Contracts and Sales

Question 1

formation of contracts

Answer 1

binding K requires: (i) manifestation of mutual assent; (ii) consideration; and (iii) lack of valid defenses

Question 2

offer

Answer 2

objective manifestation of a willingness by offeror to enter into agreement that creates power of acceptance in offeree

Question 3

intent (offer)

Answer 3

a statement is only an offer if:
- person to whom it is communicated could reasonably interpret it as an offer
- expresses present intent of a person to be legally bound by a K

Question 4

knowledge (offer)

Answer 4

offeree must know of the offer in order to have the power to accept

Question 5

terms of offer

Answer 5

must be certain and definite or K fails for indefiniteness
- common law: essential terms (parties, subject matter, price, quantity) must be covered in K; if the parties intended to create a K, the court may supply missing terms
- UCC: only essential term is quantity; K formed if both parties intend to K and reasonably certain basis for giving remedy
– exception: requirements or output Ks (UCC implies “good faith”)
– UCC “fills the gap” if other terms are missing

Question 6

language (offer)

Answer 6

offer must contain words of promise, undertaking, or commitment, and be targeted to a number of people who could actually accept

Question 7

bilateral contract

Answer 7

if a return promise is requested

Question 8

unilateral contract

Answer 8

if an act is requested

Question 9

invitation to deal

Answer 9

advertisements are only an invitation to receive offers (but may qualify as an offer if sufficiently specific and limit who can accept or if associated with a stated reward)

Question 10

ways to terminate an offer

Answer 10

• lapse of time
• death/mental incapacity
• destruction/illegality
• revocation
• rejection

Question 11

lapse of time

Answer 11

specified termination date or reasonable period of time if none state

Question 12

death/mental incapacity (effect on offer)

Answer 12

offer terminates, even if offeree does not learn of offeror’s death until after the offeree has sent what he believes is an acceptance

exception: offers for option Ks do not terminate because consideration was paid to keep the offer open

Question 13

revocation

Answer 13

offer can be revoked at any time prior to acceptance (even if it states it will be open for specific amount of time)
- not effective until communicated
- revocation sent by mail not effective until received

Question 14

option contract

Answer 14

offeree must generally give consideration for option to be enforceable

Question 15

UCC firm offer rule

Answer 15

offer irrevocable (for reasonable time no more than three months) if offeror is a merchant (or any business person), and assurances (in authenticated writing) are made that offer will remain open

no consideration needed to keep offer open

Question 16

promissory estoppel

Answer 16

if offeree reasonably and detrimentally relies on offer it may become irrevocable

Question 17

partial performance

Answer 17

for all Ks, offeree must have knowledge of offer when performance begins

unilateral K: offeror cannot revoke once offeree has begun performance

bilateral K: commencement of performance operates as promise to render complete performance

Question 18

rejection by offeree

Answer 18

offeree clearly conveys to offeror that he no longer intends to accept the offer; rejection usually effective upon receipt

Question 19

counteroffer

Answer 19

acts as rejection of original offer and creates new offer

Question 20

acceptance

Answer 20

objective manifestation by the offeree to be bound by the terms of the offer

Question 21

acceptance of bilateral k

Answer 21

exchange of promises that render both enforceable

Question 22

acceptance of unilateral k

Answer 22

promise to do something by one party in return for an act of the other party

starting to perform is not enough, but it will make offer irrevocable for a reasonable period of time to complete performance

offeree must be aware of offer before acting

Question 23

means of acceptance

Answer 23

unless offeror specifies, offeree can accept in any reasonable manner/means

Question 24

silence (acceptance)

Answer 24

not acceptance unless offeree has reason to believe offer could be accepted by silence or previous dealings make it reasonable to believe that offeree must notify offeror if he does not intend to accept

Question 25

shipment of goods (acceptance)

Answer 25

buyer’s request that goods be shipped is inviting acceptance either by seller’s promise to ship or by prompt shipment of goods

Question 26

nonconforming goods shipped

Answer 26

both acceptance and a breach, unless seller seasonably notifies buyer that goods are an accommodation (counteroffer); buyer may then accept or reject the nonconforming goods