Mutual Assent (O+A) Flashcards
What the the requirements for an enforceable contract?
- Mutual assent (offer + acceptance)
- Consideration (or substitute)
- No defense to formation
What is consideration?
A bargained for exchange of something of legal value
What are substitutes for consideration?
- Promissory estoppel
- Detrimental reliance
- (for UCC) good faith modification
What are defenses to formation?
- Mistake - mutual or (under certain conditions) unilateral mistake
- Lack of capacity - makes contract void or voidable
- Illegality - renders contract void
- Statute of Frauds
What is required to form a valid offer?
The offeror must:
- Manifest a willingness to enter into an agreement, AND
- Create a power of acceptance in the offerree
What are the terms required in an offer?
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
How is an offer terminated? (4 ways)
- Lapse of time: after a reasonable amount of time
- Rejection: including counteroffer (rejection and new offer)
- Revocation: unless it is FOUR (Firm offer, Option contract, Unilateral contract, or Reasonably foreseeable)
- Death or incapacity of offeror
What are the 4 exceptions to a revokable offer?
- Firm offer: by a merchant in a signed writing under UCC; open for a max of 3 months
- Option contract: a promise to hold open the offer + consideration for that promise
- Unilateral contract: if offeree BEGINS performance then offer is held open for a reasonable time
- Reasonable foreseeable: substantial reliance on offer
How do courts generally construe broad publications or ads?
As solicitations for offers or invitations to deal
What are the term requirements for real estate transactions?
Land specified and price
What are the term requirements for the sale of goods under Art. 2 of the UCC
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
What are the term requirements for employment and other services?
Nature of the work
If the duration is NOT specified, then it will be construed as terminable at the will of either party
How will courts handle missing terms?
As long as it’s clear that the parties intended to make a contract then courts can supply the missing term
How will courts deal with “vague” terms in a contract?
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
How will courts handle terms to be agreed upon later?
If the term is material, then the offer is too uncertain and thus unenforceable
For the offeree to have the power of acceptance what does it require on their part?
Knowledge of the offer
How to tell whether a response to an offer is a mere inquiry?
Test: whether a reasonable person would believe that the original offer had been rejected
When is a rejection effective?
When received by the offeror
What happens when an offeree rejects an option?
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
What are the 2 manners in which and offeror can terminate the offer?
- Directly, by telling the offeree the offer is revoked OR
- 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
How would a court handle “preparations to perform” under a unilateral contract?
It does NOT constitute beginning performance, but may constitute detrimental reliance
Once an offeree begins performance on a unilateral contract are they bound to complete performance?
No, acceptance is when performance is complete
Once an offeree begins performance on a bilateral contract, must they complete performance?
Yes, because a contract is complete and irrevocable (generally) once accepted
How is a contract terminated by operation of law?
- Death or insanity of either party (need NOT be communicated to the other party)
- Destruction of the proposed contract’s subject matter, OR
- Supervening illegality
What is acceptance?
Manifestation of assent to the terms of an offer
Who can accept an offer?
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
Is silence an acceptance?
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.
What happens under the UCC when a merchant sends a confirmatory memo with add’l or different terms?
It’s subject to the battle of the forms provision
What is the mailbox rule?
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
