Formation of Contracts - Offer

Question 1

What does a legally enforceable K require?

Answer 1

1. Mutual Assent (Offer & Acceptance)
2. Consideration
3. Lack of valid defenses

Question 2

What is an offer?

Answer 2

1. objective manifestation of a willingness by offeror to enter into agreement
2. That creates power of acceptance in the offeree (nothing left to do but say “yes” to conclude the deal)

Question 3

Requirements for a valid offer

Answer 3

1. Intent to be bound
2. Definite & Certain Terms
3. Communicated to the offeree

Question 4

What standard is used in determining if an offer exists?

Answer 4

Statement is offer if:

• Reasonable Person Std. AND
  
  • Person to whom it is communicated could reas. interpret it as an offer
  • Expresses the present intent to be legally bound by a K

Question 5

Terms of the offer - Common Law

Answer 5

The terms must be certain and definite or the K fails for indefiniteness

• Essential terms must be covered in K
  
  • Parties
  • Subj. Matter
  • Price
  • Quantity

Question 6

Terms of Offer - UCC

Answer 6

K is formed if:

1. both parties intend to K AND
2. There is a reas. certain basis for giving a remedy

The only essential term is quantity & UCC Fills gaps if other terms are missing

• Exception - Requirements or Output Ks (UCC implies Good Faith)

Question 7

Missing Terms - Common Law

Answer 7

K may still be formed when a term is missing if it appears the parties intended to create a K

• Ct. may supply the terms b/c there is a presumption that the parties intended to include a reas. term

Question 8

Missing Terms - UCC

Answer 8

UCC fills the gap

• Time - Reasonable
• place for delivery - Seller’s place of bus.
• Time of Payment - When buyer gets the goods
• Assortment of Goods - Reas. choice of B
• Price for Goods - Reas. price at time of delivery
• NOT for subj. matter or quantity

Question 9

What must the language of the offer contain?

Answer 9

words of promise, undertaking or commitment and be targeted to a number of people who can accept

Question 10

Employment K

Answer 10

If duration is not specified & Offer is accepted = K will be considered terminable at will

Question 11

Advertisements

Answer 11

Advertisements are not offers, they are invitations to make an offer

• Ads lack the intent to commit

Question 12

What is the legal effect of an offer?

Answer 12

Creates the power of acceptance in the offeree

Question 13

How can an offer be terminated?

Answer 13

1. Lapse
2. Death/mental incapacity of offeror
3. Destruction/Illegality
4. Revocation
5. Rejection by offeree

Question 14

Termination by Lapse

Answer 14

• Offeree fails to accept within time pd. stated in the offer OR
• W/in reas. time pd. if not time is stated

Question 15

Termination of Offer by Death/Mental Incapacity

Answer 15

After offer but b/f acceptance - if death by either party OR if either party becomes ment. incompetent the power of acceptance is terminated

Question 16

Termination of Offer by Revocation

Answer 16

Offer can be revoked any time prior to acceptance by unamb. words or actions indicating the offer no longer may be accepted

Question 17

Multiple Offers & Revocation

Answer 17

If one offeree accepts

• Offeror must notify every other offeree to effectively revoke the other offers

Question 18

When are offers irrevocable?

Answer 18

1. Option K
2. UCC Firm Offer
3. Promissory Estoppel
4. Partial Performance

Question 19

What are the elements of a common law option contract ?

Answer 19

1. An offer
2. A second promise to keep the offer open for a set pd. of time
3. Consideration for the second promise

Question 20

UCC Firm Offer Rule

Answer 20

Offer is irrevocable for a reas. amount of time (no more than 90 days) if:

1. Offeror is a merchant AND
   
   • Includes anyone who deals in the type of goods AND anyone who holds themselves out as having knowledge ro skill peculiar to the goods involved
2. assurances are made that the offer will remain open
3. In an authenticated writing
4. NO consideration required

Question 21

Irevocable by Promisorry Estoppel

Answer 21

If offeree reas. & detrimentally relies on offer it may become irrevocable

Question 22

Irrevocable by Partial Performance

Answer 22

Offeree must have knowledge of offer when perf. begins

• Unilateral K - Offeror can’t revoke once offeree has begun perf.
• Bilateral K - Commencement of performance operates as promise to render complete perf.

Question 23

How can an offeree reject an offer?

Answer 23

1. Offeree clearly conveys to offeror that he no longer intends to accept the offer
   
   • Rejection is effective upon receipt
2. Counteroffer - acts as rejection of orig. offer and creates a new offer

Question 24

Who is the offeror in an auction?

Answer 24

The Bidder

• The auctioneer is inviting offers
• The responsive bidders are the offerors

Question 25

Advertisements - Exceptions

Answer 25

Exception - Language exists that is sufficiently specific & limits who can accept (e.g. 1st come, 1st serve)

Exception - Ad in nature of a reward - gen. is an offer b/c offer $ in exchange for perf. of specified task

Question 26

Termination of Offer by Death/Mental Incapacity

Exception

Answer 26

Exception - Offer is an option K b/c can’t be revoked

Question 27

When is a revocation effective?

Answer 27

It is not effective until it is communicated:

• Can be by actions, if offeree learns about it from a reliable source

Question 28

When does a revocation sent by mail become effective?

Answer 28

not effective until it is received

Question 29

What is the effect of a common law option contract?

Answer 29

Promise limits the offeror’s power to revoke until after the pd. has expired

Question 30

Empliyment Contract - Contract states “ Permanent Employment”

Answer 30

Perm. employment = at will employment

Either party can term. agreement at any time w/out the term. being a breach