Formation

Question 1

Offer

Answer 1

Outward manifestation (oral, written or via conduct) that signals that acceptance will conclude the deal.

Question 2

Commercial Advertisements

Answer 2

American rule: Ads, catalogs, price lists are invitations for offers, since responses may exceed available supply of goods or services

Exception: Language that identifies who gets limited supply of goods even if there is an excess demand (First come, first served, or first 10 customers)

Question 3

Reward offers

Answer 3

Offers because they are communications that promise cash in exchange for performance of specific tasks

Question 4

Termination

Answer 4

Offer creates the power of acceptance in the offeree. 4 ways to terminate this power:

1. Lapse: after time state in offer or after a reasonable time. Reasonable time determined by 1) subject matter/market conditions, and 2) degree of urgency and means of transmission
2. Death or incapacity- of either party after offer is made terminates the power of acceptance
3. Revocation of offer by Offeror- offeror may revoke an offer at any time, for any reason. However, it must be revoked before acceptance and revocation must be communicated to the offeree either directly or indirectly. Indirect revocation requires action that is inconsistent with intent to go through with the offer and offeree learning of such action from a reliable source.
4. Termination by Offeree’s Rejection-
5. Outright rejection
6. Rejection via counteroffer unless a mere inquiry
7. Rejection via non-conforming acceptance also known as the mirror image rule which states that acceptance must mirror the terms, and any variation is a counteroffer.

Question 5

Option Contract

Answer 5

Offer + Separate promise to keep it open + Valid mechanism for enforcing subsidiary promise.

Question 6

Reliance/Construction

Answer 6

Courts will hold offers open when the offeree has detrimentally relied on them, such as when general contractors rely on subs-contractor’s bids in forming their own bids on a project.

Question 7

Firm Offer under UCC

Answer 7

Irrevocable offer by merchant to buy or sell goods without consideration

1. offer made by merchant (in the business of buying or selling goods) and
2. In a writing signed by the merchant
3. Expressly stating it will be held open.

Irrevocable for time stated or reasonable time, BUT no longer than 3 months even if stated otherwise.

Question 8

Bilateral Contract

Answer 8

Offer seeking acceptance by a promise. A promise is being exchanged for a promise. Once promises are exchanged, both parties are bound.

Question 9

Unilateral Contract

Answer 9

Offer seeking performance in return. Offeror not bound until offeree completes performance, and offeree is NEVER bound.

Question 10

Revocation of a Unilateral Contract

Answer 10

Once offeree begins performance, an option K is created and offeror may not revoke. Mere preparations do not create an option K, only beginning performance.

Question 11

Acceptance

Answer 11

Must mirror terms of offer and be communications to the offeror.

Question 12

Exceptions to Requirement that Acceptance be communicated

Answer 12

Two exceptions to requirement that acceptance be communicated:
1. Unilateral contract: Acceptance is effective only by completing performance, no communication is required unless offer provides otherwise.

2. Acceptance by mail- common law mailbox rule- acceptance is effective upon dispatch if properly posted. Applies only to acceptances and not any other communications. Default rule provides unless the offer provides otherwise.

Question 13

Restatement/Majority Rule

Answer 13

Mailbox rule is not applicable and acceptance is only effective upon receipt.

Question 14

Mailbox rule does not govern if

Answer 14

rejection is mailed before acceptance, and whichever arrives first will be effective

Question 15

UCC Acceptance by Sellers Shipment

Answer 15

Seller can accept buyer’s offer to purchase goods for prompt or current shipment in 3 ways:

1. Promise to ship goods
2. Shipping non-conforming goods; unless the seller sends the shipment as an accommodation (i.e. counteroffer)

Question 16

UCC Battle of the Forms

Answer 16

An offeree’s nonconforming acceptance or confirmation (with additional terms) will operate as an effective acceptance of the offer, thus forming a contract (not a counteroffer)

Question 17

Effect of additional or different terms between Merchants

Answer 17

Between merchants, the additional terms in offeree’s acceptance or confirmation become part of the K EXCEPT in 3 circumstsances:

1. The offer expressly limits acceptance to its own terms
2. If Offeror objects to the additional terms within a reasonable time
3. If the additional terms would materially alter the K.
   Material alterations are those that would result in surprise or hardship if incorporation w/o the express awareness of the other party.

Question 18

Knockout rule

Answer 18

Different terms in the two writings dealing with the same topic knock each other out.

Question 19

Conditional Acceptance

Answer 19

If the offeree’s “acceptance” is specifically conditioned on offeror first agreeing to additional terms in the acceptance before offeree will proceed, this nonconforming, conditional acceptance will NOT be effective to form a K (i.e. its a counteroffer)

No K is formed by the writings until the offeror expressly assents to the additional terms.

Question 20

Contracts Formed by Conduct

Answer 20

The UCC provides that the parties’ conduct in recognizing the existence of a contract is sufficient to establish a contract even though their writings do no otherwise establish a contract

The terms of the contract will be:

• terms on which the writings of the parties agree; and
• default terms provided by the UCC.