Card Set Information
A contract is a promise or a set of promises for the breach of
which the law gives a remedy, or the performance of which the law in
some way recognizes as a duty.
§ 2 PROMISE; PROMISOR; PROMISEE...
(1) A promise is a manifestation of intention to act or refrain
from acting in a specified way, so made as to justify a promisee in
understanding that a commitment has been made.
(2) The person manifesting the intention is the
(3) The person to whom the manifestation is
addressed is the promisee....
§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.
§26. PRELIMINARY NEGOTIATIONS
A manifestation of willingness to enter into a bargain is not an
offer if the person to whom it is addressed knows or has reason to know
that the person making it does not intend to conclude a bargain until he has made a
further manifestation of assent.
§30. FORM OF ACCEPTANCE INVITED
(1) An offer may invite or require acceptance to be made by an
affirmative answer in words, or by performing or refraining from
performing a specified act, or may empower the offeree to make a selection of terms in his
(2) Unless otherwise indicated by the language
or the circumstances, an offer invites acceptance in any manner and by any
medium reasonable in the circumstances.
§32. INVITATION OF PROMISE OR
In case of doubt an offer is interpreted as inviting the offeree
to accept either by promising to perform what the offer requests or by
rendering the performance, as the offeree chooses.
(1) Even though a manifestation of intention is intended to be
understood as an offer, it cannot be accepted so as to form a contract
unless the terms of the contract are reasonably certain.
(2) The terms of a contract are reasonably certain if they
provide a basis for determining the existence of a breach and for giving
an appropriate remedy.
(3) The fact that one or more terms of a
proposed bargain are left open or uncertain may show that a manifestation of intention is not
intended to be understood as an offer or as an acceptance.
AND CHOICE OF TERMS; EFFECT OF PERFORMANCE OR
(1) The terms of a contract may be reasonably certain even
though it empowers one or both parties to make a selection of terms in
the course of performance.
(2) Part performance under an agreement may remove
uncertainty and establish that a contract enforceable as a bargain has been formed.
(3) Action in reliance on an agreement may make a
contractual remedy appropriate even though uncertainty is not removed.
§36 Methods of TERMINATION of the power of acceptance
(1) An offeree's power of acceptance may be terminated by:
(a) rejectiong of counteroffer by the offeree, OR
(b) lapse of time, OR
(c) revocation of the offeror, OR
(d) death or incapacity of the offeror or offeree
(2) In addition, an offeree's power of acceptance is terminated by the
non-occurance of any condtion of acceptance under the terms of the offer
(1) a counter-offer is an offer made by an offeree to his offeror
relating to the same matter as the original offer and proposing a
substitued bargain differing from that proposed by the original offer
(2) an offeree's power of acceptance is terminated by his making of a
counter-offer, unless the offeror has manifested a contrart intention or
unless the counter-offer manifests a contrary intention of the offeree
§41 When Offeree's power of acceptance is terminated
(1) An o'ee's power of acceptance is terminated at the time specified
in the offer, or if no time is specified, at the end of a reasonable time
(2) what a reasonble time "is" is a question of face, depending on all
the circumstances existing when the offer and attempted aceptance are made
(3) Unless otherwise indicated by the language or the circumstances,
and subject to the rule stated in §49, an offer sent by mail is
seasonably accepted if an acceptance is mailed at any time before
midnight on the day on which the offer is recieved
§43 INDIRECT communication of Revocation
An o'ee's power of acceptance is terminated when the o'or takes definite
action inconsistent with an intention to enter into the proposed
contract and the o'ee acquires reliable information to that effect
§50 Acceptance of offer defined;
Acceptance by performance;
Acceptance by promise
1.) Acceptance of an offer is a manifestation of assent to the terms thereof
made by the offeree in a manner invited or required by the offer.
2.) Acceptance by performance requires that at least part of what the offer requests be performed or tendered
and includes acceptance by a performance which operates as a return promise.
3.) Acceptance by a promise requires that the offeree complete every act essential to the making of the promise.
§54. ACCEPTANCE BY PERFORMANCE;
NECESSITY OF NOTIFICATION TO OFFEROR
(1) Where an offer invites an offeree to accept by rendering a
performance, no notification is necessary to make such an acceptance
effective unless the offer requests such a notification.
(2) If an offeree who accepts by rendering a
performance has reason to know that the offeror has no adequate means of learning of the
performance with reasonable promptness and certainty, the contractual duty of the offeror
is discharged unless
(a) the offeree exercises reasonable diligence
to notify the offeror of acceptance, or
(b) the offeror learns of the performance
within a reasonable time, or
(c) the offer indicates that notification of
acceptance is not required.
ACCEPTANCE BY PROMISE; NECESSITY OF NOTIFICATION TO OFFEROR
Except as stated in §69 or where the offer manifests a contrary
intention, it is essential to an acceptance by promise either that the
offeree exercise reasonable diligence to notify the offeror of acceptance or that the
offeror receive the acceptance seasonably.
PURPORTED ACCEPTANCE WHICH ADDS QUALIFICATIONS
A reply to an offer which purports to accept it but is
conditional on the offeror's assent to terms additional to or different
from those offered is not an acceptance but is a counter-offer.
ACCEPTANCE OF OFFER
WHICH STATES PLACE, TIME OR MANNER OF ACCEPTANCE
If an offer prescribes the place, time or manner of acceptance
its terms in this respect must be complied with in order to create a
contract. If an offer merely suggests a permitted place, time or manner of acceptance,
another methodof acceptance is not precluded.
§63. TIME WHEN ACCEPTANCE
(a) an acceptance made in a manner and by a medium invited by an
offer is operative and completes the manifestation of mutual assent as
soon as put out of the offeree's possession, without regard to whether it ever
reaches the offeror; but
(b) an acceptance under an option contract is
not operative until received by the offeror.
§64. ACCEPTANCE BY
TELEPHONE OR TELETYPE
Acceptance given by telephone or other medium of substantially
instantaneously two-way communication is governed by the principles
applicable to acceptances where the parties are in the presence of each other.
§71 REQUIREMENT OF EXCHANGE; Type of Exchange
(1) To constitue consideration, a performance or a return promise must
be bargained for
(2) A performance or return promise is bargained for if it is sought by
the promisor in exchange for his promise and is given by the promisee
in exchange for the promise
(3) the performance may consist of:
(a) an act other than a promise, OR
(b) a forbearnce, OR
(c) the creation, modification, or destruction of a legal relation
(4) The performance or return promise may be given to the promisor or
to some other person. It may be given to the promisee or by some other
§90 Promise reasonably Inducing Action or Forbearance
(1) A promise which the promisor should reasaonbly 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
Section 151 – Mistake Defined
A mistake is a belief that is not in accord with the facts.
Section 152 – When Mistake of
Both Parties Makes a Contract Voidable
1.) Where a mistake of both parties at the time a contract was made as to a basic assumption
on which a contract was made has a material effect on the agreed excheange of performances,
the contract is voidable by the adversely affected party unless he bears the risk of mistake under the rule stated in section 154.
2.) In determining whether the mistake has a material effect on the agreed exchange of performances, account is taken of any relief by way of reformation, restitution, or otherwise.
Section 153 – When Mistake of
One Party Makes a Contract Voidable
a mistake of one party at the time a contract was made as to a basic
assumption on which he made the contract has a material effect on the
agreed exchange of performances that is adverse to him, the contract is
voidable by him if he does not bear the risk of the mistake under the
rule stated in § 154, and
(a) the effect of the mistake is such that
enforcement of the contract would be unconscionable, or
(b)the other party had reason to know of the mistake or his fault caused
When A Party Bears The Risk Of A Mistake
Aparty bears the risk of a mistake when
(a) the risk is allocated to him by agreement of the parties, or
(b)he is aware, at the time the contract is made, that he has only limited
knowledge with respect to the facts to which the mistake relates but
treats his limited knowledge as sufficient, or
(c)the risk is allocated to him by the court on the ground that it is
reasonable in the circumstances to do so.
When A Misrepresentation Is Fraudulent Or Material
(1) A misrepresentation is fraudulent if the maker intends his assertion
to induce a party to manifest his assent and the maker
(a)knows or believes that the assertion is not in accord with the facts, or
(b) does not have the confidence that he states or implies in the truth of the assertion, or
(c)knows that he does not have the basis that he states or implies for the
(2) A misrepresentation is material if it would be likely to induce a reasonable person to
manifest his assent, or if the maker knows that it would be likely to
induce the recipient to do so.
When Duress By Threat Makes A Contract Voidable
(1) If a party's manifestation of assent is induced by
an improper threat by the other party that leaves the victim no
reasonable alternative, the contract is voidable by the victim.
(2) If a party's manifestation of assent is induced by one who is not a party to
the transaction, the contract is voidable by the victim unless the other
party to the transaction in good faith and without reason to know of
the duress either gives value or relies materially on the transaction.
Duty Of Good Faith And Fair Dealing
Every contract imposes upon each party a duty of good faith and fair dealing
in its performance and its enforcement.
Interpretation Against The Draftsman
In choosing among the reasonable meanings of a promise or agreement or a
term thereof, that meaning is generally preferred which operates against
the party who supplies the words or from whom a writing otherwise
Unconscionable Contract Or Term
If a contract or term thereof is unconscionable at the time the contract
is made a court may refuse to enforce the contract, or may enforce the
remainder of the contract without the unconscionable term, or may so
limit the application of any unconscionable term as to avoid any
Purposes Of Remedies
Judicial remedies under the rules stated in this Restatement serve to protect
one or more of the following interests of a promisee:
(a) his “expectation interest,” which is his interest in having the benefit of his bargain by
being put in as good a position as he would have been in had the
contract been performed,
(b) his “reliance interest,” which is his interest in being reimbursed for loss
caused by reliance on the contract by being put in as good a position as
he would have been in had the contract not been made, or
(c) his “restitution interest,” which is his interest in having restored to
him any benefit that he has conferred on the other party.
Measure Of Damages In General
Subject to the limitations stated in §§ 350-53, the injured party has a right to damages based on
his expectation interest as measured by
(a) the loss in the value to him of the other party's performance caused by its failure or
(b) any other loss, including incidental or consequential loss, caused by the breach, less
(c) any cost or other loss that he has avoided by not having to perform.
Avoidability As A Limitation On Damages
(1) Except as stated in Subsection (2), damages are not
recoverable for loss that the injured party could have avoided without
undue risk, burden or humiliation.
(2) The injured party is not precluded from recovery by the rule stated in Subsection (1) to
the extent that he has made reasonable but unsuccessful efforts to avoid loss.
Liquidated Damages And Penalties
(1) Damages for breach by either party may be
liquidated in the agreement but only at an amount that is reasonable in
the light of the anticipated or actual loss caused by the breach and the
difficulties of proof of loss. A term fixing unreasonably large
liquidated damages is unenforceable on grounds of public policy as a penalty.
(2) A term in a bond providing for an amount of
money as a penalty for non-occurrence of the condition of the bond is
unenforceable on grounds of public policy to the extent that the amount
exceeds the loss caused by such non-occurrence.
Effect Of Adequacy Of Damages
(1) Specific performance or an injunction will not be
ordered if damages would be adequate to protect the expectation interest
of the injured party.
(2) The adequacy of the damage remedy for failure to render one part of the performance due does
not preclude specific performance or injunction as to the contract as a
(3) Specific performance or an injunction will not be refused merely because there is a remedy for breach other than
damages, but such a remedy may be considered in exercising discretion under the rule stated in § 357.
§ 360. Factors Affecting
Adequacy Of Damages
In determining whether the remedy in damages would be adequate, the
following circumstances are significant:
(a) the difficulty of proving damages with reasonable certainty,
(b) the difficulty of procuring a suitable substitute performance by means
of money awarded as damages, and
(c) the likelihood that an award of damages could not be collected.
Measure Of Restitution Interest
If a sum of money is awarded to protect a party's restitution interest, it
may as justice requires be measured by either
(a) the reasonable value to the other party of what he received in terms of what it would have
cost him to obtain it from a person in the claimant's position, or
(b) the extent to which the other party's property has been increased in
value or his other interests advanced.