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Contracts > Formation > Flashcards

Formation Flashcards

1
Q

Offer - Definition

A

An objective manifestation of a present intent to K

Demonstrated by a promise, undertaking, or commitment; definite and certain terms; and communication to offeree

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2
Q

Offer - Objective Manifestation of Intent

A

Offer must give offeree a reasonable expectation that offeror is willing to enter into a K

Would a reasonable person believe the communication is an offer inviting acceptance?

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3
Q

Offer - Definite and Certain Terms

A

Terms included must be sufficient to allow a court to enforce the K (e.g. quantity, time for performance, price, etc.)

Vague terms or terms of negotiation are insufficient

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4
Q

Offer - Communication to an Identified Offeree

A

Offeree must know of the offer and have the power to accept it

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5
Q

Offer - Communication to an Identified Offeree (Advertisements)

A

Generally not offers, unless highly specific as to quantity and clearly indicate who may accept

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6
Q

Offer - UCC Offers

A

Quantity must be certain or capable of being made certain

Missing terms OK, particularly price, if parties clearly intended to make a K and there is a reasonably certain basis for giving a remedy

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7
Q

Termination of Offer - Definition

A

An offer may be terminated by an act of a party or by operation of law

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8
Q

Termination of Offer - Acts of Parties (3)

A

1) Revocation by Offeror

2) Rejection by Offeree

3) Lapse of Time
- Offeror can set a time limit for acceptance, at the end of which offeree’s power of acceptance automatically terminates

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9
Q

Termination of Offer - Operation by Law (3)

A

1) Death or insanity of either party

2) Destruction of proposed K’s subject matter

3) Supervening Illegality

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10
Q

Revoking Offers & Irrevocable Offers - Definition

A

An offeror may revoke her offer, which effectively terminates the offer and the offeree’s power of acceptance

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11
Q

Revoking Offers & Irrevocable Offers - Methods of Revocation (2)

A

1) Unambiguous statement by the offeror to the offeree

2) Oferee becomes aware of offeror’s unambiguous conduct or statement indicating an unwillingness or inability to contract

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12
Q

Revoking Offers & Irrevocable Offers - Limitations on Revocation

A

Revocation is only effective upon receipt by offeree

Offer cannot be revoked once it has been accepted

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13
Q

Revoking Offers & Irrevocable Offers - Limitations of Revocation (Unilateral Ks)

A

Start of performance makes the offer irrevocable for a reasonable time to complete performance

Start of performance must go beyond mere preparation

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14
Q

Revoking Offers & Irrevocable Offers - Irrevocable Offers (Option K)

A

Promise to keep an offer open

Common Law: Consideration required in exchange for option

UCC: No consideration required

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15
Q

Revoking Offers & Irrevocable Offers - Irrevocable Offers (UCC Firm Offers)

A

A merchant’s offer made in a signed writing that assures the offer will be held open is irrevocable for the time stated: no consideration is required

If no time stated, irrevocable for up to three months

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16
Q

Revoking Offers & Irrevocable Offers - Irrevocable Offers (Detrimental Reliance by Offeree)

A

Reliance must be reasonable

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17
Q

Rejection of Offer - Definition

A

Revocation by offeree terminated the offer and the offeree’s power of acceptance

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18
Q

Rejection of Offer - Methods (4)

A

1) Express Rejection

2) Counteroffer

3) Conditional Acceptance

4) Acceptance with Additional Terms

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19
Q

Rejection of Offer - Express Rejection

A

Effective when Received

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20
Q

Rejection of Offer - Counteroffer

A

Terminates original offer and becomes a new offer

  • Bargaining or requests for information are not counteroffers
21
Q

Rejection of Offer - Conditional Acceptance

A

Terminates original offer and becomes a new offer (look for terms such as “if,” “provided,” “so long as,” etc.)

  • E.g. offer to mow lawn; offeree says “I accept if you also trim the hedges”, this is a new offer; offeree is now offeror
22
Q

Rejection of Offer - Conditional Acceptance (Exception)

A

A condition that would be included anyway (e.g. implied warranty) does not terminate original offer

23
Q

Rejection of Offer - Acceptance with Additional Terms (Common Law)

A

Acceptance must MIRROR the offer; acceptance with additional terms creates a rejection and counteroffer

24
Q

Rejection of Offer - Acceptance with Additional Terms (UCC - K Involving Non-Merchant)

A

Terms of offer govern, K is formed, but additional terms are excluded and considered mere proposals to modify the K

25
Q

Rejection of Offer - Acceptance with Additional Terms (UCC - Both Parties are Merchants)

A

Additional terms become part of the K unless certain exceptions apply

26
Q

Acceptance - Definition

A

Acceptance arises upon offeree’s clear expression of assent to the terms of the offer

  • Offeror Controls Method: Offeror is the master of the offer and can dictate the manner by which an offer is accepted
27
Q

Acceptance - Mirror Image Rule (Common Law)

A

Acceptance must mirror the offer’s terms; it cannot add, omit, or change terms of the offer

28
Q

Acceptance - UCC Acceptance (2 Issues)

A

1) Acceptance with Additional Terms

2) Acceptance by Shipment

29
Q

Acceptance - UCC Acceptance (Acceptance with Additional Terms - Are both parties merchants? Yes!)

A

K is formed with additional terms unless either:

a) Additional terms MATERIAL change the offer,

b) Offer expressly limits acceptance to the offer’s terms, or

c) Offeror objects within a reasonable time

30
Q

Acceptance - UCC Acceptance (Acceptance with Additional Terms - Are both parties merchants? No!)

A

K is formed, but without additional terms

31
Q

Acceptance - UCC Acceptance (Acceptance by Shipment)

A

A merchant may accept an offer to buy goods either:

a) providing a promise to ship goods (usually written confirmation), or

b) Promptly shipping conforming goods

  • Shipment of Nonconforming goods: acts as an acceptance, but may give rise to breach
32
Q

Mailbox Rules - Definition

A

Offers and acceptance transmitted via mail (however, the mailbox rule does not apply to email) become effective upon either dispatch or receipt

33
Q

Mailbox Rules - Offers

A

Effective upon receipt

  • Rejections and counteroffers are also effective upon receipt
34
Q

Mailbox Rules - Acceptance

A

Effective upon dispatch

35
Q

Mailbox Rules - Method of Communication

A

Unless otherwise provided, offers invite acceptance in any reasonable manner under the circumstances

  • E.g. A sends offer to B via e-mail and B accepts via text message; valid K had been formed
  • If acceptance is via instantaneous two-way communication (e.g. phone), it is treated as if the parties are in each other’s presence
36
Q

Mailbox Rules - Limitations

A

If the offer stipulates acceptance is not effective until received, the offer controls (i.e. offeror can opt out of mailbox rules)

If offeree send both a rejection and acceptance, first to arrive controls

37
Q

Mailbox Rules - Limitations (Option Ks)

A

Acceptance is effective upon receipt

38
Q

Mailbox Rules - Revocation

A

Revocation is effective only upon receipt (i.e. mailbox rules do not apply)

39
Q

Acceptance by Performance - Definition

A

Unless acceptance is limited by terms of the offer, offeree may accept by partial performance (for bilateral Ks) or complete performance (for unilateral Ks)

40
Q

Acceptance by Performance - Unilateral Ks

A

Complete performance required

  • Offeree is not obligated to start or complete performance
  • Failure to perform does not give rise to breach b/c no K is formed absent complete performance
41
Q

Acceptance by Performance - Unilateral Ks (Revocability)

A

Offer may become irrevocable upon the start of performance until completion

42
Q

Acceptance by Performance - Unilateral Ks (Notice only required upon Completion)

A

Offeree is not required to give notice upon start of performance, but must notify offeror within a reasonable time upon completion

43
Q

Acceptance by Performance - Bilateral Ks

A

Partial performance gives rise to acceptance

  • Offeree must make offeror aware of acceptance
44
Q

Acceptance by Performance - Offers Requiring Acceptance by Promise (2)

A

An offer requiring acceptance by promise may still be accepted by performance if:

1) Offeree begins to perform; and

2) Offeror knows offeree has begun performance and acquiesces

Note: An offer may always limit methods of acceptance

45
Q

Consideration & Substitutes for Consideration - Definition

A

Consideration is bargained-for exchange of legal value between parties; there must be a benefit to promisor or detriment to promise

  • Required element of every K
46
Q

Consideration & Substitutes for Consideration - “Bargained-for Exchange”

A

The promise must induce the detriment and the detriment must induce the promise

Detriment = an obligation to do or refrain from doing something one would otherwise not be obligated to do or refrain from doing

47
Q

Consideration & Substitutes for Consideration - Bargained-for Exchange (Pre-existing Duty)

A

A promise to perform a pre-existing duty or obligation generally does not constitute consideration

48
Q

Consideration & Substitutes for Consideration - Bargained-for Exchange (Pre-Existing Duty - Exception)

A

Promise to pay a debt after the SOL has run is binding

49
Q

Consideration & Substitutes for Consideration - Invalid Consideration

A

The following do not constitute consideration:

1) Promises of gifts or conditional gifts

2) Illusory Promises: A promise where there is no obligation to perform (e.g. A promises to do B’s chores if he has time)

Contracts (10 decks)

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