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38 Cards in this Set
- Front
- Back
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Intent to be Bound |
For a communication to be an offer, it must create a reasonable expectation in the offeree that the offeror is willing to enter into a contract on the basis of the offered terms. |
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Intent to be Bound: Factors to Consider |
1. Language of contract 2. Surrounding circumstances (statement made in anger, bragging) 3. Prior practice and relationship between the parties |
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Is there a valid offer? (Elements) |
1. Manifestation of a present intent to contract demonstrated by a promise, undertaking, or commitment; 2. Communicated to an identified offeree; and 3. Definite and certain terms |
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Methods of Termination of the Power of Acceptance (Restatement) |
1. Rejection or counteroffer by the offeree, or 2. Lapse of time, or 3. Revocation by the offeror 4. Death or incapacity of offeror AND the non-occurrence of any condition of acceptance under the terms of the offer |
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The Mailbox Rule |
1. Revocations and rejections are effective on receipt 2. Acceptances are effective on dispatch Exception: option contracts An acceptance under an option contract is not operative until received by the offeror |
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Mailbox Rule: What if you change your mind? |
Rejection to Acceptance (Horse Race) - Rejection is effective if it gets there first - Acceptance effective if it gets there first Acceptance to Rejection - If the acceptance arrives first, then acceptance is effective - If the rejection arrives first AND the offeror relies on the rejection, then the rejection is effective |
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UCC § 2-204(3): Gap Fillers |
Gap fillers apply where the parties to an otherwise enforceable contract have not agreed about a term (or have just made “agreement to agree”) a. Price of goods b. Quantity (output contracts) c. Mode, place, and time of delivery d. Time and place for payment |
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UCC § 2-305: Open Price Term Agreements |
1. An open price term will not prevent enforcement of a contract if the parties intended to be bound 2. If the parties later fail to agree on price, the court may enforce a “reasonable price” 3. If one party has the power to fix the price, she must do so in “good faith.” |
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Three Approaches to Consideraion |
1. Bargain for Exchange Approach 2. Detriment/Benefit Approach 3. Restatement Approach |
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Requirements to Form and Terminate an Option Contract |
1. Offeror’s promise to hold offer open for a period of time and; 2. Consideration from optionee to form the option contract itself - Nominal consideration is sufficient, sometimes even if not actually paid - Mere recital is enough - To terminate, need a new agreement |
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Predominant Thrust Test (Sale of goods or services?) |
1. Language of the contract 2. Nature of the business of the supplier 3. Intrinsic worth of the materials |
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UCC §2-205: Firm Offer |
- Must be an offer by a merchant - Offer must be in signed writing - The writing must give assurances that it will be held open (Ex. this offer will be held open for 10 days) - Period of time may not exceed three months - Irrevocability assurance must be signed separately |
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When do terms materially alter a contract? (UCC) |
A term materially alters deal if it would result in surprise or hardship if incorporated without express awareness by the other party Surprise: would a reasonable merchant have consented? (Reasonable expectations in light of common practice and usage. If a term is widely used, its inclusion should be no surprise.) Hardship: would term impose substantial economic hardship on the assenting party? |
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Elements of Promissory Estoppel |
1. A Promise 2. Promisor should reasonably expect to induce action or forbearance 3. Promise does induce such action or forbearance (detrimental reliance on the promise) 4. Injustic ecan be avoided only by enforcement of the promise |
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How an offer may become irrevocable |
1. Option contract 2. R § 45: part performance under offer for a unilateral contract 3. Merchant firm offers under UCC §2-205 4. Pre-acceptance reliance |
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Illusory Promises |
General Rule: a promise is illusory if it makes performance entirely optional with the promisor |
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Pre-Existing Duties |
The performance of, or promise to perform, a pre-existing duty cannot serve as consideration |
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Common Law Mirror Image Rule |
Acceptance must mirror the terms of the offer. A purported acceptance with differing and/or additional terms is understood as a rejection and a counteroffer BUT, if both parties perform, a contract is formed |
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Common Law Last Shot Rule |
If both parties perform (despite different terms)... the terms of the last document before performance become binding |
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Battle of the Forms: if there was no acceptance, but parties perform... |
Use Knockout Rule If no acceptance of terms, but contract is formed by performance, agreed-upon terms apply but differing terms are knocked out and replaced by UCC terms |
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Battle of the Forms: if there was no performance, how do you determine whether there was acceptance? |
A definite and seasonable expression of acceptance with different or additional terms is acceptance if... 1. Made within a reasonable time 2. Is not an explicit rejection (and counteroffer) 3. If acceptance is expressly conditional on offeror's assent to the terms in the acceptance, it is a rejection and counteroffer |
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Battle of the Forms: what if there is acceptance, but one party is not a merchant? |
Additional terms become proposals If terms are different, the terms of the offer are incorporated into the contract |
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Battle of the Forms: what if there is acceptance and both parties are merchants? |
Additional terms in the acceptance become part of the contract, unless: 1. The offer expressly limits acceptance to the terms of the offer 2. The terms materially alter the contract 3. Notification of objection to them has been given or is given within a reasonable time |
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What are material terms? |
Terms that would result in surprise or hardship if incorporated without express awareness by the other party Surprise: would a reasonable merchant have consented? Hardship: would term impose substantial economic hardship on the assenting party? |
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Examples of Material Terms |
1. Price, quantity, quality, arbitration, choice of law clauses 2. Disclaimer of standard warranties 3. Seller may cancel if any invoice is not paid when due 4. Limited (non-customary, unreasonable) time to complain |
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Elements of Promissory Estoppel |
1. A promise 2. Promisor should reasonably expect to induce action or forbearance 3. Promise does induce such action or forbearance (detrimental reliance on the promise) 4. Injustice can be avoided only by enforcement of the promise |
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Unjust Enrichment |
A person whois unjustly enriched at the expense of another is subject to liability inrestitution |
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Contract Implied-in-Law |
AKA Quasi Contract When a person performs services for another which are known to and accepted by the latter, the law implies a promise to pay for those services |
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Elements of Cause of Action for a Quasi Contract |
1. P conferred a benefit on D 2. D has knowledge of the benefit and has accepted or retained the benefit conferred 3. Circumstances are such that it would be inequitable for D to retain the benefit without paying fair value for it |
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Restitution is denied if... |
1. P did not intend to be compensated (volunteer, gift) 2. P is an officious intermeddler (pushy) 3. D refused |
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Indicators of Restitution |
1. Transaction costs are high 2. Had transaction costs been workable, parties would have reached an agreement 3. Can determine the terms parties would have agreed on |
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Promissory Restitution |
If a person receives a material benefit from another, a subsequent promise to compensate the person rendering such benefit is enforceable |
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Types of Contracts within the SoF |
Marriage: marriage is consideration for a promise Year: contracts that cannot be fully performed within one year from time contract is made Land: contract for the sale of an interest in land Executors: contracts of executors or administrators of estate to perform obligations of the deceased Goods: contracts for sale of goods with total equal to or greater than $500 Suretyship: contracts to answer for the debts of another |
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Requisites of a Written Memorandum (SoF) |
1. Need a writing 2. Must be signed by the party being charged 3. Contents: - Must identify subject matter - Must be sufficient to indicate a contract or offer has been made - Must state essential terms (duration, price, names of parties, etc.) |
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Using Multiple Writings to Satisfy SoF |
Multiple writings may be used to satisfy the writing requirement (merger) - Writings do not need to refer to each other - Must state required contents - Can be an internal memo, letter, etc. - Only one document must be signed - Must be signed by person the contract is being enforced aganist |
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Exceptions to SoF |
1. Full performance by a party to a contract that cannot be performed within 1 year 2. Part performance or other reliance when transaction involves an interest in land 3. Promissory estoppel |
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Requisites of a Written Memorandum (UCC SoF) |
1. Must evidence a contract for the sale of goods 2. Must be signed by the party being charged 3. Must specify a quantity of goods |
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Merchant's Exception to UCC SoF |
1. Both parties are merchants 2. Within a reasonable time of oral contract, one of the parties sends a written confirmation to the other 3. Which is signed by the sender and otherwise satisfies the statute as against the seller 4. Recipient has reason to know its contents 5. Recipient does not give written notice of objection to it within 10 days of receipt |
