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- 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
- the mistake.
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
- unconscionable result.
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
- deficiency, plus
- (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.
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