Business Law: Contracts Part I Flashcards
What are the 3 elements of a contract?
1) An offer
2) An acceptance
3) Consideration
What is the “mailbox rule”?
Acceptances are effective upon dispatch. An offeror may opt out of the mailbox rule by stating that the acceptance must be received by a certain date to be effective.
What is a unilateral contract?
A unilateral contract is formed when a promise is exchanged for an act.
What types of contracts are governed by the common law?
Contract for services is governed by the common law. An oral contract is enforceable as modified if there is consideration on both sides.
Under the common law of contracts a contract modification is treated like a separate contract and requires consideration.
What is consideration?
Consideration includes money, a promise, acting, not acting. Consideration to be binding must be “legally sufficient.”
Are advertisements offers?
Advertisements are generally not offers, but invitations to negotiate. An advertisement is an offer only if it is a promise to perform a very specific act conditioned upon acceptance. Ex. 10 specific cars at a specific price.
What is an option contract?
A promise to keep an offer open for a specified time is unenforceable unless it is made in writing by a merchant (i.e., a merchants firm offer) or consideration supports the promise, in which case, an option contract is formed. Giving up the right to do something is valid consideration.
What is the parol evidence rule?
The parol evidence rule prohibits introduction of prior or contemporaneous oral statements and prior written statements to vary the terms of a fully integrated written contract (i.e., one purporting to reflect the whole agreement). It does not prohibit introduction of evidence of subsequent agreements, such as a modification.
Proof of the oral modification would be admissible into evidence because the parol evidence rule does not bar admission of evidence that a written contract was subsequently modified.
How does the Statute of Frauds affect service contracts?
The Statute of Frauds makes service contracts unenforceable unless they are evidenced by a writing signed by the party to be charged if the contract cannot be performed within a year.
