Contract Basics

Question 1

Contract Formation

Answer 1

Mutual Assent (Offer and Acceptance) + Consideration

Question 2

Offer

Answer 2

Manifestation of willingness to enter into a bargain

Question 3

Offer Requirements

Answer 3

• Communicated to an Offeree
• Clear and Definite (capable of acceptance
• Intent to be bound

Question 4

Who is an Offeree?

Answer 4

i. Individual
ii. Specific Group
iii. Class of people, acting separately or together
iv. General Public

Question 5

Material Terms

Answer 5

1. Parties
2. Subject Matter
3. Price
   - Expressly stated, or
   - Means of ascertaining value
4. Time of Performance
   - If not specifically stated, within a reasonable amount of time

Question 6

Offer is valid until

Answer 6

Acceptance
Revocation
Lapse of Time or Expiration
Rejection & Counter Offer

Question 7

Revocation

Answer 7

i. Offeror is free to revoke anytime prior to acceptance
ii. Revocation can involve a direct revocation notice valid upon receipt
iii. Revocation can involve indirect notice to an offeree from a 3P (arising from a definite action by the offeror that is inconsistent with an intention to contract with the original offeree) AND the information is reliable

Question 8

Conversation Rule

Answer 8

an offer made during a conversation lapses at the end of the conversation (when the parties part ways)

Question 9

Rejection and Counteroffer

Answer 9

i. Rejection terminates the offeree’s power of acceptance
ii. A counteroffer is a substituted bargain
iii. A counteroffer serves as a new offer subject to acceptance by the original offeror (now the offeree)
iv. These are valid upon receipt

Question 10

Unilateral Contract

Answer 10

a. Offeror offers the future promise of performance IF AND ONLY IF the offeree accepts by actually performing
-Performance is both acceptance and consideration
-Offeree is in control of the contract
formation and ultimately the master of
the offer

b. If offeree never performs, no contract is ever formed

Question 11

Revocation

Classic View

Answer 11

Classic View

1. The Offeror could revoke the offer anytime prior to the full performance of the Offeree.
2. Acceptance is valid upon full performance.

Question 12

Invitation of Promise or Performance?

Modern View

Answer 12

In order to prevent inequitable results, the Restatement 2d K §32 attempted to protect the Offeree by setting forth:
a. In the event of ambiguity as to how the offer can be accepted, the court will assume the Offeror intended to allow the Offeree to accept EITHER
i. through a promise to perform
or
ii. by performance itself.

Question 13

Mailbox Rule

Answer 13

Upon dispatch, if allowable.
Valid, even if lost in the mail.

iii. If rejection arrives first, no contract, if acceptance arrives first a contract is formed (Restatement 2d K Section 40)

Question 14

Consideration (Classic View/Modern View)

Answer 14

Classic View
There must be EITHER
a.	Benefit to the promisor 
OR
b.	Detriment to the promisee

Rst. of K 2d Sec. 71 (2)
Consideration is bargained for “if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise”.

Modern Bargain Theory
(Restatement Contracts 2d Sec 71)
1.	Consideration Requirement
a.	It is an exchange AND
b.	There is a benefit of the bargain
c.	Benefit AND detriment

Question 15

Acceptance

How is an offer accepted?

Answer 15

Offeree Accepts an offer by either:

• Performance
• Return Promise