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Flashcards in Contracts Deck (14):

Governing Law

UCC governs the sales of goods. Goods are movable, tangible items at the time of contract formation (includes livestock). A sale is the passing of title for a price. Common law applies to all other transactions, including services or real property.



A merchant regularly deals in the good of the kind in the transaction, or is an expert in the field.


Hybrid Contract

Hybrid contract includes both sales of goods and services. Predominant purpose test (majority) determines whether the goods or services were the main reason for the transaction, and applies either UCC or common law to the entire transaction. Gravamen test (minority) applies both UCC and common law to each portion accordingly.



A contract is a set of promises enforceable by law (the performance of which the law deems a duty, and the breach of which it provides a remedy). It includes offer, acceptance, consideration, and no defenses to the formation. Three things you can do to a contract: perform, breach, modify (rescind considered modification).



Includes mutual assent, consideration for common law, and good faith in UCC.


Bilateral Contract

Exchange of mutual promises.


Unilateral Contract

One promise for performance; acceptance can only be by performance, which creates and completes the contract.



An offer is a unequivocal manifestation of present intent to enter into a bargain containing certain, definite terms communicated to an offeree. An offer is also a promise to do something conditional on the other party doing something. Preliminary negotiations usually do not contain an offer.

Offer creates power of acceptance for offeree, and receipt of acceptance will create mutual assent and conclude the bargain. Advertisements and form letters generally are not offers, but invitations to make an offer, unless reward offer, or specifically directed at person or group (offeree identified), or use language of commitment. Preliminary negotiations are not offers if further manifestation of assent is required. Quotes are not offers.

Once an offer is made, you can do four things: accept, reject, revoke, or let lapse.


Certain Definite Terms

Certain definite terms include the subject matter, quantity, price, identification of the parties, and time of delivery. Purchase orders are offers. In a reward offer, performance acts as identification of party happens and acceptance.


Gap Fillers

UCC will insert gap fillers for missing terms, such as price, for which it will insert the market price at the time and place of delivery. In real estate, price cannot be missing. In sales of goods, quantity cannot be missing. There are no gap-fillers for choice of law, forum selection and arbitration, and regular civil procedure rules would apply. Place of delivery – seller’s place of business; time for shipment – reasonable; time for payment – when buyer receives; assortment – at buyer’s option.



Acceptance is the unequivocal manifestation of assent to the terms of the offer in the manner specified by the offer. Acceptance can be made through performance or by promise to perform. Silence does not constitute acceptance, unless dominion exercised, or previous actions justify. Unsure response is not an acceptance. Under UCC, shipping goods is acceptance.


Duty to Read

Duty to read binds one to a signed agreement, whether or not it was read prior to signing.


Mailbox Rule

The mailbox rule only applies to acceptances, and states that where mail is an (expressly or impliedly) authorized method of acceptance, a properly addressed (and stamped, if applicable) medium of acceptance is effective upon dispatch (put in mail, even if lost), unless offer states it must be received to be valid.
• Does not apply in option contract, in which acceptance is only valid upon receipt.
• Also doesn’t apply to CISG, which adopts receipt rule.
• If misaddressed but still gets there, effective upon receipt.


Rejection or Revocation

A rejection or revocation (applies to offers only) is valid upon receipt. A rejection and revocation terminate the power of acceptance, and revival of offer is new offer with same terms. If offeror decides, offer can be revoked before it is accepted, at which point, it disappears. Exception to MBR… if before letter arrives and seller reasonably relies, MBR superseded.