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36 Cards in this Set
- Front
- Back
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Agreement/mutual assent
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An essential elements for contract formation is agreement - the parties must agree on the terms of the contract and manifest to each other their mutual assent (agreement) to the same bargain
*Not all agreements are contracts - a contractual agreement arises only when the terms of the agreement impose legally enforceable obligations on the parties |
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offer
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a promise or commitment to do or refrain from doing some specified thing in the future
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Three elements for offer to be effective
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1. Offeror must have a serious intention to become bound by the offer
2. The terms of the offer must be reasonably certain, or definite, so that the parties and the court can ascertain the terms of the contract 3. The offer must be communicated to the offeree |
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Intention
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first requirement for an effective offer
courts generally adhere to the objective theory of contracts - a party's words and conduct are held to mean whatever a reasonable person in the offeree's position would think they meant |
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Expression of Opinion
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Not an offer. It does not indicate an intention to enter into a binding agreement
EX: Doctor says hand will heal in a couple days but it takes a month. his OPINION did not form a contract that the boy's hand WOULD heal in a couple days. |
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Intention
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A statement of an intention to do something in the future is not an offer.
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Preliminary Negotiations
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A request or invitation to negotiate is not an offer.
It only expresses a willingness to discuss the possibility of entering into a contract. EX: I wouldn't sell my car for less than $5,000. Also, the invitation to submit bids is not an offer and a contractor does not bind the government or private firm by submitting a bid. (The bids the contractors submit are offers, however, and the government or private firm can bind the contractor by accepting the bid) |
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Agreements to Agree
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In the past, haven't been binding but not agreements to agree may be enforceable agreements (contracts) if it is clear that the parties intended to be bound by the agreements. (focus on parties' intent rather than form)
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Advertisements
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advertisements - including representations made in mail-order catalogues, price lists, and circulars - are treated not as offers to contract but as invitations to negotiate.
Also, a seller's price list is not an offer to sell at that price, it merely invites the buyer to offer to buy at that price |
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Auctions
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A seller "offers" goods for sale through an auctioneer, but this is not an offer to form a contract - it is an invitation asking bidders to submit offers. The offer is accepted when the auctioneer strikes the hammer (before then either the auctioneer or offeror can take back their offer).
When the auctioneer accepts a higher bid, he rejects all previous bids. |
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Definiteness of Terms
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An offer must have terms that are definite so that, if it is accepted and a contract formed, a court can determine if a breach has occurred and can provide an appropriate remedy.
Terms required: 1) Identification of the parties 2) ID of the object or subject matter of the contract (and quantity when needed) including the work to be performed, with specific ID of such items as goods, services, and land 3) The consideration to be paid 4) The time of payment, delivery, or performance |
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Communication
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Requirement for an effective offer - the offer must be communicated to the offeree
EX: Missing dog reward, Bob finds it but doesn't know about the reward, can't claim it |
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Termination of Contract (3 ways)
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1) revocation
2) rejection 3) counteroffer |
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revocation
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the offeror's act of withdrawing an offer. this must be communicated to the offeree before the offeree accepts
Becomes effective when the offeree receives it An offer made to the general public can be revoked in the same manner that the offer was originally communicated |
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option contract
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This is created when an offeror promises to hold an offer open for a specified period of time in return for payment (consideration) given by the offeree.
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Detrimental Reliance
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When the offeree justifiably relies on an offer to her or his detriment, the court may hold that his detrimental reliance makes the offer irrevocable
EX: Fox wants to move her business, Luis promises to lower the rent. She doesn't look at other places but Luis doesn't change the rental price - he would be held because of Fox's detrimental reliance |
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promissory estoppel
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the promisor (offeror) is barred from revoking the offer because the offeree has already changed her actions in reliance on the offer
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partial performance
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another time when detrimental reliance can occur is when an offeree partially performs in response to an offer to form a unilateral contract
Many courts will not allow the offeror to revoke the offer after the offeree has performed some substantial part of his or her duties |
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Rejection of the Offer by the Offeree
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If the offeree rejects the offer, the offer is terminated.
*A rejection of an offer is effective only when it is actually received by the offeror or the offeror's agent |
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counteroffer
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a rejection of the original offer and the simultaneous making of a new offer
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mirror image rule
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requires the offeree's acceptance to match the offeror's offer exactly - to mirror the offer. Any change in, or addition to, the terms of the original offer automatically terminates that offer and substitutes the counteroffer
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Termination by Operation of Law
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The power of the offeree to transform the offer into a binding, legal obligation can be terminated by the operation of law through any of the following:
1. Lapse of time 2. Destruction of the specific subject matter of the offer 3. Death or incompetence of the offeror or the offeree 4. Supervening illegality of the proposed contract |
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Lapse of Time
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An offer terminates automatically by law when the period of time specified in the offer has passed
The time period specified (say, 20 days) begins when the offer is received by the offeree, not when it is formed or sent. If the offer does not specify a time for acceptance, the offer terminates at the end of a reasonable period of time |
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Destruction of the Subject Matter
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An offer is automatically terminated if the specific subject matter of the offer is destroyed before the offer is accepted
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Death or Incompetence of the Offeror or Offeree
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An offeror's power of acceptance is terminated when the offeror or offeree dies or is deprived of legal capacity to enter into the proposed contract
* If the offer is irrevocable, the death of the offeror or offeree does not terminate the offer. |
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Supervening Illegality of the proposed contract
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A statute or court decision that makes an offer illegal automatically terminates the offer
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Acceptance
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a voluntary act by the offeree that shows assent (agreement) to ther terms of an offer.
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Unequivocal acceptance
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*mirror image rule*
The acceptance must be exactly what the offer was. -still allowed even if they express dissatisfaction |
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Silence as acceptance
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ordinarily, silence can't constitute as acceptance
exceptions: -when the offeree takes the benefit of offered services even though he/she had the opportunity to reject them and knew that they were offered with the expectation of compensation -When the offeree has had prior dealings with the offeror |
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Communication of acceptance
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-communication necessary in bilateral contracts
-if the offer dispenses with the requirement, communication of acceptance is not necessary -in unilateral contracts, acceptance is generally evident so notification is unnecessary |
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mailbox rule
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Acceptance takes effects, thus completing formation of the contract, at the time the offeree sends or delivers the communication via the mode expressly or impliedly authorized by the offeror
-if the authorized mode of communication is MAIL, then the acceptance becomes valid when it is dispatched (placed in the control of the USPS - NOT when it is received by the offeror *does not apply to instantaneous forms of communication such as face-to-face, telephone, or fax (email is controversal) |
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revocation
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only effective when it is RECEIVED by the offeree
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Authorized means of Acceptance
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-A means of communicating acceptance can be expressly authorized or impliedly authorized by the facts and circumstances surrounding the situation or by law
-An acceptance sent by means NOT expressly or impliedly authorized is not effective until it is RECEIVED by the offeror -When the offeror specifies how acceptance should be made, EXPRESS AUTHORIZATION is said to exist, and the contract is not formed unless the offeree uses that specified mode of acceptance |
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When the preferred means of acceptance is not indicated
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The offeror's choice of a particular means in making the offer implies that the offeree is authorized to use the same or a faster means for acceptance
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When the authorized means of acceptance is not used
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An acceptance sent by means not expressly or impliedly authorized normally is not effective until it is received by the offeror
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Exceptions on Acceptance
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1. If the offeree's acceptance is not properly dispatched, it will not be effective until it is received by the offeror
2. If the offer stipulates when acceptance will be effective (ex:not effective until received, effective within 24 hours after being shipped) 3. If an offeree sends a rejection first and an acceptance after, the law cancels the rule of acceptance on dispatch and the first communication received by the offeror determines whether the contract is formed |
