Formation of Contracts Flashcards
Requirements to Form a Valid Contract
A valid contract requires mutual assent (offer and acceptance), consideration, and no valid defenses to enforceability.
Offer
An offer is a manifestation of intent to contract, with definite/reasonable terms that is communciated to an identifiable offeree
Acceptance
Acceptance is a manifestation of assent to the terms of the offer. Silence doesn’t generally manifest acceptance, but performance may be adequate.
Bilateral contracts –> start of performance = acceptance
Unilateral contracts –> performance makes offer irrevocable & offer is accepted upon completion of performance
Termination of an Offer
Offers can be terminated before acceptance by
1) rejection or counter offer
2) lapse of time
3) revocation
4) death/incapacity of offeror
Can be terminated indirectly when offeror takes action inconsistent with terms of offer & offeree requires reliable info about it
Consideration
Consideration is bargained for exchange of a promise for a return promise or performance that either benefits the promisor or causes detriment to the promisee.
Past or moral consideration is insufficient consideration.
Revocation of an Offer
Offer may be revoked anytime before acceptance through unambiguous words/conduct to the offeree. Revocation is effective when received.
Irrevocable offers:
- option
- merchant firm offer
- offers relied on in detriment
Contract Modification Under Common Law
Contract modifications under common law must be supported by consideration. Past performance or performance of a pre-existing duty is not adequate consideration.
Exceptions:
1) addition/change in performance or promise
2) fair modification due to unanticipated change circumstance & contract isn’t fully performed by either party
Contract Modification Under UCC
No consideration requirement for contract modifications made in GF under the UCC.
Must be in writing if:
1) SOF applies, or
2) original K mandates writing for modification
GF = honesty and fair dealing
