The Basis of Contractual Obligation

Question 1

BILATERAL CONTRACT

Answer 1

An exchange of promises in which each party promises to do something for the other

Question 2

OFFER

Answer 2

An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it (Restatement 24)

Question 3

An offer creates a _____ in the offeree

Answer 3

Power of Acceptance

Question 4

ACCEPTANCE

Answer 4

a manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer (Restatement 50)

Question 5

If the offeree manifests their “acceptance” of the offer in a legally effective way, then __________

Answer 5

then at that moment a contract comes into being

Question 6

Preliminary Negotiations

Answer 6

– A manifestation of willingness to enter into a bargain is not an offer

if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent (Restatement 26)

Question 7

MUTUAL ASSENT =

Answer 7

OFFER AND ACCEPTANCE

o Offer and acceptance are not separate from Mutual assent, they are mechanisms of mutual assent

Question 8

ADVERTISEMENT

Answer 8

not offers to sell. It is an invitation to accept offers/invitation to deal

This is because they do not contain sufficient words of commitment to sell.

Question 9

CONDITIONAL ACCEPTANCE

Answer 9

No such thing. It is a counteroffer that nullifies the original offer

 Purported Acceptance Which Adds Qualifications – A reply to an offer which purports to accept it but is conditional on an offeror’s assent to terms additional to or different from those offered is not an acceptance but is a counteroffer (Restatement 59)

Question 10

METHODS OF TERMINATION of the Power of Acceptance (Restatement 36)

Answer 10

An offeree’s power of acceptance may be terminated by

a. rejection or counteroffer by the offeree
b. lapse of time
c. revocation by the offeror
d. death or incapacity of the offeror or offeree

Question 11

COUNTER-OFFER

Answer 11

1 - relates to same subject matter and proposes a different bargain
2 - offeree’s power of acceptance for the original offer is terminated by his making a counteroffer

1. A counter-offer is an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer
2. An offeree’s power of acceptance is terminated by his making a counter-offer, unless the offer has manifested a contrary intention or unless the counter-offer manifests a contrary intention of the offeree (Restatement 39)

Question 12

If the offeree makes a counter-offer, the power to accept the original offer is _______

Answer 12

terminated just as if they flatly rejected the offer

Question 13

Lapse of Time

Answer 13

• The offeror, as “master of the offer” can set a time limit for acceptance. At the end of this time limit, the offeree’s power of acceptance automatically terminates
• If offeror does not set a time limit for acceptance, the power of acceptance terminates at the end of a reasonable time period

Question 14

The offer is free to revoke his offer _____ (when?)

Answer 14

at any time before it is accepted (except option contracts)