lesson 8 Flashcards
what are the beginning issues to consider in determining whether or not there is a valid contract?
offer and acceptance
with offer and acceptance, courts will often consider:
“was there a meeting of the minds?”
courts will analyze contract formation on an ______ basis
objective
- courts do not particularly care what a party meant to say or thought
- they look at the actual words and actions of the parties
kolodziej v mason
mason’s statement on tv dateline: “I’ll give you a million dollars if you can get from Atlanta airport to hotel in 28 mins.” people did it, asked for money, Mason said it was a joke. Court held that it was not a valid offer, “mutual assent is a prerequisite for formation of a contract”
If the Kolodziej is not a valid offer, what do the courts consider?
- do the offeror’s words and actions indicate an intention to make a bargain?
- are the terms reasonably definite?
statements that are not offers
invitations to bargain, price quotes, letters of intent, ads, auctions
invitations to bargain example
David wants to buy Will’s townhouse. Will says, “I really enjoy the townhouse and could not possibly sell it for less than 400,000.” David immediately sends a check for that amount and requests a deed for the property. this is NOT a valid contract, it is an invitation
price quotes example
Joe receives a price list, there is a price next to the backpack he likes. He sends the amount of money, the company returns it and indicates that the price is higher, and he also must pay postage. In this situation, the company is only beginning the negotiations. When joe makes the order, his order is the offer.
if limitation of liability is written in price list, and since price list is not an offer:
it is not part of the contract and the company can be held liable for damages
letters of intent
Some contracts contain dozens of terms and conditions. They are often complicated deals that are negotiated one part at a time. In order for parties to not be bound by these individual negotiated terms, they often refer to these discussions as letters of intent, since courts routinely hold that such letters are not an offer or a contract.
If ad in magazine lists product for sale, even if it has a price and order form:
It is not an offer. A person fills out the form, sends check, and that is an offer.
in auctions, bids are considered
offers. the item being bid on is not the offer, auctions are events that merely solicit offers.
auctions with vs without reserve
auctions with reserve: item has a minimum bid
auctions without reserve: no minimum bid, highest bid is sales price
definiteness
terms of a contract must generally be definite and clear. if a court cannot determine the terms through actions or words, they will hold that there is no contract
lack of payment or a number means
there’s a good chance there is no contract
major exception to the requirement of definiteness
involves sales of goods under the UCC. a provision of the UCC allows for open terms of a contract and such open terms will not cause the contract to fail for lack of definiteness. however, the open terms must be provided for a reasonable method of calculation of the open terms.
definiteness exception example
sale of natural gas by a producer to a pipeline, concerned they may not be able to have a purchaser. someone was interested, but process could take years, and price of gas and cost of supplies vary over time. they came to an agreement over loose terms.
termination of offers
may terminate by revocation, rejection, expiration, or operation of law
revocation
if the person that makes the offer changes their mind, they may revoke it. they must communicate this prior to acceptance of the offer, but once the revocation is communicated to the offeree, the offer is terminated
irrevocable offers
cannot be revoked
rejection
if offeree rejects offer, it is terminated. Rejection must be communicated back to offeror.
expiration
once expiration date passes, and offer has not been accepted, it is dead. there can be further agreements to extend offers
by operation of law
offers may terminate before acceptance if:
- offeror dies or becomes incapacitated
- object of proposed contract is destroyed/no longer exists
the key to acceptance is
some action on behalf of the offeree (formality not required, can accept without saying anything and handing offeror $100)
