Contracts Flashcards
Offer
Manifestation of a willingness to enter a bargain. The expression must be definite. It must contain the essential terms. The offer must be communicated to the offeree.
Offers are Freely Revocable
Contract formation requires an offer to be accepted; prior to acceptance, offers are freely revocable.
Lapse of Time
Offer is revoked - No acceptance - within a reasonable time.
What constitutes a reasonable time is a question of fact.
Use 30 days as a default rule.
Rejection and Counteroffer
Offeree that communicates rejection of an offer or responds with counteroffer terminates the original offer.
Rejection Meaning
A manifestation of intent not to accept an offer.
Revocation
Effective upon Notice or Receipt of Communication.
Must occur prior to acceptance.
Operation of Law
Death of the offeror or event that makes contract impossible terminates an offer.
Counteroffer Meaning
If you propose a change to the terms of an original offer, you are making a new offer – a counteroffer; there can be no contract until the counteroffer is accepted.
An offer made by the offeree to the offeror that concerns the same subject matter as the original offer but differs in its terms.
Start of Performance
Generally, the start of performance is considered acceptance of an offer. For a true unilateral contract, the start of performance makes the contract irrevocable.
Partial Performance
An offer that invites performance as a reasonable method of acceptance makes the offer irrevocable upon partial performance. Mere preparation is not enough.
Reliance on a Promise that Offer Will Remain Open
Where offeror expressly or implicitly promises the offer will remain open for a specific time and the offeree reasonably relies on the promise of irrevocability, the offer is irrevocable.
Option Contract
Promise to keep the offer open; to constitute an option contract there must be consideration for the promise to keep the offer open, usually for a specific time, or if no time is stated, for a reasonable time. Unless otherwise specified in the offer, acceptance of an option contract is only effective upon receipt.
Firm Offer Rule
The offer: (i) is made by a merchant (a person who deals in goods of the kind); (ii) is in a signed writing; (iii) which gives explicit assurance that the offer will be held open; and (iv) irrevocable for time stated, not greater than 3 months.
Acceptance
Assent by the offeree to all of the terms and condition of the offer from the offeror. Must be by offeree in response to offer. Acceptance can be by performance or communication, unless the offer expresses otherwise. Acceptance must be dispatched within a reasonable time.
UCC Acceptance
Appropriate conduct between the parties may be sufficient to show agreement to a contract for the sale of goods, even if an exchange of correspondence between the parties makes the exact moment of contract formation indeterminate.
Consideration
It is bargained for if it is given by the promisee in exchange for the promise. It does not matter that the promisee may have benefited from the requested performance, or that her motives for furnishing the requested performance were different from the promisor’s, so long as the promisee restrained her freedom of action in some way in reliance on the promise.
Non-Conforming Acceptance by Performance
Non-conforming acceptance creates a contract and a simultaneous breach.
Non-conforming acceptance accompanied by written explanation creates a counteroffer.
Pre-Existing Duty Rule
Means that if parties to an existing contract agree to modify the contract for the sole benefit of one of them, the modification will usually be unenforceable at common law, for lack of consideration.
Exceptions for third parties.
Mailbox Rule
Acceptance of the offer is effective upon dispatch.
Revocation of offer is effective upon receipt.
Exceptions to Mailbox Rule
Does not apply where the offer states that acceptance will not be effective until received.
An acceptance is not effective upon dispatch if not properly addressed.
Does not apply where the acceptance is in response to an option contract; acceptance must be received to be effective.
If the offeree sends an acceptance followed by a rejection, a valid contract has been formed, unless the offeror receives the rejection first and then acts in detrimental reliance upon the rejection.
Where rejection is sent before acceptance, whichever is received first controls.
Offer and Acceptance with New or Additional Terms
-Common Law-
Offer and Acceptance with a new or additional term = Offer and Counteroffer
NO CONTRACT CREATED
Offer and Acceptance with New or Additional Terms
-UCC – One or Both Non-Merchants-
Offer and Acceptance with a new or additional term = Contract created according to terms of ORIGINAL OFFER.
Offer and Acceptance with New or Additional Terms
-UCC – Both Merchants-
Offer and Acceptance with a new or additional term = Contract created according to terms of ACCEPTANCE and includes NEW/ADDITIONAL TERMS
Exception:
-Material Alteration
¬-Rejection of new or additional term
-Original Offer said it could only be accepted as originally stated
Non-breaching Party
Can sue for breach of contract.
