II. Formation of K

Question 1

Offer

Answer 1

LEVEL 1:

Manifestation of an intention to K (words or conduct showing commitment).

Whether a Reasonable Person in position would of the offeree would believe that his or her assent creates a K.

• PRICE and DESCRIPTION required.
• Clear Advertisement is NOT an offer.
• Exceptions: Reward & Specific quantity and who ads.

Question 2

Termination of Offer

Answer 2

LEVEL 2:

An offer CANNOT be accepted if it has terminated

(1) Lapse of Time = Time stated or Reasonable
(2) Words or Conduct of OFFEROR = Unambiguous statement by offeror or offeree is aware of

• Revocation MUST be received
• That CANNOT be revoked:
  
  • (1) Option K
    
    • Offeror has promised to keep offer open AND this promise is supported by consideration
  • (2) Merchant Firm Offer Rule
    
    • Cannot be revoked for up to 3 mos. IF (i) offer to buy or sell goods (ii) signed, written promise to keep offer open, and (iii) party is a merchant (generally in biz)
  • (3) Reliance
    
    • IF there has been detrimental reliance by the offeree that is reasonably foreseeable
  • (4) Start of Performance pursuant to an offer to enter into a unilateral K makes that offer irrevocable for a reasonable time to complete performance

(3) Words or Conduct of OFFEREE (Rejection)

• (1) Counteroffer (Not bargaining)
• (2) Conditional Acceptance (“if” “but” “provided” “so long as” “on condition that”)
• (3) Mirror Image Rule (If adding new terms is like’a counteroffer)
  
  • ADDTIONAL Terms Still Acceptance Under UCC 2-207 =
    
    • (1) Is there a K?
    • (2) Is additioanl term part of K?
• (4) Death of a Party Prior to Acceptance (Death or incapacity of either party terminates offer)
  *

Question 3

Acceptance

Answer 3

LEVEL 3:

• WHO & HOW?
• Bilateral world so most offers can be accepted by
  
  • Promise or The implied Promise resulting from start of performance
• Start of Performance pursuant ot Offer to enter into Unilateral K makes offer “irrevocable” BUT is NOT ACCEPTANCE
• Acceptance (& ONLY acceptance) effective when SENT unless…(1) meeting an option deadline (2) following a rejection

Question 4

Lack of Consideration as Reason NOT to Enforce Agreement

Answer 4

• Promise Breaker MUST have asked for something in return for her promise (bargained for)
• Promise can be consideration
• PAST CONSIDERATION:
  
  • Stuff done BEFORE Promise (past consideration) is NOT consideration
• PRE-EXISTING DUTY
  
  • Doing only what you are already obligated to do (pre-existing duty) is NOT consideration
• No new Consideration in Settlement of Due & Undisputed Debt
• Foreseeable, Detrimental Reliance (Promissory Estoppel) is substitute for consideration

Question 5

STATUTE OF FRAUDS as Reason NOT to Enforce Agreement

Answer 5

Makes it harder to make such a false or fraudulent claim by requiring “special” proof that a K exists

• (1) Is K w/in the SOF (5 + UCC kind)?
  
  • (i) Promise to do something or refrain from doing something if we marry
  • (ii) Promise by Exector to Pay Obligation of Estate from Own Funds
  • (iii) Promises to Answer for the Debts of Another
  • (iv)–Service K NOT capable of being performed w/in 1 yr. from time of the K (i.e. more than 1 yr.)
    
    • > than 1 yr. = SOF applies
    • > than 1 yr. from date of K = SOF applies
    • Task (nothing about time) = SOF NO applies
    • LIfetime K = SOF NO applies
  • (v)–Transfers of Interest in Real Estate of a Term of > 1
  • (vi)–Sale of Goods for $500
• (2) If so, is the SOF satisfied? = IF satisfied NO defense
  
  • Full performance (BUT NOT PART PERFORMANCE) of Service K
  • Sale of Goods
    
    • Deliver = NO SOF Defense
    • Undeleivered = SOF Defense
    • Specially Manufactured Goods = IF Substantiall Beginning then SOF Satisfied
  • Real Estate Satisfy IF 2 of 3:
    
    • Payment (Full or Close to Full)
    • Possession and/or
    • Improvements
  • IF a writing:
    
    • Who & What & ∆ signed if CL
    • How many and ∆ signed if Art. 2 unless…Answer Damned Letter Rule
• (3) Is there a SOF defense?

Question 6

Misrepresentation as Reason NOT to Enforce Agreement

Answer 6

Even if honest & innocent, so long as material & relied on. Distinguish non-disclosure (MUST be wrongful) & mistake