Contracts-Form and Def Flashcards
What is exchange sought in unilateral K?
Promise for complete performance (e.g. if you do X, I will do X)
Once promise is given, when is offeror bound in unilateral K?
Offeror bound only when 1) performance completed + 2) Notice to offeror if offeree has reason to know offeror will not learn.
Offeree never bound to finish.
When can offeror no longer offer in unilateral K?
Once offeree begins performing, offeror may not revoke (option K is created). Mere preparation does not trigger irrevocability.
Definite certain terms required in offer
Offeree, definite subject matter
LSK: Land and price
Service K: Nature of work
UCC: Quantity
Ct may supply reasonable missing terms, except price in LSK
4 types of irrevocable offers
1) UCC firm offer - offer by merchant in signed writing to keep offer open during time stated (or if not started up to 3 months). No consideration required;
2) Option K - promise to keep offer open for a time for consideration
3) Detrimental reliance
4) Part performance
What is the mirror image rule in common law?
In CL, acceptance must mirror the terms of the offer
Acceptance is effective when dispatched except…
When exercising option K, effective when received.
Can a K be formed between merchants even though acceptance does not match offer?
Yes unless
1) Acceptance is made conditional on offeror’s assent to additional or different terms > Acts as rejection and counteroffer
2) Original offer expressly limits acceptance to offer terms > Terms dropped but K formed
What if new terms materially alter original terms of offer re: K between merchants?
Terms dropped but K formed.
Examples: arbitration clause, disclaimer, materially shorten deadline, change usage of trade or past method of dealing
What if new terms are different re: K between merchants?
Knockout rule (maj): conflicting terms are omitted from K; gaps left are filled by UCC default terms
When can surrendering an invalid claim constitute consideration?
1) if the claim can be pursued in GF
2) or surrendering party (regardless of other party) believes the claim is well founded
What is illusory promise? Is there consideration?
No.
Only one party bound to perform
“all the widgets I want” (not I require)
“all you want to sell me” (not you produce)
What is gratuitous promise? Is there consideration
No.
A promise to make a gift and no return consideration
Cases when promise in exchange for something already performed is still consideration
i. Statute of limitations: written promise to pay a debt barred by limitation
ii. Bankruptcy: written promise to pay a debt discharged by bankruptcy
iii. Creditor offer to discharge existing debt for less than amount owed due to prior date
Substitute to consideration: promissory estoppel
1) Specific promise of future gratuitous action
2) Promisee’s action was reasonably foreseeable to promisor
3) Reliance induced by the promise and not other factors
4) Injustice w/o enforcement (willfulness of breach, relative pt positions, detriment, alternatives)
Substitute to consideration: quasi k
Where II has conferred a benefit upon D under circumstances where no enforceable K results, II may be entitled to recover the value of the benefit conferred.
Substitute to consideration: implied best efforts
Where a party is the exclusive distributor, courts will imply a promise to use best efforts to sell a product
Defense to formation: Mutual mistake elements
Mutual mistake as to existing facts: K is voidable by adversely affected pt only if
(1) mistake concerns a basic assumption of K
(2) mistake has a material effect on agreement, and
(3) affected pt did not assume the risk of the mistake
Defense: Unilateral mistake
K voidable only if non-mistaken pt knew or had reason to know of mistake by other pt
Defense: Misunderstanding
Ambiguity concerning terms. If only 1 party unaware, K enforced based on unaware.
Defense: Incapacity
Infancy (under 18) or mental incompetence at the time of K. K only voidable by that party
Exception: Can recover reasonable value for necessaries (food, clothing, shelter)
Fraudulent misrepresentation
Inducing another pt to enter into K by asserting (or conduct such that other pt infers) untrue information
K voidable if innocent pt justifiably relied on misrepresentation
Nonfraudulent misrepresentation
K voidable if innocent pt justifiably relied on material misrepresentation
