i Acing Contracts A Checklist Approach to Contracts Law Suzanne Darrow-Kleinhaus Associate Professor of Law and Director of Academic Development Touro College Jacob D. Fuchsberg Law Center Series Editor A. Benjamin Spencer Mat #40516222 ii Thomson Reuters have created this publication to provide you with accurate and authoritative information concerning the subject matter covered. However, this publication was not necessarily prepared by persons licensed to practice law in a particular jurisdiction. Thomson Reuters are not engaged in rendering legal or other professional advice, and this publication is not a substitute for the advice of an attorney. If you require legal or other expert advice, you should seek the services of a competent attorney or other professional. © 2010 Thomson Reuters 610 Opperman Drive St. Paul, MN 55123 1–800–313–9378 Printed in the United States of America ISBN: 978–0–314–17171–9 iii To my parents, Bernice and Albert Darrow, for their unwavering love and support. This book is in loving memory of my father, who taught me early the meaning of promise—and what it meant to never make a promise one could not keep. v ACKNOWLEDGMENTS T his project has been a major enterprise and would not have happened without the support and assistance of others. Thanks to my husband, Murray, for his love and support. Thanks to Meredith, who demonstrates daily what it means to be a loving mother and daughter. And thanks to Benjamin, who is always eager and delighted to learn something new. My deepest appreciation to Dean Larry Raful and to the Touro Law Center for providing a stipend in support of this work. I would also like to thank Professor Louise Harmon, Associate Dean for Academic Affairs & Faculty Development, for her receptivity to new ideas and encouragement of faculty scholarship. She truly cares about our projects and helps us make them happen. I wish to thank my former law teachers and now colleagues, Professors Heather Melniker and Sidney Kwestel, who model by example the art of teaching, the process of legal thinking, and the type of professionalism that comes only from within. But a very special thank you is owed to Sidney Kwestel, my Contracts professor, without whom this book would not have been written. I realized early in his class that what was important was learning to identify the relevant questions because the answers I sought were to be found in the questions I asked. It is wholly appropriate and right to recognize his enormous contribution to a book which shows how to organize the rules into a series of logical questions that guides the thought process to resolve the legal issue. Finally, I would like to thank my students. There are far too many to name individually, but a couple made very real contributions. vi First, Nancy Chanin, class of 2010, without whom this manuscript would never have been completed. Thank you for your careful reading, editing, and unbelievable skill with the Blue Book. Your suggestions and presence during the final phases of this book have been a comfort and true source of support. I am forever grateful. I would also like to thank Daniel Podhaskie, class of 2010, who contributed significantly to the sample analyses for several of the illustrative problems. SUZANNE DARROW-KLEINHAUS Bellmore, New York April 2010 vii Table of Contents Introduction 1. Introduction to Contract Law What Is a Contract? Central Themes of Contract Law Sources of Contract Law Common Law Restatement (Second) Of Contracts Uniform Commercial Code (UCC) Revisions To The UCC Classifying Contracts Void, Voidable, And Unenforceable Contracts Express, Implied, And Quasi–Contracts Structure of This Book The Contracts Timeline 2. Offer and Acceptance The Objective Test Unilateral and Bilateral Contracts Review of Offer Terminating an Offer Revocation Rejection or Counter-Offer Lapse of Time Death or Incapacity Review of Acceptance Acceptance by Promise Acceptance by Performance “The Mailbox Rule” Silence and Dominion as Acceptance viii Review of Option Contracts and Irrevocable Offers Consequences Of Irrevocability Review of Formation Under the UCC “Firm Offers” “Battle of the Forms” Formation Issues in the Internet Age Offer And Acceptance Checklist Illustrative Problems Problem 2.1 Analysis Problem 2.2 Analysis Points To Remember 3. Consideration Review of Consideration The Requirement of Exchange What Is Sufficient Consideration? Adequacy of Consideration Sham and Nominal Consideration Mutuality of Obligation Settlement of Claims Illusory Promises Exclusive Dealings Satisfaction Clauses Requirements and Output Contracts Modification and the Pre–Existing Duty Rule Modification Under the UCC Accord and Satisfaction Review of Promises Lacking Consideration Gratuitous Promises Past Consideration Moral Obligation/Material Benefit Rule Review of Promissory Estoppel Consideration Checklist Illustrative Problems ix Problem 3.1 Analysis Problem 3.2 Analysis Points To Remember 4. Statute of Frauds Review of the Statute of Frauds Satisfying The Statute Exceptions Part Performance Unilateral Contracts Promissory Estoppel Review of the Statute of Frauds Under the UCC Statute Of Frauds Checklist Illustrative Problems Problem 4.1 Analysis Problem 4.2 Analysis Points To Remember 5. Defenses and Limits on Enforceability