Contract Formation Flashcards
(25 cards)
Offer
Objective manifestation of present intent to enter into a promise, undertaking, or commitment; must have definite and certain terms; and must be communicated to an identifiable offeree
Common Law Requirements for an Offer
Quantity, time, identity of subject matter, parties
UCC Requirements for an Offer
Quantity, other reasonable terms may be supplied by gap-fillers
Offer Terminated by Revocation
Words or conduct terminating the offer; effective when received
An offer is revocable EXCEPT
When there is an option contract supported by consideration, a UCC merchant’s firm offer, detrimental reliance, or a unilateral contract with partial performance
Merchant’s Firm Offer (UCC)
Under the UCC an offer to buy or sell goods is irrevocable if: (1) the offer is a merchant; (2) there are assurances that the offer is to remain open; and (3) the assurance is contained in an authenticated writing (i.e., signature, initials, or other inscription) from the offeror
Offer Terminated by Lapse of Time
If a reasonable amount of time passes, the offer will be destroyed
Offer Terminated by Rejection
If an offeree rejects the offer, the offer will be terminated (unless option contract); effective when received
Offer Terminated by Operation of Law
Death or insanity (unless option contract), destruction of subject matter, or supervening illegality
Counteroffer
If the offeree makes a counteroffer the original offer is destroyed (counteroffers is different from a mere-inquiry or indecision)
Acceptance
An unequivocal agreement to the terms of acceptance that is communicated to an offeror by an offeree with the power of acceptance
Common Law Rules for Acceptance
Follows the mirror image rule; acceptance must mirror the offer
UCC Rules for Acceptance
Any seasonable manifestation of assent or shipment of conforming or non-conforming goods
UCC Battle of the Forms (2-207)
Acceptance adding new terms is valid; between merchants additional terms will become a part of the contract unless they materially alter the contract, offeror objects, or the offer is limited to its terms; different terms use the knock-out rule and reasonable gap fillers or treated as additional terms
Method of Acceptance
Any reasonable manner unless manner is stipulated by the offer; if a bilateral contract, reasonable by promise or performance; if a unilateral contract must be complete performance
Mailbox Rule
Acceptance is valid upon dispatch (does not apply if the offeree sends something else first, such as a rejection or counteroffer)
Limitations to the Mailbox Rule
The mailbox rule does not apply if the contract stipulates another manner of acceptance, if it is an option contract, if the offeree sends something else first (i.e., rejection or counteroffer), or where the offeree seeds acceptance then rejection
Consideration
Bargained for exchange for legal detriment
Past Consideration
Past consideration is not adequate for consideration unless there is a new promise in writing or past performance
Settlement of a Legal Claim
Promising not to sue someone can count as consideration as long as there is: (1) an honest belief in the validity of the claim; and (2) a reasonable basis for that belief
Preexisting Duty Rule
A promise to do something that you are legally obligated to do is not consideration
Promissory Estoppel
(1) a promise is made that would reasonably be expected to induce reliance; (2) the promisee does take detrimental action in reliance on that promise; and (3) injustice can only be avoided by enforcement of the promise
Quasi Contract
(1) did the plaintiff confer a measurable benefit to the defendant? (2) did the plaintiff reasonably expect to get paid? (3) would it be unfair to let that defendant keep the benefit without paying?
Contract Modification Under Common Law
Contract modification under common law requires consideration, unless the modification is fair and equitable in view of the circumstances not considered by the parties when contract was made
