Exam 2 Flashcards
What are the elements of a Contract?
Agreement Consideration Contractual Capacity Legality Form
What are the aspects of an Agreement?
Offer and Acceptance
What makes an agreement valid?
Parties must show mutual assent to terms of contract
Does an agreement need to be in writing?
Not always - No
How is a valid contract formed?
Once an agreement is reach and other elements of a contract are present
What are the requirements of an offer?
1- Offeror must have serious intention to be bound
2- Definiteness of terms, terms are reasonably certain
3- Communication to Offeree
What makes a legally binding contract?
Offeree’s acceptance creates a legally binding contract
What is Objective Theory of Contracts?
Contract is judged by what a “reasonable person” in the Offeree’s position would conclude about the offer
When is an Offer not valid?
Offers made in anger, jest, or undue excitement are usually not offers
Expressions of opinion are not offers
Statements of future intentions
Preliminary negotiations, and agreements to agree, are not offers
Advertisements, catalogues, price lists, and circulars are not offers
What is an example of an Expressions of Opinions?
The hand would probably heal in a few days
What is an example of a Statements of Future Intentions?
I plan to sell my vacation home for $100,000
What is an Invitation to submit a bid?
A preliminary negotiations, agreements to agree
When will courts review an offer to see if a contract exists?
IF agreement on essential terms and no disputed issues remain to be resolved
What are treated as invitations to negotiate and not contract offers?
Advertisements, catalogues, prices lists, circulars
In what such instance can the Courts find an advertisement a valid offer? Example?
When it contains definite terms that invite acceptance
Example: Ad offering reward for return of a lost pet (unilateral contract)
Are live and online auctions considered an offer?
No, but an invitation to submit offer through auctioneer (live) or to negotiate (online)
When is an offer accepted in a live and online auctions?
When the auctioneer (offeree) strikes the hammer
What is an agreement to agree (preliminary agreement)?
Agreement to agree to the material terms of a contract at a future date
Are Preliminary Agreements binding?
No - not a binding contract
What is the modern view on preliminary agreements?
Preliminary contracts may be enforceable if parties have agreed on
1- All essential terms
2- No disputed issues
3- Intended to be bound
What are the terms of an offer to make it a definite contract?
Must have terms that are reasonably definite:
1- Identification of the parties
2- Object or subject matter of the contract
3- Consideration to be paid
4- Time of payment, Delivery, or Performance
What are the two types of terms in an offer?
Expressed or Implied
What can the Courts do when two parties clearly intended to form a contract?
A court can supply missing terms
What are some ways an Offerer can communicate to the Offeree when it comes to an offer?
Communicate directly by the offerer
Communicate by the offeror to an agent of the offeree
Prior to acceptance, when can an offer be terminated?
Action of the Parties
or
Operation of Law
What is a revocation?
An offer, withdrawn by the offeror, at anytime before offeree accepts the offer
How can a revocation happen?
By express repudiation
By performance of an act inconsistent with the existence of the offer
When does a revocation become effective?
Effective when the Offeree or Offeree’s agent receives it.
