Contract Formation

Question 1

Contract Formation — 3 elements

Answer 1

Offer
Acceptance
Consideration

Question 2

Offer

Answer 2

• Creation: must be an intent to enter into a contract + specific terms (price, quantity, identity of parties) and it must be communicated to the offeree

Question 3

Requirements/ Output Contract

Answer 3

Will NOT fail for lack of quantity — amount sold or requested must be in good faith and NOT unreasonably disproportionate to a stated estimate or prior comparable output

Question 4

Methods of Terminating an offer

Answer 4

1. Lapse: offer lapses after reasonable time
2. Rejection: includes counteroffer, which is a rejection and a new offer
3. Revocation: offer can be revoked before acceptance UNLESS it falls into one of four categories:
4. Death or incapacity of offeror

Question 5

An offer can be revoked before acceptance unless it falls into one of four categories (FOUR):

Answer 5

1. Firm offer: by merchant in a signed writing under the UCC — offer can be held open for a maximum of 3 months
2. Option contract: a promise to hold open the offer + consideration for that promise
3. Unilateral contract: if the offeree begins performance on a unilateral contract, the offer is held open for a reasonable time
4. Reasonably foreseeable: substantial reliance on the offer

Question 6

Type of Contract

Answer 6

Bilateral, unilateral

Question 7

Bilateral Contract

Answer 7

accepted by a promise to perform or beginning performance

** most contracts are bilateral **

Question 8

Unilateral Contract

Answer 8

can be accepted only by full performance

examples: rewards, prizes, or offers that specify they are unilateral

Question 9

Article 2 Contract

Answer 9

• an offer for the sale of goods is accepted by PROMISING to ship OR shipping the goods
• if seller ships defective goods w/ accommodation letter = counteroffer
• if seller ships defective goods w/o letter = acceptance + breach

Question 10

Mailbox rule

Answer 10

-acceptance is effective when sent —– properly addressed + stamped*
-Exceptions:
~ option K = acceptance effective upon RECEIPT
~ rejection then acceptance mailed = whichever received first controls

Question 11

Terms of Acceptance —- how can a K and what does its terms look like?

Answer 11

• CL = acceptance MUST be the mirror image of offer
• UCC = acceptance does NOT need to be mirror image, may have additional OR different terms —– between merchants:
  ~ additional term = term is part of K unless it materially alters it, offeror objects within reasonable time, OR the offer limits acceptance to the terms of the offer
  ~ different term (majority) = term knocked out + replaced w/ gap filler

Question 12

Consideration

Answer 12

Bargained for exchange between parties & legal value (benefit to promisor or detriment to promisee aka legal benefit/detriment)

Question 13

Reliance as consideration

Answer 13

• substitute for consideration
• if there is a promise and a foreseeable & justifiable reliance, enforcement will be granted as necessary to avoid injustice

Question 14

Modifications at CL

Answer 14

• consideration needed to modify a K
  -performance of a pre-existing legal duty is NOT consideration unless it falls into an exception:
  ~ unforeseen difficulty
  ~ good faith settlement of a lawsuit
  ~ good faith payment in full of a due and disputed debt
  ~ written promise to pay a time-barred debt; or
  ~ duty owed to a 3rd person

Question 15

Modification for UCC

Answer 15

only good faith is needed to modify a contract

Question 16

Applicable Law

Answer 16

• CL = applies to services
• UCC = applies to transactions in goods (things that are moveable at the time of contract)
• courts look at the predominant purpose of the K if it is not clear