Modules 4-5 Flashcards
What does an offer create for the offeree?
A power of acceptance that permits him to transform the offer into contractual obligation. The acceptance terminates the power of revocation that the offer usually has
What is the objective theory?
Majority rule that the intent of the parties is not relevant when determining whether a party has given assent to enter into a contract. Just look at their words, conduct and demeanor. The appearance of a bargain is enough
Does a contract have to be in writing?
No, spoken words or conduct that suggest a contract was entered into are enough
What is consideration?
The thing you have promised ie) money, an act, forbearance. Something bargained for and received by a promisor from a promisee.
What is acceptance?
A voluntary act of the offeree to create a set of legal relations called a contract
Must there be consideration in order for an agreement to be enforceable?
Yes it is necessary
How do you create a contract?
The offeree must exchange the requested performance or promise for the offeror’s promise
What happens when you sign a contract without reading it?
You’re bound by its terms
Do all contracts require a signature?
No, you can accept some offers without a signature ie ) passenger tickets, insurance policies
Does the small print on a parcel check create acceptance of an offer?
No because a reasonable person could not expect to find contract provisions on a personal check
Must a person know about an offer in order to accept it?
Yes, otherwise they have no claim
What does identical cross-offer mean?
If Amy mails an offer to Bob to sell something and at the same time Bob mails an offer to Amy to buy that exact thing for the same terms
Do identical cross-offers create a contract?
A) classical view: no contract
B) Second restatement: there is a contract because there’s both subjective intent to the same deal and objective evidence of that intent
C) first restatement: The whole consideration requested by an offer must be given after the offeree knows of the offer
D) modern view: if the offeree completes performance with knowledge of the offer that is sufficient
What is a rolling contract?
Payment before revelation of full terms ie) Airline tickets, insurance policies
What is a direct seller?
Someone who manufactures and sells directly to the customer
What is a reseller?
When a product is manufactured, sold to a reseller like Costco, and then sold to the customer
What is a warranty?
An offer in the box by the manufacturer that the purchaser may accept during the warranty period. This constitutes an offer that the customer accepts by bringing an action for breach of contract
What is shrinkwrap?
Package that is wrapped in plastic and contains a printed warning saying, “if you unwrap this disc, you will have consented to the terms of the license created herein” –> from the licensor
What is clickwrap?
When you insert a disc or download something and you are asked to click “I agree to the terms” before you can continue
How do you prove intention to accept in a bilateral contract?
Subjective intent is irrelevant (unless the person knows or has reason to know that the offeree did not intend to accept
Do you prove intention to accept any unilateral contract?
A) traditional view: subjective intent is irrelevant.
B) The intent to accept is presumed in the absence of words or conduct indicating the contrary
If several motives induce an offeree to perform are they still able to prevail?
Yes because it is enough that the offer was some part of the reason for their performance
Who can accept an offer?
Only the person to whom it was made (or an authorized agent)
Can an offeree transfer the power to accept?
No, if Alice makes an offer to Bob, Kerry cannot except
How do you determine the identity of the offerees?
The reasonable person test
What is a quasi- contract?
An obligation the law creates in absence of an agreement between the parties. This is done to avoid unjust enrichment
How do you give notice of acceptance in a unilateral contract?
- don’t have to give notice of intent to perform if the offeror is in a position to learn of performance
- if notice is required, the contract is not complete until that notice has been communicated
What is a series contract?
A contact that takes place again and again over a period of time
Ie) money being forwarded on the first of every month for year
What are the two different kinds of offers for series contracts?
A) an offer to a series of contracts ie) A promises to pay B $100 a week to stop selling a rival’s paper –> unilateral contract with a series of performances
B) and offer to one acceptance with a number of performances ie) if A offers to sell B 4000 tons of coal made in equal monthly deliveries for four months –> A bilateral contract with four performances
What is the big difference between a series contract and an offer to one acceptance with a number performances?
Revocation - easy if it is a series of unilateral contracts, but not if it is a series of performances.
Is it possible to accept by silence?
- can be made by silence if the offer and acceptance are implicit instead of explicit
- if the relationship and circumstances justify silence
- there is a duty to speak when silence would be deceptive
- subjective intent is admissible
- if both parties agree that silence will show assent
- ## course of dealing (can follow a past pattern and assume assent from silence)
Who is responsible for the ambiguity created by silence?
The offeror
If A has sent goods without request to B and he always accepts them and pays for them and A makes an additional shipment and B hangs onto it for a long time without saying anything, is B’s silence an acceptance?
All about objective intent
What is the theory of estoppel?
A person should recover only if there was reliance involving an injurious change of position
Can a delay in application for insurance be seen as an acceptance?
No, but an acceptance can be implied if the premium is retained and the person wasn’t rejected within a reasonable time
Can you accept by silence when you take services?
The burden of rejecting arises because it is impossible to return services
- if a reasonable person would’ve thought they were free, no recovery
- if services are rendered within a family, no recovery
- if there should have been recovery, it is called a reverse unilateral contract
Define family
Blood or marriage. A collective body of person to form one household, under one head and one domestic government
Define consanguinity
Blood
Define affinity
Marriage
If you don’t say no to something what happens?
You are under obligation to pay for it ie) neighbor building a fence, tow truck moving your car
If you receive unsolicited goods by mail, what should you do with them?
Generally it is unlawful to offer merchandise for sale by the unsolicited sending of goods. If you get these goods in the mail, you can treat them as a gift
What is the rule for part performance?
A) classical view: the offer can be revoked at any time before complete performance
B) prevailing view: once the offeree begins to perform, the offer becomes irrevocable. He isn’t bound to complete performance, but unless he does, he isn’t entitled to recovery (preparation isn’t enough, he must start to perform)
How does cooperation between the offeror and the offeree affect part performance?
If the offeree tries to perform but is stopped by the offeror… Offer is a irrevocable even though the offeree didn’t get to perform, he tendered performance
Ie) If A offers to pay a clown to perform at a birthday party, and the clown comes to the door ready, but A sends him away –> didn’t have A’s cooperation so the clown tendered performance by showing up and that makes the offer irrevocable
Is an offeree first learned of an offer for a unilateral contract after beginning but before completing performance can she still accept the offer?
Yes by completing performance
If an arbitration term is included with the shipment of goods, how does that term become enforceable?
If the seller notified the buyer at the time of purchase that there were terms coming with the goods
If an offeree begins performance of a unilateral contract, and the offeror knows about it, who is bound?
Only the offeror
Does preparation to perform constitute a binding contract?
No
Can you revoke an offer for unilateral contract just as the offeree is trying to perform?
Yes as long as it is before acceptance
What are the ways that you can terminate power of acceptance?
A) lapse of time (its own terms) B) late acceptance0 C) death or lack of capacity D) revocation E) rejection/counter offer F) death, destruction, illegality
How can the power of acceptance be terminated by lapse of time?
If the language states when the offer ends, and you don’t accept before that time
What happens when an acceptance is received through the mail after the date it was allowed to be excepted by, but the date on the acceptance says it was before?
If the offeror knows about the delay of delivery, the time should start when the offeror received the acceptance
What amount of time is acceptable if the power of acceptance duration is not stated?
Reasonable time
How do you determine what a reasonable time is?
- Whether the transaction is speculative
- The manifest purpose of the offeror
- Whether the offeree was acting in good faith
What happens if the offer stipulates that the power of acceptance terminates on the happening of a certain event, and that event occurs before the acceptance?
Acceptance lapses even if the offer he is not informed that the event has occurred ie) subject prior to sale
When does the power of acceptance lapse in telephone conversations?
When the conversation is terminated
What are the different views on how late acceptance will terminate acceptance?
- Classical view: late acceptance is an offer that can be accepted only by a communicated acceptance
- Intermediate view: if the acceptance was late but sent in a reasonable time, the offeror must reply within a reasonable time. If he doesn’t do that there is no contract. The late acceptance is an offer that is accepted if the offeror remains silent
- Second restatement: The offeror doesn’t object to the lateness, there is a contract
What happens to an offer when the offeror dies?
Power of acceptance is terminated
A) majority view: even if the offeree doesn’t know of the death
B) Minority view: knowledge of the death is the only way to terminate the offer
How does insanity affect an offer?
Terminates the offer whether the offeree knew or not
When can a revocable offer be revoked?
Anytime before acceptance
When is a revocation effective?
A) general rule: when it is received
B) minority rule: when it is sent
How do you revoke a public offer?
Uses a medium, for as long, and equally prominent location, and the same size ad as the offer
What if you can’t revoke an offer the same way you made the offer?
Are required to give the best means of notice available under the circumstances
Do you terminate an offer indirectly?
If you make an offer to someone and while that offer is still open, you make an offer to another person who accepts it, and the first person hears about the acceptance, then the offer was revoked when the first person found out
In an indirectly terminated situation does the source of information have to be reliable?
Yes. If the info isn’t reliable, it can be ignored.
What does a rejection do to the offeree’s power of acceptance?
Terminates it
What does a counter offer do to the original offer?
Rejects it and terminates the power of acceptance
What does a new proposal do to an earlier proposal? (Aka adding qualifications or requiring performance not contained in the offer)
Supersedes it
When does a rejection or counter offer terminate the power of acceptance?
When it is received
What is a counter inquiry?
Comment on the terms or request for modification of the offer
Ie) “will you take $4800 for it?”
What is grumbling assent?
Acceptance that expresses dissatisfaction at some terms but stops short of dissent
What is a conditional contract?
Like when a contractor is making a bid and asks for bid from a subcontractor and promises that if he gets his own bed him move ahead with the contract with the subcontractor. Either party can withdraw until the event occurs, but afterward the parties are bound
What happens when there is the destruction of a person or thing that is essential to the contract?
The power of acceptance is terminated
Can illegality terminate an acceptance?
If something is made illegal between the making of an offer and its acceptance, then the illegality supervenes
What is the ribbon matching or mirror image rule?
Acceptance must match the offer exactly. And acceptance that adds conditions is a counter offer and rejection of the offer (if the conditions are only trivial)
Acceptance must be positive, unconditional, unequivocal, and unambiguous, and must not change, add to, or qualify the terms of the offer
What is the common-law rule for an acceptance that varies from the offer ?
The ribbon matching or mirror image rule
What is the UCC’s stance on acceptances that vary from the offer?
They uphold them only if they are immaterial details
What is the last shot principle?
The last set of terms placed on the table prior to the purchasers acceptance governed the terms of the contract
What does the UCC say about accepting different terms?
A definite expression of acceptance/written confirmation that is sent within a reasonable time both operate as acceptances even though the terms may be different or additional (as long as they do not diverge significantly from a Dickered term
What is considered a Dickered term?
Description of the goods, price, quantity, and delivery terms
What does the UCC say about additional terms?
They are proposals for addition to the contract, and if an acceptance is definite enough, but has additional terms, a contract has been formed
How does the UCC treat merchants that want to use additional terms?
The terms become part of the contract unless:
A) The offer expressly limits acceptance to the terms
B) they materially alter it
C) Notification of objection to the terms has already been given/given within a reasonable time after they were received
What is the language usually used to mean an express condition?
Subject to
How does the UCC deal with non-merchants and additions to contracts?
The terms of the offer are a contract without modification. Different terms do not become part of the contract unless they are excepted by the offeror
When can a bilateral offer be revoked when the parties are at a distance?
Any time prior to acceptance
When is an acceptance effective to a bilateral contract for parties at a distance?
When it is communicated
When are revocation/rejections to a bilateral contract effective?
When they are received
What is the mailbox rule?
An acceptance is communicated when I just put out of the possession of the offeree (like into a mailbox) and applies even if the communication is delayed/lost in transit
how did the UCC and restatements change the concept of a proper medium for accepting an offer?
It used to be what is authorized but now it is what is reasonable. Any medium reasonable in the circumstances is effective when it is put out of the possession of the offeree (Even if it is misaddressed or improperly stamped)
What was the traditional rule for proper medium of acceptance?
If the offeree uses an improper medium of acceptance, it is effective when received, rather than sent (same for misaddressed or improperly stamped communication)
What are the rules for acceptance of an offer to a bilateral contract when the parties are in each other’s presence?
- only works if the offeror hears it/is at fault for not hearing it
- majority of cases say the acceptance takes place when spoken by the offeree
What happens when there is a break in the phone connection between two parties that are making a bilateral contract?
The understanding of the least blameworthy party prevails
What is the majority view for a mistake in transmission by an intermediary?
The message as transmitted is operative unless the other party knows/has reason to know of the mistake
What is the minority view for mistaken transmission by an intermediary?
No contract will arise, because you are not liable for another’s negligence
What is an option contract?
And irrevocable offer. When the offeror accepts a consideration in exchange for a promise to keep the offer open for an agreed period of time
What is necessary for an option contract to exist?
Consideration, seal, beginning performance of the act in a unilateral contract
How can you terminate an irrevocable offer?
- Lapse of time
- Death or destruction of person/thing essential for the performance (creates impossibility)
- Supervening legal prohibition
What kind of things cannot terminate an irrevocable offer?
Rejection, revocation, supervening death or incapacity of the offer or offeree
When is acceptance of a revocable offer effective?
When received
What is the CISG?
United Nations convention for the international sale of goods
What does the CISG say about offers and acceptance?
a. An offer becomes the revocable when and acceptance is dispatched
b. Acceptance is effective only when it reaches the offeror
c. Acceptance can be withdrawn if the withdrawal reaches the offeror before/at the time as the acceptance would have become effective
What is the civil law’s stance on offers?
They are irrevocable for a stated/reasonable time
*** civil law favors the offeree
What does the common-law say about revocation of offers?
They are permitted, but the mailbox doctrine shortens the period in which an offer can be revoked
What is an offer?
Commitment with definite terms communicated to an identified offeree
What are the ways to terminate an offer?
A - offeree can reject it
B - offeror can revoke it
C - it can be terminated by operation of law
D - terminated by its own terms
What is the goal of the UCC?
Tries to make a contract where ever it looks like the parties have intended one. Encourages the formation of contracts
How does the UCC treat silence about acceptance?
If the contract is silent about delivery, the code will impose a reasonable time
Under the UCC what are the two ways to accept an offer?
Promise or performance
What are the two ways you can have a counter offer under the UCC?
A: The seller can ship nonconforming goods as an accommodation to the buyer
B: words of acceptance are expressly conditioned on a new and different term ie) you will only buy something if they deliver it on Saturday
When a counter offer is delivered under the UCC what does that do to the original offer?
It rejects the original offer and creates a new power of acceptance
Under the UCC if the acceptance contains a different term that is not conditional upon acceptance what does that mean?
Is considered an act of acceptance. The contract is made where the parties agree, the new or different term depends on a few factors
What is the UCC rule for additional terms when one of the parties is a non-merchant?
The original contract exists so long as the parties agree. The new/different term becomes a proposal for addition to the contract which must be separately accepted or rejected
What is the UCC position on additional terms when the contract is just between merchants?
The new or different term automatically becomes a part of the contract with three exceptions:
- unless the offer was limited to only its terms
- unless the offeror expressly rejects the term when hearing it
- when the new term would materially alter the obligations of the contract
What is the battle of the forms?
Situation when one business firm makes an offer on a preprinted form contract and the offeree responds with their own form contract. The discrepancy between the forms would prevent the ovaries response from operating as acceptance. Courts then had to resolve a battle of the forms
How can you accept a contract by performance?
If you agree to buy an item you have made an offer. The other person doesn’t have to send a letter promise, he can simply ship the item. His act of shipping is an acceptance that forms a contract
What happens when an offeree ships the wrong goods?
They become nonconforming goods and become an act of acceptance in order to form a contract, and then a breach of the contract because the goods are wrong
When is it okay to ship nonconforming goods?
If you do it as an accommodation to the buyer to see if he could use them in place of the goods that were ordered. This must be communicated. The shipment is not an acceptance, but as a counter offer that can be either accepted or rejected
When is a contract formed under common law unilateral contracts?
When you have substantial you completed the requested contract. Notice isn’t required unless completion performance wouldn’t otherwise come to the offeror’s attention, or notice is required as part of the performance
What are the elements of acceptance under common law?
- Must be a commitment:
- Must be communicated the right way using a correct method:
I) if the offer states how to communicate acceptance, then that is the only way
II) if the offer is silent about acceptance it can be communicated the same way the offer came or any reasonable way (must be as quick and is legally dependable as the original offer)
3) it will be effective upon dispatch
If you don’t respond to an offer the exact same way that it was communicated, what are your options?
You can respond in any reasonable way that is as fast or faster and as legally dependable. Ie) if the offer came by mail you can respond by mail, telegram, fax …. Not by phone because even though it is faster, it isn’t in writing, so it’s not as legally dependable
What are the three levels of knowledge/acknowledgement in contracts?
A) offer: actual knowledge by the offeree in order to accept
B) revocation/rejection of an offer: effective when received, whether or not they actually know about it
C) bilateral acceptance: effective when sent as long as it was sent the right way
L
What are the four exceptions for the mailbox rule?
- You can’t use it if the offer says you can’t
- You can’t use it in option contracts to straddle the end of the option (acceptance must be received during the option period…. Can’t be late)
- Vacillating offerees: when the other party changes her mind about whether she wants to be in the contract
- Vacillating offer number two: offer made, rejection sent, before rejection received, acceptance dispatched
Explain vacillating offeree
An offer is made, offeree accepts and dispatches an acceptance under the mailbox rule. Changes her mind and dispatches a rejection that will overtake the acceptance.
*** under the mailbox rule a contract was formed when the acceptance was sent, but if the offeror receives the rejection first and acts on it, that will supersede the mailbox rule. If he doesn’t get the rejection first, or if he doesn’t act on it when he gets it, there is a contract
Explain vacillating offer number two
An offer is made, a rejection is sent, before the rejection is received, an acceptance is dispatched.
*** mailbox rule does not apply. Whatever is received first by the offeror, that is the valid document. Acceptance first: contracts. Rejection first: no contract.
What else does the mailbox rule apply to besides mail?
Any dispatch of a message ie) fax, messenger, etc.
What happens if you were offered something and given a specific date to accept but you receive the notification much later, how long do you have?
You can add whatever period of time you would have had, had it been delivered normally, and that is the period of time lapse ie) if you would’ve had 24 hours, then you have 24 hours now
What are the two ways an offeror can revoke an offer?
A) expressly
B) I conduct
When does a letter count as being received?
When it is delivered to your door, your butler, secretary, clerk (someone in your control). It doesn’t matter if you haven’t seen it or read it… It is still received
How can an offeror expressly revoke an offer?
By words or statements that say doesn’t want to form a contract. The revocation must be received by the offeree to be effective
How can an offeror revoke an offer through conduct?
By doing an act that would prevent the performance of the contract, and the offeree learns about it from a reliable source… contract terminated
What are the three exceptional offers that do not allow revocation?
I) option contracts
II) equitable option
III) merchant’s firm offer under the UCC
What is an equitable option contract?
An implied option contract where an offeree detrimentally, reasonably, and foreseeably relies on an offer.
- offer must stay open for a reasonable time
Ie) contractor that goes to subcontractors to get bids. He will take the offer and submit it with his bid for the whole project. So he is detrimentally, reasonably relying on those bids. That will keep the offers open for a reasonable time because they foreseeably and reasonably should know how the situation works
What is a merchant’s firm offer and UCC?
When a merchant puts an offer in writing that says it will be held open it becomes an irrevocable offer for a time stated in the offer or for a reasonable time but never to exceed three months without consideration.
Are the rules of the merchant’s firm offer under the UCC?
- must be in writing
- applies to anyone in business
What are the three levels of merchants under the UCC?
1) General: people who are just in business.
2) people who are dealing in goods of a particular kind
3) people who are specialists in the kinds of procedures that are involved in a particular situation
How long must an offer stay open to a unilateral contract?
The offer must be open for reasonable time once performance has begun
- mere preparation to perform is not enough to make it an irrevocable offer
Once an offer is terminated by rejection can it revive and become viable again?
No, even if the parties return to that same offer it is a different contract
What are the four elements of a contract case?
A) parties entered into a valid contract
B) just performed each of his obligations under the contract
C) defendant failed to perform what he was obligated to under the contract
D) plaintiff was damaged as a result of the defendant’s breach
