Contracts Flashcards
Offer
An expression of willingness to enter into a contract, made in a way that the other party could reasonably believe that he could conclude the bargain by accepting. Must show the offeror’s intent to enter the contract and must have definite terms.
Merchant’s firm offer
If a merchant offers to sell goods in signed writing and the writing gives assurances that it will be held open, the offer is not revocable for lack of consideration during the time stated
Merchant’s firm offer - form supplied by offeree
If the term of an offer assuring that the offer will be held open is on a form supplied by the offeree, that term must be separately signed by the offeror to be enforced as a firm offer
When does detrimental reliance prevent revocation?
When an offeror could reasonably expect the offeree would rely to her detriment on an offer, and the offeree does so rely, the offer will be held irrevocable as an option contract
Acceptance
An assent to the terms of the offer. Generally, an acceptance must be communicated to the offeror and must be unequivocal.
Merchant’s confirmatory memo
In contracts between merchants, if one party, within a reasonable time after an oral agreement is made, sends the other party a written confirmation of the agreement that is sufficient under the Statute of Frauds to bind the sender, it will also bind the recipient if: (1) he has reason to know of the confirmation’s contents and (2) he does not object to it in writing within 10 days of receipt.
- Contract will not be enforceable beyond the quantity goods shown in the writing
UCC writing requirement
For contracts of $500 or more, there must be a writing signed by the party to be charged with performance. The signed writing only needs to indicate that a contract has been made and include the quantity.
Consequential damages
Special damages that reflect losses over and above expectation damages. May be recovered if, at the time the contract was made, a reasonable person would foreseen the damages as a probable result of the breach.
Exception to the bargained for exchange requirement (material benefit theory)
General rule is that past consideration is insufficient. But some courts have created an exception and will enforce a promise if:
(1) is is based on a material benefit that was previously conferred by the promisee to the promiser, and
(2) the promisee did not intend to confer the benefit as a gift (subjective)
Second RST also states that the promise is unenforceable to the extent it is disproportionate to the gift.
Promissory estoppel
If necessary to avoid injustice, a court will enforce a promise without consideration if:
- The promisor should have expected the promisee to change his position in reliance on the promise,
- The promisee did change his position, and
- The change in position was to the promisee’s detriment
When is a rejection sent by mail effective?
Upon receipt. Does not matter if receipt opens the letter.
NOTE: If rejection is mailed before an acceptance, the mailbox rule does not apply. Whichever is received first controls.
Demand for adequate assurances
If a party has reasonable grounds for insecurity with respect to the other party’s performance, he may demand assurances that the performance will be forthcoming a the proper time. Demand must be made in writing. Until the other party gives assurances within reasonable time (30 days), the demanding party may suspend their performance.
Failure to give adequate assurances
Results in a repudiation. Nonrepudiating party may:
- Treat the repudiation as a total breach and sue immediately,
- Suspend his own performance and wait to sue until the performance date,
- Treat the repudiation as an offer to rescind and treat the contract as discharged, OR
- Ignore the repudiation and urge performance
NOTE: Repudiating party may at any time before performance is due withdraw the repudiation unless the other party has cancelled or otherwise indicated the repudiation is final
