Contract Formation Part 1

Question 1

Formation Trinity

Answer 1

1. Offer
2. Acceptance
3. Consideration

You need all 3 satisfied to have a valid contract.

Question 2

Offer Basics

Answer 2

Offer = A communication that creates a reasonable expectation in the offeree that the offeror is willing to enter into a K on the basis of the offered terms.

Must include essential terms:
for Land = must IDENTIFY LAND and give PRICE
for Goods = must include QUANTITY (“requirements” and “output” contracts are ok)
for Employment/Services = don’t need duration. Nature of work needed

Question 3

Is an advertisement an offer?

Answer 3

General Rule: No, an advertisement is usually an invitation to deal and not an offer.

Policy for General Rule: Ads are not offers because if everyone in the world who saw it accepted it, the advertiser would run out of stock.

Exception: An ad that is definite as to quantity and other terms and says something like “first come first serve” is a valid offer.

Question 4

What if a contract offer has missing or ambiguous terms?

Answer 4

The courts will supply a reasonable term instead for missing ones. Even the price, in a sale of goods.

If time is a missing term issue, then parties will supply a reasonable time.

For AMBIGUOUS terms, if the K is so ambiguous as a whole, it will be unenforceable and thus it is not an offer.

Question 5

Offer Termination Basics

Answer 5

Termination by Offeror = Revocation

A revocation is the retraction of the offer by the offeror. A revocation terminates the offeree’s power of acceptance if it is communicated to him before he accepts.

Question 6

Statements Made in Jest

Answer 6

“I’ll give you a million dollars if you land a hole in one when we golf this Saturday”

*guy actually does it, demands money as unilateral contract performed

“Wait I was joking”

Law: Whether or not there is a valid offer depends on what a reasonable offeree would hear. K law follows objective intent.