Contract Formation

Question 1

Offer definition

Answer 1

An objective manifestation of a present intent to contract. Demostrated by a promise, undertaking, or commitment; definite and certain terms; and communication to an offeree.

An offer creates the power of acceptance in the offeree.

Question 2

Offer

Objective Manifestation of Intent

Answer 2

Offer must give offeree a reasonable expectation that offeror is willing to enter into a contract.

• Ask would a reasonable person believe the communication is an offer inviting acceptance.

Question 3

Offer

Definite and Certain Terms

Answer 3

Enough essential terms must be included to allow a court to enforce the contract.

• vague terms or terms of negotiation not allowed.
• Real Estate: requires price, parties, and identification of land.

Question 4

Offer

Communication to an Identified Offeree

Answer 4

Offeree must know of the offer and have the power to accept it.

Question 5

Offer

Advertisements

Answer 5

Generally not offers, unless highly specific as to quantity and clearly indicate who may accept.

Question 6

Offers

UCC

Answer 6

Quantity must be certain or capable of being made certain.

• Requirement/output – no unreasonably disproportionate increase in quantity allowed.
• Missing terms OK if it appears parties intended to make a contract and there is a reasonably certain basis for giving a remedy.

Question 7

Termination

Acts of Parties

Answer 7

1. Revocation by offeror
2. Rejection by offeree
3. Lapse of time

Question 8

Termination

Operation of Law

Answer 8

1. Death of insanity of either party
2. Destruction of proposed contract’s subject matter
3. Supervening illegality

Question 9

Revocation Definition

Answer 9

An offeror may revoke her offer, which effectively terminates the offer and the offeree’s power of acceptance

Question 10

Methods of Revocation

Answer 10

1. Unambiguous statement by the offeror to the oferee
2. Offeree becomes aware of the offeror’s unambiguous conduct or statement indicating an unwillingness or inability to contract

Question 11

Limitations on Revocation

Answer 11

• Revocation is only effective upon receipt by offeree.
• Offer cannot be revoked once it has been accepted.

Question 12

Irrevocable Offers

Answer 12

Offer is irrevocable if:

1. Option Contract
   
   1. Promise to keep an offer open; requires consideration
2. UCC Firm Offer
   
   1. If a merchant offers to sell goods in a signed writing and gives assurances that offer will be held open, it is irrevocable for designated period or up to three months
   2. No consideration required
3. Detrimental Relaince by Offeree
   
   1. Reliance must be reaosnable

Question 13

Revocation

Unilateral Contracts

Answer 13

Start of performance makes the offer irrevocable for a reasonable time to complete performance.

• Start of performance must go beyond mere preparation.

Question 14

Rejection of Offeror Definition

Answer 14

Rejection by offeree terminates the offer and the offeree’s power of acceptance.

Question 15

Methods of Rejection

Express Rejection

Answer 15

Express rejection by the offeree will terminate the offer.

Question 16

Methods of Rejection

Counteroffer

Answer 16

Terminates the origional offer can becomes a new offer; bargaining is not a counteroffer.

• If response to an offer is a question: bargaining
• If response is a statement: counteroffer

Question 17

Methods of Rejection

Conditional Acceptance

Answer 17

Terminates the origional offer and becomes a new offer.

Indicated by terms such as “if, only if, but, provided, so long as, on condition that, etc.”

Question 18

Methods of Rejection

Acceptance with Additional Terms (common law/UCC)

Answer 18

• Common Law: acceptance must be the mirrow image of the offer
• UCC: if both parties are merchants, additional terms are a “seasonable expression of acceptance” if they do not materially change the offer and the offeror does not object.

Question 19

Acceptance Definition

Answer 19

A clear expression of assent to the terms of the offer

Question 20

Acceptance

Common Law Mirror Image

Answer 20

Acceptance must mirror the offer’s terms; it cannot omit or add new terms

Question 21

UCC Acceptance Issues

Acceptance with Additional Terms

Answer 21

Acceptance that proposes additional terms or different terms is vlaid, unless the acceptance expressly requires assent to the different or additional terms.

• Merchants: additonal terms become part of the contract unless they materially change the offer or offeror objects within a reasonable time.

Question 22

UCC Acceptance Issues

Acceptance by prompt shipment

Answer 22

A merchant may accept an offer to buy goods either by:

1. providing a promise to ship goods (usually by written confirmation); or
2. Promptly shipping conforming goods.

Shipment of nonconforming goods may give rise to breach.

Question 23

Mailbox Definition

Answer 23

Offers and acceptance transmitted via mail or other similar methods become effective upon either dispatch or reciept.

Question 24

Mailbox Definition

Offers

Answer 24

Effective upon reciept

Question 25

Mailbox Definition Acceptance

Answer 25

Effective upon dispatch

Question 26

Mailbox Definition Limitations

Answer 26

* If the offer stipulates acceptance is not effective until received, the offer controls. * Options Contracts: acceptance is effective upon receipt. * If oferee send both a rejection and acceptance, the first to arrive is controlling.

Question 27

Mailbox Definition Revocation

Answer 27

Mailbox rule does not apply. Revocation is effective only upon receipt.

Question 28

Acceptance by Performance Definition

Answer 28

An offeree may accept by partial performance (for bilaterial contracts) or complete performance (for unilateral contracts), unless acceptance is limited by terms of the offer.

Question 29

Acceptance by Performance Unilateral Contracts

Answer 29

Complete performance is required. * Oferee not obligated to complete performance * Oferee's failure to perfrom does not constitute a breach (bc no contract formed) * Offer may become irrevocable upon the start of performance until completion

Question 30

Acceptance by Performance Unilateral Contracts Notice

Answer 30

Oferee not required to give notice upon start of performance, but must notify offeror within a reasonable time upon completion.

Question 31

Acceptance by Performance Bilateral Contracts

Answer 31

Partial performance gives rise to acceptance. * Offeree must make offeror aware of acceptance

Question 32

Offers requiring acceptance by promise

Answer 32

An offer requiring acceptance by promise may still be accepted by performance if: 1. The offeree begins to perfrom, and 2. The offeror learns that the offeree has started performance and acquiesces.

Question 33

Consideration Definition

Answer 33

A bargained-for-legal detriment incurred by each party to a contract by promise, forebearance, or performance.

Question 34

Bargained for legal detriment

Answer 34

The promise must induce the detriment and the detriment must induce the promise.

Question 35

Bargained for legal detriment Legal Detriment

Answer 35

Obligation to do or refrain from doing something one would not otherwise be obligated to do or refrain from doing.

Question 36

Bargained for legal detriment Pre-existing legal duty

Answer 36

A promise to perfrom a pre-existing legal duty is not valid consideration, unless there is a new written promise to fulfill a debt obligation.

Question 37

Substitutes for Consideration Promissory Estoppel

Answer 37

Courts may enforce a promise if: 1. Promisor reasonably expects reliance by promisee 2. Promisee acts or refrains from acting such that his relaince is detrimental, and 3. Injustice will occur without enforcement of the promise

Question 38

Substitutes for Consideration UCC Modifications to K

Answer 38

Consideration not necessary for good-faith written modification to a contract governed by the UCC.

Question 39

Substitutes for Consideration Past Debts

Answer 39

If a debt is barred by the SOL, a new written promise to fulfil the debt is enforceable without consideration, but only according to the new terms.