Contract Formation Flashcards
What are the three required components for contract formation?
Offer + Acceptance + Consideration
When does the Common Law apply?
real estate & services
When does the UCC apply?
goods
What to do in a “mixed contract?”
predominant purpose test.
How specific does an offer have to be under CL and UCC?
CL: must include all essential terms
UCC: must include quantity (gap-fill rest)
What are the six ways an offer can be terminated?
Express Revocation Constructive Revocation Death of offeror Rejection Counteroffer Lapse of Time (express or reasonable amount of time)
When can an offer not be revoked? [4 situations]
- Option
- Firm Offer
- Unilateral contract plus performance begun
- Detrimental Reliance
What are the requirements for a Firm Offer?
- Offeror is a merchant
- Signed Writing by offeror/merchant
- expressly promises not to revoke
How long can a firm offer last?
As specified by the terms of the writing. If none, a reasonable time but not to exceed 90 days.
When can silence be used for acceptance?
- Unilateral reward offers/contests (don’t necessitate communication)
- Unilateral contract & geographically close so can see performance
- prior dealings of silence equaling acceptance
- offeror states silence is form of acceptance & offeree intends to accept that way.
If the Offeror asks for a return promise, how may the offeree accept?
bilateral return promise
or
begin performance
If the Offeror asks for a return action (unilateral K) how can the offeree accept?
only by beginning performance.
When does the Mailbox rule apply and what does it do?
Applies only to communications of acceptance and it makes the acceptance effective at the moment the communication is sent.
What happens if the offeree sends nonconforming goods to accept an offer?
It constitutes acceptance and breach, unless the offeree sends the offeror notice that the nonconforming goods are an accommodation. If send within a reasonable period of time the accommodation will be a counteroffer and no contract will have been formed.
What if the acceptance contains additional or different terms than the original offer? How is this handled under common law and the UCC?
CL: mirror image rule
UCC: 2-207(1) allows the writing to constitute acceptance even if there are additional/different terms.
For non-merchants: the additional/different terms are not part of the contract created. Instead they are viewed as an offer for a separate agreement.
For merchants:
additional terms may control if: (1) both parties are merchants; (2) new term doesn’t materially alter the deal; (3) the initial offer didn’t limit acceptance to original terms; offeror doesn’t reject w/n reasonable period of time.
Different terms usually knocked out (Maj) while some Js allow original terms (min)
For a contract implied in fact, what are the terms of the contract?
only the terms that both parties agreed on.
What is consideration?
when parties exchange promises that involve a legal detriment OR a legal benefit
When is consideration needed for modification of a contract under the common law and under the UCC?
CL: preexisting duty is not consideration unless (1) change in the performance; (2) 3rd party surety; or (3) unforeseen difficulties excused performance.
UCC: modification only requires good faith. Does not require consideration.
What are the elements for promissory estoppel as a consideration substitute?
- promise is made that would be reasonably expected to induce reliance
- promisee does indeed take detrimental action in reliance on the promise; and
- injustice can only be avoided by enforcement of the promise.
