1. Offer revocation a. Revocation effective when received by offeree (if offer

published can only revoke by publishing similar way) b. Can revoke at will by offeror except where

i. Options k: offeree must give consideration for it ii. Merchant firm offer art 2--0fferee doesn’t give

consideration 1. Merchant2. Offers buy/sell goods 3. Signed writing 4. And writing give assurance that will be held open 5. --> not revocable for lack of consideration during

time given 6. If no time given tho--> 3 months max7. (if consideration given tho unlimited time period to

keep open bc then its option k and not merchant firm offer)

iii. Detrimental reliance1. Offeror could reasonably expect offeree would rely to

her detriment on offer and offeree does so, then offer held irrevocable option k for reasonable length of time 

4. Beginning performance in response to TRUE UNILATERAL K

a. Offer for unilateral k--> irrecovocable once performance begins

b. Offeror must give offeree reasonable time to complete performance

c. But offeree is not bound to complete performance and can withdraw any time prior to completion of performance

d. No acceptance until performance is complete e. Preparations--don’t make offer irrevocable tho and

instead might constitute detrimental reliance sufficient to make offeror's promise binding to extent of detrimental reliance  

5. Bilateral k--offer indifferent as to manner of acceptance--> bilateral k

a. Once performance starts by offeree--> revocation impossible bc once performance starts by offeree then k formed in bilateral k

b. Note--notification of performance starting might sometimes be required 

2. Termination of offer by offeree thru REJECTIONa. Express rejection --> rejection terminates the offerb. Counteroffer--is both a new offer and rejection (reverses roles

of parties)i. Mere inquiry is diff tho and doesn’t terminate offer when

consistent w idea that offeree still keeping original proposal under considation

1. Test: wh/r a reasonable person would believe the orignal offer been rejected

c. Rejection of offeri. Effective when received by offeror

d. Rejection of option--> rejection of or a counteroffer to an option does NOT constitute termination of the offer

e. Lapse of time might make offer termiante Death or insanity of either party--> terminates offer by operation of law (death insanity doesn’t need communicated to the other party)

--unless offer is of a kind offeror could not terminate--such as an option supported by consideration  --destruction of proposed k's subject matter--> termainates offer by operation of the law Supervening illegality--> terminates offer by operation of the law      

Revocation by offeror

Rejection by offeree

Termination by operation of law

Effective when receivd

Effective when received

Effective when death or insanity of EITHER PARTY, the destruction subject matter or supervening illegality occurs

Express recovation or implied (offeree discovers offeror sold subject matter to

Express rejection, counteroffer, or lapse of reaosnable time

Death or insanity either party, destruction of subject matter, or supervening illegality

someone else)Limitaiton on power to terminate

Option k, merchants firm offer, detrimental reliance, beinging performance of unilateral k

Generally cannot reject if already accepted

Power of ACCEPTANCE Generally offeree's power of acceptance CANNOT BE ASSIGNED

o However, if offeree has paid consideration to keep offer open--> option k created--> the right to accept IS TRANSFERABLE 

Acceptance unilateral ko Not accepted until completes performacne (but offeree not

obligated to complete performance once starts) But once starts then irrevocable offer for reaosnble period of

timeo Generally, offeree NOT required to notify offeror that begun

requested performance (so as to make offer irrevocable reaosnable period of time)

But, is required to notify offeror within a reasonable time after performance is completed

However, no notice required if offereor waived notice or offerees performance noramlly come to attention offeror within reasonble time  

Acceptance Bilateral k (bilateral k presumed)o Accept either by promise to perform OR by beginning performance

(once begins performance--> obligated to complete performance)o Usually acceptance in bilateral k--> must be communicated to

offeror, unless offer provides acceptance need not be communicated

o Offers to buy goods for current or prompt shipment Art 2 offer to buy goods invites acceptance by either

Promise to ship Or by current or prompt shipment of conforming or

NONCONFORMING goods o CL acceptance--> mirror image ruleo UCC --> no mirror image rule

Shipment nonconforming goods--> acceptance creating bilateral k (as well as a breach) unless seller seasonably notifies buyer that shipment of nonconforming goods offered only as an accomodation

Buyer NOT REQUIRED TO ACCEPT ACCOMODATION GOODS (can reject them)

 If buyer rejects nonconforming goods--> shipper NOT BREACH & MAY RECLAIM the accomodation

goods, bc her tender doesn’t constitute an acceptance of the buyer's original offer

U can only accept by shipping nonconforming goods which means also a breach when shipment is used as form of acceptance

If instead party accepts an order by promising to ship  Then later discovers lack specified goods and ships

NONCONFORMING GOODS AS AN ACCOMODATION0--> this is BREACH & NOT an accomodation

Bc there, there was a promise to ship (As method of acceptance--not the shipment act itself)

Thus the shipment wasn’t acceptance And therefore, accomodation not possible

 BATTLE OF FORMS 2-207 UCC K'S:

MIRROR IMAGE RULE NOT REQUIRED (mirror image rule for acceptance only in CL)o Proposal of add'l or diff terms by offeree in definite and timely

acceptance doesn’t constitute rejection and counteroffer Rather, is effective as acceptance,

UNLESS: acceptance expressly made conditional on assent to the add'l or diff terms

So, art 2 for offer for purchase or sale of goods--> acceptance w diff or addl terms still acceptance --> thus k still formed (w or wo new terms)  

o Wh/r addl or diff terms become part of the k depends on wh/r or not both parties are merchants

Bc art 2 provides a k can be formed even tho terms of acceptance don’t match terms of offer, art 2 specific rules for detemrining which terms included in the k in such instances

These rules depend on wh/r both parties to transaction r merchants

K'S INVOLVING NONMERCHANT--TERMS OF OFFER govern

If any party is not merchant Addl or diff terms considered mere proposals to

modify the k Don’t become part of k unless offeror expressly

agrees K's btw MERCHANTS --additional terms usually included

 If both parties to k are merchants, addl terms in acceptance will be included in k unless--> materially alter the original terms of the offer

Materially alter the original terms of offer (if they change a partys risk or remedies)

Offer expressly limits acceptance to terms of the offer

Or offeror has already objected to particular terms or objects within reasonable time after notice of them is received

If both parties merchants, DIFF TERMS may or may not be included (depends on k split)

Some cts treat diff terms like addl terms and follow test above in determining wh/r to include them in the k

Other cts use KNOCKOUT RULE 2-207 States that conflicting terms in offer and

acceptance are knocked out of the k bc each party is assumed to object to

the inclusion of such terms in the k Under the rule, gaps left by knocked out

terms are filled by the ucco Merchants confirmatory memo--> also governed by ucc knock

out rule Merchant memo confirms oral agreement w diff or addl

terms also subject to battle of forms provision If oral agreement and confirmatory memo sent w addl or

diff terms Despite fact k is already formed at time memo sent The memo is still put thru battle of forms prov's as it

were an acceptance Addl terms--> put thru material alteration test Depending on juris--> DIFF TERMS-->treated either

as same as addl terms or knocked out      ACCEPTANCE W ADDL TERMS

1. If response to offer is acceptance or confirmation does it propose addl terms?

a. N0--> offer acceptedb. YES--> 2

2. Is k for sale of goodsa. N--> offer rejected and counteroffer madeb. Y-->3

3. Are the parties both merchants?a. N--> k formed but addl terms are NOT included

b. Y--> 44. Did offer limit acceptance to its terms?

a. Y--> k formed but addl terms NOT includedb. N--> 5

5. Do terms materially alter the k?a. Y--> k formed but addl terms not includedb. N--> 6

6. Did offeror object to new terms in reasonable time?a. Y--> k formed but addl terms are nOT includedb. N--> k formed including the addl terms

CONDITIONAL ACCEPTANCE When acceptance made expressly conditional on acceptance of NEW

terms--> it's a REJECTION of the offero It can only be considered coutneroffer to extent that the orig

offeror may expressly assent to the new terms and thus form a ko It's NOT considered counteroffer that may be accepted by

performance If parties ship or accept goods after a conditional acceptance

--> a K is FORMED by their conduct (& new terms NOT INCLUDED) 

Effect of rejection or revocation of an offer Offeree sends accept then rejection       

  Offeree sends rejection then acceptance 

 

Offeror sends offer then revocation 

 

Consideration 1. Ct's only enforce a promise as a k only if supported by consideration or a 

substitute for consideration 2. Elements of consideration (2)

a. There must be a bargained for exchange btw partiesb. And that which is bargained for must be of legal value aka must constitute a 

benefit to promisor or detriment to promisee3. Bargained for exchange

a. Requires that the promise induce the detriment and the deteriment induce the promise 

b. No consideration--> if one party gives gift to anotherc. Act or forbearance mby promisee must be of benefit to promisor

i. Sufficient consideration ot form k if benefits promisor (benefit doesn’t need economic) 

d. Past or moral consideration--> no considerationi. A promise given in exchange for something already done--> no

consideration (no bargain) 1. "in consideration for u having done x, I promise u 1000)--> NOT

CONSIDERATION bc promise NOT ENFORCEABLE bc promise given exchange for past acts

ii. Exceptions1. Where past obligation is unenforceable bc technical defense (sol) 

that obligation will be enforceable if a new promise made in writing or is partially performed

2. Also, if past act benefitted promisor and performed by promisee at promisors request or in response emergency --> subsequent promise to pay for that act is ENFORCEABLE

4. Generally ct's don’t inquire as to adequcy of consideraiton a. But something entirely devoid of value--token consideration--> insufficient b. Sham consideration (insigifnicant recited in k)--> insufficient if not paid c. But, even if possibility of consideration (possibility of value) in thing 

bargained for then consideration will be found even if vlaue never comes into existence

5. Preexisting legal duty not considerationa. Traditionally performing or promising to perform exising legal duty 

insufficient consideration b. Exceptions

i. New or diff consideraiton promised--> considerationii. Promise is to ratify a voidable obligation (promise to ratify minors k 

after reaching 18 or a promise to go thru w a k despite other partys fraud)--> consideration valid

iii. Preexisitng duty owed to 3d person rather than promisor--> consideraiotn valid

iv. Honest dispute as to duty--> consideration validv. Unforeseen cir's sufficient to discharge party--> consideraiotn valid 

c. Good faith agreement modifying a k subject to UCC needs NO CONSIDERATION TO BE BINDING

d. Payment smaller sum than amt due on existing debt--> usually not good consideration to discharge the debti. But, might be if 

1. New or diff considreation given a. --> payment earlier than req'db. Or--> pay in stock instead cashc. ------> valid consideration to discharge debt

2. Change in performance thus could make payment smaller sum sufficient consideration to discharge the debt as enforceable promise against the creditor

6. Need to meet REQUIREMENT OF MUTUALITY to have good consideration (Can't enforce illusory promise)a. If only 1 party bound to perform then promise illusory and not enforceable 

(fails mutuality requirement bc consideraiton needed on both sides)b. All the widgets I require--> valid enforceable requirements kc. All that u produce--> valid enforceable output kd. "all u want to sell me" or "all the widgets I want"--> invalid --> unenforeable 

lacks consideration on both sides (illusory promise)(fails mutuality requirement)

e. Voidable promises (one by infant)--> enforceablef. Exclusivity agremetns --> enforceable (ct finds implied proimse to use best 

efforts)g. Conditional promises --> enforce

i. Unless, condition entirely within proimsors control-->unenforceable

h. K where a party has right to cancel if that right is somehow restricted--> enforceable (party must give 60 days notice)

   

7. PROMISSORY ESTOPPEL or DETRIMENTAL RELIANCE--> enforce k (even tho no consideration)(NO CONSIDERATION NEEDED TO ENFORCE THE K)a. Consideration not necessary if facts indicate promisor should be estopped 

from not performing b. A promise is enforceable if necessary to prevent injustice if 

i. Promisor should reasonably expect to induce action or forebearance ii. And such action or forbearance is actuallly induced

c. If elements 4 promissory estoppel present, some juris give expectation dam's (what was promised under the k) i. But the remedy may be limited as justice  requires

1. So might instead just give reliance damages (wtvv the promisee spent in relaince on promise) (which is less exp dams but might still theoretically exceed exp dams) 

d. Only look to prom estoppel after finding the party cannot enforce a valid agreement bc sometimes if party cannot prevail based on agreement then in prom estop might limit damages

1. Even if valid consideration given--> the k UNENFORCEABLE STILL IF DEFENSE TO FORMATION OF K EXISTS

a. Even if valuable consideraiton given or recognized substitute--> k unenforceable still if i. K rights unenforceable bc there's 

1. A defense to formation of the k 2. Or bc defect in capacity (making obligations voidable by  1 party)3. Or bc a defense to enforcement of certain terms exists

ii. --> any of those--> unenforceable k b. Absence of mutual assent--> unenforceable k

i. MUTUAL MISTAKE AS TO EXISTING FACTS (not facts in future)1. If both parties mistaken about existing facts (not future 

happenings) relating to agreement then contract may be VOIDABLE by adversely affected party if

a. Mistake concerns a basic assumption on which k is made  i. Ie parties think theyre contracting for sale diamond but 

its cubic zirconiumb. And the mistake has a material effect on the agreed upon

exchange (the cubic stone only worth 100th of the price in the diamond k)

c. And the party seeking avoidance    did not assume the risk    of    the mistake

2. NOT A DEFENSE IF PARTY BORE THE RISKa. Mutual mistake--> no defense--> enforce k 

i. Not a defense if party asserting the mistake as defense bore risk that assumption was mistaken 

1. Usually see where one party in position to better know risks than other party (contractor vs homeowner) or where parties knew that their assumption doubtful (parties were consciously aware of their ignorance)

ii. Mistake in value--> gnerally not a defnese--> enforce k 1. If parties make assumption as to value of subject 

matter, mistakes in those assumptions will generally not be remedied--even tho value of subject matter generally basica ssumption and mistakes creates material imbalance --bc both parties assume risk that their assumption as to value is wrong

b. Unilateral mistakei. If only 1 party mistaken about facts relating to agree 

then mistake will not prevent formation of k 1. But, if nonmistaken party knew or had reasona to 

know of mistake made by other party then k voidable by mistaken party 

1. As w mutual mistake, unilateral mistake must have material effect on agreed upon exchange and mistaken party must not have born the risk of the mistake

ii. Unilateral mistakes usually arise where 1 party makes mechanical error in computation 

1. SUBCONTRACTOR BID WRONG 2. ACREAGE IN LAND SALE K MISCALCULATED3. --> CONSIDER WH/R K MAY BE AVOIDED DUE TO 

UNILATERAL MISTAKEii. MISTAKE BY INTERMEDIARY

1. Mistake in transmission of offer or accept by intermeidary then usually msg as transmitted operative unless other party knew or reason to know of mistake

iii. Misunderstanidng--ambiguous k language1. K term 2 possible meanings, then wh/r valid enforceable k 

depends on parties awareness ambiguitya. If neither aware of ambiguity--> no k unless both parties 

intended same meaning

b. If both aware--> no k unless both parties intended same meaning

c. 1 party aware--> binding k based on what ignorant party reasonably believed to be meaning of ambiguous wordsi. One area where subjective intent taken into account 

(ambiguity)c. Fraud in inducement --k voidable (or go for rescission and all k remedies 

avaialbe to innocent party)d. Nonfraud. Misrep--k voidable  (or go for rescission and all k remedies 

avaialbe to innocent party)2. PUBLIC POLICY DEFENSES--ILLEGALITY

a. If conideration or subject of k illegal --> k void b. Exceptions

i. P unaware of illegality while def knows of itii. Or, parties no in pari delicto (1 not as culpable as the other)

iii. Or, illegality is failure to get license when license is for revenue raising purposes rather than for protection of the public 

c. If only purpose of k is illegal--> k is voidable by party who was i. Unaware of purpose

ii. Or aware but didn’t faciliate purpose and purpose doenst invovle serious moral terpitude

3. DEFENSES BASED ON LACK OF CAPACITYa. LEGAL CAPACITY TO K

i. Contracts of infants (minors)1. Under 18 lack capacity to enter a k binding on themselves (But 

k'ual promises by adult made to infant are binding on adult)a. Disaffirmance

i. Infant can choose to disaffirm a k any time before (or shortly after) reaching age of majority 

1. If choose to disaffirm--> she must return anything received under k that still remains at the time of disaffirmance 

2. But, no obligation to return any part of considreation that’s been squandered, wasted, or neg destroyed

ii. Exceptions1. Student loans, ins contracts and agreements not 

to reveal employers proprietary info--> cannot disaffirm

iii. Necessaries1. Those items necessary for minors subsistence, 

health or education (food shelter med care). Minor can disaffirm still k for necessaries but 

most states liable in restitution for vlaue benefits received

ii. Affirmance upon attaining majority 1. Infant may affirm when turns 18 (choose to be bound by k)

a. Either byi. Expressly affirming

ii. Or by conduct affimiring (fialing to disaffirm the k within reasonable time after reaching majority)

b. Mental incapacityi. One whose mental capacity so deficient that incapable of 

understanding nature and significance of k may disaffirm when lucid or by his legal representative

ii. And can affirm duing lucid interval or upon complete recovery even wo formal restoration by judicial action 

iii. So the k is voidable iv. But like infants, metnally incompetent ppl liable in quasi k for 

necessaries furnished to them c. Intoxicated ppl

i. So drunk doesn understand nature and significance of promise may be held to have made only a voidable promise if other person had reason to know of drunkness

ii. Intox perosn can affirm k upon recovery iii. Maybe liable in quasi k recovery for necessaries furnished to him 

  PAROLE EVI RULE1. When parties to k express agreement in writing w intent it emody final expression 

of bargain--> writing is "integration" a. Any other words written/oral made prior to writing (and any oral expressions 

contemporaneous w writing)--> INADMISSABLE to vary terms of the writing b. Cannot contradict or supplement integration once complete c. But if integration partial then writing cannot be contradicted but may be 

supplement by proving consistent addl temrs d. UCC presumes all writings are partial integrations

2. Merger clausea. That recites that agreement complete agreement btw the partiesb. (usually large commercial k's usually merger clause determinative)c. But its just one factor considered ind eterminig integration in other types of 

k's3. Writing (memo) by one party and not shown to other

a. Never an integration bc parties could not have intended it to be final complete expression o ftheir agreement when one party hasn’t seen it

b. Merely evi of agreement

c. Confirmatory memo may be partial integration by ucc tho bc was sent other party and that party aware of its contents

4. Evi outside scope of the rulea. Parole evi rule prohibits extrinsic evi seeking to vary or contradict or add to 

integration b. Other forms of extrinsic evi tho can be admitted if don’t bring about this 

result (fall outside scope of parole evi rule) i. Validity issues--party to written k can attack agreements validity 

1. Party acknowledges (Cocnedes) that writing reflects agrement but asserts that agreement never came into being bc any of followinga. Formation defects--fraud, mistake, duress and illegality may 

be shown by extrinsic evib. Conditions precedent to effectiveness

i. If party asserts there was an oral agreement that the written k would not become effective until a condition occurred, all evi of understnaidng may be offered and received (this is a condition precedent to effectiveness) 

c. Collateral agreements and naturally omitted termsi. Parole evi admiss if alleged parol agreemnt is collateral to written 

obligaiton (related to subject matter but not part of primary promise) and does not conflict w it

ii. Naturally omitted terms doctinre--allows evi of terms that would naturally be omitted form written agreement (ie if meet s 2 prongs)1. It doenst conflcit w written integration2. And concerns subject that similarly situated parties wouldn’t 

ordinarly be expected to include in written insturmentd. Interpretation

i. If uncertainty/ambiguity in writing agreements terms OR dispute on meaning of the written terms

ii. --> admit parol evi to aid fact finder in reaching interpretaion of agreement 

iii. But if meaning plain --> parole evi--> inadmisse. Showing of true consideration 

i. Parol evi rule will NOT BAR EXTRIN EVI SHOWING THE "true consideratoin" paid

ii. Ie evi that consideration stated in k was never paidf. Reformation 

i. If party to written agreement alleges facts (mistake) entitling him to reformation of agreement then parol evi rule inapplicable

g. Subsequent modificationsi. Parol evi can be offered to show sub modifications of written k

h. Addl terms under art 2 ucci. Art 2 generally follows above rules ii. But provides party cannot contradict written k 

iii. But can add consistent addl terms unless1. Theres merger clause2. Or cts find from all of the cirs that the wrting intended as a 

complete and exclusive statement of the terms of the agreement iv. Written k's terms may be explained or supplemented by evi course of 

performance, course of dealing, trade usage ---regardless whr or not the writing appears ambiguous