impact of the breach on other rights, transactions, or
endeavors affected by the contract.
 Consideration: (1)a promise or performance (2) that is given to get what is promised (3) and that the promise was given
to get. A promise that is merely to perform a preexisting duty due to the promisor is not consideration (unless an
exception applies)
 Consumer Contract: A contract between a business and a consumer other than an employment contract
 Contract Price: Applies if the seller cannot reasonably resell the goods (– expenses saved due to breach)
 Contract-Market Damages (K price – Market price) – expenses saved due to breach
 Contract-Resale Damages: (K price – Retail price) – expenses saved due to breach
 Contract: A legally enforceable promise or set of promises
 Corbin: Under the Corbin test, the court should look at all relevant evidence to determine whether parties intended to
supersede the prior agreement with the writing
 Counteroffer (Mirror-Image Rule): Any variance in the acceptance of an offer is a counteroffer. A counteroffer
terminates the offer, unless the offer or counteroffer indicates otherwise.
 Course of Dealing: A sequence of conduct between the parties in connection with prior contracts between them that is
fairly understood as providing a basis for interpreting the contract in question. Conduct under prior contracts can be a
course of dealing if the contracts are analogous to the one in question.
 Course of Performance: A sequence of conduct between the parties that exists fi the agreement calls for repeated
occasions for performance; and the other party with knowledge of the nature of the performance and opportunity for
objection to it, accepts the performance or acquiesces in it without objection.
 Cover: Substitute transaction from a contract you are entering into because you didn’t get the goods you need in the
first transaction. Because it’s a substitute transaction, it affects expectation damages.
 Death: The death of the offeror/offeree voids the contract. Notice is not required.
 Disclaim Implied Warranties: All implied warranties can be disclaimed by using words such as “as is” or “with all faults”
that make clear there are no warranties. Although the Code does not say so, most courts require that disclaimers under
§ 2-316(3) be conspicuous, at least if in writing.
 Disclaim Implied Warranty of Fitness For a Particular Purpose: The implied warranty of fitness for a particular purpose
can be disclaimed under § 2-316(2) only by conspicuous language in a writing.
 Disclaim Implied Warranty of Merchantability: The implied warranty of merchantability can be disclaimed in a writing
under § 2-316(2) only by conspicuous language that uses the word “merchantability.”
 Disproportionate Forfeiture: Some courts will excuse express conditions to avoid disproportionate forfeiture based on a
three factor test: extent of forfeiture; importance of risk addressed by condition; extent to which excuse of the condition
would expose the protected party to the risk in question.
 Divisibility: If the contract can reasonably be understood as a collection of mini-contracts, you can collect on the mini-
contracts you did perform even if you materially breach the whole contract.
 Duress: The party that was subject to duress is entitled to restitution of the benefits conferred on the other party under
duress and usually is required to return to the other party any property received under the contract. Duress can be used
to rescind a fully performed contract. The elements of duress are (1) improper threat, (2) inducement of assent, and (3)
absence of reasonable alternatives
 Duty to Read: Absent fraud or concealment, a party assents to all terms in a written K by signing the document, even if
the party does not read the language in which the K is written and is unaware of some of the terms
 Equitable Estoppel/Generalized Reliance Exception (Also applies to UCC): A promise is enforceable as needed to
prevent injustice based on reasonably foreseeable and actual reliance on the promise. The equitable estoppel exception
can make a contract not evidenced by a writing enforceable if four elements are met. Remedy may be limited as justice
requires.
 Excused Condition: If condition is excused, the duty comes due even if the condition does not occur.
 Expectation Damages: are the normal measure of contract damages and are calculated to give the injured promisee the
“benefit of the bargain,” that is, to put the injured promisee in the position they would have been in had the contract
been performed as agreed.
 Express Condition: Condition agreed upon by parties
 Express Warranties’: Affirmations of fact and promises about the goods that become part of the basis of the bargain are
express warranties, unless they are puffery. Several factors are relevant to assessing puffery.
 Implied Warranty of Fitness for a Particular Purpose: When the seller knows or has reason to know that the buyer
needs goods for a particular purpose and is relying on the seller to furnish goods that fulfill that purpose, an implied
warranty of fitness applies unless disclaimed. The seller does NOT have to be a merchant.
 Implied Warranty of Merchantability: When a merchant of goods of the kind in the contract is the seller, there is an
implied warranty of merchantability (that goods will be fit for the ordinary purposes for which they are used) unless it’s
disclaimed. A dealer in a type of goods is a merchant of that type of goods. The buyer must prove what fit for the
ordinary purpose means in the particular case.
 Implied Warranty: Under UCC, there are two implied warranties: merchantability and fitness for a particular purpose.
 Implied-in-Fact- Contract: A promise that is found without words of promise, such as accepting a car wash.
 Impossibility: A party can avoid a contract based on impossibility when performance becomes “objectively impossible”
without the fault of the party claiming impossibility, the impossibility is not known at the time the K was made, and the
risk of impossibility is not allocated to the party claiming impossibility
 Impracticability: Where, after a contract is made, a party’s performance is made impracticable without his fault by the
occurrence of an event the nonoccurrence of which was a basic assumption on which the contract was made, his duty to
render that performance is discharged, unless the language or circumstances indicate the contrary
 Incidental Damages: Costs and expenses incurred by the victim of a breach in attempting to deal with it and in taking
action to seek a substitute transaction or to curtail losses.
 Installment Contract: In an installment contract, the buyer can reject an installment only if the nonconformity
substantially impairs the value of the installment and cannot be cured.
 Integrated Agreement (Parol Evidence): A writing adopted by the parties as a final expression of one or more terms of
an agreement
 Intoxication: (R2K§16) If one party has reason to know the other is so intoxicated that (a) they don’t understand what
they’re doing OR (b) they can’t make a reasonable decision the intoxicated party can get out of the contract
 Land Transfer Full Performance Exception: If the seller actually transfers the land, completing their performance, then
the buyer’s remaining promise to pay is no longer covered by the Statute of Frauds, and is therefore enforceable,
meaning they must pay. This exception can only be acted upon by the seller.
 Land Transfer: Transfers of an interest in land are covered by the Statute of Frauds, and therefore require a signed
writing. If there is no writing, the contract is unenforceable.
 Lapse: The offer lapses when the offeror specifies, or after a reasonable time.
 Last Shot Rule: When there is an exchange of communications that is a series of counteroffers, with an acceptance by
complete or part performance, the last open offer sets the terms of the contract.
 Loss of Power of Avoidance: Unreasonable delay may cause you to lose power of avoidance. For incapacity, duress, or
undue influence, time starts when duress ends. For misrepresentation, time starts when victim knows, learns, or should
know about the misrepresentation
 Mailbox Rule: In lagged communications such as mail, fax, and email, the acceptance is effective when it is sent, if the
manner and medium is invited by the offer. Revocation and rejection are effective upon receipt.
 Material Breach: 5 factors determine whether a breach is material: (1) Extent to which the injured party didn’t get what
they bargained for (most important); (2) Extent to which the injured party can be adequately compensated with money
for what they didn’t get that they bargained for; (3) Extent to which the party failing to perform will suffer forfeiture; (4)
Likelihood that the party failing to perform will cure their failure to perform; (5) Extent to which the behavior of the
party failing to perform breached in good or bad faith. (if breach was willful, there can’t be substantial performance)
 Material Term: is a term of a contract that is an important component of the contract, so central to the values
exchanged that it is a fundamental basis of the bargain between the parties.
 Maxims for Interpretation: are a fallback when other modes of interpretation fail. Catchall terms are considered to
include terms of the same kind as an enumerated list. Ambiguous items in a list are interpreted to be consistent with
other items in the list. An expressions of some items in a list excludes items not listed. Finally, the contract should be
interpreted against the drafter.
 Merchant: A merchant is any business professional acting in their business capacity.
 Merger Clause:
 Misrepresentation: Contracts that result from misrepresentation are voidable by the recipient. Misrepresentation
involves fraudulent or material affirmation, concealment, or nondisclosure that induces assent and is justifiably relied on.
 Modified Objective Theory: If the parties mean the same thing, there is a contract based on their shared meaning; If the
parties mean different things, ask whether each party has reason to know the other’s meaning; If one party had a greater
reason to know the other’s meaning, then there is a K on the less informed party’s terms; If neither party had greater
reason to know the other’s meaning, and the difference is material, no K.; Difference is material” = significantly different
meanings/changes
 Mutual Assent: Both parties’ agreement or apparent agreement to an exchange; often accomplished through offer and
acceptance; required for most contracts (bargain Ks) EXCEPT for promissory estoppel & promissory restitution
 Mutual Inducement: The promise was given to get the potential consideration and the potential consideration was given
to get the promise.
 New York Rule for Interpretation: If an integrated writing is unambiguous, extrinsic evidence of negotiations cannot be
used to find an ambiguity or otherwise interpret the writing. If a document is ambiguous on its face, the court can
consider only sources of objective meaning (dictionaries and Big 3: course of performance, court of dealing, trade usage)
to determine the meaning of the ambiguous term.
 Nominal consideration: A nominal consideration is something non-bargained-for that the parties call consideration to
enforce the contract, but doesn’t actually induce a promise.
 Objectively Reasonable Meaning: The objectively reasonable meaning prevails unless (1) The parties actually shared a
meaning, or (2) One party knew or had reason to know that other’s meaning, and the other did not have equivalent
knowledge—then the more informed party loses.
 Offer: An offer is a manifestation of intent to enter into a bargain upon acceptance. It proposes a bargain that the
offeree can accept, forming a contract. There are five elements: (1) Identifies who can accept (2) Reasonable
communicated to offeree (3) Finality (4) Definite (5) Legally enforceable
 One-Year Rule Full Performance Exception: The Statute of Frauds applies to contracts that cannot be performed in a
year, but if a contract is completely performed, the one-year rule does not apply and the Statute of Frauds does not bar
enforcement of the contract.
 Option Contract: An option contract is a legally enforceable promise to hold an offer open, limiting the promisor’s power
to revoke. There must be one of four bases to enforce the promise to keep the offer open.
 Parol Agreement: A written or oral agreement made prior to the adoption of the final writing or an oral agreement made
contemporaneously with the adoption of the writing. Evidence of such an agreement is parol evidence.
 Parol Evidence: Evidence of a written or oral agreement made prior to adoption of a writing or an oral agreement made
contemporaneously with adoption of the writing. See “integrated agreement”, “partial integration”, “complete
integration”
 Partial Breach: A breach that is not, or has not yet become, significant enough to qualify as a total and material breach. A
party who has substantially performed commits a partial breach, but even where performance is not substantial and the
breach is potentially material, it is a partial breach if the breaching party is able to avert it by an effective cure.
 Partial Integration: The writing adopted is a final expression of some but not all of the terms of the agreement.
 Performance v. Preparation *weight these factors: (1) Conduct clearly referable to offer (not usual operations: buy
regular order vs. special order) (2) Substantial character of conduct (starting to build vs. browsing/brainstorming) (3)
Extent conduct is of actual or prospective benefit to the offeror rather than the offeree (custom job vs. work that profits
 off error in some other way) (4) Communication (does K explicitly state what constitutes as performance as opposed to
prep?) (5) Prior course of dealing (how did parties hold each other responsible in the past?) (6) Trade usage/ customs
(when people usually “start the clock” in that field)
 Predominant Purpose Test: A commonly used test for determining whether the UCC governs a hybrid goods-and-
services contract. If the predominant purpose of the transaction is to provide goods, with services incidental, Article 2
applies. If the predominant purpose of the transaction is to provide services, with goods incidental, Article 2 does not
apply.
 Promise: 3 element test: (1) Manifestation of intent to (2) act or refrain from acting in a certain way (3) so as to justify a
promise in understanding that a commitment has been made
 Promissory estoppel: Stopped from denying the existence of consideration supporting a promise you made to the other
party. Even if a promise to negotiate is too indefinite to enforce via an order to perform or damages based on full
performance, the promisee can still recover what they lost because of the promise if if the promisor (1) intended to and
(2) actually did induce substantial reliance and (3) took wrongful advantage of the promisee’s reliance. Remedy may be
limited as justice requires.
 Promissory Restitution: Recipients of past benefits generally do not need to pay, even if they promised to do so, because
their promise is not supported by consideration. A promise in recognition of benefit previously received “by the promisor
from the promisee” is enforceable “to the extent necessary to prevent injustice,” based on several factors. There is a
two-step test for determining whether justice requires enforcement of the promise to pay.
 Puffery: Affirmations of fact and promises about the goods that become part of the basis of the bargain are express
warranties, unless they are puffery. Several factors are relevant to assessing puffery: vague v. specific; qualified v.
definite; oral v. written; relative knowledge of the goods; ease of inspection.
 Purely Promissory Acceptance: If indicated by the offer, acceptance by pure promise is valid if the offeree assents to the
offer, creating a bi-lateral contract.
 Quotes: Quotes are only offers if they meet the five elements of an offer.
 R2K: A set of statements of “rules” about the common law of contracts, with commentary, that is not law, but important
persuasive authority about the common law.
 Rejection: A rejection terminates the offer unless the offeror specifies that the offer can survive rejection.
 Reliance Damages: are less commonly used than expectation damages and designed, in case of a total breach, to put the
promisee in the financial position they would have been in if the contract had never been made.
 Reliance Exception for Land Transfer Agreements: The contract will be enforceable in specific performance if the
plaintiff has changed their position in reasonable reliance on the contract with assent of the defendant such that
injustice can be avoided only through enforcement.
 Repudiation: When a party states they will not substantially perform a contract or they voluntarily do something that
makes it impossible for them to substantially perform
 Restitution for Performance Under an Unenforceable Contract: A person who performs under an agreement that is not
enforceable because of [(1) Indefiniteness / (2) State of Frauds] is entitled to restitution.
 Restitution: A person who is unjustly enriched at the expense of another is subject to liability in restitution, requiring a
party to pay for or return benefits even if no promise was made to do so. A restitution claimant can recover funds
sufficient to avoid unjust enrichment of the other party.
 Revocation: The offeror can revoke the offer at any time as long as it is a clear manifestation the offer is no longer
regarded as a commitment.
 Rules in Aid of Interpretation: Courts can establish what meanings are reasonably possible by looking at surrounding
circumstances, interpreting the writing s a whole, and interpreting the writing according to purpose.
 Settlement of claims: Forbearance to file an invalid claim can be consideration if the party genuinely believes the claim is
valid.
 Signature Requirement (Common Law AND UCC): The use of any symbol executed with the present intent to adapt or
accept a writing is a valid signature.
 Specific Performance: Specific performance is available when damages are an inadequate remedy and a balancing of
several factors supports the grant of specific performance: Inadequacy of damages; Public interest; Supervisory
concerns; Equity concerns
 Standard Contract Term: Term, relating to a consumer contract, that has been drafted prior to the transaction for use in
multiple transactions between the business and consumer parties. Standard terms and conditions in a consumer contract
require “reasonably conspicuous notice of the existence of contract terms and unambiguous manifestation of assent to
those terms” per Meyer v. Uber
 “Standards” In Interpretation: The contract should be interpreted to make the contract reasonable, lawful, and
effective. First look at express terms, then course of performance, then course of dealing, and then use of trade. Specific
terms prevail over general terms. Separately negotiated and added terms prevail over standard terms. Course of
performance can’t contradict express terms.
 Statute of Frauds:
 Substantial Performance: Performance that is not affected by other material failure to perform
 Sufficiency of the Writing Under SoF: A writing is sufficient if it meets four elements. If it is deemed insufficient, the
contract is unenforceable.
 Suretyship: A contract for one to be liable for another’s performance is covered by the Statute of Frauds, therefore
requiring a signed writing. If there is no writing, the contract is unenforceable.
 Terminating Offer:
 The One-Year Rule: A contract that cannot be completed within one year of the date of the agreement is covered by the
Statute of Frauds, therefore requiring a signed writing. If there is no writing, the contract is unenforceable.
 Total Breach: A breach of contract that is both material and incurable, entitling the victim to rescind the contract and
claim full expectation relief.
 Trade Usage: Trade usage evidence can be used to interpret a writing if the party against whom it is used knows or
should know – including by being in the trade – of the trade usage.
 UCC 2-204 Acceptance by promise to ship goods: A contract can be formed by a shipment of goods in response to an
order or another offer, under UCC 2-206(1)(b).
 UCC 2-207: SEE FLOWCHART. A definite and seasonable expression of acceptance or a written confirmation operates as
an acceptance even though it states terms additional to or different from those offered, unless acceptance is expressly
made conditional on assent to the additional or different terms. This means that it repeals the mirror-image rule for
transactions within the scope of 2-207.
 UCC Acceptance: Under UCC Article 2, an offer can be accepted in any reasonable manner unless the offer indicates
otherwise.
 UCC Article 2: UCC Article 2 applies to, and only to, sales of goods, which are movable things.
 UCC Confirmation Exception: In a contract between merchants with a writing stating the terms of an oral agreement, if
several elements are met the UCC Confirmation Exception will apply to make the contract enforceable.
 UCC Merchant’s Firm Offer: If a merchant states in a signed, written offer to buy or sell goods that the offer will be kept
open, the offer is irrevocable.
 UCC Part Performance Exception 1: A contract for the sale of goods not evidenced by a writing is enforceable if the
goods are to be specially manufactured for the buyer, are not suitable for sale to others, the seller substantially starts
manufacturing or makes commitment to buy the goods, and does so before the buyer says they no longer want the
contract.
 UCC Part Performance Exception 2: A contract for the sale of goods not evidenced by a writing is enforceable if the
goods have either been paid for and accepted, or received and accepted.
 UCC Statute of Frauds: If it is a contract for the sale of movable goods worth $500 or more, it is covered by the UCC
Statute of Frauds, and therefore requires a signed writing. If there is no writing, the contract is unenforceable.
 UCC Sufficiency of the Writing Under SoF: A writing is sufficient if it shows that an exchange has been made between
two parties and states the quantity. If these two elements are met, writing works even if the rest is incomplete or wrong.
The quantity stated in the writing will be enforced even if incorrect.
 UETA Signature: If a signature is required, an electronic signature is fine.
 UETA Writing: If a writing is required, an electronic record is fine.
 Unconscionability: There is procedural and substantive unconscionability. Procedural unconscionability is unequal
bargaining power or other problems with the bargaining process. Substantive unconscionability is when a K has an
unjustifiably one-sided result. In CA, both must be present, but need not be present to the same degree. If a contract or
term is unconscionable at the time the contract is made, a court may refused to enforce the K, enforce the remainder of
the K without the unconscionable term, limit the application of any unconscionable term to avoid any unconscionable
result.
 Undue Influence: Unfair persuasion based on status and bargaining concerns that induces assent.
 Unilateral Mistake Modern Expansion Test: Under the modern expansion of the unilateral-mistake test a party can
avoid a contract based on its own unilateral mistake if a five-element test is met: Mistake is mechanical/clerical; mistake
is material; mistake is not the result of extreme negligence; enforcement would be harsh; non-mistaken party has not
substantially relied on the contract. Prompt notice is important too.
 Unilateral Mistake Traditional Test: A party can be excused from a contract based on its own unilateral mistake if the
mistake is material and the other party knew of the mistake, had reason to know of the mistake, or was at fault in
causing the mistake.
 Unilateral Mistake: Only the part trying to avoid the contract made the mistake in question
 Usage of Trade: Any practice of method of dealing having such regularity of observance in a place, vocation, or trade as
to justify an expectation that it will be observed with respect to the transaction in question.
 Williston: If the writing appears incomplete on its face, it’s not completely integrating.