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Contracts - Bar Prep > Contracts Offer & Acceptance > Flashcards

Contracts Offer & Acceptance Flashcards

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1
Q

What constitutes an offer?

A

A party’s communication must be:

  1. An outward manifestation AND
    • oral, written or or via conduct
    • inward thoughts or subjective thoughts are irrelevant
  2. That signals accapetance will conclude the deal
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2
Q

What communications are not offers?

A

Preliminary Negotiations

Invitations for an Offers

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3
Q

When does a sitiuation of multiple offerees occur?

A
  • CAR
    • Commercial Advertisements
    • Auctioons
    • Reward Offers
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4
Q

How are commercial advertisments treated?

A

Under the American Advertising Rule, ads, catalogs & price lists are treated as invitations to offers

EXCEPTION - Language that identifies who gets the limited supply of goods even if there is an excess of demand

  • i.e. - “first come, first served”
  • “first 10 customers only”
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5
Q

How are auctions treated?

A

They are generally treated as invitation for an offer:

  • the auctioneer is inviting offers
  • the resoonding bids are the offers

EXCEPTION - When the auction is w/o reserve then the auctioneer is making an offer to sell to the highest bidder

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6
Q

How are rewards treated?

A

Generally treated as offers b/c they’re communications that promise a bounty in exchange for the performance of a specialized task

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7
Q

What are the different types of reward offers?

A
  1. Self-limiting rewards
    • offers that indicate the task to be performed can only be performed once
    • i.e. - “Will pay $1K for find my dog.”
  2. Open-field rewards
    • offers that indicate the tasks to be performed can potentially be performed by multiple parties
    • EXCEPTION - Languagein the offer that specifies a limitation on how many can accept the offer.
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8
Q

What is the legal effect of an offer?

A

It creates the power of acceptance in the offeree

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9
Q

How can an offer be terminated?

A
  1. Lapse of Time
  2. Death or Incapacity of either party
  3. Revocation by the offeror
  4. Rejection by the Offeree
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10
Q

How is an offer terminated by lapse of time?

A

An offer terminates after:

  • the time indicated in the offer
  • if no indication then at a reasonable time
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11
Q

What is the reasonable time determination for a lapsed offer?

A

Factors to consider:

  • subject matter & market conditions
  • degree of urgency & means of transmission
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12
Q

What is the Face-to-Face Conversation Rule?

A

An offer generally lapses at the end of the conversation unless specified otherwise

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13
Q

How is an offer terminated by the death or incapacity of either party?

A

Death:

  • Dead men cannot make contracts
  • it terminates the power of acceptance

Incapacity:

  • if either becomes mentally incompetent & power of acceptance is terminated
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14
Q

What is the American Rule to revoke an offer?

A

An offeror may revoke an offer at any time and for any reason so long as two requirements are met:

  1. Must be revoked before the offer is accepted AND
  2. The revocation must be effectively communicated to the offeree
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15
Q

How is a revocation of an offer effectively communicated?

A

Directly

  • When the offeror directly communicate his intent to the offeree to withdraw the offer

Indirectly

  1. Offeror takes some action inconsistent w/the intent to go through with the offer AND
  2. Offereelearns of such action from a reliable source
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16
Q

How do you revoke an offer made to multiple offerees?

A

Apply the functional equivalent rule in which the offeror revokes by communicating the revocation in a functionally equivalent manner in which the offer was made

This terminates the power of acceptance even if the offeree is unaware of the revocation

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17
Q

In what way can you prevent revocation of an offer?

A
  1. Under the common law option contract
  2. Under the UCC firm offer
18
Q

What is an option contract?

A
19
Q

What elements are neede to prevent revocation of an offer under the common law option contract?

A
  1. An underlying offer
  2. A subsidary promise to keep the offer open
    • “sell by” date may not a subsidary promise to keep offer open but just a sell by date
  3. Some valid mechanism for enforcing the subsidary promise
    • i.e. - consideration
20
Q

What are some issues with option contracts?

A
  • Signed writing with false recital of consideration
    • Majority rule is that it is rebuttal
    • Minority rule will enforce the option contract even if recital for (consideration) the option is false
  • Promissory Estoppel
    • courts will sometimes enforce a subsidary promise to keep the offer open if there is detrimental reliance
21
Q

What is the special rule for construction contracts?

A
22
Q

What is a firm offer?

A
23
Q

In what way do you prevent revocation of an offer under the UCC firm offer?

A

An irrevocable offer made by a merchant to buy/sell goods that meets the following conditions:

  1. The offer to buy/sell is made by a merchant
  2. the offer is made in writing signed by the merchant AND
  3. The offer expressly by its terms state that it will be held open
24
Q

How long does a firm offer stay open?

A

For the time stated in the offer or for a reasonable time

The UCC shelf life is no more than 3 months

25
Q

What is the 3 Month Ruel for Firm Offers?

A

If an offer is more than 3 months, it is only irrevocable for those first 3 months

If longer than 3 months, need consideration to be binding as an option contract under common law

26
Q

How does an offeree reject an offer?

A
  1. Outright rejection
  2. Counteroffer
    • this in essences rejects the current offer and the offeree now becomes the offeror making a new offer
    • NOTE - mere inquires do not constitute a counteroffer and does not terminate the offer
  3. Rejection via non-conforming acceptance
27
Q

How can an offer be revived?

A

After Rejection or Lapse, an offer c-an be revived by:

  1. offeror can via language or conduct restating the offer OR
  2. giving more time to decide
28
Q

What is a unilateral contract?

A

A promise in exchange for performance

29
Q

When is an offeror bound in a unilateral contract?

A

The offeror is bound once the offeree’s performance is completed.

(the offeree is never bound)

30
Q

What is a bilateral contract?

A

It is a promise for in exchange for a promise

(Once a promise is exchanged, both are bound)

31
Q

What are examples of unilateral contracts?

A
  • reward offers
  • REBA - real estate brokage agreements
32
Q

How to revoke an offer under a unilateral contract?

A

Common law - revoke up until the moment the before the offereee actually completes performance

Modern rule - once the offeree begins performance, an option contract is created thus cannot revoke, give time to finish

33
Q

What is the difference between beginning performance & mere preparation?

A
34
Q

How is an offer accepted under the common law?

A

Effective acceptance requires:

  1. Mirror Image Rule AND
  2. Acceptance must be communicated to the offeror
35
Q

How is acceptance communicated to the offeror?

A

by the means stipulated or

by any reasonable means of transmission if not stipulated

36
Q

What means of transmission are reasonable for acceptance?

A

Unless otherwise indicated:

  1. the same means udes by the offeror
  2. means customarily used in similar transactions
  3. means that is equivalent to the speed & reliability to the means used by the offeror
37
Q

What are the exceptions that acceptance be communicated?

A
  1. Silence
  2. Unilateral contract
  3. Mailbox Rule
38
Q

What is the rule for acceptance by silence?

A

Default - silene does not constitute acceptance

EXCEPT:

  1. When offeree takes the benefit of the offeror’s services with
    • resaonable opportunity to reject
    • reason to know compensation was expected
  2. When the offeror have given the offeree reason to believe that acceptance may be communicated by silence
    • the offeree’s silence will constitute acceptance if they intend as such
  3. When b/c of previous dealings/circumstances it is reasonable to believe that the offeree should notify the offeror if he does not intend to accept
39
Q

What is the Mailbox Rule for acceptance?

A

Common Law - acceptance is made upon dispatch so long as properly posted

  • applies only to acceptance
  • offeror cannot revoke once acceptance has been dispatched
  • dispatch creates binding contract
  • rule applies unless the offer states otherwise
40
Q

What happens when parties simultaneously dispatch offers?

A

Meeting of the minds does not count. Offers have to be received in order to create power of acceptance

41
Q

Does the Milbox Rule apply to option contracts?

A

Majority rule - No does not apply & acceptance is only effective upon receipt

42
Q
A

Contracts - Bar Prep (10 decks)

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