Formation Flashcards
Elements of a contract
(1) offer; (2) acceptance; and (3) consideration
Offer/Revocabilty/Ads
Outward manifestation of an intent to enter a contract with definite and certain terms, communicated to the offeree.
Offers are generally revocable, the offeror has the power to terminate the offer, until and unless the offeree accepts. However, the offer will terminate automatically if an event is specified, the offeree rejects, or within a reasonable time.
Advertisements are generally considered invitations to offer. However, if an advertisement contains more specific and definite terms, it may become an offer.
When does an offer become irrevocable?
(1) option contract – a promise to keep an offer open for a period of time accompanied by additional consideration and between non-merchants.
(2) firm offer – a written, signed promise between merchants to keep an offer open for a reasonable time not to exceed 3 months. No consideration is required for firm offers.
(3) unilateral contract – a promise for performance. When a party begins performing, the offer becomes irrevocable.
Counteroffer
A counteroffer changes the term of the offer and no contract is created. The original offeror now has the power to accept or reject the counteroffer.
Rejection
The offeree declines the offer and terminates the offer and his power of acceptance.
Acceptance (CL, UCC, Mailbox)
An outward manifestation of intent to enter into the contract. Acceptance can be communicated in any reasonable manner, unless the offeror specifies a means of acceptance.
Common law: the acceptance must follow the mirror image rule, it must be to the exact terms of the offer.
UCC: If two merchants enter into a contract under the UCC, and the acceptance contains terms that are additional to the offer, the additional terms will be incorporated as part of the contract unless: 1) the additional terms materially alter the terms of the offer; 2) the other party objects to the additional terms within a reasonable time; or 3) the offer limits acceptance to the terms of the offer. If the acceptance contains conflicting terms with the offer, then the “battle of the forms” approach apply and the conflicting terms will be knocked out.
Mailbox rule: when accepting by mail, the acceptance becomes effective upon dispatch. If a letter of rejection is mail first, followed up by a letter of acceptance, whichever letter arrives first controls.
Consideration
A bargained for exchange. In Florida, there must be a legal detriment or benefit between the parties.
What is a merchant?
A seller who regularly deals in goods of the kind sold or who otherwise by their profession holds themselves out to be/have special knowledge/skills as to the practices or goods involved
