Contracts and Sales Flashcards
Applicable Law (UCC or Common Law)
The common law of contracts applies to all contracts except sales of goods, which UCC applies.
OG: The common law of contracts applies to all contracts other than the sale of goods, to which the UCC applies.
Sale under UCC
A sale is a contract in which title to goods passes from the seller to the buyer for a price.
Goods under UCC
UCC defines goods as all things movable at the time they are identified as goods to be sold under the contract.
Merchants under UCC
One who regularly deals in goods of the kind sold or, by his occupation, holds himself out as having knowledge or skill peculiar to the practices or goods involved. Merchant must be acting in his mercantile capacity, i.e., he must be acting in his business than personal capacity.
Unliateral Contracts
contracts formed from acceptance only by full performance
rare: only public rewards or accept by sending goods
Bilateral Contract
unless indicated otherwise by language or circumtances, all offers are indifferent offers and thus be accepted by promising or start of performance
every written agreement and most oral agreements
Valid Contracts
A valid contract requires an offer, acceptance, and consideration
Offer
A promise, undertaking, or commitment to enter into a contract (i.e, intent to enter into contract) with the essential terms certain and definite which are communicated to the offeree.
An advertisement is an invitation to make an offer, not an offer.
Essential terms
Common law
Essential terms requires the offeree’s identity and the subject matter, the price, the quantity, the time of performance or payment, and the nature of the work to be performed.
Vague terms manifested an intent that cannot be determined
Essential terms
UCC
Essential terms requires the offeree’s identity and the subject matter, the price, the quantity, the time of performance or payment, and the nature of the work to be performed. Reasonable price and reasonable time will be supplied if none are stated. In a sale of goods contract, the quantity must be certain or capable of being made certain.
Continuing Offer
Some offers are offers for a series of contracts and are revocable at will unless made irrevocable by statute or by payment of consideration.
Revocation
Revocation occurs when offeror retracts an offer, terminating the offeree’s power of acceptance if it is communicated to her before she accepts.
easier to understand but longer:
Revocation occurs when the offeror retracts an offer and communicates the revocation to offeree before offeree can accepts. Revocation would terminate the offeree’s power of acceptance.
Communicate Revocation
Offeree received communication of the offeror’s revocation if either: (1) offeree received it directly; or (2) the offeree received it indirectly if he received correct information from a reliable source of the offeror’s acts that would indicate to a reasonable person that the offeror no longer wishes to make the offer.
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Offeree received it directly;
Offeree received it indirectly if he:
1. receives correct information
2. from a reliable source
3. of acts of the offeror that would indicate to a reasonable person that the offeror no longer wishes to make the offer
UCC - reasonable time not to exceed 3 months
after 3 months, revocable at will until acceptance –> note offeree may argue for detrimental reliance
Communication of Revocation - Timing
UCC - approach for merchant’s firm offer
not rule - see merchant’s firm offer
UCC merchant firm offer: if no time stated or exceeds three months, it will be held open for a reasonable time not to exceed 3 months.
But after 3 months, revocable at will until acceptance –> note offeree may argue for detrimental reliance
when merchant give firm offer to offeree
Revocation at will
Offer not supported by consideration can be revoked at will.
Limiting Power to Terminate/Revoke Offer
The power to terminate an offer is limited where:
- Option Contract - The offeree gives consideration for an offeror’s promise not to revoke;
- Merchant’s firm offer - Under the UCC, a merchant executes an offer in writing that, by its terms, gives assurance it will be held open. (if no time is stated or exceed three months, it will be held open for a reasonable time not to exceed 3 months); or
- Detrimental reliance - Promisee exercises detrimental reliance.
e.g., Contract 2
Revocation Not Permitted
same as limiting termination
not a rule?
Revocation will not be permitted where:
1. consideration was given by the offeree
2. merchant’s firm offer up to 3 months
3. promisee exercises detrimental reliance
Acceptance under Common Law
At common law, an acceptance is an unqualified assent to the terms of an offer. The acceptance must be communicated to the offeror. An offer may be accepted by any medium reasonable under the circumstances, [except that if an offer limits the form of acceptance, the acceptance must comply with the offer’s limitation.]
Mirror Image
Mailbox Rule
subrule for acceptance
Acceptance by mail creates a contract at the moment of dispatch.
Exception:
1. when the offer stipulates that acceptance is not effective until received or otherwise controls the form of acceptance, or
2. an option contract is involved, where acceptance is effective only on receipt
Conditional Acceptance
Not an acceptance but a rejection
Counteroffer
Under common law, Counteroffer operates both as a rejection of the original offer and a new offer.
Acceptance under UCC
Under UCC, an accceptance that varies the terms is still a valid acceptance.
Battle of the forms - UCC 2-207
UCC 2-207 Battle of the forms
Approach - Not analysis
- Determine whether the proposals are additonal or different terms
- Different terms
a. majority: knock-out rule
b. minority: treat them like additional terms if between merchants - Additional terms (if between merchants)
This is analysis approach
Battle of the Forms (UCC 2-207)
The offeree’s proposal of additional or different terms in a definite and timely acceptance does not constitute a rejection and counteroffer, but as acceptance, unless
1. the offer expressly limits acceptance to the terms of the offer,
2. materially alter the offer, or
3. notification of objection to the additional or different terms is given within a reasonable time after notice is received.