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26 Cards in this Set
- Front
- Back
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Valid Contract
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A valid contract consists of an offer, acceptance, consideration & lack of formation defenses…
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When does the UCC apply?
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UCC applies to transactions in goods of $500 or more / parties are merchants
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Offer
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An offer is a manifestation of present contractual intent communicated to an identified offeree with containing definite and certain terms.
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Definite and certain terms: Majority Rule..
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Offer need only state the subject matter of the contract with definiteness and certainty. All other terms can be implied using reasonable terms.
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Definite and certain terms: Minority Rule / Common Law..
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The offer must make clear the subject matter, quantity, price, and time of performance.
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QTIPS:
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Quantity, Time of performance, Identity of parties, Price, & Subject matter.
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Offer Revocable: General Rule
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Offeror is the master of the offer; offers are freely revocable by offeror w/ 4 exceptions (3 at common law, 1 UCC only)
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4 types of irrevocable offers:
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1) Option contract, 2) Detrimental reliance by offer, 3) Unilateral contract, and 4) Merchants firm offer
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Option Contract:
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Requires consideration, open for time stated or reasonable time. Counter offers during this time DO NOT terminate the power of acceptance.
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Detrimental reliance by offeree:
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Requires reasonable / foreseeable reliance or forbearance of a substantial character.
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Unilateral Contract:
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Once substantial performance has begun, offer must be kept open for a reasonable time.
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Merchant’s firm offer:
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When a merchant gives a firm offer in writing that an offer will be held open it must remain open for a reasonable time, not to exceed 3 months. Can stay open longer but only non-revocable for three months.
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6 Ways to terminate offer: (ROCCER)
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Rejection by offer, Operation of law, Counter Offer, Conditional, Expiration or lapse & Revocation
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Acceptance:
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Acceptance is the unequivocable assent to the terms and conditions of the offer communicated to the offeror by the identified offeree in an authorized manner.
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Common Law - Mirror image rule:
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Any deviation in acceptance in an attempt to add to or to qualify the offer is a rejection; it is also considered to be a counteroffer or a conditional offer. Statements of clarification are not rejections. Statements of implied terms are not rejections.
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“Last Shot Rule”:
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Last expression before performance: Parties exchange rejections / counteroffers. When one party does not return a rejection / counteroffer, but performs. The courts will find an implied acceptance by performance.
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UCC 2-207(1)
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An acceptance with additional or different terms is still a valid acceptance. However if the acceptance is a CONDITIONAL acceptance it is still a rejection / counteroffer.
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Under UCC what is needed for an acceptance?
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There will always be an acceptance as long as the acceptance is NOT made conditional. Terms might still be open but acceptance is made.
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Acceptance w/ additional terms – 2-207(2), as between merchants..
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the additional terms become part of the contract unless:
● The offer limits acceptance to the terms of the offer; ● The offeror objects within a reasonable time; or ● The terms materially alter the contract. ● A material term is any term that results in a surprise or hardship ● A term is material if it substantially affects the economic risks or benefits or in any way limits the usual remedies for breach (hardship). ● Arbitration clauses are not considered material because they are so commonplace in commercial contracts that their inclusion would not result in a surprise or hardship. |
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What are considered material terms that will alter a contract?
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● A material term is any term that results in a surprise or hardship
● A term is material if it substantially affects the economic risks or benefits or in any way limits the usual remedies for breach (hardship). ● Arbitration clauses are not considered material because they are so commonplace in commercial contracts that their inclusion would not result in a surprise or hardship. |
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Acceptance w/ additional terms – 2-207(2), at least one party is NOT a merchant..
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The additional terms will be ignored and NOT become part of the contract.
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If the term does not become part of the contract..
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then the term results in a proposal for the additional term that requires EXPRESS assent.
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Acceptance w/ different terms – 2-207(2)...
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● Majority Rule is that the different terms get “knocked-out” and one applies gap fillers, custom & usage, and course of dealing or performance.
● Minority view is that the different terms in acceptance are ignored and the terms of the offer control. ● CA view treats “different terms” the same as “additional terms.” |
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The three ways to accept an offer under 2-206
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● Acceptance by promise to ship;
● Acceptance by shipment of conforming goods; or ● Acceptance by shipment of nonconforming goods. |
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How does an acceptance by sending non-conforming goods work?
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● If the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer, then, the shipment of non-conforming goods does not constitute an acceptance, but a counter-offer.
● If there is no letter of accommodation, then, the shipment of non-conforming goods will be an acceptance and a breach. |
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Mailbox rule:
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Acceptance is effective upon dispatch, provided that it is done as expressly authorized in the offer. If the manner of acceptance is not expressly prescribed, then it is determined by a reasonable means, which is interpreted by the following rule; the method must be as speedy and legally dependable, postage prepaid and properly addressed.
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