Contract Formation

Question 1

Requirements of contract formation (4)

Answer 1

1. Offer
2. Acceptance
3. Consideration
4. Sufficient specification of essential terms

Question 2

Express contract v. implied-in-fact contract

Answer 2

Express: assent by words/conduct

Implied-in-fact: understood by circumstances as apparent to reasonable person

Question 3

Restatement (Second) definition of “offer”

Answer 3

The manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that their assent to that bargain is (1) invited and (2) will concede it.

Question 4

Determining if Party Intended to Be Bound Prior to Written Execution of Contract (6)

Answer 4

1. whether contract usually put in writing
2. does k need formal writing for full expression
3. does k have few or many details
4. is k common or unusual
5. is a common form of k widely used in similar transactions
6. does either party take any action in preparation for performance during negotiation

Question 5

Legal Consequence of Acceptance

Answer 5

Moment of acceptance fixes terms of contract to those agreed upon in offer

Question 6

Acceptance of Offers (3)

Answer 6

1. Acceptance of offer is manifestation of assent to terms thereof made by offeree in manner invited/required by offer
2. acceptance by performance: at least part of what offer requests be performed/tendered and includes acceptance by a performance operating as a return promise
3. acceptance by a promise: offerree must complete every act essential to the making of the promise

Question 7

UCC 2-207

Answer 7

1. additional terms are ok unless assent made expressly conditional on additional terms
2. conflicting terms drop out

Question 8

termination of offer

Answer 8

1. revocation
2. counter offer
3. additional terms
4. conditional acceptance
5. destruction of subject matter
6. illegality of subject matter

Question 9

UCC 2-207

Answer 9

1. additional terms ok unless assent expressly conditional on terms
2. between merchants, additional terms become part of contract
3. between non-merchant, additional terms are proposal for acceptance/rejection
4. conflicting terms “knock each other out”

Question 10

Silence as Acceptance

Answer 10

1. party retains benefit with opportunity to object and knowing party expects payment
2. custom between parties has indicated silence is acceptance

Question 11

mailbox rule

Answer 11

acceptance is upon dispatch, not upon receipt

Question 12

exceptions to mailbox rule

Answer 12

1. schizophrenic acceptance: buyer sends both rejection and acceptance. if rejection arrives first, no contract. if acceptance arrives first, contract is formed, but formation is upon receipt.
2. option contract: acceptance upon receipt
3. unauthorized means of acceptance: acceptance upon receipt

Question 13

consideration

Answer 13

bargained-for exchange of legal value

Question 14

modifications that do not require additional consideration

Answer 14

1. change in obligations
2. honest dispute about original obligations
3. unforeseen circumstances

Question 15

substitutions for consideration

Answer 15

1. promissory estoppel

2. sale of goods/services: good faith is ok, valuable consideration is mere technicality

Question 16

promissory estoppel

Answer 16

1. promise made
2. action/forbearance taken in reliance on promise
3. promisor can reasonably foresee action/forbearance will be undertaken in reliance
4. non-enforcement is unjust