2. Valid Contract? Flashcards
Terms to Remember
Offers Terminate Firmly w/ Options.
Accept Methods of Consideration and Promise Estopped.
Output Requires Implied Fact/Law.
a. Was there an offer?
RST § 24
i. Manifestation of intent to contract
ii. Communicated to offeree
iii. Definite and certain terms
b. Has the offer terminated?
i. Time
ii. Revocation: direct/indirect, effective when received.
iii. Rejection: effective when received, counteroffer acts as a rejection
iv. Termination by operation of law: destruction of subject matter, illegality of subject matter, death/insanity of either party
c. Was there a firm offer?
Yes, irrevocable
UCC § 2-205
i. UCC—signed writing by a merchant who deals in goods, explicitly assuring the offeree that an offer to buy or sell goods will be held open for a limited amount of time. (no more than 90 days).
d. Was there an enforceable option contract?
Yes, offer remains open
i. Option contract results when there is an offer, a subsidiary promise to keep the offer open, and consideration for securing enforcement of the subsidiary promise.
e. Was there acceptance?
Effective on dispatch, unless rejection sent first. (Mailbox rule) RST § 63
i. Must be unequivocal, no quibbling
ii. Acceptance is a manifestation of assent to the terms thereof made by the offeree in the manner required (mirror image rule: Common Law), and the acceptance must be communicated to the offeror. Must be mutual assent.
iii. If both parties perform, last shot rule. Terms of last document before performance binding.
iv. UCC § 2-207 additional terms
1. 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
c. notification of objection to them has already been given
- Battle of the forms.
a. Step-Saver Approach: First decide when the contract was formed and what the terms were. If box top comes after formation, then the additional terms are knocked out of the contract because they would materially alter it. Applies 2-207(2) or (3)
b. Gateway Approach: Contract is formed when the refund option expires/when box top license accepted. Terms of box-top control since that was the contract.
f. Proper method of acceptance?
i. UCC: Reasonable means
ii. Unilateral K: Performance
iii. Bilateral contract: Promise or Performance
g. Was there consideration?
RST § 71
i. Consideration exists when something of value is exchanged in a bargain. This means that the promisor must give something of value to the promisee, and, in exchange, the promisee must give something of value to the promisor. (Act or forbearance)
1. Lack of consideration
A. Adequacy
B. Past consideration, gifts, and illusory promises
C. Preexisting duty rule
h. Does promissory estoppel make the promise binding?
RST § 90
i. A promisee that reasonable relies to his detriment on a gratuitous promise may be able to enforce that promise even if there is no consideration
1. Promise
2. Foreseeable reliance
3. Reliance
4. Injustice cannot be avoided without enforcement
i. Output/Requirements Contracts:
UCC § 2-306
- Output Contract – one party agrees to sell all, or a portion, of output to buyer
- Requirements contract – buyer agrees to buy all required goods from seller
- Both require good faith.
j. Contract implied-in-fact:
contract based on social circumstances; A contract that is implied by the court due to the parties’ nonverbal conduct implying a tacit understanding that a contract has been formed. (Dry cleaners) Bailey v. West/didn’t apply!
k. Contract implied-in-law:
A contract that is implied by the parties’ conduct, their relationship, or the likelihood of unjust enrichment if a remedy is not imposed. (Wrong house painted/no effort to stop painter)
