Contracts

elements of consideration

(1) a bargained for exchange between parties (2) that which is bargained for must be considered of legal value, or it must constitute a benefit to the promisor OR a detriment to the promissee

Restatement 33

(1) even though a manifestation of intention 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 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.

UCC 2-305

(2) a price to be fixed by seller or buyer means a price for him to fix in good faith (3) when a price is left to be fixed otherwise than by agreement of parties fails to be fixed through one party's fault, (4) where parties intent not to be bound unless price is fixed and it is not fixed, no contract

Doctrine of Detrimental Reliance

A promise will be enforced to the extent necessary to prevent injustice if it was made with a reasonable expectation that it would induce reliance and such reliance was in fact induced.

Mailbox rule

A rule providing that an acceptance of an offer becomes effective on dispatch, if mail is, expressly or impliedly, an authorized means of communication of acceptance to the Offeror. In order for Offeror to revoke, the revocation must be communicated to the offeree BEFORE the offeree mails the acceptance. Offeror takes the risk by using mail; can protect self by requiring acceptance via phone. Modern application to email and fax as well.

bilateral contracts

An exchange of promises between parties. Have a promisor and promissee.

Parole Evidence Rule

Limits the extent to which a party can claim that communication prior to the signed, written contract should be taken as part of the agreement.

Policy of protecting reliance

People must be bound the their promises or else no one would enter into contracts

Promissory estoppel

Promises which foreseeably induce reliance on the part of the promissee will often be enforceable without consideration. Binding of injustice can be avoided only with enforcement of the promise

termination of acceptance

Res 2d 36: Ways an offer can terminate: 1) revocation by the Offeror (revokes prior to acceptance) 2) offeree rejects the offer, 3) offeree makes a counteroffer (don't like the terms and requests different terms), and 4) lapse of time, (5) Offeror or offeree death or mental incapacity. The moment a counteroffer is received, the original offer terminates.

option contract

Res 2d 45 (1) created when the offeree tenders or begins the performance of the contract (2) offeror's duty to perform is conditional on completion of the offeree's performance

mirror image rule

Res 2d 58: offeree's response operates as acceptance only if it is the precise mirror image of the original offer

Mutual assent

Res d2d 21 The parties to a contract must manifest by words or conduct that they have agreed to enter into a contract

Counter offer

Restatement § 59 states that a reply to an offer which purports to accept it but is conditional on the offeror's agreement to terms additional to or different from those offered is not an acceptance but is a counter offer.

offer

Restatement §24 defines offer as 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.

acceptance of unilateral contract

Restatement §45 states when 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. 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.

acceptance

Restatement §50 defines acceptance as (1) a manifestation of assent to terms thereof made by the offeree in a manner invited or required by the offer, (2) acceptance by performance requires that at lease part of hat the offer requests be performed or tendered and includes acceptance by a performance which operates as a return promise, or (3) acceptance by a promise requires that the offeree complete every act essential to the making of the promise.

power of acceptance

The ability of the offeree to either accept or reject the offer

objective theory of contracts

The modern rule holds that mutual assent exists if a reasonable person would objectively have understood the outward actions and statements of the other party to indicate an intent to enter into a legally binding contract and agreement to terms and conditions of the contract

Agreement to Agree rule

To be enforceable and valid, a contract to enter into a future covenant must specify all material terms and leave nothing to be agreed upon as a result of future negotiations.

misunderstanding or mistake in contract formation

When a required "meeting of the minds" doesn't take place, no contract is formed if (1) parties each have different subjective belief about the terms (2) the term that isn't agreed on is a material one (3) neither party knows about the mistake

implied in fact contracts

When offeree accepts the contract in silence. The ways to do this are (1) reason to understand because Offeror has given permission (2) a benefit of service that could be rejected (3) prior conduct makes it reasonable (4) accept by dominion by keeping the goods

Unilateral contracts

When the offeror offers to exchange his promise of future performance only in return for the offeree actually performing, rather than a return promise. Performance= acceptance

General rule of mutual assent

absent of fraud, duress, or mutual mistake, one having capacity to understand a written document who reads and signs it, or, without reading it or having it read to him, signs it, is bound by his signature

Restatement §43

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.

UCC 2-204(3)

even if one or more terms are left open, a contract does not fail for indefiniteness if the parties intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

Restatement §32

in cases 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 chooses. (can make into a bilateral contract)

Formal contract contemplated

incomplete bargain. Parties have reached agreement in principle on at least major provisions of agreement, but are still contemplating the execution of a formal written contract.

Restatement 27

manifestations of intent are in themselves sufficient to conclude a contract will not be prevented from by the fact that the parties also manifested intent to prepare a written memorial, but the circumstances may show the agreements are preliminary negotiations.

components of a contract

offer, acceptance, consideration

Cancellation clause

party's right to terminate the contract upon the occurrence of specified conditions

Objective theory of contracts

theory states that people enter into a contract with the intent to be bound

offer made in jest (joking)

when Offeror is joking, and a reasonable person would know s/he is joking, the offer is not valid

acceptance by dominion

when offeree receives goods and keeps them= acceptance