Formation Flashcards
Was there an offer?
An offer requires:
1. Outward manifestation (oral, written, via conduct)
2. Signal that acceptance will conclude the deal
Commercial advertisements are not offers, they are invitations for offers, UNLESS language in the advertisement identifies who gets a limited supply of goods.
A reward is an offer b/c it is a communication that promises $$ in exchange for performance of a specific task
Was there acceptance? (CL)
- Acceptance must mirror terms of the offer and
- Acceptance must be communicated to the offeror
UNLESS
A. There is a unilateral contract, which requires performance (e.g. reward contract “I’ll pay you X if you do Y”) or
B. Acceptance is provided by mail (the mailbox rule), as such acceptance is effective upon dispatch if properly posted UNLESS the offeree first mails rejection and then mails acceptance, whichever mailing reaches the offeror first controls
Was the offer terminated?
The power of acceptance/an offer is terminated if:
- There was a time lapse as determined by the subject matter and market; and degree of urgency and means of transmission
- Either the offeror or the offeree died or became incapacitated
- The offeror revoked the offer before it was accepted and the revocation was communicated (directly or indirectly - the offeror takes action inconsistent with intent to continue with offer and the offeree learns of such action from a reliable source) to the offeree
- The offeree terminated by (1) rejecting, (2) rejected via a counteroffer (not a mere inquiry), or (3) rejected via non-conforming acceptance (in common law, acceptance must mirror the terms)
Unilateral contract revocation
Offeror seeks performance in return
- CL: Offeror free to revoke until offeree completed performance
- Modern/majority rule: Once offeree begins performance, an option contract is created and offeror may not revoke
An offeror’s ability to revoke/terminate an offer can be prevented by…
- An option contract (offer + separate promise to keep open + valid mechanism for enforcing subsidiary promise) (CL)
- Reliance (detrimentally relied on offer)
- Firm offer under UCC (irrevocable offer by merchant to buy or sell goods w/o consideration), which requires:
- Offer by merchant + writing signed by merchant + expressly stating will keep offer open
- This is irrevocable for the time stated or reasonable amount of time, not to exceed 3 months (even if states otherwise)
Was there acceptance? (UCC)
Under the UCC a seller may accept a buyer’s offer to purchase goods by:
1. A promise to ship goods in conformity with offer
2. Prompt or current shipment of goods in conformity
3. Shipment of conforming goods (also a breach of k UNLESS seller sends as an accommodation)
What happens if there are differing or additional terms in the UCC seller’s acceptance form?
The contract is still enforceable, however:
- if one of the parties is a consumer, the differing/additional terms are mere proposals
- if both parties are merchants, add’l terms become part of the contract (unless the offer limits acceptance to the terms of the offer, offeror objects to add’l terms w/in reasonable time, or the terms would materially alter the contract) and differing terms are knocked out (majority) or mere proposals (minority)
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Was there consideration? What is consideration?
- A bargain-for-exchange (good or service)
Consideration: Legal detriment test
The promisee is doing something they have a legal right not to do or forgoing an activity they have a legal right to engage in
Consideration: Inadequacy of consideration vs. insufficient consideration
Inadequacy of consideration occurs when consideration is present but too small compared to the promise it is exchanged for
Insufficient consideration occurs when there is no consideration for a particular promise, no bargain
Consideration: An illusory promise is…
A promise of performance that leaves performance to the discretion of the promising party
A gratuitous promise, or promise to make a gift, is usually unenforceable due to insufficient consideration (i.e. no consideration) unless…
…gratuitous transfer, which requires a present intent to give a gift and actual or symbolic delivery
An executed gift is binding
A promise in exchange for something already given or already performed is not supported for consideration UNLESS…
- A written promise to pay a dent that has expired past the statute of limitations
- A written promise to pay a debt discharged by bankruptcy
- There was a material benefit (minority rule), or promise made based on past benefits, which is enforceable if (the promisee conferred the benefit on the promisor and the benefit is material
Consideration: What is promissory estoppel?
Promisee reasonably relies to their detriment on gratuitous promise may be able to enforce that promise even w/o consideration if there is:
1. A promise
2. Foreseeable reliance
3. Actual reliance (induced by the promise)
4. Injustice w/o enforcement
Analysis: Was a valid contract formed?
Was there an:
- Offer?
- Acceptance?
- Consideration?
