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58 Cards in this Set
- Front
- Back
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Bilateral contract
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both offer and acceptance are in the form of promises on both sides to do something in the future (promise in exchange for a promise)
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Unilateral contract
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the acceptance is actual performance by the accepting party
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"Classical system" of contract law
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- Prefers rules over standards
- Largely indifferent to issues of social policy - believes in the sanctity of contract - But, also believes in freedom from contracting |
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Basis of Contractual Formation (obligation)
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Mutual assent and consideration
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R2C 17: 2 requirements for formation of a contract:
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A bargain in which there is:
1. manifestation of mutual assent to the exchange AND 2. Consideration |
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Mutual Assent
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- usually occurs through offer and acceptance
- Sometimes referred to as "Meeting of the Minds" |
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Objective manifestation of intent
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sufficient, even if one party is mistaken as to what he or she is agreeing to
Rationale: upholding the other party's reasonable expectations; a contrary rule would make it very difficult to enforce contracts |
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RST 20: Effect of misunderstanding
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There is no manifestation of mutual assent if the parties attach materially different meanings to their manifestations
AND 1) Neither party knows or has reason to know of the other's meaning OR 2) Both parties know or have reason to know of the other's meaning |
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The manifestations of the parties are operative in accordance with the meaning attached to them by one of the parties if:
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1)That party does not know (or have reason to know) of any different meaning attached by the other
AND 2) the others knows (or has reason to know) the meaning attached by the first |
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Offer and Acceptance-- Bilateral K
Classical Theory |
- preliminary period of negotiation, eventually followed by offer + acceptance = K
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Bilateral contract
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both offer and acceptance are in the form of promises on both sides to do something in the future (promise in exchange for a promise)
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R2C 22(1) Mutual assent usually take the form of an "offer"
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by one followed by an "acceptance" by the other party
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R2C 24
Offer |
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
Considerations: language used, specificity, seriousness |
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Offer v. Preliminary Negotiations/Invitations to receive offers
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Preliminary negotiations/invitations to receive offers are generally NOT OFFERS
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R2C 26: A manifestation of willingness to enter into a bargain...
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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
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Promise v. Statement of Present Intention
Advertisements (as offers) |
General rule: NOT an offer but "invitations for offer" or "offers to receive offers"
Exceptions: 1) Deliberately misleading ad that leads reader to think one exists 2) Some language of commitment or invitation to take action without further communication |
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Lonergan v. Scolnick
Advertisement General Rule |
No offer
General rule: the offeror is the master of her offer Rule: If no "meeting of the minds" not an enforceable contract |
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Izadi v. Machado (Gus) Ford
Advertisement Exception #1- Offer |
Rule: If an offer is conveyed by the objective reading of an advertisement, it odes not matter the advertiser may subjectively have not intended for its chosen language to constitute a binding offer
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Lefkowitz (fur coats)
Advertisement Exception #2- Offer |
1st come, 1st served (convert as to offer)
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Power (manner) of Acceptance
Time |
expiration of offer after stated period, or if no period stated, a reasonable time
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Power of Acceptance
Manner: |
If offeror requires certain manner of acceptance, that manner is required
If no manner is specified; offer invited acceptance in any reasonable manner and by any reasonable medium unless there is contrary indication |
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Forms of termination
R2C 36: |
a) rejection or counter-offer by the offeree, or
b) lapse of time, or c) revocation by the offeror, or d) death or incapacity of the offeror or offeree |
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Rejection:
R2C 38 |
1) an offeree's POA is terminated by his rejection of the offer, unless the offeror has manifested a contrary intention
2) A manifestation of intention not to accept an offer is a rejection unless the offeree manifests an intention to take it under further advisement |
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R2C 39 Counter-offer
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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 the original offer
2) an offeree's POA is terminated by his making of a counter-offer, unless the offeror has manifested a contrary intention or unless the counter-offer manifests a contrary intention of the offeree |
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Time when Acceptance takes effect
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when it is communicated
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Mailbox Rule R2C 63
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1)Bilateral K: acceptance is effective when dispatched (deposited in mailbox- post marked midnight same day)
2) Option K: not operative until received by offeror - this is a default rule and can be changed by the terms of the itself, "the offeror is master of the offer." |
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Normille v. Miller rule
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a prospective purchaser does not have the power to accept a counteroffer after receiving notice of its revocation by accepting the counteroffer within the time period specified in the prospective purchaser's original (time clause did not become part of counteroffer)
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Unilateral Contract
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the acceptance is actual performance by the accepting party
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Bilateral v. Unilateral contract
Which one? |
look at the offer:
determine what the offeror is asking |
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Petterson v. Pattberg
Unilateral K rule: |
an offer to enter into a unilateral contract may be withdrawn at any time prior to performance of the act requested to be done
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Dicta: completed performance (compared to R2C-45 Option K)
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would apply even had begun performance (initial payment) because act requested is completed act of payment
Rationale: if performing party is not bound until performance is completed, then offeror can't be either |
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R2C 45: Option K created by Part Performance or Tender
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1) Where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance, an option K is created when the offeree tenders or begins the invited performance or tenders a beginning of it
2) The offeror's duty of performance under an option K so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer |
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Cook v. Coldwell Banker
Revocation of a unilateral contract |
in the context of an offer for a unilateral contract, the offer may not be revoked when the offeree has accepted the offer by substantial performance
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UCC Mutual Assent (UCC 2): Sale of Goods
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includes: all things that are movable
Does not include: real property, services, leases of goods |
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Promise to make a gift
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No consideration, promise to make a gift not enforceable
- mere pretense of consideration or "nominal" consideration will be insufficient for the enforcement of promise (actual BFE must be present) - No reliance, problems of proof, promises made emotionally/not deliberately, may serve as good reason to revoke later if considered contract |
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Batsakis v. Demotsis
Adequacy of consideration = irrelevant |
Mere inadequacy of consideration will not void a contract
R2C 79(b): If the requirement of consideration is MET, there's no additional requirement of equivalence in value's exchanged |
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"Illusory" promises as consideration:
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NOT consideration
- Make performance by promisor entirely optional Mutuality of obligation |
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Mutuality of obligation:
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both parties must be bound or neither is bound
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Plowman v. Indian Refining Co.
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Past consideration is NOT consideration
Rule: not enforceable. 1) VP had no authority 2) even if promise of lifetime payments was made, unenforceable for lack of consideration |
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Insufficient forms of consideration (4):
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- Past services
- Moral consideration - Condition to gratuitous promise - Forbearance |
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Pre-acceptance reliance
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Limiting offeror's power to revoke; irrevocability by statute ("firm offer")
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Offeror's power to revoke:
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General Rule: offeror can revoke at any time prior to acceptance, even if offeror promised to hold offer open
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Exceptions to Offeror's power to revoke
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1) Option contract: when the offeree has given consideration (even if nominal) to have the offer held open for a stated period of time R2C 87(1)(b)
2) Past performance (unilateral K): when the offeree has begun the requested performance-- offer must stay open until offeree can complete performance, resulting in acceptance 3) Reliance (bilat. K): on offer for a bilat. K being held open i.e. promissory estoppel/ detrimental reliance |
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Contractor/Sub-contractor examples
James Baird Co. v. Gimbel Bros |
NO Contract
Rules: 1) Bilateral contract formed? Where an offer is withdrawn before it is accepted, and the offer language does not indicate a contrary intention, a contract is not formed 2) Promissory estoppel? Doctrine of PE is not applicable where an offer is made for an exchanged act or promise and no consideration has been received by the offeror 3) Option K? No reason to suppose that D meant to subject itself to such a one-sided obligation |
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Contractor/Sub-contractor examples
Drennan v. Star Paving Co. |
K? Yes
Rule: Promissory estoppel/detrimental reliance - D made bid based on its own business interests with knowledge P could use it and could reasonably foresee harm that would ensue from an erroneous estimate - Implied promise not to revoke its offer that P relied upon to its detriment Exceptions (rec. by Judge): - if offer itself provides that it's revocable - if offeree shops around to obtain a better bid or tries to reopen neg. - if offeror made bona fide mistake, know to offeree - if D made a mere estimate, not a bid |
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R2C 87 Option K
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1) An offer is binding as an option k if it:
a) is in writing and signed by the offeror, recites a purported consideration for the making of the offer, and proposes an exchange on fair terms within a reasonable time OR b) is made irrevocable by statute 2) An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice |
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Consideration forms #2 & #3
(Liability in the absence of BFE) |
No actual consideration but form shows liability as condiseration
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Promissory Estoppel/ Detrimental Reliance
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* Must be pled and proven as different COA (if other forms consideration also claimed)
2 possibilities: 1) does the party giving the gift receive a benefit from the other party OR 2) is the party receiving the gift suffering some detriment? |
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Promissory estoppel and detrimental reliance:
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consideration substitute in absence of BFE
R2C 90: Promise reasonably inducing action or forbearance |
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5 Elements of P.E. R2C 90(1)
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1)promise
2) foreseeability of reliance (induce action or forbearance) of the promise or 3rd person 3) reliance does occur by promisee (does induce action or forbearance) 4) reasonableness of reliance 5) injustice can only be avoided by enforcement of the promise |
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Charitable subscriptions R2C 90(2)
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a charitable subscription or marriage settlement is binding under [1] without proof that the promise induced action or forbearance
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Pop's Cones v. Resorts International Hotel
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Contracts b/t 2 merchants (UCC);
"Firm Offers" |
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UCC "Firm Offers" (UCC 2-205)
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An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if not time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror
- Can have option K that's valid in UCC even w/o consideration if you meet all of the other requirements |
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Option K ( R2C 87(1) )
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offer binding if in writing, signed by offeror, if recites purported consideration for making of offer, it proposes an exchange on fair terms
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"Battle of the forms" (Acceptance)
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Terms may be different in "offers" between parties
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Mirror Image Rule
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Under Common Law, anything in response to the original offer that is different;
NOT an acceptance but a Counter-offer |
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Last Shot Rule
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the party who sends the last document wins; the 1st document is not on the table anymore
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UCC 2-207: Additional Terms in Acceptance or Confirmation
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(1) Acceptance even if additional/different terms than ones offered/agreed upon, unless acceptance expressly determined to be conditional
(2) Additional terms construed as proposals. Between merchants such terms become part of the K unless: a) offer expressly limits acceptance to the terms of the offer; (b) they materially alter it or (c) notification of objection to them has already been given or is given within a reasonable time after notice of them has been received (3) conduct by both parties which recognize the existence of a contract is sufficient to establish a K for sale although the writings of the parties do not otherwise establish a K. In such case, the terms of the particular K consist of those terms on which the writings of the parties agree, together with any suppl. terms incorp. under any other provisions of this act |
