Formation

Question 1

Controlling Law - UCC or Common law

Answer 1

• Goods : UCC Article 2.
• Services & Land: Common law
• Mixed K: then predominate purpose of K will determine controlling law. UNLESS the terms of K break up payment of goods and services.

Question 2

UCC & Common Law Distinctions

Answer 2

ACCEPTANCE

• Common Law: Acceptance only valid if mirror image of offer.
• UCC: If BOTH parties are merchants additional terms become apart of the offer IF (1) not materially change offer or (2) other party don’t object.

OPTION K’s

• Common Law: requires consideration or reliance.
• UCC: Merchants may give firm offer; irrevocable for 3 months w/o consideration or permanently with it.

K MODIFICATION

• Common law: Not w/o consideration
• UCC: consideration not required but must be in writing & in good faith.

SUBSTANTIAL PERFORMANCE vs PERFECT TENDER
-Common law: if one party to K substantially performs; other party must perform (or pay)
-UCC: buyer not required to pay unless seller makes perfect tender of goods.
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Question 3

Offer

Answer 3

A valid offer must:

(1) be clearly expressed to offeree & manifest an objective intent to be bound.
(2) have definite & certain terms.
(3) creates the power of acceptance in the offeree.

DEFINITE & CERTAIN TERMS (required terms)

• Common law: Parties, Price, Qty., Subj. matter
• UCC: only requires Qty., and manifested intent that both parties intended to K. UCC will provide the rest.
• Real estate: requires price & identification of land.

IDENTIFIED OFFEREE

• offeree must know of offer & have power to accept.
• Advertisements generally not offers unless it is specific in qty. & who can accept.

Question 4

Termination of offer

Answer 4

Offer can be terminated by act of either party or by operation of law.

Acts of parties:

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

Operation of law:

1. Death or insanity of either party
2. Destruction of subject matter
3. Supervening illegality

Question 5

What is a contract (K)?

Answer 5

Contract legally forcible agreement or promise, if breached the law will provide a remedy for.

Three types: Unilateral, bilateral, quasi K

1. Unilateral: a promise for a specific act.
2. Bilateral: a promise for a promise.
3. Quasi-K: Equitable remedy to avoid unjust enrichment by one party to an unenforceable K. Look for;
   (a) P conferred benefit to D &
   (b) expected to be paid for it.
   (c) D knowingly accepted benefit &
   (d) D will be unjustly enriched if P is not compensated.

Question 6

Terminating the offer

Answer 6

How to terminate an offer.

1. Offeror expressly terminates offer before offeree accepts
2. Offeror does something inconsistent and unambiguous that indicates intent NOT to contract.

LIMITATIONS TO REVOCATION

• Revocation only effective upon receipt by offeree.
• Can’t be revoked after its accepted.

IRREVOCABLE OFFRS (THREE)
(a) Option K’s, (b) Unilateral K, (c) Quasi K
Can’t be revoked if meet requiments. See “Irrevocable Offer” card.

Question 7

IRREVOCABLE OFFRS (THREE)

Answer 7

3 types of irrevocable offers are: a) Option K’s, (b) Unilateral K, (c) Quasi K are irrevocable.

(a) Option K: (1) Common Law: requires consideration.
(2) UCC: requires a signed writing by merchant w/ assurances it will stay open, then Irrevocable for 3 months.

(b) Unilateral K: once offeree starts performance offeror can’t revoke.
(c) Quasi-K: detrimental reliance on K by one party prevents other party from revoking K.

Question 8

Rejection of Offer and Methods to reject

Answer 8

Rejection by offeree terminates the offer and offerree’s power to accept.

METHODS

1. Express Rejection
2. Indirect Rejection
3. Counter-offer - Terminaes orginal offer and becomes a new offer; bargning is NOT a counteroffer. **Test tip: (a) If response is a statement = counteroffer. (b) if response is a question = barganing.
4. Conditional acceptance - terminates orginal offer and becomes a new offer. **test tip: terms such as: “if”, “only if”, “but”, “provided”, “so long as”, “on condition that”, are conditonal langauge.
5. Acceptance with additional terms: (a) Common law = not valid acceptance, may be a counteroffer. (b) UCC = considered “seasonable expression of acceptance” if they do not alter terms and offeror doesn’t object.

Question 9

Common Law Acceptance

Answer 9

Is determined by the Objective Theory of Contracts; which requires that offeree (1) receive & understand the offer, (2) have honest belief that manifesting acceptance would create binding contract.

Question 10

Mailbox Rules

Answer 10

Offers and acceptances sent via mail become effective on dispatch or receipt.

Offers - effective on recepit
Acceptance - effective on dispatch
Revocation - only effective on recepit; mailbox rule don’t apply.

Limitations:

(a) if offer states accpetance not effective until receipt, the offer controls.
(b) Option K’s - acceptance is effective upon receipt.
(c) If offeree sends both offer and acceptance, rule not apply and the first to arrive controls.

Question 11

Acceptance by Performance

Answer 11

Unless deifined by the offer, offere may accept through performance.

1. Bilateral K (promise for promise) Offeree may accept by partial performance.
   (a) Offeree must make offerror aware of acceptance.
   (b) Once offeree starts performance and offerror learns of it, Offerro must stop Offerre or will considered accepted.
2. Unilateral K (promise for action) offeree must complete performance.
   (a) Offeree’s failure to complete task is NOT a breach. K is only formed once requsted taks is complete.
   (b) Offer may become irrevocable upon start of performance.
   (c) Notice- Offeree not required to give at start of performance but must give notice within a resaonble time upon completion.