Contract Formation

Question 1

Offer

Answer 1

Objective manifestation of present intent to enter into a promise, undertaking, or commitment; must have definite and certain terms; and must be communicated to an identifiable offeree

Question 2

Common Law Requirements for an Offer

Answer 2

Quantity, time, identity of subject matter, parties

Question 3

UCC Requirements for an Offer

Answer 3

Quantity, other reasonable terms may be supplied by gap-fillers

Question 4

Offer Terminated by Revocation

Answer 4

Words or conduct terminating the offer; effective when received

Question 5

An offer is revocable EXCEPT

Answer 5

When there is an option contract supported by consideration, a UCC merchant’s firm offer, detrimental reliance, or a unilateral contract with partial performance

Question 6

Merchant’s Firm Offer (UCC)

Answer 6

Under the UCC an offer to buy or sell goods is irrevocable if: (1) the offer is a merchant; (2) there are assurances that the offer is to remain open; and (3) the assurance is contained in an authenticated writing (i.e., signature, initials, or other inscription) from the offeror

Question 7

Offer Terminated by Lapse of Time

Answer 7

If a reasonable amount of time passes, the offer will be destroyed

Question 8

Offer Terminated by Rejection

Answer 8

If an offeree rejects the offer, the offer will be terminated (unless option contract); effective when received

Question 9

Offer Terminated by Operation of Law

Answer 9

Death or insanity (unless option contract), destruction of subject matter, or supervening illegality

Question 10

Counteroffer

Answer 10

If the offeree makes a counteroffer the original offer is destroyed (counteroffers is different from a mere-inquiry or indecision)

Question 11

Acceptance

Answer 11

An unequivocal agreement to the terms of acceptance that is communicated to an offeror by an offeree with the power of acceptance

Question 12

Common Law Rules for Acceptance

Answer 12

Follows the mirror image rule; acceptance must mirror the offer

Question 13

UCC Rules for Acceptance

Answer 13

Any seasonable manifestation of assent or shipment of conforming or non-conforming goods

Question 14

UCC Battle of the Forms (2-207)

Answer 14

Acceptance adding new terms is valid; between merchants additional terms will become a part of the contract unless they materially alter the contract, offeror objects, or the offer is limited to its terms; different terms use the knock-out rule and reasonable gap fillers or treated as additional terms

Question 15

Method of Acceptance

Answer 15

Any reasonable manner unless manner is stipulated by the offer; if a bilateral contract, reasonable by promise or performance; if a unilateral contract must be complete performance

Question 16

Mailbox Rule

Answer 16

Acceptance is valid upon dispatch (does not apply if the offeree sends something else first, such as a rejection or counteroffer)

Question 17

Limitations to the Mailbox Rule

Answer 17

The mailbox rule does not apply if the contract stipulates another manner of acceptance, if it is an option contract, if the offeree sends something else first (i.e., rejection or counteroffer), or where the offeree seeds acceptance then rejection

Question 18

Consideration

Answer 18

Bargained for exchange for legal detriment

Question 19

Past Consideration

Answer 19

Past consideration is not adequate for consideration unless there is a new promise in writing or past performance

Question 20

Settlement of a Legal Claim

Answer 20

Promising not to sue someone can count as consideration as long as there is: (1) an honest belief in the validity of the claim; and (2) a reasonable basis for that belief

Question 21

Preexisting Duty Rule

Answer 21

A promise to do something that you are legally obligated to do is not consideration

Question 22

Promissory Estoppel

Answer 22

(1) a promise is made that would reasonably be expected to induce reliance; (2) the promisee does take detrimental action in reliance on that promise; and (3) injustice can only be avoided by enforcement of the promise

Question 23

Quasi Contract

Answer 23

(1) did the plaintiff confer a measurable benefit to the defendant? (2) did the plaintiff reasonably expect to get paid? (3) would it be unfair to let that defendant keep the benefit without paying?

Question 24

Contract Modification Under Common Law

Answer 24

Contract modification under common law requires consideration, unless the modification is fair and equitable in view of the circumstances not considered by the parties when contract was made

Question 25

Contract Modification Under the UCC

Answer 25

Contract modification under the UCC only requires good faith, no need for additional consideration