Contract Formation Flashcards by Nick Borrillo

Offer

(1) Communicated to whom it is addressed to
(2) Desire to enter into K. “specified the performances to be exchanged + terms that will govern relationship”
(3) Expressly or impliedly invite acceptance
(4) Offeror is master of the offer
(5) Acceptance be reasonably made in time

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Contract formation Requires

Requires: a Bargain, in which there is a manifestation of mutual assent to the exchange and a consideration

Needs: an agreement b/t parties
Intent to enter K
exchange relationship
at least one promise
enforceability

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Ray v. Eurice Objective vs subjective approach

Subjective- Actual intention of a party, rather than that’s party’s conduct determines the party’s legal obligation

Objective- Requires any “manifestation of mutual assent” only the signing of the K
Hypo- reasonable person sees signing not inside head

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Meaning of Detriment in Consideration

Is any relinquishment of a legal right
Not harm but Yielding of a legal right
Forbearance

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Definite + Certain Terms

Parties make the K not courts
Law requires substantial certainty as to the material terms upon which the minds of the parties have met

UCC allowed to have open price and gap fillers but need QUANTITY

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Mirror Image Rule

Terms of acceptance must mirror the terms of the offer
New or different terms is considered counter

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Counter Offer

An offer by the offeree to the offeror, relating to the same matter as the original offer and proposing a different substitute bargain

Rejection of the O.G. offer

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Unilateral vs Bilateral

Bilateral-exchange of mutual promises

Unilateral- Acceptance by performance

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Consideration

“Legal value + bargained for exchange”

(1) the Promisee incurs a legal detriment OR the promisor receives a legal benefit AND
(2) The promise induces the detriment AND the detriment induces the promise (Reciprocal Inducement)

Gratification of influencing someone’s behavior (forbearing something they have legal right to do) can be consideration

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Consideration Sub Issues

Gifts/Conditional Gifts
“Did not seek that detriment for the promise”
“Motivated by Kinship not binding”

Nominal Consideration and Gross Inadequacy
“a mere pretense of bargain does not suffice, as where there is a false recital of consideration or where the purported consideration is merely nominal”

Illusory Promise
“if it makes performance entirely optional with the promisor”
“at will” promisor can terminate anytime
- slight restriction can trump illusory

Moral Consideration

Past Consideration

Pre-existing Legal Duty

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Consideration Can Be

(1) An act other than a promise
(2) A forbearance
(3) the creation, modification, or destruction of a legal relationship

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Purpose of Consideration

(1) Prove Promise made
(2) Cautionary function, prevent entering detrimental agreement
(3) Courts can dismiss non-serious promises

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Is Conditional Gift Consideration ?

No Consideration,
Legal action that you are not required to take, however

The Detriment does not induce the promise

Ex- Pick-up old couch its yours,
You spent gas money to get the promisor’s old couch

Your act of spending gas money was the detriment that induced the promisor giving you the couch

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For K you need for Common law vs UCC

CL- Parties, Subject, quantity, Price

UCC - Partie, subject, quantity
(gap fillers will fill in the rest)

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Option K

Involves promise to keep offer open, a promise binding to offeror
(NEED consideration to keep it open)

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Unilateral K Rules

Acceptance is made once completed,

irrevocable once substantial performance has been made. Essentially becomes an option K (consideration was put in, must be completed now timely)

Example: contest/ lost dog
Need to find lost dog to accept the offer

Conditional Gift the Willston Approach

If the promisor merely intends to make a gift to the promisee upon performance of a condition, the promise is gratuitous, and the satisfaction of the condition is not consideration for a K

Option K creation vs
Firm offers

Option K- When offeree starts performing a unilateral K
- Promise to keep an offer open and not sell for specific amount of time - It needs consideration though

Firm- UCC Goods
(1) Made by a MERCHANT
(2) Writing
(3) open for reasonable time
(4) IF exceeds 3 months need add on consideration to keep open

Illusory Consideration

A promise or apparent promise is not consideration IF by its terms the promisor or purported promisor reserves a choice of ALTERNATIVE PERFORMANCES (choice)

Methods of termination of offer

(1) Rejection of Counter
(2) lapse of time
(3) Revocation by offeror, OR
(4) Death or incapacity by offeror/ee

For modification of K look to see if

(1) UCC or Common Law
(2) additional or new consideration

(a) Common Law need additional or new consideration
(b) UCC Good Faith Test

Modification Fact Pattern:
Promisor LL - Promisee Tenant
(Exchange rent money for lease)

Tenant asks LL to lower rent for next month/ LL agrees

LL pulls out K and adds new term to lower payment for the month and both sign

Month passes and Tenant Pays new term

Another month passes and LL needs money so sues Tenant for the money owed from the modification

Can LL recover for the difference b/t new and old K

If original controls Tenant owes LL difference

If modification valid tenant doesn’t owe LL anything

Common law: modification needs additional new consideration

Was the modification supported by consideration?

NO, tenant was not taking an obligation he wasn’t already legally obligated to take
Lowering is not an additional or new duty
Already required in contractual obligations

LANDLORD SUCCESSFUL

OG contract controlled
Tenant didn’t take on detriment when they modified K (tenant already owed that money)

Tenant can do extra task (detriment) or pay earlier in exchange to lower rent

Preexisting Legal Duty, Consideration?

Not consideration, offering $100 to stop someone from Crack Cocaine is illegal. (legal duty to not smoke that)

Past Consideration (not consideration)

Detriment occurred before promise is made
Emergency situations

look at the moment promised is formed what is promisee doing for you? (looks almost like a gift)

Nominal consideration not confused with adequacy

Nominal (recital of consideration) NOT CONSIDERATION cannot be induced by $1 Courts don't look at the fairness of the deal but IF unconscionable would fall under a defense formation

Illusory promise

Promise that is non-committal (indefinite promise) not consideration IF i want to or fell like How many I feel like selling (need to be bound by a performance) not same as UCC goods selling entire yield from this years crops (formula to calculate what that is)

Modification consideration required for UCC

Exception to Common Law modification consideration requirement

Unforeseeable difficulty arises that will make performance impractical than it doesn't need additional or new consideration.

Indefinite or vague terms can be the result of:

Deferred agreements, poor or imprecise language in the contract, or an oversight by the parties may all lead to indefinite terms and thus cause a contract to fail, or alternatively, force a court to gap-fill if the court feels there was still and intention to be bound.

In a contract between two parties that leaves an important term open, under the common law the contract will nonetheless be enforceable so long as:

Common law allows for important terms, such as price, to be left open if the parties have manifested their intent to be bound and the term can be objectively determined without the need for further expression by the parties. Leaving it blank with an intention to work it out later may indicate an intention to not be bound. Under the common law, typically giving no indication of the price or amount to be paid will be an indication of a lack of intention to be bound (though the U.C.C. has explicit gap fillers for such instances). The less than one-year length of the contract is immaterial.

officious intermeddler.

A neighbor, without asking mows your lawn for you one weekend while you are out of town. The services are unwelcome and not invited

A claim in unjust enrichment is also known as

a contract implied at law or a quasi-contract, as it is enforced to prevent injustice. This differs from a true contract, including one implied in fact, or a promissory estoppel claim as it is not based on a promise.

Advertisements as offers?

“A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent.” See Rs. 2d § 26. Advertisements by sign are not ordinarily intended or understood as offers to sell. See Rs. 2d § 26, cmt. b. In order for an advertisement to be considered an offer, there must be some language of commitment or some invitation to take action without further communication. Id. Here, the advertisement was an invitation to the public to come and make an offer to purchase puppy food. There was no extra information in the advertisement that had any signs of an offer. For an advertisement to be an offer, the offeror must unequivocally communicate present commitment by, for example, saying “first come, first served.” This advertisement lacks this essential feature.

When interpreting a contract, courts will generally prefer (1) to give lawful, reasonable, and effective meaning to all terms; (2) to give greater weight to specific terms than to general terms; (3) to give greater weight to negotiated or added terms than to standard terms; and (4) to interpret terms against the drafter when choosing among reasonable meanings. See Restatement (Second) of Contracts § 203 (1981);

When enforcing promissory estoppel the court usually

When applying the doctrine of promissory estoppel, courts usually limit the promisee’s remedy to only what justice requires. This principle typically means that a court will enforce only the part of the promise that the promisee has actually relied on, by placing the promisee back in the position that he would have been in had the promise never been made.

Promissory estoppel, who must induce the detriment

The promisor, if th epromisee finds out from someone else than it wasnt induced by the promisor. the promise of the promisor has to induce...