Contracts

Question 1

Define Offer under Common Law

Answer 1

Offer is the manifestation of present intent to contract that has definite and certain terms and is communicated to the offeree

Question 2

Define Offer under UCC 2-204

Answer 2

Under UCC 2-204 an offer is made in any manner to show agreement between both parties that a contract exists; it may be made even if the making is undetermined; and even if the terms are left open; it does not fail indefiniteness if the parties intended to contract and there is a reasonable remedy.

Question 3

Define Contract under UCC 2-106

Answer 3

Under UCC 2-106 states that the UCC governs all cases involving the sale of goods. This rule applies regardless of whether either party is a merchant; however, some UCC rules do require one or both parties to be a merchant.

Question 4

Define Contract under Common Law

Answer 4

Contract is a promise or a set of promises for breach of which the law gives a remedy or the performance of which the law in some way recognizes as a duty; it requires an offer, acceptance, and consideration.

Question 5

Define a “Good” under UCC 2-105

Answer 5

Under UCC 2-105 a “good” is all things which are movable/tangible at the time of identification of the contract. Goods must be both existing and identified before any interest in them can pass.

Question 6

Define “Merchant” under UCC 2-104

Answer 6

Under UCC2-104 a “merchant” is a person who deals in goods of a kind or holds themselves as though they have knowledge or skill peculiar to the practices or goods.

Question 7

Requirements of a valid offer

Answer 7

1. intent by offeror: offeror must have objective intent to be bound to a contact
2. definite and certain terms: parties, time of performance, price, and subject matter
3. communicated to offeree

Question 8

What are the ways an offer/acceptance can be terminated

Answer 8

• Lapse in time
• Death or incapacity
• Rejection
• Revocation

Question 9

Lapse in Time

Answer 9

a lapse of time is when no period is specified in the offer then the offer lapse after a reasonable time.

1. If the offer specifies a time/period in which the offer will terminate then the offer terminates at midnight on that date.
2. Generally, silence is not acceptance

Question 10

Death or Incapacity

Answer 10

Death or incapacity of the offeror terminates an offer, even if the offeree does not know of the death or incapacity.

Question 11

Rejection

Answer 11

Rejection of an offer by the offeree terminates the power of acceptance and the offeree cannot accept the offer, and is effective upon receipt.

a. A counter offer by the offeree constitutes as a rejection of the original offer and may become an offer to the offeror relating to the same manner as the original offer but proposing a different/substituted bargain.

Question 12

Revocation

Answer 12

An offer can be revoked by the offeror up until the moment of acceptance.

An exception to revocation is the Options Contract.

Question 13

Options Contract

Answer 13

An options contract is a promise that meets the requirements for formation of a contract and limits the promisor’s power to revoke an offer for a time period.

Question 14

The five ways to form an options contract

Answer 14

1. By giving consideration
2. By reciting consideration in a signed writing
3. By a statute such as UCC 2-205-Firm Offer
4. By substantial reliance by the offeree
5. Tending or beginning performance of the un-lateral contract.

Question 15

Define Acceptance under Common Law

Answer 15

Acceptance is a voluntary unequivocal assent to the terms of the offer, and is communicated to the Offeror.

Question 16

Define Acceptance under UCC 2-206

Answer 16

Unless otherwise ambiguously indicated by the language or circumstances;

an offer to make a contract is construed as inviting acceptance in any manner and my any means reasonable in the circumstance;

an order or offer to buy goods for prompt or current shipment is construed as inviting acceptance, by either a prompt promise to ship or by prompt or current shipment of conforming or non-conforming goods,

but such shipment of non-conforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.

Question 17

Requirements for a valid Acceptance under common law

Answer 17

1. Accepted by Offeree: An offer can be only be accepted by a person to whom it invites to furnish the consideration, unless the offeror manifests a contrary intention.
2. Mirror Image Rule: you must accept the offer exactly, without modifications; if you change the offer in any way, this is a counter-offer and kills the original offer.
3. Nonfiction of acceptance: Offeree must communicate the acceptance to the offeror.
   - If this is a bilateral contract then the offeree has to give notice.
   - If this is a unilateral contract then the offeree does not have to give notice

Question 18

When is an acceptance effective?

Answer 18

The general rule is that acceptance is effective upon receipt.

Under Restatement 63 “Mailbox Rule”: Unless offer provides otherwise:
1. An acceptance made in a manner and by a medium invited by an offer, and by a means that is as fast or faster than the offer, is operative upon dispatch.

2. Acceptance under an option contract is not operative until received by the offeror.
3. If a rejection is mailed and then acceptance is mailed, then the Mailbox rule doesn’t apply and whichever one is received first is effective.
4. If acceptance is mailed then rejection is mailed, then the Mailbox rule applies and acceptance is effective, unless offeror receives rejection first and changes position in reliance on it. In that case, offeree is estopped from enforcing it.
5. If elements of the mailbox rule don’t apply, acceptance is still effective upon receipt.

Question 19

Silence as Acceptance

Answer 19

Generally silence is not an acceptance unless, there are previous dealings between the parties or where the offeror has given the offeree a reason to understand that silence or inaction is acceptance to the offer.

Question 20

Additional Terms in Acceptance or Confirmation Under 2-207

Answer 20

1. A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.
2. The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:
   (a) The offer expressly limits acceptance to the terms of the offer;
   (b) They materially alter it; or
   (c) Notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
3. Conduct by both parties, which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act.