Contracts-Examples-Becker-Regs Flashcards
Express Contract
A contract formed by language, (oral or written) is an express contract.-If Ann promises to give Barb $10 if Barb will wash Ann’s car, the contract is express.
Implied-in-Fact Contract
A contract formed by(conduct)s an implied-in-fact contract.-Alex goes to Doctor and tells Doctor that he is sick. Doctor examines Alex and gives him an antibiotic. Alex and Doctor have entered into a contract for Doctor’s services even though no oral or written promises were exchanged. Their conduct implies their intent to enter into a contract.
Quasi-Contract
Joanne gives Keith $10,000 as a down payment to purchase Keith’s house. The contract is oral and as will be discussed later, is unenforceable. Keith decides to back out. Joanne can recover the down payment in quasi-contract.
Advertisements-Genera/not offers
Steve places an ad in a local paper announcing the grand opening of his store and quoting the price of certain items. Such an ad is not an offer but is only an invitation seeking offers.
Terms Must be Definite and Certain
Alex asks Bob to repair a broken window at Alex’s store within three days, at a price to be agreed upon later. The offer here will fail for indefiniteness of the price term.
Communication to Offeree - No knowledge, no acceptance
To have the power to accept, the offeree must have knowledge of the offer. Therefore, the proposal must be communicated to him-Alex returned to Bob his lost briefcase unaware that Bob had placed an advertisement offering a $20 reward for its return. Since the offer had not been communicated to Alex, there could not be mutual assent. Hence, there is no contract and Bob is not obligated to pay the reward.
Revocation by Offeror
the offeror can revoke an offer any time before acceptance by communicating the revocation to the offeree. Except as discussed below, this is true even where the offeror promises he will keep the offer open. -Maurice sent Schmit an e-mail offering to sell him a one-acre tract of commercial property for $8,000. Maurice stated that Schmit had three days to consider the offer and in the meantime the offer would be irrevocable. The next day, Maurice received a better offer from another party, and he telephoned Schmit, informing him that he was revoking the offer. This was an effective revocation.
Revocation by Offeror-oral-written-conduct-sell to someone else
The revocation can be direct (e.g., a phone call to the offeree withdrawing the offer) or indirect, where the offeree receives correct information the offeror no longer wants to make the offer.-Alex offers to sell his car to Bob for $500. Bob tells Alex that he wants to think about it. The next day, Carol, a friend of Bob, drives over to Bob’s house to show Bob the car she just purchased from Alex. The offer to Bob is revoked.
Irrevocable Offers 1
(1) Ann sends Barb an offer to sell a parcel of land for $60,000. The offer states that it will not be withdrawn for 60 days. Ten days later, Ann calls Barb and tells Barb that she is revoking the offer. The next day, Barb sends Ann a letter of acceptance. There is no contract because the offer was revocable (no consideration was given to keep the offer open). It was revoked before Barb accepted.
Irrevocable Offers 2
The same facts as above, except the offer stated that Ann would keep the offer open if Barb promised not to sue Ann for 60 days on an unrelated dispute, and
Barb agrees not to sue. There is a contract here because (as will be explained later) forbearance to sue is valid consideration. Thus, an option was created, so Ann’s offer could not be revoked for 60 days; Ann’s attempted revocation was ineffective and Barb’s acceptance was effective.
Counteroffer-1
(1) Alex offers to sell Barb his car for $450. Barb says, “No.” The offer is terminated. If Barb later has a change of heart and tells Alex “I accept ,” Barb has at most made a new offer. No contract is created.
Counteroffer-2
Alex offers to sell Barb his car for $450. Barb says “No, but I’ll give you $425.” Barb has rejected and made a new offer through a counteroffer.
Counteroffer-3
Alex offers to sell Barb his car for $450. Barb(asks)Alex if he’d consider taking $425. Alex says no. Barb accepts the offer for $450. There is a contract here because Barb’s initial question was not a counteroffer, but rather was a mere inquiry.
Counter offer-Effective When Received
On January 3, Sam sent Ben a signed letter offering to sell his warehouse for $95,000. On January 5, Ben wrote Sam a letter saying that he would not pay $95,000 because that price was too high. On January 6, Ben was advised that similar property had recently been sold for $99,000. Ben immediately faxed Sam an acceptance of Sam’s January 3 offer. Ben’s letter arrived the next day. There is a contract because a rejection is not effective until received. The rejection here arrived after the offer was accepted by fax.
Termination by Operation of Law
Dee offered to sell Sue a parcel of land for $300,000. If either Dee or Sue dies before the offer is accepted, the offer will terminate by operation of law. However, if Sue paid consideration for the offer (thus creating an option contract), the offer will remain open for the period of the option (i.e., Sue or Sue’s estate could accept during the option period and a contract would be formed with Dee or Dee’s estate)
Termination by Illegality
Lucky Lou offers Vegas Vernon a share in his casino business. Prior to acceptance, a law is passed banning casinos. The offer is automatically terminated.
Generally)Effective upon Dispatch-the(Mai/box Rule
On February 1, Ann sends Bob a letter offering to employ Bob in Ann’s auto dealership. On February 5, Bob sends Ann a letter accepting the offer. On February 6, Ann has a change of heart and calls Bob to revoke the offer. On February 7, Ann receives Bob’s acceptance. A contract was formed here on February 5, when the acceptance was sent. Ann’s attempted revocation is ineffective because it came too late {after the acceptance was sent). The date Ann received the acceptance is irrelevant. Indeed, under the mailbox rule, a contract is formed on dispatch even if the acceptance letter is never received by the offeror.
Offeror May Opt Out
On November 1, Dee sent Steve a fax offering to sell Steve a vase. The offer provided that
an acceptance must be received by 5:00 on November 2. At 3:00 on November 1, Steve sent Dee an acceptance by overnight mail, but the acceptance did not reach Dee until November 3. There is no enforceable contract because the acceptance came too late. The offer provided that the acceptance had to be received by 5:00 on November 2, so the mailbox rule does not apply. .
