Mutual Assent (O+A)

Question 1

What the the requirements for an enforceable contract?

Answer 1

1. Mutual assent (offer + acceptance)
2. Consideration (or substitute)
3. No defense to formation

Question 2

What is consideration?

Answer 2

A bargained for exchange of something of legal value

Question 3

What are substitutes for consideration?

Answer 3

1. Promissory estoppel
2. Detrimental reliance
3. (for UCC) good faith modification

Question 4

What are defenses to formation?

Answer 4

1. Mistake - mutual or (under certain conditions) unilateral mistake
2. Lack of capacity - makes contract void or voidable
3. Illegality - renders contract void
4. Statute of Frauds

Question 5

What is required to form a valid offer?

Answer 5

The offeror must:

1. Manifest a willingness to enter into an agreement, AND
2. Create a power of acceptance in the offerree

Question 6

What are the terms required in an offer?

Answer 6

CL: all essential terms (parties, subject, quantity, price)

UCC: parties, subject, quantity (price not req.)

NOTE: a requirements or output contract will NOT fail for lack of quantity as long as (1) made in good faith and (2) not unreasonable disproportionate to stated estimate or prior comparable output

Question 7

How is an offer terminated? (4 ways)

Answer 7

1. Lapse of time: after a reasonable amount of time
2. Rejection: including counteroffer (rejection and new offer)
3. Revocation: unless it is FOUR (Firm offer, Option contract, Unilateral contract, or Reasonably foreseeable)
4. Death or incapacity of offeror

Question 8

What are the 4 exceptions to a revokable offer?

Answer 8

1. Firm offer: by a merchant in a signed writing under UCC; open for a max of 3 months
2. Option contract: a promise to hold open the offer + consideration for that promise
3. Unilateral contract: if offeree BEGINS performance then offer is held open for a reasonable time
4. Reasonable foreseeable: substantial reliance on offer

Question 9

How do courts generally construe broad publications or ads?

Answer 9

As solicitations for offers or invitations to deal

Question 10

What are the term requirements for real estate transactions?

Answer 10

Land specified and price

Question 11

What are the term requirements for the sale of goods under Art. 2 of the UCC

Answer 11

Quantity

Note: requirements and output contracts will not fail for lack of quantity as long as (1) made in good faith and (2) not unreasonably disproportionate to a stated estimate or prior comparable output

Question 12

What are the term requirements for employment and other services?

Answer 12

Nature of the work

If the duration is NOT specified, then it will be construed as terminable at the will of either party

Question 13

How will courts handle missing terms?

Answer 13

As long as it’s clear that the parties intended to make a contract then courts can supply the missing term

Question 14

How will courts deal with “vague” terms in a contract?

Answer 14

Then the contract may be deemed too vague to be enforced unless there is (1) full performance or (2) part performance that clarifies the vague term

Question 15

How will courts handle terms to be agreed upon later?

Answer 15

If the term is material, then the offer is too uncertain and thus unenforceable

Question 16

For the offeree to have the power of acceptance what does it require on their part?

Answer 16

Knowledge of the offer

Question 17

How to tell whether a response to an offer is a mere inquiry?

Answer 17

Test: whether a reasonable person would believe that the original offer had been rejected

Question 18

When is a rejection effective?

Answer 18

When received by the offeror

Question 19

What happens when an offeree rejects an option?

Answer 19

It does NOT terminate the offer. The offeree is still free to accept the offer w/i the option period UNLESS the offeror has detrimentally relied on the rejection

Question 20

What are the 2 manners in which and offeror can terminate the offer?

Answer 20

1. Directly, by telling the offeree the offer is revoked OR
2. Indirectly, when the offeree receives (1) correct info, (2) from a reliable source, (3) of acts of the offeror that indicate to a reasonable person that the offer no longer wishes to make the offer

Question 21

How would a court handle “preparations to perform” under a unilateral contract?

Answer 21

It does NOT constitute beginning performance, but may constitute detrimental reliance

Question 22

Once an offeree begins performance on a unilateral contract are they bound to complete performance?

Answer 22

No, acceptance is when performance is complete

Question 23

Once an offeree begins performance on a bilateral contract, must they complete performance?

Answer 23

Yes, because a contract is complete and irrevocable (generally) once accepted

Question 24

How is a contract terminated by operation of law?

Answer 24

1. Death or insanity of either party (need NOT be communicated to the other party)
2. Destruction of the proposed contract’s subject matter, OR
3. Supervening illegality

Question 25

What is acceptance?

Answer 25

Manifestation of assent to the terms of an offer

Question 26

Who can accept an offer?

Answer 26

Only the person to whom the offer is addressed UNLESS it is an option contract where consideration is paid to keep the offer open, then the right to accept is transferable

Question 27

Is silence an acceptance?

Answer 27

Generally no, unless acceptance by silence is reasonable given prior dealings or trade practices.

Also, if offeree knew or had reason to know that the offeror was moving forward and expects payment and chose to stay silent, may be deemed by the court as having accepted.

Question 28

What happens under the UCC when a merchant sends a confirmatory memo with add’l or different terms?

Answer 28

It’s subject to the battle of the forms provision

Question 29

What is the mailbox rule?

Answer 29

An ACCEPTANCE sent by mail/email/fax is valid at the moment it is sent UNLESS:

(1) the offeree uses the wrong address/postage
(2) the offeror expressly stipulates otherwise
(3) it is an option contract
(4) the offeree sends a termination letter before the acceptance letter, OR
(5) the offeror detrimentally relies on a termination before he receives an the acceptance letter