2 - Contract Formation: Agreement

Question 1

What are the four main topics of contract formation?

Answer 1

1) The agreement - offer + acceptance
2) Consideration
3) Defenses to contract formation
4) Statute of frauds

Question 2

How specific must an offer be in the common law universe?

Answer 2

All essential terms must be covered in the agreement - parties, subject, price, and quantity

Question 3

How specific must an offer be in the UCC universe?

Answer 3

Usually only need subject, parties, and quantity - DO NOT have to specify price
-Not as strict as common law - will usually plug any gaps

Question 4

What are output and requirement contracts and are they acceptable under the UCC?

Answer 4

Output - seller promises to sell all they make of a product to a specific buyer
Requirement - buyer promises to purchase all of a product from a seller
*Both are specific enough under the UCC - you can work out the quantity

Question 5

Who can make a firm offer?

Answer 5

Merchants

Question 6

What are the elements of a firm offer?

Answer 6

1) Must be written
2) Must contain an explicit promise not to revoke the offer
3) Must be signed by the offeror

Question 7

How long does a firm offer last for?

Answer 7

Either as long as stated in the offer or for a reasonable time period not to exceed 90 days

Question 8

Who is the master of the offer?

Answer 8

The offeror is the master - the offeree must accept the offer according to the rules of the offeror

Question 9

What if a method of acceptance is not specified in the offer under the UCC?

Answer 9

Acceptance can take place by return promise or by performance (typically shipping the goods)

Question 10

What if a seller chooses to accept by sending the wrong goods?

Answer 10

UCC views this as an acceptance plus a breach

EXCEPTION: If the seller notifies the buyer that the wrong goods are being shipped as an accommodation then no acceptance occurs - it is a COUNTEROFFER

Question 11

When do you have a counteroffer and not an acceptance under the common law?

Answer 11

Common law uses the mirror image rule - terms of the acceptance must match the terms of the offer exactly or it isn’t an acceptance, but a counteroffer

Question 12

When do you have an acceptance under UCC 2-207?

Answer 12

Acceptance that isn’t a mirror image can still be a legal acceptance in many circumstances - but while there may be a contract, it doesn’t mean the acceptance’s terms will govern

DOES NOT matter if either party is a merchant

Question 13

How do you know if new terms of a UCC acceptance will control?

Answer 13

1) Both are merchants
2) Initial offer didn’t expressly limit acceptance to its terms
3) New term does not materially alter the deal
4) Offeror doesn’t object to new term within a reasonable time

-VERY hard to meet

Question 14

What if there is no contract but the parties act like there is? (In UCC)

Answer 14

Only the terms that both writings agree on are part of the contract
-Everything else is filled by the UCC default rules

Question 15

In an auction, what are bids?

Answer 15

Each bid is an offer

Question 16

In an auction when is there acceptance?

Answer 16

With the fall of the hammer

Question 17

In an auction, what if someone bids as the hammer falls?

Answer 17

The auctioneer can either reopen bidding or declare the auction final

Question 18

What is a no reserve auction?

Answer 18

Seller cannot withdraw item once a bid is received

Question 19

In an auction, can bidders retract?

Answer 19

Yes, as long as the auction isn’t finished?