Contract Formation: Agreement Flashcards
The four main topics covered for K formation?
- Agreement
- consideration
- Defenses
- SoF
All Contracts Don’t Stink
Offer and acceptance are governed by the objective test, which means?
the outward appearance of words and actions are what matter, not secret intentions
What is an offer?
a manifestation of a willingness to enter into an agreement that creates a power of acceptance in the offeree
Key Q for an offer?
Does it display and objectively serious intent to be bound?
differentiate from an invitation to deal. Advertisements that are very specific and leave nothing open to negotiation, including how acceptance can occur can be an offer. Ultimately, a valid offer msut conveyr the power of accptance; they can simply say “i accept” and the deal is consummated.
Offer
How specific must the offer be under common law versus UCC?
Common law: All essential terms must be covered by the agreement. Typically the parties, subject, price, and quantity
UCC: All you need it to identify the **subject, the parties, and the quantity. ** The law is more willing to fill the gaps with reasonable terms and find a K.
Is this a valid offer: Sue offers to sell Bob “all wiper blades that I make this week.”
Yes, it’s an output contract
Output—seller promises to sell 100% to a specific buyer
Requirements—buyer promises to purchase 100% from a specific seller
How can an offer be terminated or revoked?
- By express communication to the offeree
- By taking an action that is absolutely inconsistent with a contuning ability to contract and the offeree learns of this action
- the offeree rejcts the offer
- the offeree makes a counter offer
- The offeror dies (does not terminate a K usually)
- A reasonable amount of time passes
Can be revoked at any time before acceptance
Irrevocable Offers and the Merchant’s Firm Offer
A ________ in the UCC universe can make a __________ ______________ to buy or sell goods (i.e., a binding, free option)
- Merchant
- firm offer
Requirements for a firm offer? (3)
- Must be written
- Must contain an explicit promise not to revoke the offer; and
- Must be signed by the offeror
How long does a firm offer last?
Either for as long as stated in the offer or for a resaonable time period not to exceed 90 days
Cars.com offers to sell you a car for $5,000, and it promises via a
signed writing not to revoke this offer for a week. Ten days later, you write back to accept the offer. Can you still accept?
Yes as long as the offer is not revoked and a reasonable time period has not expired
Other irrevocable offers?
- Option K (consideration to keep offer open)
- firm offer
- Offeree starts performing on unilateral K (requests acceptance by performance)
- Detrimental reliance: arises when an offeree reasonably and detrimentally relies on the offer in some forseeable manner (look for contracter/subcontractor scenario)
How does the unilateral K one work in the UCC universe?
Acceptance
Who is the master of the offer?
The offeror. The offeree must accept the offer according to the rules of the offeror
If nothing in the offers specifies the method of acceptance, the UCC permits acceptance by …
return promise or by performance (typically shipping the goods)
What happens when a seller tries to accept an offer by sending the wrong goods?
UCC generally treats this as acceptance w/ a breach.
Exception: If the seller seasonably notifies the buyer that the wrong goods are being shipped as an accommodation then no acceptance occurs, and you have a counteroffer.
Acceptance
The offer must be ____________ to the person trying to accept it
specifically directed
Acceptance
Even with an open-to-all offer, you must ________________ about that offer to accept it
Know
Acceptance
How do you accept?
communicate acceptance to the offeror
Acceptance
What is the Mailbox Rule? What does it not apply to?
an acceptance sent by mail is effective when the mail is sent.
It does not apply to the following:
1. if the offeree sends something first (e.g., rejection, counteroffer)
2. other types of communications (rejection, counter, revocations)
3. option contracts; or
4. it is unclear whether it applies to other media
Depends on receipt; what is opened first
Acceptance
What is the limit on the mailbox rule?
I send acceptance in mail. I change mind and call to reject. There is a K unless the offeror detrimentally relies on the rejection.
Acceptance
What are the ways in which an offer can be accepted without communication?
- Unilateral reward offers or contests (find dog)
- Unilateral offer in which the parties are geographically close (such that the offeror will see performance)
- A past history of silence serving as acceptance (such that the offeree should reasonably notify the offeror if she does not accept)
- the offer says that acceptance must come by silence, and the offeree intends to accept the offer by silence
Acceptance
what is an implied-in-fact contract?
Acceptance by gestures or action. E.g., go get a haircut
What is the common law rule for acceptance?
The mirror image rule. The terms of acceptance must amtach the terms of the offer exactly or it is not acceptance but a counteroffer.
What UCC section replaces the common law mirror image rule?
UCC 2-207
What soe UCC Section 2-207(1) say?
A definite and seasonable (timely) expression of acceptance [or a written confirmation] which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional upon assent to the addition or different terms.”
It does not matter whether the parties are merchants for this section
Assume inconsistent terms are knocked out
Under 2-207 (2), when will the new terms in the acceptance control?
- Both parties are merchants
- the new terms does not materially alter the deal
- The initial offer did not expressly limit acceptance to its terms; and
- The offeror does not object within a reasonable time to the new term
“materially alter” = Terms materially alter the agreement if there is hardship through significant shifting of the burden or surprise.
Applies to additional terms. Assume inconsistent terms are knocked out
Under 2-207(1), what happens when there is an oral agreements and then a confirming memo with additional terms?
It can operate as acceptance–“a written confirmation which is sent within a reasonable time operates as an acceptance even though it state terms addition l to or different from”–but the new terms will only come in if 2-207(2) is satisfied.
Under 2-207(3), what happens when there is no contract but still act as though there is an agreement (issue with 2-207(1)) (e.g., exhange goods for money)?
Only the terms that both writings agree upon become part of the K, all other terms supplied by the UCC default rules.
E.g., materially inconsistent terms
Auction contracts
How should each individual bid be understood?
as an offer
Auction contracts
When does acceptance occur?
when the hammer falls
Auction contracts
what happens if somone bids exactly when the hammer falls?
Under the UCC, an auctioneer has discretion to either:
* Re-open the bidding; or
* declare the auction final
Auction contracts
What is a “no-reserve auction?”
the seller cannot withdraw an item after a bid has been received
Auction contracts
Can bidders retract offers in a no reserve auction?
Yes, as long as the auction is not finished. This DOES NOT revive the prior bid.
