Restatements (Second) Of Contracts

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Section 1 - Contract Defined

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A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.

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Section 2 - Promise; Promisor; Promisee; Beneficiary

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(1) A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.

(2) The person manifesting the intention is the promisor

(3) The person to whom the manifestation is addressed is the promisee.

(4) Where performance will benefit a person other than the promisee, that person is a beneficiary.

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Section 4 - How a Promise May Be Made

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A promise may be stated in words either oral or written, or may be inferred wholly or partly from conduct.

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Section 17 - Requirement of a Bargain

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(1) Except as stated in Subsection (2), the formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration.

(2) Whether or not there is a bargain a contract may be formed under special rules applicable to formal contracts or under the rules stated in subsection 82-94.

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Section 22 - Mode of Assent: Offer and Acceptance

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(1) The manifestation of mutual assent to an exchange ordinarily takes the form of an offer or proposal by one party followed by an acceptance by the other party or parties.

(2) A manifestation of mutual assent may be made even though neither offer nor acceptance can be identified and even though the moment of formation cannot be determined.

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Section 24 - Offer Defined

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

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Section 25 - Option Contracts

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An option contract is a promise which meets the requirements for the formation of contract and limits the promisor's power to revoke the offer.

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Section 26 - Preliminary Negotiations

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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.

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Section 32 - Invitation of Promise or Performance

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In case of doubt an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering the performance, as the offeree choses.

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Section 36 - Methods of termination of the Power of Acceptance

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(1) An offeree's power of acceptance may be terminated by

(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

(2) In addition, an offeree's power of acceptance is terminated by the non-occurrence of any condition of acceptance under the terms of the offer

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Section 38 - Rejection

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(1) An offeree's power of acceptance 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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Section 39 - Counter-Offers

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(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 owner.

(2) an offeree's power of acceptance 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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Section 43 - Indirect Communication of Revocation

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An offeree's power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect.

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Section 45 - Option Contract 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 contract 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 any - option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer.

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Section 59 - Purported Acceptance Which Adds Qualification

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A reply to an offer which purports to accept it but is conditional on the offeror's assent to terms additional to or different from those offered is not an acceptance but is a counter-offer.

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Section 63 - Time When Acceptance Takes Effect

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Unless the offer provides otherwise,

(a) an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree's possession, without regard to whether it ever reaches the offeror; but

(b) an acceptance under an option contract is not operative until received by the offeror.

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Section 71 - Requirement of Exchange; Types of Exchange

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(1) To constitute consideration, a performance

or a return promise must be bargained for.

(2) A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.

(3) The performance may consist of

(a) an act other than a promise or

(b) a forbearance, or

(c) the creation, modification or destruction of a legal relation

(4) The performance or return promise may be given to the promisor or to some other person. it may be given by the promisee or by some other person.

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Section 79 - Adequacy of Consideration; Mutuality of Obligation

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If the requirement of consideration is met, there is no additional requirement of

(a) a gain, advantage, or benefit to the promisor or a loss, disadvantage, or detriment to the promisee; or

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Section 81 - Consideration as Motive or Inducing Cause

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(1) The fact that what is bargained for does not of itself induce the making of a promise does not prevent is from being consideration for the promise.

(2) the fact that a promise does not of itself induce a performance or return promise does not prevent the performance or from being consideration for the promise.

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Section 87 - Option Contract

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(1) An offer is binding as an option contract if it

(a) is in writing and signed by the offeror, recites a purported consideration for the making of the offer, and proposes in exchange on fair terms within a reasonable time; or

(b) is made irrevocable by statute