Contract 1-15 Flashcards
What are the elements of a valid contract?
Mutual Assent (offer and acceptance);
Consideration or a substitute; AND
No defenses to formation.
Priority: HIGH
What law governs contracts for the Sale of Goods?
Article 2 of the Uniform Commercial Code.
*For mixed contracts the predominant purpose of the contract determines what law governs.
Priority: HIGH
What are the elements of Mutual Assent?
Offer: A manifestation of intent to contract, with definite and reasonably certain terms, that is communicated to the offeree.
Acceptance: A manifestation of assent to the terms of the offer, which indicates a commitment to be bound.
Bilateral contracts: performance manifests acceptance, Unilateral contracts: offer is accepted only when performance is complete.
Priority: HIGH
Are advertisements considered offers?
No, BUT instead are deemed invitations for offers.
It may be considered an offer if it includes sufficiently clear and definite terms so a reasonable person would understand how performance and acceptance may be completed.
Priority: Medium
What is the Mailbox Rule?
If the offeror mails a letter revoking, but the offeree sends a letter accepting BEFORE he receives the revocation, then a valid contract is created. This is because the acceptance was effective before the revocation.
Acceptance = once sent or communicated
Revocation = when received
Priority: Medium
When will conduct by the parties create a contract?
If:
The conduct is intentional; AND
Each party knows (or has reason to) that the other party will interpret the conduct as an agreement to enter into a contract.
Priority: Low
Output Contract
vs.
Requirement Contract
Output: Requires a seller to sell all of the output of the particular goods to the buyer.
Requirement: Requires the buyer to purchase all of the particular good that the buyer requires from the seller.
Priority: Medium
When is an offer Terminated?
Offers may be terminated before acceptance by:
Rejection or Counter-offer by offeree;
Lapse of time;
Revocation by offeror; OR
Death / Incapacity of either party.
Priority: Medium
When may an offer be revoked, and which types of offers are notrevocable?
Offers may be revoked at any time before acceptance through unambiguous words/conduct indicating an unwillingness/inability to contract (effective when received).
Irrevocable offers include: option contracts, a merchant’s firm offer, and offers that were relied on to the offeree’s detriment.
Priority: Medium
What is a Merchant’s Firm Offer?
An offer to buy or sell goods;
By a merchant;
In a signed writing;
Which states that the offer will be held open and is not revocable; AND
The assurance to keep the offer open must be signed separately by the offeror.
*Enforceable WITHOUT consideration.
Priority: Low
Rejection vs. Counteroffer
Rejection: Manifestation of intent to not accept an offer (words/conduct) which terminates the offer. Offers CANNOT be accepted after they have been rejected.
Counteroffer: Both a rejection that terminates the original offer and a NEW offer.
Priority: N/A
What is the Mirror Image Rule and UCC exception?
The common law Mirror Image Rule holds that an acceptance MUST exactly mirror the offer.
UCC Art. 2 Exception: The acceptance DOES NOT need to mirror the offer, and additional terms may be added. Additional terms are included if:
Both parties are merchants;
The term is not a material change;
The offer doesn’t limit acceptance to the exact terms; AND
No objection was made within a reasonable time.
Priority: Medium
When is an agreement deemed Indefinite?
When the terms of the agreement are NOT certain (they cannot be ascertained to a reasonable degree of certainty), the contract is deemed indefinite and is unenforceable.
*A contract that is indefinite as to duration is generally invalid.
Priority: N/A
What is Consideration?
A bargained for exchange of a promise for a return promise or performance (that benefits the promisor or causes detriment to the promisee).
*Past or moral consideration is NOT sufficient to support a contract.
Priority: HIGH
When does Promissory Estoppel apply?
Applies when:
A party reasonably and foreseeably relied to his detrimenton the promise of the other party;
The promisor should have reasonably expected a change in position in reliance of the promise; AND
Enforcement of the promise is necessary to avoid injustice.
Priority: Medium
