Contracts (Offers, Acceptance, Modifications)
Unilateral Contract
results when a promise is exchanged for performance.
Bilateral Contract
results when the parties mutually exchange promises.
Under what circumstances may a seller of a software bind a buyer to licensing terms that are not disclosed to the buyer at the time of purchase BUT are reveled ONLY when the buyer installs and run the software?
If the buyer is given an opportunity to return the product after having an opportunity to read the terms. If the buyer has reason to know that the transaction will be subject to licensing terms of the kind used by the seller, and the terms are fair, reasonable, and within the reasonable expectations of a person in t he buyer's position.
Under what circumstances may a seller of a software bind a buyer to licensing terms that are not disclosed to the buyer at the time of purchase but are revealed only when the buyer installs and runs software?
If the buyer is given opportunity to return the products after having an opportunity to read the terms and if the buyer has notice the transaction will be subject to licensing terms. 1) Notice of terms 2) opportunity to read/review 3) opportunity to reject
click-wrap agreement
Internet contract that requires a person to click to accept terms before payment
2-207(3)
Not merchants or additional terms Different terms cancel each other out. Knock-out-rule - Contract consist only of terms agreed upon by parties in contract plus any terms the UCC provides ***
Browse-Wrap Agreement
Terms and conditions of use presented to an Internet user at the time user is using or downloading a product, to which user need not actively assent to before use or download the product. websites seek to bind users to their terms just by posting them somewhere on their sites or making them accessible through a hyperlink likely not enforceable
Lefkowitz v. Great Minneapolis Surplus Store
Is an Ad an offer? § Generally, Ads are not offers but rather an invitation to an offer § But it may be if it is clear, definite, explicit & leaving nothing open for negotiation Standard in Lefkowitz was clear, definite, explicit, & left nothing open for negotiation Advertisement listed rabbit furs for a $1.00. First come, first serve. RULE: an advertiser has the right to modify its offer. HOWEVER, it does not have the right to impose new conditions AFTER a party has already accepted
Modifications in on-going relationship
Modification permitted if: · Notice & opportunity to review provided; · Consumer may reject & continue the relationship; and · Consumer assents or does not reject modification
Shrink-wrap terms
Terms made available to the buyer only after purchase, receipt, and opening of the product.
Alaska Packers' Association v. Domenico
A contract modification is not enforceable without new consideration pre-existing duty rule** past consideration is no consideration
2-207 Battle of the Forms
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.
What is a gratuitous promise and is it enforceable?
A gratuitous promise is a promise to do or refrain from something, made w/out the expectation of actual compensation. A gratuitous promise is not enforceable as a contract because it is not supported by consideration.
Under what circumstances can a joke or an offer made in jest constitute a valid offer?
Objective standard Test applies to determine whether an offer is serious. The offer has to be serious, and have clear and reasonable terms, & If a reasonable person would believe an offer was made than an offer is valid. A joke or an offer made in jest can be valid, only if the offeree neither knows nor has reason to know that the offer is a joke. The offeree must belive that it has been made seriously. If both parties to a transaction manifest an intent to be bound.
A "firm offer" under UCC
- Promises to keep offer open - In signed writing - Made by merchant - Specified time/reasonable time - No more than 3 months Under the UCC, a merchant is bound to keep an offer to buyer or sell goods open for a stated period or if no time is stated, then it will be open for a reasonable time not exceeding three months, if the merchant gives assurance in a signed writing that the offer will be held open.
Anderson v. Douglas & Lomason Co.
An employee handbook can create a contract where the handbook constitutes the offer, which the employee accepts by embarking performance on the employment. For a contract to arise, the handbook must be sufficiently definite.
Four basic element required to form a contract are:
Offer Acceptance Intent, and Consideration Parties to a contract must mutually assent to the formation & understand that they are entering into a contract.
What are the three approaches of Electronic Contracts?
1) Easterbrook - Payment first terms later Bound, so long as notice there were terms, opportunity to read, & opportunity to reject 2) Klocek - Order goods make an offer additional terms are just proposals 3) Telman - buy something, the transaction is over terms later are NOT a form of formation it is a modifications
The mailbox rule does not apply to:
1) Option Contracts - Acceptance of which is effective upon receipt by the offeror; 2) Unilateral Contracts - Acceptance of which is effective upon full performance by offeree; and 3) Offers that specify an alternate time or way of acceptance
What six events or circumstances will terminate an offer before the offer has been accepted?
1) Rejection of the offer by the offeree; 2) A counteroffer by the offeree that constitutes rejection of the offer combined w/ a new offer on different terms; 3) Lapse of the offer at the conclusion of the period stated for acceptance, or a reasonable period if no period is stated' 4) Revocation of the offer by the offeror, communicated to the offeree; 5) Death or incapacity of either the offeror or the offeree; or 6) Destruction of a thing essential for performance
Options Contract
A binding promise to keep an offer open for a stated period of time: requires consideration.
traditional preexisting duty rule
A builder and a landowner entered into a valid written contract under which the builder agreed to erect a house on the landowner's land according to certain plans and specifications and the landowner agreed to pay the sum of $200,000 upon completion. During the course of construction, building costs increased by $15,000 due to an unexpected shortage of materials. The builder informed the landowner of the increased costs, and the parties agreed in writing that the builder could omit installing the air conditioning unit called for by the specifications (thus saving the builder approximately $10,000) and nevertheless receive the full construction contract price. Is this subsequent written agreement enforceable? Responses Modification of the contract must be supported by consideration. Consideration is usually found to exist where the obligations of both parties are varied, but a modification solely for the benefit of one of the parties is usually unenforceable for lack of consideration.
On November 3, an investor who had watched his stocks sink to unprecedented low levels sent a fax message to a dealer in precious metals: "Please quote your best price on 800 troy ounces platinum bars for immediate delivery at my bank." At 10 a.m. the next morning (November 4) the dealer replied by fax, "My best price is $475 per ounce." The investor received the dealer's message later on that same day. What is the best characterization of the communications between the investor and the dealer?
A request for an offer and an offer. The investor's communication was a request for an offer and the dealer's response was an offer. For a communication to be an offer, it must create a reasonable expectation in the offeree that the offeror is willing to enter into a contract on the basis of the offered terms. The investor's communication does not pass the test because it is clear on its face that he did not want to be bound by whatever price the dealer came up with, but rather wanted to find out what the dealer would offer. The dealer's communication, on the other hand, passes the test. While it said nothing more than the price, it was sent in response to a request containing specific delivery terms and a specific quantity. Under the circumstances, the dealer's response would have created a reasonable expectation in the investor that the dealer was willing to enter into a contract under the terms of the two communications. (Intent to be bound)
Does an agreement for the sale of goods lack consideration if it binds the seller to supply goods ordered by the buyer, but it gives the buyer the discretion to order only the quantity that it requires?
A requirements contract may seem to lack mutuality of obligation because the seller has an absolute commitment to supply goods to the buyer but the buyer can choose how many goods to order, including none at all. The buyer must act in good faith and in accordance w/ reasonable commercial standard in determining and ordering its actual requirements so both parties have given consideration.
How certain must an offer's terms be to constitute a valid offer?
A valid offer must set forth reasonably certain terms. Reasonably certain terms are terms which a reasonable person could conclude that (1) an offer has been made and (2) understand that communication of acceptance is all that is necessary to form a binding contract. Typically, an offer must identify the parties, describe the subject of the agreement, and if applicable include a price term Certain additional terms may be required depending on the subject matter of the contract. Ex: An offer to buy or sell goods must include a quantity term under the UCC
Under what circumstances, can a website operator bind a customer to standard contract terms accessible through a link on a website?
A website operator may bind a customer to standard terms accessible through a link on a website (i.e. browse-wrap terms), provided that the terms are conspicuous and properly placed on the website so that the customer receives reasonable notice that the transaction will be subject to the terms. A customer will be bound by terms that are reasonably displayed and accessible, even if the customer does not read them. If the terms are placed out of range of a customer's immediate view, the terms do not give reasonable notice and are not binding.
Under what circumstances can an ad constitute a valid offer?
An Ad is not considered a valid offer UNLESS the language makes an express promise to adhere to specific terms. Although many ads are properly interpreted as mere solicitations for offers, an advertisement can qualify as an offer if it: 1) States the material terms of the K 2) Is clear, definite and explicit & leaves nothing open to be negotiated; and 3) is reasonably understood to invite acceptance Mere puffery (describing a product/service in flattering language to attract potential buyers) is not a valid offer
What is the mailbox rule?
An acceptance is effective to create a contract at the time of dispatch. (i.e., addressing and stamping sent acceptance) Regardless of the offeror receives the acceptance. The mailbox rule applies when sending the acceptance by mail is reasonable or otherwise not specified. Thus, acceptance is effective at the given time acceptance is mailed
What is an acceptance?
An acceptance is the showing or manifestation of assent to an offer's terms by an intended offeree with knowledge of the offer. An acceptance may consist of a promise or performance by the offeree, depending upon the terms of the offer. If the offer stipulates the method of acceptance, then acceptance must conform to the terms of the offer for the acceptance to be valid. Otherwise, any reasonable method of acceptance will be valid, including either acceptance by promise (forming a bilateral contract) or acceptance through performance (forming a unilateral contract).
What is a requirements contract?
An agreement in which a buyer agrees to purchase all the goods the buyer needs or requires from the seller during a given time period. A requirements contract for the sale of goods is governed by the UCC. The UCC imposes a duty of good faith on the buyer to order no more or less than its actual requirements.
A yoga instructor entered into a valid written contract with a builder to construct a large yoga studio on some land she owned outside of town. She agreed to pay the builder $150,000 upon completion of the job. As work progressed, and due to substantial increased building costs, the yoga instructor and the builder orally agreed that the builder may omit installation of the koi pond planned for the atrium (saving the builder $1,000), and that the contract price would be reduced to $149,500. The builder completed the job (minus the koi pond) in reliance thereon. What would most courts likely hold this subsequent oral agreement to be?
An enforceable contract. The agreement is enforceable because both the builder and the yoga instructor gave new consideration to support the modification. If parties agree to modify their contract, consideration is usually found to exist where the obligations of both parties are varied. It is usually immaterial how slight the change is, because courts are anxious to avoid the preexisting duty rule. Here, the obligations of both the builder and the yoga instructor are varied-he will not install the koi pond and she will pay a construction price reduced by $500. Consideration is therefore found in the promise of both parties to forgo their rights under the original contract-the builder's right to full contract price and the yoga instructor's right to the koi pond.
What is an illusory promise?
An illusory promise looks like or sounds like a promise but in fact promises nothing. If a promise depends on the happening of a future event, or if the promisor reserves a choice for alternative performance, the promise is illusory. Unlike true promises, illusory promises do not bind the promisor. I f a promise is illusory, the promisor is free to choose on a whim not to fulfill the promise. Therefore, an illusory promises is not actually a detriment to the one making the illusory promise, and it is not guaranteed to benefit the one receiving the illusory promise. This means an illusory promise cannot provide the consideration necessary to create a binding agreement.
What is an offer?
An offer is some showing or manifestation of willingness to enter into a bargain that is made by an offeror and justifies acceptance by an offeree. An offer is the first step in contract formation. To form a contract, an offer must be reasonably certain, communicated to the offeree, and must not have terminated prior to acceptance.
Under what circumstances may an offeree's silence constitute a valid acceptance?
An offeree's silence constitutes acceptance when: 1) Offeree receives the benefit of offered services despite the reasonable opportunity to reject those services, & the offeree knows that compensation is expected; 2) Silence is reasonable based upon prior dealings, for the offeror to understand that the offeree accepted by remaining silent; and 3) Offeror under an implied-in-fact contract has indicated that the offeree may accept by silence & the offeree intends to accept the offer by remaining silent or inactive These are exceptions to the general rule that silence is not an acceptance.
What is an option contract?
An option contract guarantees, in exchange for something of value, that an offer will not be revoked for a specified amount of time. Essentially the offeree provides something of value in exchange for the promise to keep an offer open.. (i.e. Separate consideration)
Petterson v. Pattberg
Any offer to enter into a unilateral contract may be withdrawn before the act requested to be done has been performed.
Peppercorn theory of consideration
As long as one party promises to give another party something and the other party promises to give something in return and it's bargained for, there doesn't have to be equivalence in value Ex: Cheeseburger in exchange for a car Fisher v. Union
Princess Cruises, Inc. v. General Electric Co.
Contract for services for cruise ship, battle of forms ensued re: liability clause. Ship was repaired negligently, causing missed income from Christmas and Easter cruises ii. Trial jury was instructed on UCC2-207, appeals court found that UCC should not have applied. iii. Holding: GE did breach contract, but under common-law, their terms govern and they are protected by indemnity clause, judgment for P, but in amount of $231,925.
Nguyen v. Barnes & Noble
Browse-wrap must provide actual or constructive notice of terms Here, Nguyen had neither: · Link cannot be hidden · Terms must be sufficiently conspicuous that a reasonably prudent user would notice them.
Berkson v. Gogo LLC
Burden is on offeror to impress on consumer the details of the K § Duty to explain the relevance of critical terms K here is "sign-up wrap - by agreeing to use the website, you also agree to service - Sign-in wraps enforced only if: Terms next to button that allows consumer to continue Sign-in leads to clickwrap page Links to terms present multiple test
What is consideration?
Consideration is something of value given (e.g. money, a return promise, or a forebearance) by a promisee to a promisor. Consideration can constitute either a benefit to the promisor or a detriment to the promisee. It must be the product of a mutually bargained-for exchange. To have sufficient consideration to form a contract, the parties must both (1) bargain for and (2) exchange something
What is the difference between sufficient consideration and adequate consideration?
Consideration is sufficient if the detriment (the relinquishment of a legal right- alleged to be consideration satisfies the legal standard required to constitute consideration. Consideration is generally adequate if it is reasonably equivalent in value to the performance for which is exchanged. To support a contract, consideration must be sufficient, but it need not be adequate. Any exchange of value will usually be deemed sufficient, but there is no need for the exchanged values to be equivalent.
Alaska Packers' Association v. Domenico Facts & Holding
Domenico entered into K with D. Provided duties they would perform along with compensation. Once in Alaska, they stopped working and demanded a new K with increased compensation. D couldn't find new workers. No K because Pl already obligated himself to those duties at the original rate. Taking advantage of D. RULE: A contract modification is not enforceable without new consideration
Easterbrook's Approach
Easterbrook's approach: Terms are accepted if: Consumer receives notice of terms to follow; Has reasonable opportunity to reject terms; and Consumer has right to reject goods w/out unreasonable expense
Leonard v. Pepsico
Facts: Pepsi started a Pepsi Points advertisement campaign. Leonard saw the Pepsi Stuff commercial and contends that it is an offer of a Harrier Jet. There is no entry or description of a Harrier Jet in the Order Form. Leonard collected $700,000 to buy Pepsi Points. He mailed in the check for $700,008.50 and 15 Pepsi Points. He was rejected (obviously). Black letter law: An objectively reasonable person would discern it is not an offer.
Bargain Theory of Consideration
Mutual reciprocal inducement: Ex: Williston's Tramp The parties must have bargained for (agreed to) an exchange of the promise for the detriment, so that each induces the other. a performance or return promise must be bargained for to constitute consideration.
Can a contract be formed if one party receives nothing of value for its performance?
No a contract cannot be formed if one party receives nothing of value for its performance. A contract requires an exchange of value between the parties. The exchange of value can be very unequal and even nominal. If a party received nothing of value, there's no consideration and thus no contract.
Does a modification of a K for the sale of goods require consideration in order to be valid?
No a modification of a K for sale of goods does not require consideration in order to be valid. In a sale of goods, the UCC expressly abolishes the CL rule that requires consideration to make a K modification binding. Under UCC, consideration requirement is replaced by a test of Good Faith. UCC defines Good Faith to require BOTH subjective honesty & the reasonable standards of fair dealings.
At CL is a contract created if an offeree accepts an offer but also adds an additional term not in the offer?
No at CL, a contract is not created if an offeree accepts an odder but also adds an additional term not in the offer. A response to an offer does not qualify as an acceptance unless it manifests the intention to enter the transaction on the terms proposed by the offer and only on those terms. CL applies the MIR. anything other than the proposed terms of the offer is a counteroffer rejecting the offer..
A woman had been stressed from her job. Her uncle noticed she looked exhausted and said "you need a vacation. I know you are short on money, but if you pay for your hotel, I will give you some of my airline reward miles to cover cost of your airfare." The woman responded, "Thank you, i'm excited for this trip!" Has the woman given consideration in exchange for her uncle's promise of his airline reward miles?
No consideration was given. Here, the woman's excitement appeared to manifest her intention of booking a hotel and using the miles to cover her fare, but she did not relinquish a legal right in exchange for her uncle's promise. The uncle did not ask her to commit to booking a hotel, and she made no commitment.
May an offeror revoke an offer for a unilateral contract after the offeree begins performance, but before a reasonable time has passed for completing performance?
No the offeror of a unilateral contract (i.e. a contract which the offer is to be accepted through performance) may not revoke the offer after the offeree has begun performance. Once the offerre has begun performance, he/she is entitled to a reasonable time to complete performance before the offeror may revoke. A unilateral contract is not actually formed until the offeree has completed performance thus, binding the offeror to his promise.
A man promised to give a gift to his neighbor. The neighbor and the man executed a written agreement stating that the man's promise was in "exchange for good and valuable consideration." In actuality, the neighbor gave no consideration. Did the written agreement bind the man to his promise to make the gift?
No. the written agreement did not bind the man to his promise to make the gift. If nothing is given in return for a promise, nothing is exchanges and there is no consideration. Thus, no contract was formed, and parties cannot validate the promise of a gift merely by making a formal recital that consideration was given for the gift. Here, although the written agreement stated the man promised the gift "in exchange for good and valuable consideration," the neighbor actually gave nothing in return for the mans promise. Therefore, no consideration was given and the man is thus not bound by his promise to make the gift.
A retailer operated a website on which customers could purchase products. The retailer intended to make all transactions on the webiste subject to its standard terms. Retailer included a link at the bottom of each page of website, "All transactions are subject to out standard terms, which can be accessed by clicking on this link." The link was not accentuated on the page. The link was at the bottom of each web page and it was was not visible on customer's screen unless the customer scrolled down beyond the operative content of the page. If a customer ordered products on the website but did not scroll down to the bottom of the page to click the link & read the terms, would the terms bind the customer?
No the terms would not bind the customer. A website operator may bind a customer to standard terms accessible through a link on a website (i.e. browse-wrap terms), provided that the terms are conspicuous and properly placed on the website so that the customer receives reasonable notice that the transaction will be subject to the terms. A customer will be bound by terms that are reasonably displayed and accessible, even if the customer does not read them. Here, the terms do not give reasonable notice to the user. The link of the terms was not accentuated and was at the bottom of the webpage past any operative content and out of the customer's immediate view. Thus, the terms were not conspicuous or properly paced to give the customer reasonable notice therefore not binding the user.
At Common Law (CL) is a contract (K) created if an offeree accepts an offer but also adds an additional term not in the offer?
No, at CL a K is not created if a response to am offer does not qualify as an acceptance unless it manifests the intention to enter the transaction on the terms proposed by the offer. The Mirror Image Rule (MIR) admits of absolutely no variation in response. The response must be exactly (mirror) in accord with the offer & may not vary or add terms proposed in the offer. Many courts have moved away from this rigid approach & treat a response to an offer as an acceptance if it clearly manifests intent to accept & contains only minor, non-material variations from the offer.
A man emailed a woman and offered to sell her some land. The man's email stated that the offer was irrevocable and would be held open until 6 p.m. on June 1. On May 28, the woman received another email for the man, revoking the offer. The women answered the second email immediately, accepting the offer and stating that the man's attempt to revoke the offer was impermissible and ineffective. Did the parties form a contract?
No, the parties did not form a contract. An offer terminates immediately when the offeror notifies the offeree that the offer has been revoked. Once an offer is revoked, a person may no longer accept. Essentially for a contract to be irrevocable, the offeree must give consideration in exchange for irrevocability of the offer. Here, the man originally stated the offer was irrevocable, but the woman gave no consideration for the promise to keep the offer open. W/out consideration no option contract was formed. The offeror has the power to revoke any time prior to acceptance. Thus, the offer was revocable and terminated when notice of revocation was communicated and acceptance could not be tendered. Therefore, no contract was formed.
A builder agreed to remodel a homeowner's bathroom and charge the homeowner only for the cost of materials? Do the parties have an enforceable contract?
No, the parties do not have an enforceable contract. While it may appear to be a contract in which both parties have given consideration, the builder actually gets nothing out of the transaction because the homeowner is just reimbursing the builder for costs incurred on the homeowners behalf. The builders promise is a gratuitous.
Can an existing duty serve as consideration for a new agreement between the same parties?
No. An existing duty cannot serve as consideration for a new agreement between the same parties. Under the pre-existing duty rule, a promisee cannot form a contract by promising or performing a legal duty already owed to the promisor, because the promisee does not suffer a legal detriment.
Can past consideration support a contract?
No. Past consideration cannot support a contract if the offeror's promise is made in recognition of a benefit already conferred by the offeree. Any asserted moral obligation to fulfill a promise made in response to the past consideration is not legally enforceable.
If a promisee acts in justifiable reliance on a promise but does not suffer a detriment if the promise is not kept, can the promisee use promissory estoppel to enforce the promise?
No. Promissory estoppel relief is premised on detrimental reliance. If a promisee acts in justifiable reliance on promise but does not suffer a detriment the promisee cannot use promissory estoppel to enforce the promise. Promissory estoppel requires : 1) promissor expects or should reasonably expect the promise to induce performance 2) promisee justifiably relies on the promise, and 3) promisee suffers a substantial detriment
A farmer hired temporary workers in advance for one-day job picking berries for shipment. All the berries had to be picked on one specific day, so the berries had to be picked on one specific day, so the berries would not spoil before reaching customers. on the morning of the day scheduled for the picking, the workers demanded an increase in wages and threatened to walk out unless the farmer agreed to the increase. The farmer realized that it would be impossible to replace the workers at short notice, and thus agreed to the wage increase. Is the farmer bound by this modification of the K?
No. The farmer is not bound by the modification because it is void for lack of consideration. If the contract is modified to add to the obligations of one of the parties new consideration is necessary. Here, the farmer suffered a new detriment by promising to increase the worker's wages, but the workers obligation was unchanged from the preexisting duty to perform under the original K. Thus, because the workers have not undertaken any new obligation, they have not provided consideration to support the modification. Therefore, the farmer is not bound by the modification.
A landowner mailed an offer to sell a plot of land to a woman for $500,000. The woman wrote back and stated, "That price is too high. I will buy the property if you reduce the price to $490,000." The landowner did not respond to the woman's communication. Did the parties form a contract?
No. The parties did not form a contract. The counteroffer constitutes a rejection if the offer, which terminates the original offer & becomes a new offer for the original offeror to accept. Silence or inaction cannot in most cases constitute acceptance of an offer. Here, the woman responded to the landowner's offer to sell the land & proposed a different price term. The woman made a counteroffer thus rejecting the initial offer and proposing different terms. Furthermore, Landowner did not respond to the offer. Thus, the landowner did not accept and his silence cannot constitute acceptance. Thus, no contract was formed.
2-207(2)
Only if BOTH parties are MERCHANTS & terms are ADDITIONAL
What five elements must a promisee prove to succeed in a claim for promissory estoppel?
Promisee must prove: 1) the promisor made a promise to the promisee; 2)the promisor had a reasonable expectation that the promisee would act or forbear from acting in reliance on the promise; 3) the promisee did in fact act or forbear from acting in justifiable reliance on the promise, 4) the promise suffered economic loss as a result of that reliance, and 5) the enforcement of the promise is necessary to avoid injustice.
Scroll Wrap
Scroll all the way down before agreeing to terms best way to bind user to the terms.
ProCD v. Zeidenberg
Shrinkwrap licenses included within a product's packaging are enforceable unless their terms are objectionable on grounds applicable to contracts in general, such as violating a positive rule of law or being unconscionable. If a buyer is presented with additional terms and offered the opportunity to reject and return the goods and subsequently does not reject the goods, then the buyer will have accepted those terms.
A city entered into a contract w/ an asphalt company. Under the contract, the asphalt company agreed to supply the city's asphalt requirements for a 10-year period. The contract left open the quantity of asphalt to be supplied so that the city would have the flexibility to order asphalt based on its variable needs. Assuming the UCC applies to the contract, did the open quantity term make this contract too indefinite to be enforceable?
The contract is enforceable and the terms are not too indefinite. The UCC contemplates an indefinite quantity term in a requirements contract to give the buyer flexibility in deciding the quantity of goods needed during a period. Here, the company agreed to supply all of the city's asphalt requirements for a 10-year period. the open quantity term was permissible under the UCC because it gave the city flexibility to order the asphalt as needed, limited by the duty of good faith to order only its actual requirements.
Objective Test of Assent
This test calls for an evaluation of what a reasonable person in the position of the recipient would have understood the communication to mean** It does not consider the subjective intent of the person who made the communication or the subjective understanding of the person to whom it was made. To determine whether a communication could reasonably be construed as an offer in cases of mutual misunderstanding (If an apparent offeror intends a communication in jest, but the person whom it is addressed believes it to be a serious offer) (Lucy v. Zemur)
How does a party make a valid offer for a unilateral contract?
The language or circumstances of the offer must make clear that the offeree can accept ONLY by rendering the performance that constitutes the offeree's consideration under the contract. Complete performance = contract
Klocek v. Gateway
UCC 2-207, In transactions btwn a vendor & buyer (not a merchant) terms added after a sale & not expressly agreed wont be part of k
A 21-year old man enjoyed smoking cigars. the man's aunt was concerned that smoking was a hazardous to the man's health, so she told the man that if he quit smoking for a year, she would pay him $5000. Motivated by his aunt's promise, the man quit smoking immediately and did not smoke for a year. At the end of the year, the man claimed the $5000 reward from his aunt, but she refused to pay him. the man sued his aunt for the $5000. The aunt's lawyer defended the suit on the basis that the aunt was not bound by the promise because it lacked consideration, arguing that quitting smoking was beneficial to the man and therefore did not constitute a detriment. Is he correct, that giving up smoking was not a detriment and could not be consideration for the aunt's promise?
The lawyer is incorrect. Quitting smoking is considered a detriment to the man for consideration purposes. A promisee furnishes consideration by incurring a legal detriment in exchange for the consideration to be received for the promisor. Under the consideration doctrine, "detriment" means giving up a legal right. Here, the man had the legal right to smoke. His aunt's promise to pay him $5000 induced him to stop smoking. Because the man gave up a legal right to smoke, quitting was a detriment to the man for consideration purposes, even if it ultimately benefited his health. Thus, the man giving up smoking constitutes consideration for the aunt's promise.
What are the material terms to a contract?
The material terms to a contract are the significant and relevant aspects of a contract, including details such as time, price, quantity, and party names. A contract will typically not be enforced without mutual assent, either express or implied, to all material terms by the parties.
What is a firm offer?
UCC: an offer for the sale of goods cannot be revoked for up to 3 months if 1) signed, written promise to keep the offer open 2) signed by a merchant A firm offer guarantees that a merchant will not revoke an offer to sell goods for a certain period of time. Because it involves the sale of goods, a firm offer is governed by the UCC. Unlike an option contract, the offeree is not required to provide anything of value in exchange for holding the offer open. The firm offer may specify an amount of time that the offer will be open, or, in the absence of such a term, the offer will be held open for a reasonable period of time. In either case, the maximum time a firm offer may be held open is three months. Only offers to buy or sell goods contained in a writing signed by the offeror will be deemed firm offers.
Hammer V. Sidway (Older Test for Consideration)
Uncle promised to give nephew $5000 if he refrained from smoking, etc until he was 21, but died before having paid him any portion of the money. D argued that the contract lacked consideration, court held that courts should not ask whether the thing which forms the consideration benefits the promissee or is of value to anyone. test for consideration is a benefit to the promisor in exchange for a legal detriment to the promisee.
Hill v. Gateway
Under the UCC, a purchaser may be bound to terms included in product packaging if the purchaser has an opportunity to review the agreement and reject it by returning the product.
Under the bargain theory of consideration, is it enough for valid consideration that one party benefits from the detriment of the other?
Under the bargain theory of consideration it is not enough that one party benefits from the detriment of another. The bargain theory of consideration views contracts as an exchange of bargain between parties. To constitute consideration under the bargain theory, the promisee's detriment must be exchanged for the promisor's promise. The basis of the bargain MUST BE that the promisor seeks the promisee's detriment.
What is the last shot rule?
Under the common-law last-shot rule, if the last communication in the offer-and-acceptance process contains a new or different term, that communication is treated as a counteroffer that rejects and replaces any earlier offer. If the recipient of the last communication subsequently performs without objection, the recipient's performance is deemed to be an acceptance by conduct of the new or different term.
The owner of a factory that uses widgets in making its product and a widget maker entered into negotiations over the telephone and, after a time, reached a general understanding that the factory owner would buy widgets from the widget maker. Following their conversation, the widget maker sent the factory owner a contract, which he had already signed, agreeing to sell 1,000 widgets to the factory owner for a total contract price of $10,000. Upon receipt of the contract in the mail, the factory owner signed the contract and deposited an envelope containing the contract in the mailbox located in front of his workplace. Before the widget maker received the contract, the factory owner had a change of heart. He telephoned the widget maker and told him that he could not afford to buy the widgets he had ordered, and he was "not interested in that contract we talked about." The widget maker replied, "That's all right, I understand. Maybe we can do business some other time." The next day, the signed contract was delivered to the widget maker's office. The widget maker, also having had a change of mind, decided that he wanted to enforce the contract. Is the contract enforceable against the factory owner?
Yes, because the acceptance occurred prior to rejection. The contract is enforceable because the mailbox rule applies here. Acceptance by mail creates a contract at the moment of posting, properly addressed and stamped, unless the offer stipulates that acceptance is not effective until received. If the offeree sends an acceptance and then rejects the offer, the mailbox rule applies; i.e., a contract is created upon dispatch of the acceptance. His attempt to reject occurred after acceptance took place. Thus, a valid contract was formed and the widget maker may enforce it
A seller was moving and needed to sell some furniture. the seller called an antiques dealer and invited the dealer to inspect the furniture for possible purchase. On September 1, the dealer sent a representative to the seller's house. The dealer's representative expressed interest in buying the furniture for the seller's asking price of $50,000. The offer stated that it was a firm offer, to be held open for acceptance by no later than September 4. On September 2, the seller contacted the dealer and revoked the offer. Was the seller's revocation legally effective to terminate the offer?
Yes, the sellers revocation terminated the offer. The UCC eliminates consideration as a requirement to validate a firm offer (i.e. an option) made by a merchant (i.e. a person who deals in the types of good in the transaction or anyone who holds themselves out as having expertise knowledge relevant to the sale of goods.) if the offer is in a signed writing and is irrevocable for three months or less. Here, the seller is a homeowner selling personal property and not someone who deals in antiques. The seller is thus not a merchant, and the transaction is not subject to the UCC. Furthermore, under CL, the seller's promise to keep an offer open must be supported by consideration for the offer to be irrevocable. Here, the dealer gave no consideration and thus the seller was able to revoke the offer.
If a particular performance would constitute consideration, does a promise to render that performance in the future also qualify as consideration?
Yes, if a performance would constitute consideration, a promise to render that performance in the future is also consideration. A party's legal detriment is the same whether the party renders performance at the same time that the contract concluded (creating a unilateral contract) or commits itself to rendering that performance in the future (creating a bilateral contract) For consideration purposes, there is no distinction between incurring the legal detriment of performing a contractual obligation and the detriment of promising to perform in the future.
A buyer entered into a K to buy a painting from a a gallery for $500,000. Soon after the contract was executed, but before the painting was delivered and paid for, a similar painting by the same artist sold for $750,000. The gallery then realized that the K price in its sale to the buyer was too low and told the buyer it would cancel the sale unless the buyer agreed to pay considerably more than the contract price. Assuming the UCC applies, may the buyer avoid the modification and enforce the original K of sale for $500,000?
Yes, the buyer may avoid the modification and enforce the original K because the gallery acted in bad faith. Here, the gallery motivated only by the desire to make a greater profit threatened to breach its original K with the buyer unless the buyer agreed to a higher price for the painting. This bad faith conduct violates the obligation of good faith under the UCC.
A man told his sister that he would give her a gift certificate for a certain hotel as a birthday present.. On the strength of the promise, the sister booked a non-refundable two-night stay at the hotel for the weekend after her birthday. The cost of two-nights accommodation was $450. The man never gave his sister the promised gift certificate, and the sister had to pay the $450 herself. The man's promise was clearly gratuitous. Does the doctrine of promissory estoppel provide a basis to enforce the promise?
Yes, the doctrine of promissory estoppel may permit enforcement of a promise that is not otherwise enforceable under contract law. Here, the brother promised his sister to hotel gift certificate and must have expected his sister to act in reliance on the promise. Further the sister justifiably relied on the promise to her detriment by committing herself to a non-refundable $450 expense an economic loss. Thus, promissory estoppel provides a basis to enforce the man's promise.
A farmer was considering selling a farm and knew that a man was interested in buying it. The farmer composed an email to the man, offering to sell the farm to the man for a stated price. Before sending the email, the farmer had second thoughts and decided not to sell. The farmer intended to delete the email but, without realizing it, hit the "send" button instead of the "delete" button and accidentally sent the email to the man. The farmer did not discover this mistake until the next day, when the man replied to the farmer and accepted the offer. Was the farmer's email an offer to sell the farm?
Yes, the email was an offer. An offer is the manifestation of an offeror's willingness to enter into a contract that justifies acceptance from an offeree. Such a manifestation will bind the offerror even if he did not subjectively intend to make an offer. Here, though the farmer did not subjectively intend to make an offer, the email was a binding manifestation of willingness to enter into a contract. the farmer knew the man wanted the farm, & the email offered to sell him the farm at a stated price. A reasonable person would conclude that a genuine offer was made, and that a contract would be formed if the man accepted. Thus, the email was an offer.
((2-207(3)) Under the UCC, can parties form a contract by engaging in conduct that recognizes a K, even if the written communication between them are too conflicting (different) to constitute offer and acceptance?
Yes, under the UCC parties can form a contract by engaging in conduct that recognizes a contract, even if written comm. b/w them are too conflicting. Any conflicting terms in the writing are discarded, and any gaps are filled by supplementary terms enacted by the UCC or in the absence of applicable UCC provisions, by default terms under CL. Terms of K will consist only of the terms agreed upon by the parties plus/along with any supplementary terms incorporated under the UCC or CL.
Under the UCC, can parties form a contract by engaging in conduct that recognizes a contract, even if the written communications between them are too conflicting to constitute offer and acceptance?
Yes, under the UCC, parties can from a contract by engaging in conduct that recognizes a contract, even if the written communications between them are too conflicting to constitute an offer and acceptance. In cases that this occurs, any conflicting terms in the writings are discarded, and any gaps are filled by supplementary terms enacted in the UCC, OR in the absence of any applicable UCC provisions, by default terms recognized under CL. The terms of the contract will thus consist of the terms on which the parties agree, along w/ those terms incorporated under the UCC or CL.
Is a contract for the sale of goods valid and enforceable if it does not state the price of the goods?
Yes. A contract for the sale of goods can be valid and enforceable if it does not state the price of the goods. Provided that the parties manifest the intention to be bound, the UCC recognizes that parties can conclude a contract with an open price term. The price of the goods is the reasonable price at the time of delivery (market value)
Is a modification to an existing contract supported by sufficient consideration if both parties alter their duties?
Yes. A modification to an existing K is enforceable and supported by consideration if both parties alter their duties such as by agreeing to accelerate performance. Each Party's alteration of duties provides sufficient consideration for the other's.
Does an exchange of promises constitute sufficient consideration to create an enforceable contract?
Yes. An exchange of promises generally constitutes sufficient consideration to form an enforceable bilateral contract.
If an offer for a unilateral contract permits acceptance exclusively by a non-instantaneous contractual performance, must the offeree complete the performance to accept the offer?
Yes. If an offer for a unilateral contract permits acceptance exclusively by a instantaneous contractual performance, the offeree must complete the performance to accept the offer. Under a unilateral K, an offeree can accept an offer only by rendering the performance that constitutes the offeree's consideration under the K. Even if the performance cannot be completed instantly (I.e. Painting a house), the offeree's consideration is full performance, so acceptance occurs only when the performance is complete
A movie theater advertised in the Sunday newspaper that on Wednesday night, all seats in the theater would be on sale for $5. the advertisement contained no words of limitation or qualification. A customer showed up at the theater on Wednesday night, asked for 4 tickets, & tendered a $20 bill in payment. The box office employee refused to sell the 4 tickets for $20, stating that the theater had decided to cancel the promotion & that the price of a ticket was the usual $15 Did the theater's advertisement constitute an offer?
Yes. The ad was an offer. Here, the ad was stated the ticket sale price & the sale time w/out any limitation or qualification; it was clear, definite & explicit; it left nothing open for negotiation; and it was reasonably understood to invite the public to participate in the sale. Thus, the ad constituted an offer, which the customer accepted by paying the stated price of $20 for 4 tickets.
A truck driver contracted w/ a manufacturer to deliver goods to a warehouse by 5 p.m. on Friday. On Thursday, the manufacturer realized that the goods needed to arrive by noon the next day. the manufacturer offered the driver an extra $100 if he could get the goods to the warehouse by noon. The driver agreed and arrived at noon. 5 hours earlier than he had originally contracted w/ the manufacturer. Is the driver's early arrival valid consideration for the extra $100
Yes. The truck driver's early arrival constitutes valid consideration for the extra $100. Because both parties are already legally obligated to perform terms of the contract, a modification is usually unenforceable. Here, the driver has a preexisting duty to deliver goods. However, the delivering of goods earlier than stipulated in the contract is a significant alteration of duties. Thus, the truck driver's arrival at the warehouse is a legal detriment and is valid consideration for the manufacture's promise of an extra $100. The pre-existing duty rule provided that an act of forbearance does no constitute consideration if it is already a legal obligation or not a legal entitlement. A modification to a contract will, however be enforceable if the parties duties are altered sufficiently to constitute consideration
Under the UCC, is a contract (K) created if an offeree accepts an offer but also adds an additional term not in the offer?
Yes. Under UCC, a K is created if an offeree accepts an offer but also adds additional term not in the offer. The UCC rejects the CL MIR that requires an acceptance be exactly in accord w/ the offer. Under UCC, as long as the response to an offer is a definite expression of acceptance, it does not fail as an acceptance merely because it contains terms that are different from or in addition to those included in the offer.
Under the UCC, is a contract created if an offeree accepts an offer but also adds an additional term not in the offer?
Yes. Under the UCC, a K is created if an offeree accepts an offer but also adds an additional term not in the offer. The UCC rejects the CL MIR that requires an acceptance to be exactly in accord with the offer. Under the UCC, as long as the response to an offer is a definite expression of acceptance, it does not fail as an acceptance merely because it contains terms that are different from or in addition to those included in the offer.
Under CL, is new consideration required for a modification of a contract?
Yes. parties must both give new consideration to validate the modification of a contract. rationale is the preexisting duty rule - a party does not incur a legal detriment by promising or performing a legal duty that is already owed. If the contract is modified to add to the obligations of one of the parties, the other party's preexisting obligation under the contract will not support the modification. Rather consideration doctrine requires that the other party must also undertake a new obligation to provide consideration in support of the modification.
At 8:00 a.m. a homeowner called a plumber and left a voicemail message reporting that a water pipe in the homeowner's house had burst and needed urgent repair as soon as possible. The homeowner told the plumber "if you come to my house & repair the pipe at 11 a.m., I will pay you $500 for the repair work. I'll leave the front door unlocked for you to come in & fix the pipe while i'm out." At 11 a.m., the plumber went into the homeowner's house, entered through the unlocked front door, & repaired the pipe. Did the homeowner & the plumber form a contract?
Yes. the parties formed a unilateral contract. A unilateral contract is formed when a promise is exchanged for a performance. The offeree cam accept the offer by rendering the performance that constitutes the offeree's consideration under the K. Once the offeree has performed, the offeror is bound by the promise. Here, the homeowner promised to pay $500 if the plumber reoaired the pipe at 11 a.m. the plumber arrived at 11 a.m. and performed the repairs as the homeowner directed. Thus, the parties formed a unilateral contract and the homeowner must pay the $500 as promised for complete performance.
Benefit-Detriment Approach
defines consideration as a benefit received by the promisor or a detriment incurred by the promisee. Ex: Hammer v. Sidway Giving up a legal right
A builder and a landowner entered into a valid written contract under which the builder agreed to erect a house on the landowner's land according to certain plans and specifications and the landowner agreed to pay the sum of $200,000 upon completion. During the course of construction, building costs increased by $15,000 due to an unexpected shortage of materials. The builder informed the landowner of the increased costs, and the parties agreed in writing that the builder could omit installing the air conditioning unit called for by the specifications (thus saving the builder approximately $10,000) and nevertheless receive the full construction contract price. Is this subsequent written agreement enforceable?
yes, because it is fair and equitable in view of the unanticipated increase in the cost of materials. Exp: under the modern view, a modification is enforceable without consideration if it is fair and equitable in view of the unanticipated circumstances. Here, there was an unexpected shortage of materials and an increase in costs. The $10,000 savings is fair in view of these circumstances. Thus, a court will enforce the modification.
