Contracts, taught the way first year is taught.

Fifteen lectures so far, one doctrine each, by Professor Ruth Castellano. Every case and statute verified against the primary source. Watch here; take the five-question quiz on the study club site.

Module 1 · Foundations

Lecture 1

Why does the law enforce some promises and not others?

What a contract is, and why the law enforces bargains but not gifts. The common law and Article Two of the Uniform Commercial Code, and the predominant-purpose test for mixed deals. Bilateral and unilateral contracts.

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Lecture 2

What did they say, not what did they mean: the objective theory of assent

Assent is judged by outward words and acts as a reasonable person in the other party's position would understand them, not by secret intent, unless the other party knew the words were not meant.

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Lecture 3

How to read a contracts case

Posture, facts, question, holding, reasoning, disposition. Reading a case three times. Holding versus dictum; distinguishing versus overruling. Exemplar: Hawkins v. McGee (N.H. 1929), the promise of a perfect hand.

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Module 2 · Offer

Lecture 4

What is an offer?

An offer hands the other party the power to close the bargain by saying yes: commitment, definite terms, an addressee. Statements of price and expressions of interest are negotiation, not offers.

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Lecture 5

Advertisements: when is a public statement an offer?

An advertisement is an invitation to deal unless it is clear, definite and explicit and leaves nothing open to negotiate.

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Lecture 6

How an offer dies: rejection, counter offer, revocation, lapse

The five ways a power of acceptance ends, and the line between a counter offer and a mere inquiry.

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Module 3 · Acceptance

Lecture 7

Accepting by promise, accepting by doing

An offer may invite a return promise or a performance. Performance is acceptance, knowingly done, without advance notice where the offer dispenses with it, and beginning the invited performance makes the offer irrevocable.

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Lecture 8

When does acceptance take effect? The mailbox rule, and silence

An invited acceptance takes effect when it is sent; rejections and revocations when they arrive; crossing communications; and the narrow cases in which silence accepts.

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Lecture 9

Assent in the modern transaction: boxes, clicks and forms

An offeror may name the act that counts as acceptance; keeping goods, using software or clicking a button after reasonable notice of the terms is assent, but terms a reasonably prudent person would not have seen bind nobody.

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Module 4 · Consideration

Lecture 10

What the law takes in exchange: the bargain

Consideration is what the promisor asks for and gets in exchange: a promise, a performance, or a forbearance. Benefit to the promisor is not required, and a recital of value is not value.

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Lecture 11

Adequacy, nominal consideration, and the pre-existing duty rule

Courts do not weigh a real exchange, but a sum named as a mere form is no exchange, and neither is a promise to do what one is already bound to do. Modifications survive when fair and unanticipated, or, for goods, without any consideration.

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Lecture 12

Past consideration, moral obligation, and the illusory promise

A promise made for a benefit already received has no consideration, and moral obligation alone does not supply it; a minority of courts enforce a later promise to pay for a material benefit the promisor himself received. A promise that leaves the promisor free not to perform is illusory, but reasonable efforts, express or implied, are real.

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Module 5 · Promissory estoppel

Lecture 13

When reliance takes the place of a bargain

A promise the promisor should expect to induce reliance, which does induce it, is binding if injustice cannot otherwise be avoided. Not consideration: a separate ground with its own elements.

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Lecture 14

Reliance before the deal: bids, options and negotiations

An offer the offeror should expect to be relied on before acceptance, and which is relied on, cannot be revoked for a reasonable time so far as injustice requires; and a concrete assurance given in negotiations can bind its maker to the reliance losses it caused.

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Lecture 15

Limits and remedies: what the promisee gets

Section 90 enforces a promise only so far as required to prevent injustice, and the remedy may be limited as justice requires: reliance losses where the promise was indefinite, the value of the promise where it was definite and the loss provable.

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Module 6 · Definiteness and mutual assent

Lecture 16

Definite enough to enforce: the terms a court needs

A contract needs terms definite enough for a court to know what was promised and give a remedy: a term left to one party's discretion fails, a term tied to an ascertainable standard stands, and for goods Article 2 supplies even an open price.

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Lecture 17

Agreements to agree

A term left to be agreed is no term: at common law an agreement to agree on a material term is unenforceable unless the agreement supplies a method or an outside standard, but where the parties clearly meant to be bound and their mechanism fails a court may set a reasonable term.

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Lecture 18

Letters of intent and preliminary agreements

A preliminary writing binds only if the parties objectively intended to be bound; 'subject to a definitive agreement' ordinarily denies it, a complete unqualified memorandum may support it, and a separate promise to negotiate in good faith is enforceable for reliance losses only.

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Module 7 · Statute of Frauds

Lecture 19

Which promises need a writing, and what counts as one

Land, the one-year clause, suretyship, marriage, an executor's promise, and goods of $500 or more are unenforceable without a writing signed by the party to be charged; but the writing may be informal, may be several papers read together, and for goods need only show a contract and state the quantity.

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Lecture 20

The one-year rule and the land rule

The one-year provision catches only a contract whose own terms make performance within a year impossible; a contract for land needs a writing unless the buyer's reliance, known to the seller, makes conveyance the only just remedy.

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Lecture 21

Getting around the statute: estoppel, admissions and the Article Two exceptions

The statute yields to unjust enrichment or unconscionable injury from reliance, and for goods to a merchant's confirmation, specially manufactured goods, an admission in court, or goods paid for or accepted; a sworn denial ends the search for an admission.

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Module 8 · Interpretation and parol evidence

Lecture 22

Whose meaning? Ambiguity and the reasonable reader

A contract's words carry the meaning a reasonable person in the other party's position would give them: a party who knows the other's meaning is held to it, a party urging an unusual meaning must prove it, and only a genuinely equivocal term that neither party had reason to understand the other's way makes no contract at all.

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Lecture 23

The parol evidence rule

When the parties make a writing the final expression of their agreement, earlier or contemporaneous agreements cannot contradict it, and if the writing is complete they cannot add to it; New York and California test completeness differently, and Article 2 admits course of dealing, usage and course of performance.

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Lecture 24

Reading the words: plain meaning, context, and the Kozinski objection

New York reads a written term by its plain meaning and admits outside evidence only for an ambiguity on the face; California admits evidence of any meaning the words are reasonably susceptible of but never to contradict them; for goods, express terms control but course of performance, course of dealing and usage of trade explain them.

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Module 9 · Conditions and performance

Lecture 25

Conditions: what must happen before a duty is due

A condition is an event, not certain to occur, that must occur before a contractual duty comes due; if it fails, the duty never arises and no one is in breach. Express conditions are enforced strictly, but doubtful words are read as a promise or a timing term rather than a condition where a condition would forfeit one party's performance for a risk the other is better placed to bear.

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Lecture 26

Constructive conditions and substantial performance

Where promises are exchanged, each party's performance is an implied condition of the other's, satisfied by substantial performance: a trivial and innocent shortfall leaves the other party bound and liable only in damages, at the cost of repair unless that is grossly disproportionate and then at the difference in value; a wilful default forfeits the doctrine. For goods, tender must be perfect and the seller may cure (UCC §§ 2-601, 2-508).

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Lecture 27

Waiver, the order of performance, and what a defaulting party gets back

A condition that is an incident of performance rather than its consideration may be waived without new consideration, and once waived the forfeiture falls with it though damages remain. Where a contract for work is silent on payment, the work must be substantially performed before payment can be demanded. A party who defaults after part performance cannot sue on the contract but may recover in restitution the benefit conferred, up to the contract rate, less the damages caused.

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Module 10 · Breach and repudiation

Lecture 28

Material breach: when the other side's failure lets you stop

Every unexcused failure to perform is a breach and gives damages, but only a material breach, judged by the benefit lost, the adequacy of damages, the breaching party's forfeiture, his prospects of cure and his good faith, excuses the other party from performing. A party who treats a minor breach as material and walks away has himself committed a material breach.

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Lecture 29

Anticipatory repudiation: breaking a promise before it is due

A party breaches before performance is due only by repudiating: a distinct, unequivocal and absolute refusal to perform, or an act that makes performance impossible. Doubtful statements and requests for cancellation are not enough. The injured party may treat the contract as ended and sue at once or await performance, and until he elects or relies the repudiating party may retract (UCC §§ 2-610, 2-611).

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Lecture 30

Adequate assurance: what to do when you fear the other side will not perform

When reasonable grounds for insecurity arise, a party may demand in writing adequate assurance of due performance and, if commercially reasonable, suspend its own performance until it comes; failure to give adequate assurance within a reasonable time not exceeding thirty days is a repudiation (UCC § 2-609; Restatement (Second) § 251). The demand must rest on objective grounds and may seek only assurance of the performance owed, not new security.

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Module 11 · Defenses

Lecture 31

Capacity: minors and the mentally ill

A minor's contract, other than for necessaries, is voidable at the minor's option and may be disaffirmed by any act showing that intent; emancipation does not change the rule, and a lie about age binds the minor only in tort, if fraud is proved. A person who by reason of mental illness cannot understand a transaction, or cannot act reasonably in relation to it where the other party has reason to know of the illness, incurs only voidable duties.

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Lecture 32

Duress and undue influence: consent that was not free

A contract is voidable for duress where a wrongful threat, including a bad-faith threat to breach or to withhold an admitted debt, leaves the victim no reasonable alternative, and for undue influence where excessive pressure, applied so as to overcome the will without convincing the judgment, is brought to bear on a person unduly susceptible to it. Hard bargaining, good-faith disputes and second thoughts are none of these.

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Lecture 33

Misrepresentation and the duty to disclose

A contract is voidable where a party is induced by a false assertion of fact, which includes an opinion from someone with superior knowledge, a half truth and a false answer to a question, and by silence where the other party is mistaken about a basic assumption, where there is a relationship of trust, or where a home seller knows a material fact the buyer cannot see. Bare nondisclosure between equals is still not fraud.

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Lecture 34

Unconscionability and public policy: bargains the court will not enforce

A court may refuse to enforce a contract or clause that was unconscionable when made, meaning an absence of meaningful choice together with terms unreasonably favourable to the other party (UCC § 2-302), and will refuse to enforce a promise where the public policy against it clearly outweighs the interest in enforcement (Restatement (Second) § 178). Where only part of a term offends, a court may enforce the reasonable part but may not add to it (§ 184).

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Module 12 · Mistake and changed circumstances

Lecture 36

Impossibility and impracticability: when performance becomes too hard

Performance is excused where an unexpected contingency, the non-occurrence of which was a basic assumption of the contract, makes performance impracticable, meaning possible only at an excessive and unreasonable cost, and the risk of that contingency was not allocated to the promisor (UCC § 2-615; Restatement (Second) § 261). A fixed price allocates the risk of price change, increased cost alone is not enough, and a force majeure clause excuses only the events it names and their like.

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Module 13 · Third parties

Lecture 38

Third-party beneficiaries: who else can sue on a promise

A third person may enforce a promise made for his benefit where the promisee intended the performance to satisfy a debt to him or to make him a gift (a creditor or donee beneficiary), and everyone else who might gain from performance is an incidental beneficiary with no rights (Restatement (Second) § 302). Until the beneficiary relies, sues or assents, the parties may vary the promise, and the promisor keeps every defense he had against the promisee.

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Quizzes, scores and the study club

Each lecture has a five-question quiz with every answer explained. Quizzes and your scores live on the study club site, which needs a free account: club.firstyearlaw.com.