Bus5 ch. 9-14 Overview

1. Option Contract:The offeror has received consideration (usually money) to hold the offer open. In these cases, the offeror cannot revoke the offer for the agreed upon time. For example, suppose that Joshua is selling his property for $200,000.00. Maria gives Joshua $2,000.00 to hold his offer open for one week. In this case, Joshua cannot revoke his offer for one week.

2. Firm Offer: Merchant offeror makes a written offer, providing assurances that the offer will remain open for a period of time. Under the Uniform Commercial Code, the offeror cannot revoke the offer for the time stated in the offer.

3. Unilateral Contract Offer: This situation occurs when the offeror revokes his or her offer after the offeree has already started to perform. For example, Helen makes a unilateral contract offer to Paul. She tells him that if he paints her garage, she will pay him $200.00. When Paul is 3/4 of the way finished with the job, she revokes the offer.

4. Promissory Estoppel: This is an equitable doctrine. Essentially, an offeror may not be able to revoke an offer if the offeror made a clear and definite offer that the offeree detrimentally relied upon. We will explore this concept in more detail when we cover chapter 12 (Consideration).

Which of the following disparities between the offer and the reply would "materially alter the deal?"

A change in the price.

Which of the following disparities between the offer and the reply would "materially alter the deal?" 2

A change in the quantity of the goods being sold.

If an offeror does not limit the offer to its own terms, what kind of response constitutes a counteroffer?

A form that materially alters the deal.

Classification of Contracts You should be able to distinguish between different types of contracts. An express contract is one in which the terms of the contract are stated explicitly, whether orally or in writing.

A lease for an apartment is a good example of this type of contract as the terms are spelled out in writing. In an implied contract, on the other hand, the mutual agreement is inferred from the conduct of the parties. When a customer dines at a restaurant, agreement is implied. When the customer consumes the food, it is understood that the customer agrees to pay for the meal.

There are a couple of terms that you should keep in mind when distinguishing between the types of mistakes. A unilateral mistake is when only party makes a mistake about a basic assumption of fact.

A mutual mistake, on the other hand involves a mistake by both parties. Please review the requirements for each and be able to distinguish each type of mistake.

a. effect of emancipation on Minor Capacity Emancipation means that a parent's right to control a child and receive wages from the child is terminated.

A question may arise whether emancipation gives a child capacity since that child is essentially on his or her own. The rule in most states is that even if a child is emancipated, this status does not give a child the capacity to contract.

Past Consideration Let's examine another example involving questionable consideration. Suppose that Diego worked as an engineer at ABC Co. for 30 years.

After he retired, the CEO of that company told Diego that he would give him $2,000.00 since he was such a wonderful employee. Did the CEO have to give Diego the $2,000.00? No, because this is an example of past consideration. The promises were not given in response to each other. In other words, there was no bargained for exchange

If the Uniform Commercial Code (UCC) does not govern a contract, what law does govern?

Common law of contracts.

Which of the following items is required to create a legally enforceable contract?

An agreement.Parties that have capacity.Parties that enter into the agreement voluntarily.Consideration.

Duress Duress is another defense to contracts. Many of you may have already heard of this defense. This ground for avoiding contracts requires that a party was basically forced to enter into a contract by an improper threat.

An extreme example of this would be where one party threatens imminent physical violence, unless the other party signs. Of course, this is probably rare in real life

Fraud Let's start by looking at the doctrine of fraud. Most of you have probably heard of this word and have a general understanding that fraud involves deceit.

As noted in the textbook, fraud involves a false statement of a fact. In looking at fraud, the term scienter is used. This basically refers to the person's knowledge of falsity.

Legal Value In most cases, people exchange a good or service for money. For example, Bob buys a car (good) from Ed for $5,000.00. Alternatively, Jan pays Robert to paint (service) her house for $2,000.00. Sometimes what is exchanged is intangible. For instance, suppose that Aunt Sue is concerned that her niece, Molly, is drinking too much.

Aunt Sue offers Molly 10,000.00 if she can quit for one year. Assume that Molly is 22. If Molly does give up drinking for one year, does Aunt Sue have to pay Molly the $10,000.00? To answer this question, let's look at the consideration given by each party. Aunt Sue is giving money or 10,000.00. Molly, on the other hand, is giving up her legal right to drink. Therefore, both parties are giving consideration.

Capacity to Contract This chapter explores the issue of capacity. We have already explored the elements of agreement and consideration. For a contract to be valid, the parties must have the capacity to contract.

Basically this means that a party has the ability to incur the legal obligations imposed by a contract and also to acquire legal rights.

When does the battle of the forms apply, and when does the mirror image rule apply?

Battle of the forms: sale of goods. Mirror image: everything else.

How much of a difference between the offeror's and the offeree's forms will the contemporary mirror image rule tolerate before it determines there is no contract?

Changes in spelling, typographical changes and the like, but nothing material

What types of contracts does the Uniform Commercial Code govern?

Contracts for the sale of goods.

Contract Law has Evolved Historically, there was a great deal of freedom in contracting. The courts would generally leave the parties alone if the agreement was entered into voluntarily and the minimum requirements were met.

Courts really did not inquire into the bargaining power even if the results were extremely inequitable. The thought was that the parties decided to enter into the contract under their own free will and the courts should generally uphold the contracts.

In which of the following cases would the battle of the forms most likely apply?

Defective computer components.

In this chapter we learn that contracts induced by misrepresentation, fraud, mistake, duress or undue influence are considered to be voidable.

Essentially this means that the person who entered the contract by mistake, for example, can cancel the contract. If this contract is rescinded (cancelled) by the court, both parties must return whatever was given in exchange under the contract.

Requirements of an offer Most people are already familiar with the term "offer". To be a valid offer in a legal sense, there are three requirements that you will learn about in this chapter

First, as noted in the textbook, the offeror must show a present intent to be bound. In other words, we want to know that the offeror is serious or committed to making the offer. This needs to be distinguished from a person who is merely joking or unsure.

Additionally, acceptance by silence could also be found where the offeree accepts the offeror's performance knowing what the offeror wants in return.

For example, Harvey Painting, Inc. offers to paint Dr. Walter's office building for $4,000.00. Dr. Walter does not formally accept the offer, but stands by while employees of Harvey Painting paint the office building. In this case, the courts would probably find that Dr. Walter had accepted the offer by silence. After all, Dr. Walter reaped the benefits of this service and had the opportunity to reject.

Manner of Acceptance As the master of the offer, the offeror can state how the offeree has to accept. If the offeror does specifically state a manner of acceptance, then the offeree must accept in that way for the acceptance to be effective

For example, if the offeror specifies that the contract must be sent to the offeror's place of business and the offeree emails a copy instead, then the acceptance may not be effective. What if the offeror does not indicate a way to accept the offer? Then under the Uniform Commercial Code, the offeror can accept in any reasonable manner.

A contract is an agreement between two or more parties that is enforceable in court. The key is that the parties must have a "meeting of the minds". Additionally, just because the parties agree to a contract does not mean that it is enforceable in court.

For example, parties can put an agreement in writing and sign it, but the court may still not enforce it. There may be technical problems with the contract. As you read through the following chapters, keep in mind that there are a number of rules that can determine the validity of a contract.

Undue Influence Undue Influence usually arises in cases of special relationships. In a fiduciary relationship, one party has a duty to take care of the other party and look out for his or her best interests. As noted in your textbook, a key factor is unfair persuasion was exerted.

For example, suppose an attorney asks a wealthy client if she can borrow money from the client. They enter into a contract with very low interest terms. The client who depended on the attorney for legal advice may loan money out of fear that the attorney will no longer represent the client. This is an example of undue influence in a relationship of trust.

c. necessaries There are special rules for minors when purchasing necessaries. These are items that the minor needs like food, clothing and medical care. In determining if items are necessaries, courts will look to the particular circumstances of that minor such as his or her station in life and age.

For necessaries, the minor is responsible for the reasonable value of the good or service that the minor received. Note that the minor is not responsible for items that he or she agreed to, but has not received. Please see page 431 of your textbook, where the very interesting case of Young v. Weaver is referenced. The court had to decide if an apartment was a necessity for a minor who also had the option to live with her parents.

How has the mirror image rule changed with time?

It is less strict than it once was

What if John agrees to give Sally $100.00, but she does not agree to give anything of value in return. He is just being nice since Sally has a rent to pay. They write up a contract and both parties sign it.

If John does not give Sally the money, can she legally sue to recover the money? The answer is no, because there is no consideration. If the court allows Sally to recover, then the court would be enforcing a gift.

Another distinction to be made is between bilateral and unilateral contracts. A bilateral contract is the most common type of contract. This is where parties exchange mutually dependent promises.

If John requests to pay $500.00 a month to lease a car from ABC Leasing and the leasing Company agrees, they have entered into a bilateral contract. The contract is formed when the parties agree even before any performance occurs.

In the case where a person has been adjudged incompetent before the contract was formed, the contract is void from the beginning.

If after the contract was formed, a court determines that the person lacked capacity at the time of entering the contract, the contract is voidable by the incompetent individual.

The Restatement of Contracts is a summary of judge-made law which is essentially a consensus of what the law is.

It is not actually the law. The Court often finds the Restatement persuasive and adopts them in common law rules. The restatement is written by a professors, practicing attorneys and judges.

b. disaffirmance Most states give minors a reasonable time after turning 18 to cancel a contract. The time period which is considered reasonable varies according to the facts of the case

If the adult has given something to the minor under the contract or relied more heavily on the contract, then the time considered reasonable is likely to be shorter than when there is no reliance by the adult.

Exchanges that lack Consideration In this chapter, pay special attention to examples where it will appear that consideration is given, when it is really lacking. The chart below identifies the contracts where consideration is lacking.

Illusory Promise For example, suppose Anne states she will pay Martin $300.00 to paint her fence if she is in a good mood. Is consideration valid? Here, the consideration is illusory, since Anne has not incurred any obligation. The consideration she has given is more of an illusion since she is not bound by the promise.

in what cases does the mirror image rule apply instead of the battle of the forms for determining contract acceptance?

In all cases but those involving the sale of goods

Please note that not all contracts must be in writing. In fact, oral contracts can be enforced.

In chapter 16, we will learn about the types of contracts that must be in writing according to the Statute of Frauds.

in reviewing this chapter, you will note that there are three categories which lack capacity. They include minors (generally under 18), intoxicated individuals and those who are mentally incompetent.

In the majority of cases, the contracts are voidable. This means that the party can enter the contract and also avoid it on one of the above grounds. Note that in some cases, the contract is void. Please see the discussion below regarding mentally incompetent individuals and void contracts.

Acceptance in Bilateral v. Unilateral Contracts You may recall these terms from Chapter 9. In bilateral contracts, mutually dependent promises are exchanged. Therefore, to accept one must make the promise requested by the offeror.

In unilateral contracts, on the other hand, the offeror bargains for completion of a requested act. Note that even if the offeree begins performance, this may be enough to bind the offeror as the offeror may not be able to revoke the offer anymore.

How does a bilateral contract differ from a unilateral contract?

In unilateral contracts, only one party makes a promise.

Adequacy of Consideration As a general rule, courts do not weigh the value of the "something" exchanged. It is not about whether each party received a fair deal.

Instead, generally as long as each party received something, consideration will exist. Note that if there is a great disparity, this may indicate an issue such as misrepresentation or undue influence

What is the rationale for the mailbox rule?

It assures the accepting party that the new contract will not be undone by a subsequent revocation.

Battle of the Forms Rule Under the Uniform Commercial Code, a contract can be created even when there are differences between the offeror's and the offeree's terms. This rule came about due to the modern way in which commercial transactions are conducted. Merchants today commonly use preprinted forms that were prepared by their attorneys.

It is rare that all of the terms would agree. To facilitate ease of contracting in these types of situations, the battle of the forms rule is applied. Under certain circumstances, additional terms in the offeree's contract will become part of the contract.

Under the battle of the forms, an attempt to accept an offer will become a rejection and counteroffer if it contains new terms that "materially alter the deal." What does that mean?

It means the same thing as "material difference" does in the context of the mirror image rule

Reality of Consent Even though a contract may be signed by all parties and appear to be valid, it may not be enforceable due to a defense such as fraud or undue influence. This chapter explores how a party can cancel a contract because of the lack of voluntary consent.

It would be unfair to make a party go through with a contract when his or her consent was not real. Note that one of the grounds for avoiding a contract may also be the basis of a tort claim. Fraud is such an example. The textbook defines a tort as a civil wrong which is not a breach of contract. The area of torts is also often referred to as personal injury law.

In unilateral contracts, by contrast, only one party makes a promise. In this case, a contract is formed once the other party performs the requested act. For example, suppose Doug loses his dog. He promises a $500.00 reward to anyone who can return his dog.

Janet sees the sign for the reward and then locates Doug's dog. Therefore, she has completed the requested act or performance. A unilateral contract is formed.

The Agreement: Acceptance In the last chapter, we learned that the offer is the first step in the agreement. In Chapter 11, we will explore acceptance and the requirements that make it valid. Generally, the offeree has to agree to the terms of the offer and accept it in the manner that the offeror specified.

Just as with offer, in determining whether there was a valid acceptance, the courts look at whether the offeree had a present intent to contract. In other words, the offeree was committed to going through with the contract. To make this evaluation, the courts will look at the circumstances surrounding the acceptance rather than what the offeree said he or she was intending.

Would a contract to fix a car for $100 still be binding if one of the parties entered into the contract because of coercion?

No - to qualify as a contract, a set of promises must be based on voluntary agreement

The law differentiates between people who been adjudged incompetent and those who have not yet received such a determination of incompetence by the court.

When a court determines that a person is incompetent, a guardian is appointed to take care of the person's affairs and to provide protection.

Additionally, courts look to see if the misrepresented fact was one which would be important to the party entering into the contract. The innocent party must have reasonably relied on that fact and then was hurt by that reliance. When reading about fraud, pay attention to the different types of fraud.

Note that even if the fact misrepresented was not material, the contract may still be cancelled if the misrepresentation was intentional. Still there must be reliance on the misrepresentation for rescission to be granted. Please review the case of Timothy v. Keetch to see how fraud was alleged in a case involving a loan.

in your textbook, you will see the term disaffirmance. This is another way of saying the minor has the right to cancel the contract.

Note that there are statutory exceptions to when a minor can cancel a contract with an adult. Examples include child support agreements, medical insurance agreements and educational loans.

Intoxicated Individuals A person who is intoxicated may lack the capacity to contract. In these cases, the contract is voidable by the intoxicated person.

Note that this requires a showing that the person was so intoxicated that he or she could not comprehend the nature of the business transaction. This is not an easy standard to meet.

The Special Case of Advertisements As a general rule, advertisements are not considered offers. Instead the court will treat them as merely invitations to deal.

Occasionally, the advertisements may be treated as offers if they are specific enough and nothing further is left to be negotiated. An advertisement was considered to be an offer in the case of Lefkowitz v. Great Minneapolis Surplus Store.

The Mailbox Rule Under this rule, the offeree's acceptance is effective upon dispatch. Thus, once the acceptance is in the hands of the post office, the acceptance is effective and the contract is formed.

Of course, this assumes that this manner of acceptance was expressly or implicitly authorized by the offeror.

Why is it important to the battle of the forms to determine how many merchants are privy to the transaction?

Offers from merchants are limited to their own terms by default.

if one person relies on the promise made by another person - even though the promise and surrounding circumstances are not sufficient to justify the conclusion that a contract has been created because one or more elements is missing - what doctrine may protect the person who relies to his or her detriment?

Promissory estoppel

If contract law protects agreements or bargains, what is it that promissory estoppel protects?

Reliance

Which of the following constitute elements of promissory estoppel?

Reliance on the part of the promisee. A promise. Foreseeability that the promisor is going to induce reliance on the part of the promisee. Injustice as a result of the promisee's reliance.

How might a merchant reject an offer from another merchant, assuming the offeror has not limited the offer to its own terms?

Respond with a form that materially alters the deal.

Mistake Mistake is another grounds for cancelling the contract. Suppose that Amy bought Andy's farm for $250,000.00. Six months later, Amy later realized that she did not do enough research about the property value and paid too much.

Should she be able to cancel the contract based upon her mistake about the value? The answer would be no unless there is some other issue such as fraud involved. Imagine how many people would try to avoid contracts based upon buyer's remorse.

Two parties negotiate a contract for employment. The prospective employer pulls a folded piece of paper from her pocket. It contains an offer. She signs and dates it and pushes it across the table toward the prospective employee. The prospective employee examines it for a few minutes, writes something on it, and pushes it back across the table. They now have a contract. What might the employee have added to the piece of paper?

Signature, date, maybe typographical corrections, but nothing at all that alters the arrangement.

Sources of Law: The common law (case law), the Uniform Commercial Code and the Restatement of Contract law are all sources of law that may guide a court in resolving a contract dispute.

The Uniform Commercial Code is a statute which has been adopted in almost all states, except Louisiana which has adopted only part of the code. We will be focusing on Article 2 of the Uniform Commercial Code which applies to the sale of goods. Contracts for the sale of real estate, services, and intangibles are governed by the common law of contracts.

Note that a minor can also ratify the contract after reaching the age of majority. This is an act affirming the contract. This act can be as simple as an express statement showing intent to be bound

The approval can also be implied by the facts such as when the minor continues to perform on the contract after turning 18.

The second requirement is that the offer must contain terms which are certain and definite. If the terms are vague, this tends to indicate that the parties are merely in a negotiating phase. This is also important because if the terms are vague, the court will have a challenging time enforcing the contract if the contract is breached

The final requirement is that the offer must be communicated to the offeree. An offeror may talk about his or her intent to make an offer, but until that offer is actually communicated to the offeree, the offer is not valid.

Revocation of Offers Offerors are the masters of the offers. Generally, offerors have the power to revoke (withdraw) their offers.

The general common law rule is that offerors can revoke their offers at any time before acceptance. This is the case even when the offeror has promised to hold the offer open. There are exceptions to the common law. In some cases the offeror cannot revoke the offer. The list below identifies the exceptions:

A merchant sends a bid to buy goods to another merchant. The selling merchant responds with an identical form, but attaches an arbitration provision. This change means the two do not have a contract. What can be inferred in this situation?

The initial offer was limited to its own terms.

The Agreement: Offer The offer is the first step in making an agreement.

The person making the offer is called the offeror. The person to whom the offer is made is the offeree.

Mirror Image Rule Under the traditional rule, the offeree's acceptance must mirror or be exactly the same as the offer. Modernly, the courts are more relaxed and apply this rule more liberally.

The results are very fact specific. Of course if the court finds that the acceptance does not mirror the offer enough, then the response will be treated as a counteroffer. Essentially this operates as a rejection of the offer and a proposal for a new offer at the same time.

It is important that a party that was induced to enter into the contract not wait to cancel the contract. If this occurs, the other party may argue that contract was ratified.

The term ratified is applied when the party with the power to cancel the contract chose not to do so. Thus, as soon as the party realizes that his or her consent was not real, he or she should move to rescind the contract or risk ratification.

If there is an offer for a sale of goods, why is relevant if all the parties are merchants regarding the "battle of the forms"?

The terms added to the accepting form, if any, will become part of the contract unless the offeror objects timely.

The terms used to differentiate a contract where one or both parties are making promises are:

The terms used to differentiate a contract where one or both parties are making promises are:

An offeror sends an offer using priority US mail to an offeree. The offeree uses a slower medium that is neither customary in the business nor explicitly authorized by the offeror. What results under common law?

There is no contract until the offeror receives the acceptance.

A car dealership decides that it is going to outsource the cleaning of its used vehicles to save money. A local detail shop sends a bid for the cleaning contract to the dealership. The dealership finds the terms agreeable and sends back a form that is identical except that reallocates the risk of environmental impact of the disposal of the cleaning materials between the two parties. Which of the following statements is correct?

There is no contract.

An amusement park notices that many of its trees are developing a fungus. A local tree surgeon makes a bid to eradicate the fungus. The amusement park finds the terms agreeable and sends a form back to the tree surgeon that is identical except that an arbitration clause is attached. Which of the following statements is correct?

There is no contract.

Suppose Virgin Records sends Pusha T a deal that would require T to release his next three records on Virgin. T responds with a form reducing the number to two. Which of the following is a true statement?

There is no contract.

Where do the UCC and the common law differ on the mailbox rule?

They differ on the question of when acceptances become effective on receipt as opposed to dispatch.

How does the UCC's version of the mailbox rule differ from the common law version?

They have different rules for what mode of delivery makes an acceptance effective upon dispatch.

During the 20th Century, the government's regulation of private contracts increased. This was largely in response to the emergence of large business organizations after the Civil War. These large businesses were preparing more standardized contracts

This could result in more unequal bargaining power since the businesses were basically in charge of the terms of the contracts. Modernly, the courts will look more at the equality of bargaining power and the fairness of contract rules rather than settling for a pure mechanical application of rigid rules.

The concept of a preexisting duty also applies in the case of a liquidated debt. This is a debt that is not in dispute. In other words, both parties agree that the debt is owed to the other party. If the party who owes money (debtor) pays less that what is owed, this cannot be fair consideration for the creditor's agreement to accept less than what is owed.

This is the case since the debtor has not given anything new of value, he or she already had a preexisting duty to pay that amount. This rule also comes into play when a party tries to modify its contractual duties under a construction contract.

Consideration Keep in mind that contracts must have certain elements present to be valid. We have already learned about the first element of agreement which consists of an offer and an acceptance. Consideration is another element that must be present for a contract to be valid.

This means that both parties must give something of value and there must be a bargained for exchange. An example of this would be where John agrees to buy Sally's textbook for $100.00. They are both exchanging something of value. John is giving money whereas Sally is giving a textbook.

Additionally, contracts must have certain elements to be valid. One such element is that there must be an agreement which consists of an offer and acceptance. Consideration is another element that must be present.

This means that both parties must give something of value and there must be a bargained for exchange. In addition to having agreement and consideration, the parties must have the capacity to contract. Finally, the object of the contract must be legal. We will explore each of these elements in more detail in the subsequent chapters.

In this case, the minor would return the item if possible, but it would be damaged or have little or no value. Under the traditional rule, the minor is not responsible to the adult for the benefits received or to give compensation to the adult for any depreciation in value.

This rule has been criticized particularly where adults dealt fairly with the minor. Due to the harsh effects of this rule in some cases, there is a growing trend to reject this rule and have minors reimburse the adults for the depreciation.

Mentally Incompetent Persons Individuals who are mentally incompetent should be able to void the contract if there is proof of such incompetency.

Under the cognitive test, mental incompetence refers to a person's ability to appreciate or understand the nature and consequences of the transaction.

An offeror retracts the offer. When is this effective?

Upon receipt

Preexisting Duty Rule In evaluating whether consideration is valid, look at whether the parties are giving something new. Imagine that Nellie took her nephew, Justin, to an amusement park. Although she tried to watch him very closely, he managed to get lost.

When Nellie told a police officer that she could not find Justin, she offered him a reward of $1,000.00 if he could find Justin that same day. Is the reward valid? No. The police officer is already under a preexisting duty to find missing persons and property.

Across long distances, when does the revocation of an offer take effect?

Whenever the offeree receives it.

Minors Let's look at the case of minors. Minors can cancel most contracts with adults since they do not have the capacity to contract. In most states, minors are individuals under the age of 18.

While minors can generally void a contract, the adult does not have the same option. Think about why minors receive this special protection. Are we protecting minors from adults who may take advantage of the minor's lack of experience?

Misrepresentation You should also distinguish between fraud and misrepresentation. Remember when fraud is proven, the person made the statement with intent to deceive.

With misrepresentation, the statement is not true, however, the person did not intend to deceive. This could happen when a person making the false statement speaks without sufficient knowledge or mistakenly believes the information is true.

Which of the following would constitute duress, and therefore render a contract voidable or void due to the lack of voluntariness of consent?

Your friend threatens to harm you if you do not fix his car.

Promissory Estoppel An exception to where consideration is needed is the concept of promissory estoppel which was discussed in previous chapters.

as you will recall, promissory estoppel is an equitable doctrine and will be applied when the plaintiff justifiably relied on a promise that the defendant made; the defendant knew the plaintiff would rely on the promise and injustice can only be avoided by making the defendant follow through with his or her promise.

What is the legal name for a "legally enforceable promise or set of promises"?

contract

Valid contracts are _____

contracts that meet all legal requirements for a binding contract

here are other circumstances where the offer will terminate. An offer may terminate due to lapse of time, the offers own terms, rejection by the offeree, death or insanity of the offeror or offeree

destruction of the subject matter and intervening illegality.

Courts evaluate whether an offeror has a present intent to be bound by looking objectively at the circumstances surrounding the offer rather than looking at what the offeror says he or she intended. Thus courts will consider what the words, acts and circumstances reveal about his or her intention.

if a reasonable person viewing all of the circumstances surrounding the offer believes that the offer intended to contract, then a court would most likely find that an offer was made. This is critical because if this was not a valid offer, then there would be no agreement or contract.

We also have to look at what the minor's duty is once he or she has disaffirmed the contract. If nothing has been exchanged, then the solution is simple. The contract is over and no relationship exists under the contract

if consideration has been exchanged, then the minor and adult must return the items. A special case is presented when the consideration given by the adult to the minor has been lost, damaged, or destroyed.

What happens under the UCC if the offeree responds in a medium that is slower than the medium the offeror used?

it depends on considerations such as the time sensitivity of the transaction and the business custom.

Silence as Acceptance Generally, one's silence is not enough to qualify as acceptance. There are circumstances, however, where an offeree may have a duty to reject the offer or risk being bound to the contract. This could occur where the parties have a history of prior dealings. Perhaps, on previous occasions of the parties working together,

silence had indicated acceptance. For example, Jenny had an office supply store. She regularly dealt with Bob, who supplied a number of office accessories. For the past five years, she would return items she did not want within a few days. Therefore, if she kept the supplies for the month that would probably constitute acceptance of those items.

More common examples would involve something other than physical force. Instead a party could take advantage of someone under economic duress for example. Perhaps, a new company, Construction Experts, is constructing a building for ABC Company. ABC Company agrees to pay Construction Experts $200,000.00 to construct the new building. When Construction Experts is almost done, ABC Company says they will only pay $150,000.00,

take it or they have the option of taking ABC Company to court. Additionally, ABC Company tells Construction Experts that it must sign a release for any further money owed if they do take the 150,000.00. Construction Experts has rented equipment that it needs to return and has a number of employees to pay. Construction Experts is also a new company in need of immediate funds. If Construction Experts takes the money, it may be able to sue later, claiming an economic duress claim.

A contract that has all the required elements and is binding on the parties is a(n) _______ contract.

valid

An illegal contract, such as a mafia "hit" contract, is an example of a(n) ______ contract.

void

Suppose that an offeree changes her mind about an acceptance that she just mailed out in a fully proper medium. So she decides to try sending out a revocation that will reach the offeror before the acceptance gets there. Is there a contract?

yes