Fall 2024 Final (K formation)

Question 1

Situations that limit acceptance: lapse of an offer

UCC 2-205 Merchant offer rule [Firm offer]

Answer 1

if a merchant makes an offer in writing, signs, and gives assurance it will be held open (but no time is given); it will be considered irrevocable for a reasonable time, but no longer than 3 months

Question 2

UCC 2-206 acceptance

Answer 2

a) offer to make K invites acceptance in any manner and medium reasonable under the circumstances (can encompass mailbox rule)
b) orders invite acceptance through promise or shipment of goods. Shipment of non-conforming goods does not constitute acceptance if the sellser notifies the buyer that shipment is only offered as accomodation (Corinthian)
(2) where beginning of performance is a reasonable mode of acceptance, an offeror not notified of acceptance within a reasonable time may treat the offer as lapsed.

Question 3

UCC 1-205 Seasonableness

Answer 3

(a) Reasonability under UCC depends on nature, purpose, and circumstances of action
(b) Action required by UCC is taken seasonably if it is taken within time agreed, or if no time agreed within reasonable time

Question 4

Default rule silence (UCC)

Answer 4

silence ≠ acceptance unless language, course of dealing, or course of performance provides otherwise

Question 5

UCC 2-204(3) indefinite terms test

Answer 5

Even terms left open, K does not fail for indefiniteness if parties have intended to make a K and reasonably certain basis for giving remedy

Question 6

R36 Situations that terminate of Power of acceptance

Answer 6

offeree’s power of acceptance may be terminated by (a) rejection or counteroffer by offeree (b) lapse of time, (c) revocation by offeror, or (d) death or incapacity

Question 7

R41 Lapse of offer

Answer 7

(1) offeree’s power of acceptance is terminated at the end of time specified or end of a reasonable time
(2) reasonable is a Q of fact, depends on circumstances existing when offer and attempted acceptance are made (reasonable man test)

Question 8

Need to notify…

Answer 8

offeror if accepting by promise unless offer dispenses with notice requirement

Question 9

Do not need to notify…

Answer 9

if accepting by performance unless you have reason to know the offeror has no means of learning of the performance with reasonable promptness

Question 10

Default rule silence (CL)

Answer 10

≠acceptance unless R96
a. where an offeree takes a benefit with reason to know they were offered with expectation of compensation
b. where offeror has given offeree reason to understand assent may be manifested by silence/inaction, and offeree in remaining silent intends to accept
c. where based on previous dealings, it is reasonable that the offeree should notify offeror if he does NOT intend to accept

Question 11

Revocable offers

R45 Option K by performance

Answer 11

where an offer invites acceptance by performance ONLY, an option K is created when the offeree tenders or begins invited performance

Question 12

Option K (binding?)

Answer 12

Where an offer does NOT invite promise, beginning of performance completes manifestation of mutual assent and furnishes consideration for an option K.

Offeree is not bound to complete performance

If offeree abandons performance, offeror is no longer bound

Preparations to perform not enough [ie loading the truck], has to be beginning of performance [arriving at site, etc]

Question 13

Ways to form an option K

Answer 13

1. separate consideration to keep the offer open
2. merchant–writing (this offer will be open for x amt of days, if no days specified, a reasonable amt of time but no longer than 3 mths UCC2-205)
3. Unilateral K (R45)
4. In writing R87(1)
5. Reliance R87(2) Drennan

Question 14

Timing Issues

mailbox rule

Answer 14

an offer is accepted, and acceptance valid, once the offer is mailed

Mailbox rule N/A unless letter properly addressed and precautions taken

Question 15

R63 Time when acceptance takes effect

Answer 15

Unless the offer provides otherwise:
(a) an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent, as soon as put out of offeree’s possession (doesn’t have to reach offeror); but
(b) an acceptance under option K is not operative until received by offeror

Question 16

When do contractual acts become effective?

Answer 16

offer- when received
acceptance- when sent if revocable offer; when received if irrevocable offer
counteroffer–> when received
revocation–> when received

Question 17

R40 when rejection or counteroffer terminates power of acceptance

Answer 17

rejection or counter offer does not terminate power of acceptance until received. But if an offeree rejects then accepts, the acceptance is a counteroffer if received after the rejection, and an acceptance if received BEFORE the rejection

Question 18

Miscommunications

Raffles v. Wichelhaus

Answer 18

Parties K is void because there was no “meeting of the minds.” The moment it appears two ships called the “Peerless” were about to set sail for Bombay, there is a latent ambiguity and evidence may be presented which shows P and D meant different things.

Question 19

R20 Effect of misunderstanding

Answer 19

(1) No manifestation of mutual assent (“meeting of the minds”) if parties attach materially different meanings to their manifestations and
* (a) Neither party knows or has reason to know the meaning attached by the other; or
* (b) Each party knows or has reason to know the meaning attached by the other
(2) The manifestations of the parties are operative with the meaning attached by one of the parties if
* (a) That party does not know of any different meaning attached by the other, and the other knows the meaning attached by the first party; or
* (b) That party has **no reason to know **of any different meaning attached by the other, and the other has reason to know the meaning attached by the first,

Question 20

Special problems in agreement process: agreed to transact, but different

UCC 2-207 Battle of the Forms

Answer 20

(1) Written, seasonable acceptance operates as acceptance even though it states additional terms, unless acceptance is expressly made conditional on assent to additional terms
(2) the additional terms are construed as proposals for addition to the K. Between merchants such terms bcome part of K unless
(a) offer limits acceptance to terms of offer
(b) they materially alter it
(c) notification of objection is given within resonable time
(3) if goods are sent, the terms on which the parties agree constitute K, together with any supplementary terms (gap fillers)

Question 21

Mirror Image Rule (CL)

Answer 21

Acceptance must mirror the offer. If not–> counteroffer

Question 22

What is not a rejection under mirror image rule?

Answer 22

1. independent propsals (unrelated to matter in og offer)
2. acceptance with request for change
3. added term is a repetition of term implied in og offer

Question 23

Shrinkwrap

Hill v. Gateway

Answer 23

Accept or return terms can govern the sale of a product. Vendor, as master of the offer, may invite acceptance by conduct

PP: Customers as a group are better off when vendors skip costly or ineffectual steps like telephone recitations, and use instead a simple approve-or-return device

Question 24

Klocek

Answer 24

Customer is the offeror, 2-207 doesn’t require two or more writings. No evidence at time of transaction P was informed that transction conditioned on acceptance of terms

PP: not unreasonable for a vendor to clearly communicate to buyer, at time of sale, either complete terms of the sale or the fact that the vendor will propose additional terms as a condition of sale

Question 25

clickwrap

Answer 25

Generally enforceable if user has notice of terms before clicking

Question 26

Browsewrap

Answer 26

if you use our service, you agree. Hard to enforce bc users not on notice of terms. More enforceable if internet company

Question 27

# indefinite or missing terms in agreements Varney v. Ditmars

Answer 27

D fires P for insubordination after staying home on election day, not realizing P was ill. D promised P if he kept up the good work he would get a fair share of Ds profits grom his books. Ct held agreement unenforceable bc too indefinite (no price term, no way to calculate price if breach). Although cts will resolve indefinite language by imputing intentions of the parties in most cases, in this case would have been impossible.

Question 28

R33 Certainty

Answer 28

(1) Even though manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a K **unless terms are reasonably certain** (2) Terms are reasonably certain if they provide a basis for determining the **existance of a breach and for giving an appropriate remedy** (3) If terms left open, may indicate manifestation of intention is not intended to be understood as offer or acceptance

Question 29

Modern Doctrine indefinite term

Answer 29

Ks will inevitably have gaps and those do not preclude Ks from being enforced; particularly true in relational Ks (repeat players)

Question 30

Oglebay

Answer 30

Parties had a long term K and could not agree on price term. Held: close relationship between parties, coupled w language of K (mechanisms for determining price term and breach) **includes a clear intention to be bound.**

Question 31

UCC 2-305 price gap filler

Answer 31

(1) Parties can K for sale even though price term not satisfied. Price is a reasonable price at time of delivery if: (a) nothing is said as to price term; or (b) the price is left to be agreed by parties and they fail to agree (2) price to be fixed by seller or buyer means a price for him to fix in good faith (3) when a price left to be fixed otherwise than by agreement of the parties **fails to be fixed through the fault of one party**, the other may at his option treat the K as cancelled or himself fix a reasonable price (4) where parties intend not to be bound unless price fixed or agreed, and it is not--> no K

Question 32

Terms req'd to form a K (UCC)?

Answer 32

1. Type of good (or way to determine) 2. quantity of goods (or way to determine)

Question 33

UCC gap fillers

Answer 33

1. price 2. single-delivery 3. place for delivery 4. time for delivery 5. time for payment 6. performance of parties 7. warranties

Question 34

# Precontractual liability Hoffman v. Red Owl

Answer 34

Even though offeror's promises were too vague to constitute acceptable offers, P may be entitled to relief for reliance on Ds promises R90--> (1) a promise (2) which promisor should reasonably expect to induce reliance, (3) promisee does rely to his detriment, (4) binding if injustice can be avoided only by enforcement of promise

Question 35

Default precontractual liability

Answer 35

not unreasonable to rely on precontractual promises. PE can permit precontr. liab. where parties, by agreeing on something significant, indicated their intention to be bound PP: prevents offeror from baiting and switching/moving the goal post

Question 36

# Formation defenses: S o F R110 S of F

Answer 36

3 classes [for exam] of Ks required to be in writing to be enforceable: 1. Ks for transfer of interest in land 2. K not capable of being performed in one yr from date K was formed (ignore practical analysis) 3. UCC2-201 Ks for sale of goods where price is more than $500

Question 37

UCC2-201 SoF

Answer 37

(1) K for sale of goods for $500+ is not enforceable by way of action or defense unless in writing. Writing is not insufficient bc it omits or incorrectly states a term, but not enforceable beyond quantity written. Requirements of a writing: (1) must evidence a K, (2) must be signed, (3) must specify a quantity (2) **between merchants** if within a reasonable time a writing in confirmation of the K and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against such party **unless written notice of objection** to its contents is given **within 10 days after it is received** (3) K not satisfying requirements of above is enforceable (a) if the goods are to be specially manufactured, (b) admits K for sale (c) if goods or payments have been made/received and accepted

Question 38

R131 requirements of a writing

Answer 38

A K within S o F is enforceable if it is in a writing, signed by (or on behalf) of party being sued, which 1. reasonably **identifies the sm** of the K 2. is **sufficient** to indicte K was formed; and 3. states with **certainty essential terms** of the unperformed promises in K

Question 39

R134 Signature

Answer 39

signature may be any symbol made or adopted with intention to authenticate the writing as that of signer

Question 40

R130 K not performed within a yr

Answer 40

(1) where any promise cannot fully be performed within 1 yr from time K was made, K is within S o F **until one party completes performance** (2) where one party has completed his performance, **one yr provision of statute does not prevent enforcement** of promises of other parties

Question 41

R139 Reliance

Answer 41

(1) a promise which the promisor should reasonly expect to induce reliance, and which does, is enforceable notwithstanding S o F if injustice can be avoided only by enforcement of promise. Remedy limited as justice so requires.

Question 42

R 139(2) reliance factors

Answer 42

1. **availability** and adequacy of **other remedies** 2. **definite and substantial character of [reliance]** the action or forebearaance in relation to remedy sought 3. the extent to which the action or forebearance **corroborates evidence** of the making and terms of the promise, or making and terms are otherwise established by clear and convincing evidence 4. **reasonableness** of action or forbearance 5. extent to which action or forebearance was **foreseeable**

Question 43

# Formation defenses: mistake R151 Mistake

Answer 43

A mistake is a belief that is not in accord with the facts

Question 44

Sherwood v. Walker

Answer 44

Barren cow. Mutual mistake of fact renders a K unenforceble if the thing delivered or received is **different in substance** from the thing bargained for. [not just some quality]

Question 45

R152 when mutual mistake makes a K voidable

Answer 45

(1) where (1) **a mistake of both parties at the time a K was made as to a basic assumption** on which K was made (2) has a **material effect** on the agreed exchange of performances, the K is voidable by adversely affected party UNLESS he bears the risk of mistake under r154

Question 46

R154 a party bears the risk of mistake when

Answer 46

(a) **risk is allocated to him** by agreement of the parties, or (b) he is aware, at the time the K is made, that he has only **limited knowledge** with respect to the facts to which the mistake relates, but treats his limited knowledge as sufficient (c) the risk is **allocated to him by the ct** on grounds that it is reasonable in the circumstances to do so Cmt d: ct will consider purposes of the parties and will have recourse to its own general knowledge of human behavior in bargain transactions

Question 47

Lenawee Cty v. Messerly

Answer 47

Ks should be rescinded due to mutual mistake as to property's value as habitable land bc relates to basic assumption of parties upon which K was made and which materially altered agreed performance. BUT here Ps assumed risk of mistake by signing K with as-is clause

Question 48

Two precedents

Answer 48

when mistake only affects value--> does not materially alter K When mistake affects the essence of contractual consideration--> does materially alter

Question 49

R153 Unilateral mistake

Answer 49

Where a mistake of one party at the time a K was made as to a **basic assumption** on which he made the K has a **material affect** on the agreed exchange of performances that is adverse to him, K is voidable if he does not bear risk of mistake r154, **AND** (a) the effect of mistake is such that enforcement would be **unconscionable**, or (b) the other party has **reason to know** the mistake or **his fault caused** the mistake