(1) Promise and Assent

Question 1

What is a contract?

Answer 1

• R2K § 1: “[A] promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty.”
• MOMA (manifestation of mutual assent, i.e. offer and acceptance) + consideration = contract (R2K 17)

Question 2

What is a promise?

Answer 2

• R2K § 2 (1): A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.
• What to look for: objective signs of commitment
• Watch out for: illusory promises, where there is no real intent of the promisor to commit

Question 3

Judging a Party’s Intent:

Answer 3

• R2K § 2 comment b: an objective standard
• In other words, would a reasonable person understand the words (oral or written) or conduct, in light of the circumstances, to constitute a commitment?
• Jokes: R2K § 18 comment c; a party may not be serious in his offer, but if the other person takes it seriously, he may be bound by the contract
• Peerless: note that if both parties misunderstand a key term, and the parties don’t know of each other’s interpretation of that term, a court may conclude that there is no contract at all. Know R2K § 20!! Very important.

Question 4

Offer:

Answer 4

• R2K § 24: “An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain will be invited and will conclude it.”
• Advertisements (Lefkowitz): not generally a manifestation of and intent to commit; can be if clear, definite, explicit, and leave nothing open for negotiation. Bids, however, can be viewed as offers.
• Public promise of a reward: differs from advertisements in that the offer is intended to induce the offeree to perform a specific act, often for noncommercial reasons
o Factors to consider: the specificity of the terms, the context in which the offer was made, the manner in which a person is to accept

Question 5

So you’ve got an offer… now what?

Answer 5

• Termination of the offer:
o Lapse of time (either the time specified, or if none is specified, a reasonable time)
o Death or incapacity (the offer dies with the offeror/offeree)
o Revocation (See R2K § 42 and § 43 (indirect revocation)); Offeror cannot revoke once there has been acceptance!
• Acceptance of the offer:
o Outright
o With proposal or inquiry
o Grumbling (still an acceptance!)
o Silence? (See R2K § 69)
• Rejection of the offer:
o Outright
o Counteroffer (asks are they committing? Or are they still trying to negotiate? There MUST be an offer for there to be a counteroffer)
• Counteroffer without rejection (R2K 39(2)):
o In general, counteroffers kill the original offer. BUT, this is not always the case (e.g., the person doing the counter off manifests an intent to simply make a suggestion and not kill the original offer, OR the offeror of the original offer manifests an intent to keep the original offer open despite the counter offer.)

Question 6

Bilateral:

Answer 6

o Contract formed by a mutual exchange of promises. If offer is silent on what it wants, assume it is an offer for a bilateral contract. If it’s silent, and offeree chooses to accept by performing, as soon as performance begins . . . BAM. Bilateral contract is formed (§ 62). Required notice here is set out in R2K § 54 (see comment B). Note, however, that if performance is simply delivery, the contract formation will result in a unilateral K.

Question 7

Unilateral:

Answer 7

o Only one party is promising anything, and all they want is an act. When the offeree starts performance in response to an offer for a unilateral contract, an option contract is created. The offer is now irrevocable for a reasonable time, or until the offeree quits (see R2K §45). Full acceptance is not rendered until the performance is completed in full.

Question 8

Restatement vs. UCC:

Answer 8

• The UCC governs sales of goods (gotta have both!). If you don’t have a sale of goods, you
aren’t in Article 2!
o Remember, Article 1 accompanies Article 2! Article 1 is always triggered if another article in the UCC is triggered. (for this class, almost all focus will be article 2 and article 1 is a ride along to it.)
• The Restatement covers other transactions in Contracts

Question 9

Mailbox rule:

Answer 9

• R2K§63
• Acceptance usually effective upon dispatch (remember the exception, where rejection is sent first)
o Option Contract exception: effective upon receipt; R2K § 63(b)
• Death of the offer or under option K does NOT affect ability of offeree to accept; R2K §§ 48(d), 37
• Rejection and revocation are effective upon receipt

Question 10

Battle of the Forms: UCC § 2-207:

Answer 10

• Be methodical!
• Do you have a sale of goods? Do you have an offer (if no, no 2-207)? Is it in writing? Does the offeree reply with a writing?
• Start in subsection (1):is there a K? There are 3 kickouts.
• If yes, go to (2).
o Be aware of the three jurisdictional approaches to “different” terms.
o Be careful about “between merchants.”
• If not, go to (3).
o Remember the knockout rule and gap-fillers.