Contract Formation

Question 1

Offer

Answer 1

(1) Communicated to whom it is addressed to
(2) Desire to enter into K. “specified the performances to be exchanged + terms that will govern relationship”
(3) Expressly or impliedly invite acceptance
(4) Offeror is master of the offer
(5) Acceptance be reasonably made in time

Question 2

Contract formation Requires

Answer 2

Requires: a Bargain, in which there is a manifestation of mutual assent to the exchange and a consideration

Needs: an agreement b/t parties
Intent to enter K
exchange relationship
at least one promise
enforceability

Question 3

Ray v. Eurice Objective vs subjective approach

Answer 3

Subjective- Actual intention of a party, rather than that’s party’s conduct determines the party’s legal obligation

Objective- Requires any “manifestation of mutual assent” only the signing of the K
Hypo- reasonable person sees signing not inside head

Question 4

Meaning of Detriment in Consideration

Answer 4

Is any relinquishment of a legal right
Not harm but Yielding of a legal right
Forbearance

Question 5

Definite + Certain Terms

Answer 5

Parties make the K not courts
Law requires substantial certainty as to the material terms upon which the minds of the parties have met

UCC allowed to have open price and gap fillers but need QUANTITY

Question 6

Mirror Image Rule

Answer 6

Terms of acceptance must mirror the terms of the offer
New or different terms is considered counter

Question 7

Counter Offer

Answer 7

An offer by the offeree to the offeror, relating to the same matter as the original offer and proposing a different substitute bargain

Rejection of the O.G. offer

Question 8

Unilateral vs Bilateral

Answer 8

Bilateral-exchange of mutual promises

Unilateral- Acceptance by performance

Question 9

Consideration

Answer 9

“Legal value + bargained for exchange”

(1) the Promisee incurs a legal detriment OR the promisor receives a legal benefit AND
(2) The promise induces the detriment AND the detriment induces the promise (Reciprocal Inducement)

Gratification of influencing someone’s behavior (forbearing something they have legal right to do) can be consideration

Question 10

Consideration Sub Issues

Answer 10

Gifts/Conditional Gifts
“Did not seek that detriment for the promise”
“Motivated by Kinship not binding”

Nominal Consideration and Gross Inadequacy
“a mere pretense of bargain does not suffice, as where there is a false recital of consideration or where the purported consideration is merely nominal”

Illusory Promise
“if it makes performance entirely optional with the promisor”
“at will” promisor can terminate anytime
- slight restriction can trump illusory

Moral Consideration

Past Consideration

Pre-existing Legal Duty

Question 11

Consideration Can Be

Answer 11

(1) An act other than a promise
(2) A forbearance
(3) the creation, modification, or destruction of a legal relationship

Question 12

Purpose of Consideration

Answer 12

(1) Prove Promise made
(2) Cautionary function, prevent entering detrimental agreement
(3) Courts can dismiss non-serious promises

Question 13

Is Conditional Gift Consideration ?

Answer 13

No Consideration,
Legal action that you are not required to take, however

The Detriment does not induce the promise

Ex- Pick-up old couch its yours,
You spent gas money to get the promisor’s old couch

Your act of spending gas money was the detriment that induced the promisor giving you the couch

Question 14

For K you need for Common law vs UCC

Answer 14

CL- Parties, Subject, quantity, Price

UCC - Partie, subject, quantity
(gap fillers will fill in the rest)

Question 15

Option K

Answer 15

Involves promise to keep offer open, a promise binding to offeror
(NEED consideration to keep it open)

Question 16

Unilateral K Rules

Answer 16

Traditional- (only completed)

Modern- irrevocable once substantial performance has been made. Essentially becomes an option K (consideration was put in, must be completed now timely)

Question 17

Conditional Gift the Willston Approach

Answer 17

If the promisor merely intends to make a gift to the promisee upon performance of a condition, the promise is gratuitous, and the satisfaction of the condition is not consideration for a K

Question 18

Option K creation vs
Firm offers

Answer 18

Option K- When offeree starts performing a unilateral K
- Promise to keep an offer open and not sell for specific amount of time - It needs consideration though

Firm- UCC Goods
(1) Made by a MERCHANT
(2) Writing
(3) open for reasonable time
(4) IF exceeds 3 months need add on consideration to keep open

Question 19

Illusory Consideration

Answer 19

A promise or apparent promise is not consideration IF by its terms the promisor or purported promisor reserves a choice of ALTERNATIVE PERFORMANCES (choice)

Question 20

Methods of termination of offer

Answer 20

(1) Rejection of Counter
(2) lapse of time
(3) Revocation by offeror, OR
(4) Death or incapacity by offeror/ee

Question 21

For modification of K look to see if

Answer 21

(1) UCC or Common Law
(2) additional or new consideration

(a) Common Law need additional or new consideration
(b) UCC Good Faith Test

Question 22

Modification Fact Pattern:
Promisor LL - Promisee Tenant
(Exchange rent money for lease)

Tenant asks LL to lower rent for next month/ LL agrees

LL pulls out K and adds new term to lower payment for the month and both sign

Month passes and Tenant Pays new term

Another month passes and LL needs money so sues Tenant for the money owed from the modification

Can LL recover for the difference b/t new and old K

Answer 22

If original controls Tenant owes LL difference

If modification valid tenant doesn’t owe LL anything

Common law: modification needs additional new consideration

Was the modification supported by consideration?

NO, tenant was not taking an obligation he wasn’t already legally obligated to take
Lowering is not an additional or new duty
Already required in contractual obligations

LANDLORD SUCCESSFUL

OG contract controlled
Tenant didn’t take on detriment when they modified K (tenant already owed that money)

Tenant can do extra task (detriment) or pay earlier in exchange to lower rent

Question 23

Preexisting Legal Duty, Consideration?

Answer 23

Not consideration, offering $100 to stop someone from Crack Cocaine is illegal. (legal duty to not smoke that)

Question 24

Past Consideration (not consideration)

Answer 24

Detriment occurred before promise is made
Emergency situations

look at the moment promised is formed what is promisee doing for you? (looks almost like a gift)

Question 25

Nominal consideration not confused with adequacy

Answer 25

Nominal (recital of consideration) NOT CONSIDERATION cannot be induced by $1

Courts don’t look at the fairness of the deal but IF unconscionable would fall under a defense formation

Question 26

Illusory promise

Answer 26

Promise that is non-committal
(indefinite promise) not consideration

IF i want to or fell like How many I feel like selling (need to be bound by a performance)
not same as UCC goods
selling entire yield from this years crops
(formula to calculate what that is)

Question 27

Modification consideration required for UCC

Answer 27

NO

Question 28

Exception to Common Law modification consideration requirement

Answer 28

Unforeseeable difficulty arises that will make performance impractical than it doesn’t need additional or new consideration.