Mutual Assent

Death of An Offer (36)

(1) An offeree's power of acceptance may be terminated by: a. Rejection or counter-offer by the offeree b. Lapse of time c. Revocation i. An offer can be revoked anytime by the offeror : 1.) Before full performance, and 2.) The revocation must be communicated to the offeree prior to full performance. (Direct or indirect communication suffices) d. Death or incapacity of the offeror or offeree. (2) Failure of the Offeree to perform the condition(s) of acceptance under the terms of the offer.

Breach of Contract

A breach of contract occurs through non-performance or defective performance of contractual obligations.

Promise (2)

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.

Contract

A promise or set of promises for the breach of which the law provides a remedy, or the performance of which the law recognizes as a duty.

Bargain

An agreement between parties for the exchange of promises or performances. A bargain is not necessarily a contract because the consideration maybe insufficient or the transaction maybe illegal.

Telephone Rule

An offer ends when the telephone conversation ends.

Time Period For Acceptance

For both offer and counter offer, if time period for acceptance is not stated, the offeree has a reasonable time period to accept or before the offer or counter offer is revoked. o EXCEPTION: If the offer/counter offer has adopted an Option Contract, the offer/counter offer cannot be revoked until the time frame on the option has expired.

Acceptance by Performance (50) (Memorize)

Generally, acceptance is a manifestation of assent to the terms there of, by the offeree, in a manner invited or required by the offer. However more specifically, acceptance of an offer for unilateral contract requires that the offeree at least partially perform what the offer requests.

Promise (2)

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

What are the two approaches to preliminary agreements?

1) Classic Common Law - i. An agreement without fully negotiated and enunciated terms was deemed a mere agreement to agree. ii. Such an agreement was unenforceable 2) Contemporary Contract Law - i. Focus on mutual assent ii. If courts can find objective intent to be bound and a definite agreement, then there is an enforceable contract.

Offer (24)

1) Manifestation of willingness 2) To enter into an agreement, expressed in such a way 3) that the receiving party can conclude the transaction 4.) With no further action except assent. Buzz Words/Phrases: "Communicates a desire to enter into a bargain" "Sufficiently detailed" "Specifies a means of acceptance" "Creates the power of acceptance on the part of"

Mutual Assent

1.) Both parties objectively demonstrate an intent to be bound AND 2.) Sufficiently definite agreement. • Mutual Assent CAN exist where one party makes a valid offer and the other party makes a valid acceptance. However, even when there is no offer and/or no acceptance, there can still be mutual assent for a contract to exist.

Counter Offer

1.) Rejection of the original offer (Original Offer is now Dead) 2.) Beginning of a new offer proposed by the offeree.

What are seven ways an offer can be terminated?

1.) Revocation 2.) Counter offer 3.) Rejection 4.) Death 5.) Incapacity offor or/& offeree 6.) Failure to accept within a reasonable time period 7.) Lapse of time

Certainty (33)

1.) When there is an offer, it cannot be accepted as a contract unless the terms of the contract are reasonably certain 2.) The terms of the contract are reasonably certain if you can determine the existence of a breach and give an appropriate remedy. 3.) If one or more of the terms of the offer are left open or uncertain, then the proposed bargain may not be understood as an intent to be bound to the offer or acceptance.

Mail Box Rule

Acceptance is valid when sent and not received. To get around this rule, the offer simply needs to include a clause which states that acceptance is valid upon receipt not when sent. Offeror is mater and creator of the contract and sets the terms of offer and acceptance

Mirror Image Rule

Acceptance must mirror the terms of the counter offer. (Offeree must accept according to the terms of the counter offer) (Also known as "Non-Conforming Acceptance and Deviant Acceptance")

Acceptance of Offer (50)

Acceptance of an offer is a manifestation of assent to the terms therof made by the offeree in a manner invited or required by the offer.

Option Contract (Common Law)

An agreement to hold an offer open for a specified time period WITH consideration. Offer cannot be revoked for the time stated.

Offer For Unilateral Contract (Memorize)

An offer is a manifestation of willingness to enter into an agreement made in such a way that the receiving party can conclude the transaction with no further action except assent. More specifically, where an offer seeks a return performance by an offeree, an offer for unilateral contract is created. An offer for unilateral contract exists where the offeror requires a performance by the offeree in exchange for a promise by the offeror. Buzz Words/Phrases: "Communicates a desire to enter into a bargain" "Sufficiently detailed" "Specifies a means of acceptance" "Creates the power of acceptance on the part of"

Offer For Bilateral Contract (Memorize)

An offer is a manifestation of willingness to enter into an agreement made in such a way that the receiving party can conclude the transaction with no further action except assent. More specifically, where an offer seeks a return promise by an offeree, an offer for bilateral contract is created. An offer for bilateral contract exists where the offeror seeks a promise to do or refrain from doing some specified act by the offeree in exchange for a return promise by the offeror

Preliminary Agreements

An offer is not created if the person to whom the bargain is addressed knows or has reason to know that the person proposing the bargain does not intend to conclude it until he (the person proposing the bargain) has made a further manifestation of assent.

What "Test" does contemporary contract law abide by in determining Mutual Assent?

Contemporary Contract Law abides by the Objective Test. The courts are not mind readers. They cannot determine the state of the parties minds while entering a contract. (DO NOT allude to a meeting of the minds rationale on an exam!)

Acceptance by Promise (50) (Memorize)

Generally, acceptance is a manifestation of assent to the terms thereof, by the offeree, in a manner invited or required by the offer. However, more specifically, acceptance of an offer for bilateral contracts requires that the offeree complete every act essential to the formation of the making of the promise.

Are advertisements ("Ads") offers?

Generally, advertisements, catalogs, circular letters, and the like containing price quotations are not offers. Ads are construed as mere invitations for offers. However, in certain situations, courts held that ads are offers when the language contains a promise, terms are certain and definite, and where the offeree is identifiable.

Invitation of the Offer is Unclear (32)

In case of doubt, an offer is interpreted as inviting the offeree to accept by either a return promise or by performance. (If an offer is unclear as to whether it is a bilateral or unilateral offer, the offeree may accept by either a return promise or by performance)

"Subjective Test" For Mutual Assent

Looks at the actual intentions of a party rather than the parties actual conduct. (Was there a "meeting of the minds"? Mentally, did each party have the same understanding of the contract agreement?).

"Objective Test" For Mutual Assent

Looks at the conduct of the parties from the perspective of a reasonable person rather than their actual, subjective intentions ("Meeting of the Minds"). (Examples: Signing of various documents, accepting the contract by performance, the words of the parties, the commercial context and custom, prior dealings,etc)

What are the two elements of contract formation?

Mutual Assent and Consideration

Revocation of Offer For Bilateral Contract

Revocation of Offer for Bilateral Contract Can: 1.) Be revoked at any time AND 2.) The revocation must be communicated to the offeree. (Direct or Indirect Communication suffices)

Revocation of Offer For Unilateral Contract

SPLIT: Common Law - Offer for Unilateral K Can: 1.) Be revoked at any time before full performance and 2.) The revocation must be communicated to the offeree prior to full performance. • Direct or Indirect Communication suffices. • Direct Communication - Offeror explicitly informs offeree that offer is revoked • Indirect Communication - Offeree learns from an objectively reliable source that the offer has been revoked. Restatement 45 - 1.) Where a unilateral contract is created, an option contract is created when performance is begun. 2.) The offeror cannot revoke but must give the offeree an opportunity to complete performance.