Formation

Question 1

Offer requirements

Answer 1

An offer must be:

(1) On the part of the offeror, a manifestation of willingness to enter into an agreement;
(2) On the part of the offeree, creation of the power of acceptance;
(3) Directed at a specific offeree unless a contest or reward offer;
(4) Sufficiently specific to cover the key terms:
(a) At common law, the parties, subject, price, and quantity;
(b) By contrast, UCC contracts only need to specify quantity.

Question 2

Terminating the offer

Answer 2

An offer terminates if:

(1) The offeror revokes the offer by express communication to the offeree;
(2) Constructive revocation;
(3) The offeree rejects the offer;
(4) The offeree makes a counteroffer;
(5) The offeror dies or becomes incapacitated, even if the offeree learns of it after the offeree dispatches what she believes to be an acceptance; or
(6) A reasonable amount of time passes.

Question 3

Irrevocable offers

Answer 3

An offer is irrevocable if it is:

(1) An option contract, which requires separate consideration to make the option enforceable;
(2) A firm offer under the UCC;
(3) A unilateral offer under which the offeree has started performance; or
(4) The offeree detrimentally relies on the offer, especially in the general contractor–subcontractor context.

Question 4

Consideration: promissory estoppel

Answer 4

Promissory estoppel applies as a consideration substitute when:

(1) The promisor makes a promise that would reasonably be expected to induce reliance;
(2) The promisee detrimentally relies on the promise; and
(3) Only enforcement of the promise avoids injustice.

Question 5

Quasi-contract doctrine

Answer 5

For a contract implied in law, recovery often is limited to the fair value of the benefit conferred.

An implied-in-law contract exists if:

(1) The plaintiff conferred a measurable benefit on the defendant;
(2) The plaintiff reasonably expected to get paid; and
(3) It would be unfair to let defendant keep the benefit without paying because:
(a) the defendant had an opportunity to decline the benefit but knowingly accepted it; or
(b) the plaintiff had a reasonable excuse for not giving the defendant such opportunity—usually, because of an emergency.

Question 6

Consideration: settlement of litigation

Answer 6

A promise not to bring a legal action or to assert a particular claim or defense in such an action generally can serve as consideration for a settlement agreement because the party making the promise is foregoing a legal right.

The legal action need not be one that is certain to succeed. Instead, the claim or defense must be in fact doubtful due to uncertainty of facts or law, or the party failing to assert the claim or defense must believe in good faith that it may be fairly determined to be valid.

Question 7

Consideration: minimum requirements

Answer 7

Some legal detriment be bargained for—of some benefit to the promisor or detriment to the promisee—suffices to fulfill the consideration requirement.

Question 8

Terminating the offer: constructive revocation

Answer 8

If the offeree acquires reliable information that the offeror has taken definite action inconsistent with the offer and a continuing ability to contract, the offer is automatically revoked.

Question 9

Material benefit doctrine

Answer 9

Under the material benefit rule, when a party performs an unrequested service for another party that constitutes a material benefit:

• the modern trend permits the performing party to enforce a promise of payment made by the other party after the service is rendered,
• even though, at common law, such a promise would be unenforceable due to lack of consideration.