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Cards in this deck (55)
- 1Mutual Assentoffer, acceptance
- 2SS 25 Rest 2nd. Intent to be bound“If A promises and B knows or has reason to know that A does not intend fixed purpose until he has given a further expression of assent, he has not made an offer.”
- 3Offer Rest. 2d § 24.A party makes an offer if she demonstrates a willingness to enter into a bargain under reasonably certain and definite terms without the need for any further assent on her part.
- 4Acceptance Rest. 2d §50a manifestation of assent to the terms of an offer in the manner prescribed or authorized in the offer.
Through this manifestation of assent, the offeree exercises the power given by the offeror to create a contract.
The acceptance must be an absolute, unequivocal and unqualified acceptance of each term in the offer. - 5Primary SourceCommon Law and Statutory Law
- 6Statutory LawUniform Commercial Code (UCC)
▪ Covers the sale of goods
▪ Adopted at least in part by all states
▪ Legislatively enacted by congress - 7Secondary SourcesRestatement 2nd.
of Contracts and Legal Commentary - 8Mailbox Ruleacceptance by mail or similar means (i.e., given to a courier service, such as UPS) creates a contract at the time of dispatch, provided that the mail is properly addressed and stamped, UNLESS:
i) the offer stipulates that acceptance is only effective when received; or
ii) if the offeree sends a rejection and then sends an acceptance, whichever arrives first is effective;
iii) if the offeree sends an acceptance and then a rejection, the acceptance is effective (ie, the mailbox rule applies) unless the rejection arrives first and the offeror detrimentally relies on it. - 9Rest 2nd SS 39Counter-offer
- 10Counteroffer Rest 2nd SS 39a) an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substantial bargain differing from that proposed by the original offer.
b) An offeree’s power of acceptance is terminated by his making of a counteroffer, unless the offeror has manifested a contrary intention or unless the counter-offer manifests a contrary intention of the offeree. - 11Bi-lateral contract1. offeror makes offer to offeree
2. offeree has acceptance to the offeror - 12Breach of contractWhen a party does not fulfill their part of the contract
- 13Elements of contractmutual assent (offer and acceptance) and consideration
- 14Rest. 2d § 26. Preliminary NegotiationsA 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.
- 15Lonergan v ScolnickThis case explains that mutual assent is needed to create a contract and that mutual assent consists of both an offer and acceptance. Communications that do not result in an offer and acceptance are considered preliminary negotiations.
- 16Ads and Offers: Common Law RuleAdvertisements, catalogs, circular letters, and the like containing price quotations are usually construed as mere invitations for offers.
In certain situations, courts have treated ads as offers where the language of the ad can be construed as containing a promise, where the terms are certain and definite and where the offeree is clearly identified.
Courts enforce deliberately misleading advertising which intentionally leads the reader to the conclusion that a contract exists. - 17Unilateral ContractParty A, as a promisor has a DUTY where party B the promisee has a benefit. Party B then performs a duty for A and A benefits.
- 18Rest. 2d § 45. Option Contract Created By Part Performance Or Tender(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. - 19Rest. 2d § 24. Offer DefinedAn 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 it.
- 20Restatement 2d § 33. Certainty(1) ] a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain.
(2) The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.
(3) The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance. - 21Certainty Requirments1) identity of offeree;
2) subject matter;
3) price to be paid;
4) quantity;
5) nature of work to be performed. - 22Rest. 2d §36. Methods Of Termination Of The Power Of Acceptance(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. - 23Qualified or conditional acceptancea mere inquiry regarding the possibility of different terms, a request for a better offer, or a comment upon the terms of the offer, is ordinarily not a counter-offer. Such responses to an offer may be too tentative or indefinite to be offers of any kind; or they may deal with new matters rather than a substitution for the original offer; or their language may manifest an intention to keep the original offer under consideration.
- 24ConsiderationA detriment occurs if the promisee does something that s/he is under no legal obligation to do, or refrains from doing something s/he has a legal right to do.
A detriment may occur even though the promisee is personally benefited by the action, so long as the promisor primarily sought to induce the detriment by making the promise. - 25Restatement 2d§71.(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. - 26Restatement 2d Sec.§79. Adequacy Of Consideration; Mutuality Of ObligationIf 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
(b) equivalence in the values exchanged; or
(c) "mutuality of obligation." - 27The Consideration RuleEvery contract requires valuable consideration to support it.
Consideration consists of two elements:
1) a bargained-for exchange between the parties, and
2) that which is bargained for must be of legal value.
A bargained-for exchange consists of a bargain in which the promise induces the detriment and the detriment induces the promise. - 28Bargained-for exchangeconsists of an exchange in which the promise induces the detriment and the detriment induces the promise.
There need not be actual negotiation for there to be a bargained-for exchange. - 29sufficient legal valueIn general, a detriment incurred or a waiver of a legal right at the request of another party provides consideration with legal value.
The detriment must be the price of the exchange (not that the promisee merely incurs the detriment). - 30Motive testIf the motive of the promisor was to induce the detriment, then treat the action by the promisee as consideration.
If the motive of the promisor was no more than to state a condition of the promise to make a gift, then there is no consideration. - 31Consideration Requirments serve what functions:1. Evidentiary Function: Provides objective evidence that the parties intended to make a binding agreement.
2. Cautionary Function: Parties will be less likely to make thoughtless or bad bargains if providing consideration will make them liable.
3. Categorizing Function: Requiring consideration helps us categorize or label transactions as legal or non-legal. - 32Donative Promises(aka executory gifts or gratuitous promises) as a future-gift it lack consideration and therefore are unenforceable.
If either party intends to make a gift, then she is not bargaining for return consideration and the law does not recognize gifts as contracts - 33Gross inadequacy of considerationmay be relevant to charges of fraud, incapacity, duress and other defenses.
- 34Sham or token consideration(e.g., insignificant sum, such as $1). If sham or token consideration is given, then the thing conveyed is likely a gift.
an inadequate consideration - 35inadequate considerationsMere inadequacy of consideration will not void a contract. “Courts will typically not inquire into adequacy of consideration.” Dohrmann v. Swaney
No requirement of equivalent values exchanged. Restatement 2d Sec. 79.
Failure of consideration. If the purported consideration has no value, then the consideration fails and no contract is formed. - 36Past and Moral ConsiderationPast consideration does not have legal value.
Something which has been delivered before the promise is executed, and, therefore, made without reference to it, cannot properly be legal consideration. -Plowman v. Indian Refining Co.
Moral consideration also does not have legal value. - 37Merchant’s Firm Offer UCC § 2-205An offer by a merchant to buy or sell goods in a signed writing which by its terms give assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no 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.
- 38offer in writing (UCC)in signed-writing, which by its terms give assurance that it will be held open is not revocable for lack of consideration during the time stated or if no time stated-- for a reasonable time
- 39irrevocability exceeds three monthsSee Comment 3:
A promise made for a longer period will operate under this section to bind the offeror only for the first three months of the period but may of course be renewed.
If supported by consideration it may continue for as long as the parties specify. This section deals only with an offer that is not supported by consideration. - 40Any term of assurance on a form supplied by the offeree must be ____separately signed by the offeror.
- 41Protection is afforded against the inadvertent signing of a firm offer whencontained in a form prepared by the offeree by requiring that such a clause be separately authenticated.
- 42UCC § 2-104. "Merchant"means a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill.
- 43UCC § 2-105. Goodsmeans all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities (Article 8) and things in action. "Goods" also includes the unborn young of animals and growing crops and other identified things attached to realty as described in the section on goods to be severed from realty.
- 44Restatement 2d Contracts § 87. Option Contract(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 an exchange on fair terms within a reasonable time; or
(b) is made irrevocable by statute. - 45Test to determine whether the UCC or common law governsFOR COMMON and not UCC
-- The rendition of service, with goods incidentally involved
e.g., contract with an artist for a painting
-- Or is it a transaction for sale of a good, with labor incidentally involved
e.g., purchase of a water heater with installation - 46Factors to determine whether the UCC or common law governsA court should consider:
(1) the language of the contract,
(2) the nature of the business of the supplier, and
(3) the intrinsic worth of the materials.
(citing Coakley v. Williams) - 47UCC §2-207. Additional Terms of Acceptance or Confirmation.(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.
- 48UCC ss2-207(1) mirror image lawUnder the common law, the acceptance must exactly match the offer. Under the UCC, a contract is formed despite differing terms so long as other requirements are met.
Exception: A conditional acceptance turns into a counter-offer, which then must be accepted by the original offeror (now new offeree). - 49UCC 2-207(2) whose terms control the est. contractIf at least one party is not a merchant, then the additional terms are mere proposals to modify the contract.
If both parties are merchants, then the additional terms automatically become part of the contract UNLESS one of three conditions occur. - 50elements of UCC 2-207 (2) Merchant v Merchant Terms to Contract, Unless:(a) the offer expressly limits acceptance to the [offer terms];
(b) they materially alter it; or
(c) notification of objection has already been given or is given within a reasonable time after notice of them is received. - 51UCC 2-207(2)(a) If the original offer expressly limits acceptance by the offeree to the termsthen any additional terms are automatically rejected and do not become part of the contract.
The offeror is the master of the offer and so can define what constitutes acceptance. - 52UCC 2-207(2)(b) If the additional terms materially alter the contract, _____Then those terms are not part of the contract.
Terms materially alter a contract if it would result in surprise or hardship by the other party. One test is whether the terms change a party’s risk profile or the remedies available. - 53UCC 2-207(2)(c) Recognition of the Existence of a KConduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act.
- 54UCC 2-207(3) If the offeree’s terms conflict with the terms in the offer such that no contract was formedIf the offeree’s terms conflict with the terms in the offer such that no contract was formed (i.e., the offeree’s conditional acceptance is never accepted), BUT the parties’ conduct is such that it recognizes the existence of a contract, then (1) the conflicting terms are knocked out (2) the contract consists of terms that the forms agree on and (3) the UCC implies reasonable terms under the Act.
- 55Elements for promissory estoppel1) there is a promise, 2) the promisor should have reasonably expected that the promisee would detrimentally rely on the promise, 3) there was actual reliance by the promisee, and 4) injustice can be avoided only by enforcement of the promise and enforcement may be limited as justice requires.
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- Flashcards on K, created by Hegel Salgado on 28/09/2017.
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