Chaper 11- Agreement

Question 0

Mutual assent

Answer 0

Agreement

Question 1

Agreement

Answer 1

The parties must agree on the terms of the contract and manifest to each other mutual assent to the same bargain

Question 2

Offer

Answer 2

A promise or commitment to do or refrain from doing some specified thing in the future

Question 3

Three elements for an offer to be effective:

Answer 3

1. Serious intention to become bound by the offer
2. The terms of the offer must be reasonably certain, or definite, so that parties and the court can ascertain the terms of the contract
3. The offer must be communicated by the offeree

Question 4

Expression of opinion

Answer 4

Not an offer. Does not indicate an intention to enter into a binding agreement. “You will probably feel better in four days”

Question 5

Statement of future intent

Answer 5

A statement of an intention to do something in the future is not an offer. “I plan to sell stock”

Question 6

Preliminary negotiations

Answer 6

A request or invitation to negotiate is not an offer. Only expresses a willingness to discuss the possibility of entering into a contract.

Question 7

Agreements to agree

Answer 7

Traditional: Agreements to agree to the material terms of a contract at some future date. Not considered binding contracts.

Modern: agreements to agree may be contracts if it is clear that the parties intended to be bound.

Question 8

Advertisements

Answer 8

Treated not as offers to contract but as invitation to negotiate

Question 9

Definiteness of terms

Answer 9

1. Identification of the parties
2. Identification of the object or subject matter of the contract, including the work to be performed, with specific identification of such items as goods, services, and land.
3. The consideration to be paid.
4. The time of payment, delivery, or performance.

Question 10

Communication

Answer 10

The offer must be communicated to the offeree

Question 11

Revocation

Answer 11

The offerors act of withdrawing an offer

Question 12

Irrevocable offers

Answer 12

Cannot be revoked or cancelled

Question 13

Option contract

Answer 13

Created when an offeror promises to hold an offer open for a specified period of time in return for a payment (consideration) given by the offeree

Question 14

Promissory estoppel

Answer 14

The promissory or offeror is barred from revoking the offer

Question 15

Estop

Answer 15

To bar, impede, or preclude something

Question 16

Rejection of the offer by the offeree

Answer 16

If the offeree rejects the terms, the offer is terminated

Question 17

Counteroffer by the offeree

Answer 17

A rejection of the original offer and the simultaneous making of a new offer

Question 18

Mirror image rule

Answer 18

Requires the offeree’s acceptance to match the offerors offer exactly

Question 19

Termination by operation of law

Answer 19

1. Lapse of time
2. Destruction of the specific subject matter of the offer
3. Death or incompetence of the offeror or offeree
4. Supervening illegality of the proposed contract

Question 20

Lapse of Time

Answer 20

An offer terminates automatically by law when the period of time specified in the offer has passed.

If the offer does not specify a time for acceptance, the offer terminates at the end of a reasonable period of time.

(Reasonable period of time depends on the subject matter of the contract, business and market conditions, & other relevant circumstances)

Question 21

Destruction of subject matter

Answer 21

When the specific subject matter of the offer is destroyed before the offer is accepted, the offer automatically terminates.

Question 22

Death or incompetence of the offeror or offeree

Answer 22

If the offeror or offeree dies or becomes incompetent, this terminates the offer (unless the offer is irrevocable)

Question 23

Supervening illegality

Answer 23

When a statue or court decision makes the proposed contract illegal, the offer automatically terminates.

Question 24

Acceptance

Answer 24

A voluntary act by the offeree that shows assent (agreement) to the terms of an offer.

Question 25

Unequivocal acceptance

Answer 25

To exercise the power of acceptance effectively, the offeree must accept unequivocally.

Question 26

Silence as acceptance

Answer 26

Silence cannot constitute acceptance, even if the offeror states, “by your silence and inaction, you will be deemed to have accepted this offer”

Question 27

Communication of acceptance

Answer 27

The offeror must be notified of the acceptance depends on the nature of the contract.

Bilateral: communication of acceptance is necessary because acceptance is in the form of a promise.

Unilateral: notification is usually unnecessary because an act will be performed so it is evident.

Question 28

Mode and timeliness of acceptance

Answer 28

Acceptance in bilateral contracts must be timely. The general rule: acceptance is timely if it is made before the offer is terminated.

Question 29

Mailbox rule

Answer 29

If the authorized mode of communication is the mail, then an acceptance becomes valid when is dispatched, NOT when it is received by the offeror.