Formation of Contracts Flashcards
What is a contract?
Legally enforceable agreement.
Universes in Contract Law
- Common Law
- UCC
- Mixed Contracts
Common Law Universe
Whenever a contract deals with real estate or services
Article 2 of the UCC
Whenever a contract deals with goods
Mixed Contracts
Contract has elements of both services
Rule 1: The All of Nothing Rule
Rule 2: Predominant Purpose Rule
The All or Nothing Rule
You cannot be in two universes at the same time, so mixed contracts must fall into one universe or the other.
Exception: Divisible contracts - the agreement is divided into mini-contracts
Predominant Purpose Rule
Does a good or service play a bigger role?
Four topics in formation of a contract
- Agreement (offer and acceptance)
- Consideration (and related theories for when you have to keep your promise)
- Defenses to formation
- Statue of Frauds (enforceability)
All Contracts Don’t Stink
Offer
A manifestation of a willingness to enter into an agreement (by the offeror) that creates a power of acceptance (in the offeree)
How specific must offer be: Common Law
All essential terms must be covered in the agreement
How specific must offer be: UCC
Law is more willing to fill the gaps and find a contract, even if the agreement leaves out some key terms.
Under the UCC, the only essential term is the quantity. The price does not need to be stated.
Invitations to Deal
A preliminary communication that reserves a final right of approval with the speaker. It does not convey a power of acceptance to the other side
Advertisement
Usually understood as an invitation to deal.
Exceptions:
- Reward advertisements
- Advertisements that are very specific and leave nothing to negotiation, including how acceptance can occur.
If a return promise is requested, then contract is:
bilateral contract
If an act is requested, then the contract is:
unilateral contract
