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contracts > 1. formation of contracts > Flashcards

1. formation of contracts Flashcards

1
Q

common law vs. UCC

A

UCC – goods

Common law — others (services/real estate)

mixed contract: 1. all or nothing — except: divisible contract 2. predominant purpose

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2
Q

offer/acceptance is governed by ––– test

A

objective [words/conduct (implied-in-fact contract)]

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3
Q

how specific should the offer be?

A

common law: all essential terms

UCC: quantity [price is not essential]

[two step: goods?–UCC/common law–essential term?]

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4
Q

requirements contract vs. output contract

A

requirements contract: the buyer promise to buy all his demand from the seller during the period

output contract: the seller promise to sell all his production to the buyer during the period

both have quantity [as a formula]

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5
Q

invitations to deal vs. offer

A

a valid offer must create the power of acceptance in the offeree

advertisement is an invitation to deal, unless

  1. reward advertisement
  2. very specific and leave nothing for negotiation.
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6
Q

missing term vs. vague term

A
  1. missing term:
  • common law: if parties have intent to form a contract, the court may supply a reasonable term
  • UCC:
    • gap filling: reasonable time, delivery at the seller’s place of business
    • except: subject matter and quantity.
  1. vague terms: no presumption that the parties intend to form a contract
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7
Q

bilateral v. unilateral

A

bilateral: a return promise is requested
unilateral: an act is requested

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8
Q

termination of offer

A
  1. revoke by communication: effective upon receipt
  2. constructive revocation: offeree knew the offeror had taken an action that is absolutely inconsistent [house vs. book (fungible)] with a continuing ability to contact
  3. reject: effective upon receipt
  4. counter offer [vs. counter inquiry]
  5. death or mental incapacity of offeror before acceptance is effective [vs. death after formation]
  6. a reasonable period or a period specified by the offer [revival: give a same offer again when the old one lapsed] (from the time the offer is received - not sent) (if there is a delay in transmittal, expires when it would have been expired had there been no delay)
  7. destruction or illegality

撤回/拒绝/不一致，死了傻了/过期了，毁了违法/新要约

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9
Q

revocation of general offers

A
  • general offer: made to a large number of people
  • the revocation must be at the same level of publicity [regardless of actual knowledge]
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10
Q

irrevocable offer

A
  1. option: an independent promise to keep an offer open that the offeree has given separate consideration for
  2. UCC firm offer: (1) merchant, (2) writing + signed by the offeror + explicit promise to not revoke, (3) time period: as stated in the offer or a reasonable period — < 90 days
  3. unilateral contract + offeree has begun performance [the right but not the obligation to finish]
  4. detrimental reliance: reasonably foreseeable
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11
Q

unilateral v. bilateral

A

bilateral: acceptance = promise to perform / starting performance (obligation to complete)
unilateral: acceptance = complete performance (no obligation to complete)

whether the offer is unilateral or bilateral, is decided by the offeror

when there is ambiguity, may accept by either. (“please ship me two books.”)

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12
Q

means of acceptance

A

decided by offeror

if no specific instruction, any reasonable manner — used by the offeror, customarily in the industry, in prior transactions between the parties

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13
Q

acceptance by silence

A
  1. unilateral reward offer
  2. unilateral offer in which the parties are geographically close enough so that the offeror can see the performance occurred
  3. past history
  4. the offer says that acceptance must come by silence and the offeree intends to accept the offer by silence
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14
Q

shipment of nonconforming goods

A

acceptance + breach

but if the offeree [seller] seasonably notifies the buyer that the nonconforming goods are tendered as accommodation, then as counteroffer.

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15
Q

mailbox rule

A

acceptance by mail is effective when the mail is sent.

does not apply to

  1. other communications [revocations, rejections, counter offers] are effective upon receipt
  2. options and other irrevocable offers that requires the acceptance to be received before expiration of the offer
    3.
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16
Q
  1. rejection following acceptance
  2. acceptance following rejection
A
  1. rejection following acceptance: acceptance shall control, unless the offeror detrimentally relied on the rejection.
  2. acceptance following rejection: first one received by the offeror [come into possession, not actually read the letter]
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17
Q

notice of acceptance

A
  • bilateral contract: required [regardless by return promise or by beginning performance]
  • unilateral contract: not required, unless he has reason to know the offeror would not learn of performance within a reasonable time, or the offer requires notice —- if notice is required but not given, the offeror’s duty is discharged unless
  1. the offeree has exercised reasonable diligence to notify
  2. the offeror has learnt about the performance within a reasonable time; or
  3. the offer indicates that notice of acceptance is not required
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18
Q

knowledge of offer is always required for acceptance: true or false?

A

true

19
Q

Common-law mirror-image rule

A
  • acceptance and offer must be the same [including conditional acceptance] – or rejection + counter offer
  • mere suggestions or inquiries are not counter offers
20
Q

UCC 2-207(1): when is an acceptance with different/additional terms still valid acceptance? [confirming memo containing additional terms]

A

意愿明确，及时传达，条件不必要

  1. definite and seasonable (compare: thanks but I no longer sell this)
  2. sent within a reasonable time
  3. not expressly made conditional upon assent to the additional/different terms
21
Q

UCC2-207: additional term become part of the contract?

A

if all: 商人，不改，无限制，不反对

  1. both are merchants
  2. not material change [surprise or create hardship without express awareness by the other party]
  3. initial offer does not expressly limit acceptance to its terms
  4. the offeror does not object within a reasonable time
22
Q

UCC 2-207: different term

A

knock-out rule: neither control — UCC default rules shall fill the gap

[minority: the initial offer shall apply]

23
Q

UCC 2-207(3): parties fail to make a contract but still act as though a contract has formed, what are the terms of their contract?

A

only terms contained in both writings

other terms shall be filled by the UCC

24
Q

UCC 2-207(3): parties fail to make a contract but still act as though a contract has formed, what are the terms of their contract?

A

only terms contained in both writings

other terms shall be filled by the UCC

25
Q

auction: reserve vs. no-reserve

A
  • reserve: the default — may withdraw before completion of the auction [hammer]
  • no reserve: may not withdraw after the auctioneer calls for bids
26
Q

what is consideration?

A
  • bargained for exchange
    1. either a benefit to the promisor or a detriment to the promisee [promise to (not) do or (not) do]
    2. mutuality: The promise must induce the detriment, and the detriment must induce the promise
27
Q

gift vs. consideration

A
  1. is the promise induced by the action/inaction of the promisee?
  2. whether the offeree could have reasonably believed that the intent of the offeror was to induce the action
28
Q

when is gift enforceable?

A

promissory estoppel

  • if the promisor/donor knows that the promise will induce substantial reliance by the promisee
29
Q

Adequacy of Consideration

A

a pretense of consideration is insufficient [1 dollar]

  • difference in economic value ≠ inadequate
  • subjective value can be adequate
30
Q

Modification & Preexisting-duty rule:

  1. Common law: general rule + exception
  2. UCC
A

general rule: a promise to perform a preexisting legal duty does not qualify as consideration [promise to repay vs. early repay] — modification needs new consideration

exceptions: when pre-existing duty can be valid consideration?

  1. a change in performance [e.g. early repayment]
  2. a third party promising to pay
  3. unforeseen difficulties that would excuse the performance

UCC: modification is binding without new consideration if the modification is made in good faith.

31
Q

past consideration

A

not valid [but can be enforceable under material benefit rule]

32
Q

accord

A
  • when a party agrees to accept performance that differs from the original contract, there must be new consideration [different payment]
  • performance of the accord agreement (satisfaction) = discharge of both the original contract and the accord agreement [vs. substitute agreement: immediately discharge the original contract]
33
Q

illusory promise

A

the promisor is not really committed [the promisor can choose to honor the obligations or not]

34
Q

consideration: Settlement of a legal claim

A
  1. if the fact or law is in fact doubtful or uncertain
  2. the party not to assert or releasing the claim believes in good faith that it is valid.
35
Q

consideration substitutes

A
  1. promissory estoppel
  2. quasi contract
  3. moral obligations
36
Q

promissory estoppel

A
  1. a promise is made that would be reasonably expected to induce reliance
  2. the promisee does indeed take detrimental action in reliance on the promise [charity exemption]
  3. injustice can only be avoided by enforcement of the promise [limited to cost]
37
Q

moral obligation + subsequent promise

A

[normally past consideration is not binding]

but [moral obligation + subsequent promise] is enforceable

38
Q

A new promise to pay a debt after the statute of limitations has run

A

enforceable without any new consideration.

  1. in writing and signed by the debtor; or
  2. implied when the obligor
    1. voluntarily made payment
    2. acknowledges to the obligor the present existence of debt
    3. states to the obligee that the statute of limitations will not be pled as a defense.
39
Q

A new promise made to pay a debt discharged in bankruptcy

A

enforceable without any new consideration.

  • there must an express promise to pay [rather than a mere acknowledgment or partial payment]
  • need not be in writing
40
Q

voidable promise by minor

A
  • the other party cannot escape his obligations on the ground that the promise is voidable — this does not by itself make the consideration lacking
    • [e.g. contract with a minor]
  • a new promise to perform the voidable duty that is not voidable would be binding without new consideration
    • [e.g. if the minor gives a new promise after he turns 18]
41
Q

material benefit rule

A
  • elements:
    • unrequested services + material benefit + perform with the expectation of compensation
  • promise to pay by the benefited party is enforceable even without consideration
  • but only costs [to the extent necessary to prevent injustice]
42
Q

implied in law contract [quasi contract]

A
  1. the plaintiff confers a measurable benefit on the defendant
  2. the plaintiff reasonably expected to be paid [without gratuitous intent]
  3. it would be unfair to let the defendant keep the benefit without paying because either (i) the defendant had an opportunity to decline the benefit but knowingly accepted it, or (ii) the plaintiff had a reasonable excuse for not giving the defendant such opportunity (e.g., because of an emergency).

[call a doctor in emergency vs. paint house without consent]

43
Q

implied in fact contract

A
  • acceptance to an offer is inferred solely from the person’s conduct + the offeree know or have reason to know that his conduct may cause the offeror to understand that conduct as assent to the offer.
  • [requested services + perform with the expectation of compensation]
  • can recover the reasonable value of the services

contracts (3 decks)

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