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Contracts Critical Pass > Contract Formation > Flashcards

Contract Formation Flashcards

1
Q

Offer definition

A

An objective manifestation of a present intent to contract. Demostrated by a promise, undertaking, or commitment; definite and certain terms; and communication to an offeree.

An offer creates the power of acceptance in the offeree.

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2
Q

Offer

Objective Manifestation of Intent

A

Offer must give offeree a reasonable expectation that offeror is willing to enter into a contract.

  • Ask would a reasonable person believe the communication is an offer inviting acceptance.
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3
Q

Offer

Definite and Certain Terms

A

Enough essential terms must be included to allow a court to enforce the contract.

  • vague terms or terms of negotiation not allowed.
  • Real Estate: requires price, parties, and identification of land.
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4
Q

Offer

Communication to an Identified Offeree

A

Offeree must know of the offer and have the power to accept it.

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5
Q

Offer

Advertisements

A

Generally not offers, unless highly specific as to quantity and clearly indicate who may accept.

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6
Q

Offers

UCC

A

Quantity must be certain or capable of being made certain.

  • Requirement/output – no unreasonably disproportionate increase in quantity allowed.
  • Missing terms OK if it appears parties intended to make a contract and there is a reasonably certain basis for giving a remedy.
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7
Q

Termination

Acts of Parties

A
  1. Revocation by offeror
  2. Rejection by offeree
  3. Lapse of time
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8
Q

Termination

Operation of Law

A
  1. Death of insanity of either party
  2. Destruction of proposed contract’s subject matter
  3. Supervening illegality
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9
Q

Revocation Definition

A

An offeror may revoke her offer, which effectively terminates the offer and the offeree’s power of acceptance

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10
Q

Methods of Revocation

A
  1. Unambiguous statement by the offeror to the oferee
  2. Offeree becomes aware of the offeror’s unambiguous conduct or statement indicating an unwillingness or inability to contract
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11
Q

Limitations on Revocation

A
  • Revocation is only effective upon receipt by offeree.
  • Offer cannot be revoked once it has been accepted.
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12
Q

Irrevocable Offers

A

Offer is irrevocable if:

  1. Option Contract
    1. Promise to keep an offer open; requires consideration
  2. UCC Firm Offer
    1. If a merchant offers to sell goods in a signed writing and gives assurances that offer will be held open, it is irrevocable for designated period or up to three months
    2. No consideration required
  3. Detrimental Relaince by Offeree
    1. Reliance must be reaosnable
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13
Q

Revocation

Unilateral Contracts

A

Start of performance makes the offer irrevocable for a reasonable time to complete performance.

  • Start of performance must go beyond mere preparation.
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14
Q

Rejection of Offeror Definition

A

Rejection by offeree terminates the offer and the offeree’s power of acceptance.

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15
Q

Methods of Rejection

Express Rejection

A

Express rejection by the offeree will terminate the offer.

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16
Q

Methods of Rejection

Counteroffer

A

Terminates the origional offer can becomes a new offer; bargaining is not a counteroffer.

  • If response to an offer is a question: bargaining
  • If response is a statement: counteroffer
17
Q

Methods of Rejection

Conditional Acceptance

A

Terminates the origional offer and becomes a new offer.

Indicated by terms such as “if, only if, but, provided, so long as, on condition that, etc.”

18
Q

Methods of Rejection

Acceptance with Additional Terms (common law/UCC)

A
  • Common Law: acceptance must be the mirrow image of the offer
  • UCC: if both parties are merchants, additional terms are a “seasonable expression of acceptance” if they do not materially change the offer and the offeror does not object.
19
Q

Acceptance Definition

A

A clear expression of assent to the terms of the offer

20
Q

Acceptance

Common Law Mirror Image

A

Acceptance must mirror the offer’s terms; it cannot omit or add new terms

21
Q

UCC Acceptance Issues

Acceptance with Additional Terms

A

Acceptance that proposes additional terms or different terms is vlaid, unless the acceptance expressly requires assent to the different or additional terms.

  • Merchants: additonal terms become part of the contract unless they materially change the offer or offeror objects within a reasonable time.
22
Q

UCC Acceptance Issues

Acceptance by prompt shipment

A

A merchant may accept an offer to buy goods either by:

  1. providing a promise to ship goods (usually by written confirmation); or
  2. Promptly shipping conforming goods.

Shipment of nonconforming goods may give rise to breach.

23
Q

Mailbox Definition

A

Offers and acceptance transmitted via mail or other similar methods become effective upon either dispatch or reciept.

24
Q

Mailbox Definition

Offers

A

Effective upon reciept

25
Q

Mailbox Definition

Acceptance

A

Effective upon dispatch

26
Q

Mailbox Definition

Limitations

A
  • If the offer stipulates acceptance is not effective until received, the offer controls.
  • Options Contracts: acceptance is effective upon receipt.
  • If oferee send both a rejection and acceptance, the first to arrive is controlling.
27
Q

Mailbox Definition

Revocation

A

Mailbox rule does not apply.

Revocation is effective only upon receipt.

28
Q

Acceptance by Performance Definition

A

An offeree may accept by partial performance (for bilaterial contracts) or complete performance (for unilateral contracts), unless acceptance is limited by terms of the offer.

29
Q

Acceptance by Performance

Unilateral Contracts

A

Complete performance is required.

  • Oferee not obligated to complete performance
  • Oferee’s failure to perfrom does not constitute a breach (bc no contract formed)
  • Offer may become irrevocable upon the start of performance until completion
30
Q

Acceptance by Performance

Unilateral Contracts

Notice

A

Oferee not required to give notice upon start of performance, but must notify offeror within a reasonable time upon completion.

31
Q

Acceptance by Performance

Bilateral Contracts

A

Partial performance gives rise to acceptance.

  • Offeree must make offeror aware of acceptance
32
Q

Offers requiring acceptance by promise

A

An offer requiring acceptance by promise may still be accepted by performance if:

  1. The offeree begins to perfrom, and
  2. The offeror learns that the offeree has started performance and acquiesces.
33
Q

Consideration Definition

A

A bargained-for-legal detriment incurred by each party to a contract by promise, forebearance, or performance.

34
Q

Bargained for legal detriment

A

The promise must induce the detriment and the detriment must induce the promise.

35
Q

Bargained for legal detriment

Legal Detriment

A

Obligation to do or refrain from doing something one would not otherwise be obligated to do or refrain from doing.

36
Q

Bargained for legal detriment

Pre-existing legal duty

A

A promise to perfrom a pre-existing legal duty is not valid consideration, unless there is a new written promise to fulfill a debt obligation.

37
Q

Substitutes for Consideration

Promissory Estoppel

A

Courts may enforce a promise if:

  1. Promisor reasonably expects reliance by promisee
  2. Promisee acts or refrains from acting such that his relaince is detrimental, and
  3. Injustice will occur without enforcement of the promise
38
Q

Substitutes for Consideration

UCC Modifications to K

A

Consideration not necessary for good-faith written modification to a contract governed by the UCC.

39
Q

Substitutes for Consideration

Past Debts

A

If a debt is barred by the SOL, a new written promise to fulfil the debt is enforceable without consideration, but only according to the new terms.

Contracts Critical Pass (10 decks)

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