Themis Contracts Flashcards
Formation of K elements
binding K requires manifestation of mutual assent, consideration,
and lack of valid defenses
Offer
objective manifestation of a willingness by offeror to enter into agreement that creates
power of acceptance in offeree
Intent
Knowledge
Terms
Language
Invitation to deal
Intent
a statement is an offer only if:
* Person to whom it is communicated could reasonably interpret it as an offer
* Expresses present intent of a person to be legally bound by a K
Knowledge
offeree must know of the offer in order to have the power to accept
Terms
must be certain and definite or the K fails for indefiniteness
- Under common law (CL)
o Essential terms (parties, subject matter, price, quantity) must be covered in K
o If the parties intended to create a K, the court may supply missing terms - Under UCC
o Only essential term is quantity
Exception—requirements or output Ks (UCC implies “good faith”)
UCC “fills the gap” if other terms are missing
o K formed if both parties intend to K and reasonably certain basis for giving remedy
Language
offer must contain words of promise, undertaking, or commitment, and be
targeted to a number of people who could actually accept
* If a return promise is requested—bilateral K
* If an act is requested—unilateral K
Invitation to deal
offer must contain words of promise, undertaking, or commitment, and be
targeted to a number of people who could actually accept
* If a return promise is requested—bilateral K
* If an act is requested—unilateral K
Termination of offers
Lapse of time
Death/mental incapacity
Destruction/Illegality
Revocation
Revocation of general offers
Rejection by offeree
Lapse of time
specified termination date or reasonable period of time if none stated
Death/mental incapacity
- General rule—offer terminates, even if offeree does not learn of offeror’s death until
after the offeree has sent what he believes is an acceptance - Exception—offers for option Ks do not terminate because consideration was paid to
keep the offer open
Destruction/illegality
Offer terminated
Revocation
- Offer can be revoked any time prior to acceptance (even if it states it will be open for
specific amount of time) - Not effective until communicated
- Revocation sent by mail not effective until received
Limitations on revocation - option K
offeree must generally give consideration for option to be enforceable
Limitations on revocation - UCC firm offer rule
o Offer irrevocable (for reasonable time but no more than three months) if offeror is a
merchant (or any business person), and assurances (in authenticated writing) are
made that offer will remain open
o No consideration needed to keep offer open
Limitations on revocation - Promissory Estoppel
—if offeree reasonably and detrimentally relies on offer it may
become irrevocable
Limitations on revocation - partial performance
for all Ks, offeree must have knowledge of offer when
performance begins
o Unilateral K—offeror cannot revoke once offeree has begun performance
o Bilateral K—commencement of performance operates as promise to render
complete performance
Revocation of general offers
(to large number of people)—revocable only by notice given
at least same level of publicity as offer (effective even if potential offeree acts in reliance on
offer)
Rejection by offeree
- Offeree clearly conveys to offeror that he no longer intends to accept the offer
- Rejection usually effective upon receipt
- Counteroffer—acts as rejection of original offer and creates new offer
Acceptance
objective manifestation by the offeree to be bound by the terms of the offer
Think about:
bilateral v unilateral
means of acceptance
mailbox rule
notice
Acceptance - Bilateral v Unilateral
- Bilateral K
o Exchange of promises that render both enforceable - Unilateral K
o Promise to do something by one party in return for an act of the other party
o Starting to perform is not enough, but it will make offer irrevocable for a reasonable period of time to complete performance
o Offeree must be aware of offer before acting
means of acceptance
unless offeror specifies, offeree can accept in any reasonable manner/means
- Silence—is not acceptance unless offeree has reason to believe offer could be accepted by silence or previous dealings make it reasonable to believe that offeree must notify offeror if he does not intend to accept
- Shipment of goods
o Buyer’s request that goods be shipped is inviting acceptance either by seller’s promise to ship or by prompt shipment of goods
o Nonconforming goods shipped—both an acceptance and a breach, unless seller seasonably notifies buyer that goods are an accommodation (counteroffer); buyer may then accept or reject the nonconforming goods
Mailbox Rule
(applies only to acceptance; almost exclusively applies to bilateral Ks)
- Acceptance—effective when sent (not upon receipt), unless offer provides otherwise
- Rejection following acceptance—acceptance will control even if offeror receives rejection first (but if offeror detrimentally relies on rejection then offeree estopped from enforcing K)
- Acceptance following rejection—mailbox rule does not apply; first one received (i.e., in possession of offeror or her agent, or deposited in mailbox) will prevail; offeror need not actually read the received communication
- Revocation—effective upon receipt
- Options and other irrevocable offers—mailbox rule does not apply; acceptance must be received by offeror by a certain date or before offer expires
Notice
- Unilateral K
o Offeree not required to give notice after completing performance, unless:
Offeror wouldn’t learn of performance with reasonable certainty and promptness; or
Offer requires notice.
o Notice required but not provided—offeror’s duty is discharged, unless:
Offeree exercises reasonable diligence to give notice;
Offeror learns of performance within reasonable time; or
Offer indicates notice of acceptance is not required.
- Bilateral K—offeree must give notice of acceptance
o Mailbox rule—acceptance valid when sent (even though offeror hasn’t received it)
o UCC—if acceptance is made by beginning performance, notice is required within a reasonable time; failure to give notice results in offer’s lapse
Additional or different terms
think CL mirror image rule and UCC (no mirror-image rule)