MBE Contract

How to prevent revocation

(C/Law) Option contracts, and (UCC) Firm offer. OPTION CONTRACTS- there must be a offer, and the offeror must promise to keep the offer on the table for a specific time. Once he does that, the offeree must give some consideration to keep the offer open. Firm offers concerns merchants, it must be in writing and does not require consideration.

Remedies.

(Expectation interest, puts in as good a position as he would have been in, had the contract been performed; Reliance interest, being put in as good a position as he would have been in had the contract not been commenced. (c) Restitution interest, having restored to him any benefit that he has conferred on the other party.

Integration

A completely integrated agreement is the final draft of agreement with all terms, and is not subject to any additional terms. A fully integrated agreement is subject to additional terms.

Mutuality: Unilateral Contract:

A contract in which acceptance requires performance, (rather than through a promise) is often called the unilateral contract. The offeree's act is the consideration for the offeror's promise.

Counter offer

A counter offer occurs when an offeree tries to add or change terms in the original offer. This is considered a rejection of the original offer, as well as a new offer. Therefore, it invalidates the original offer.

Signed Writing Requirements

A number of rules in contract law require a"signed writing" in order to create an enforceable legal obligation. (a) rules pertaining to a merchant's "firm offers"; (b) statute of frauds requirements

Ricketts v. Scothorn -

A promise may be legally binding without consideration if it reasonably induced action or forbearance and if injustice will be avoided by its enforcement.

Gratuitous promise

A promise that is not supported by consideration. Generally not enforceable.

Illusory Promise:

A promise to do something but the promisor reserves the right not to perform.

Partial Payment as satisfaction of a debt

A promise to pay part of a debt, instead of the whole, is not consideration for a return promise by the creditor to relinquish the debt, because the debtor is obligated to pay anyway ("pre-existing duty"). This rule has been overruled by the UCC and by some jurisdictions.

Promise Res. 90

A promise which the promisor should reasonable expect to induce action or forbearance on the promisee, or a third party, and which in fact induces action or forbearance is binding if justice can be avoided only by enforcement of the promise.

impracticability

A promisor may be excused form his contractual obligations where unforeseen difficulties have made the performance prohibitively expensive and burdensome.

unilateral Mistake

A unilateral mistake is only excused when the other party knew, or had reason to know about the mistake, or if the mistake was a clerical error.

Harrington v. Taylor

A voluntary action of a humanitarian nature will not be adequate consideration for a subsequent promise. Court has no power to enforce D's promise.

Acceptance under the UCC

Acceptance is valid where the offeree/seller promises to ship the goods in accordance with the offeree's order, or where he ships the goods promptly in compliance with the offeree's request, or when the offeree ships non-conforming goods with out any note of accommodation.

Advertising rule

Ads, catalogs, and price lists are not offers. but invitation for offers. Responses may exceed the availability of goods or services.

Conditional acceptance -

An acceptance which includes any terms or condition which was not part of the original offer is ordinarily considered a qualified acceptance and thus an implicit rejection of the offer.

Specially manufactured goods

An aggrieved party, can secure enforcement of an oral contract by establishing the following five elements. 1. the goods were specially manufactured for the buyer; 2. the goods were not suitable for sale to others in the sellers ordinary course of business. 3. the seller has substantially begun to produce or manufacture the goods, and has made commitments to procure the goods. 4.

Time lapse

An offer lapse after the time specified in the contract has expired. If there is no specific time, them the offer lapse in a reasonable time.

Revocation by the Offeror

An offeror can revoke his offer so long as it has not been accepted by the offeree, and the revocation is communicated to the offeree.

Revival

An offeror may revive an offer at any time by words, conduct or give the offeree more time to accept.

The Offer

An outward manifestation to enter into contractual agreement. The offer may be oral, written, or by conduct. Subjective intent does not constitute an offer.

Anticipatory repudiation

Anticipatory repudiation occurs when prior to the date of performance, a party announces his intention not to perform, or circumstances makes such intention cleat to the other party.

Counter-offer

Any counter offer is a rejection of the original offer, and voids the agreement.

Parol Evidence Rule

Any evidence of negotiations prior to completing the contract is parol evidence. From time to time, the parties may attempt to introduce such evidence to either, explain, support or contradict part of the integrated contract.

Writing

Any letter from one partner to another describing the agreement. Any written acceptance of offer that forms art of the contract, a letter from one part to another repudiating the contract.

Illusory Promise

Any promise that the promiser has the right to opt out of the contract is an illusory promise.

Salt

Aunt promises to provide for her nephew. She writes a note to demonstrate the seriousness of her promise. Court holds that this is not enforceable, because it is a gift. This promise is extremely formal, however, it is still missing the elements of bargain, mutual assent and consideration.

Mutual Mistake

Both parties are assuming fault facts in relation to the contract, and the contract is voidable by the disadvantaged party.

What is a detriment?

Doing something you are not legally required to do, or refraining from doing something you are legally entitled to do in return for a promise.

Enforcing a promise of a gift

Donative promises are not generally enforceable. However, If the promisor demands specific conduct from the promisee as a condition of the gift, or the promisee counting on the promisor to keep her word, incurs irreversible obligations of her own, there might be situations in which the promise to make a future gift is enforceable. (Donation to school case)

Unconscionable Contract

Excessive price term, and other conditions that are puts the plaintiff in an unfair bargaining position.

Webb v McGowan

Facts: P saved the now-deceased J. McGowan from grave bodily injury or death by placing himself in grave danger and subsequently suffering grave bodily harm. McGowan, in return, promised P compensation. McGowan's executors, D, refused to pay the promised compensation. Rule: A moral obligation is a sufficient consideration to support a subsequent promise to pay where the promisor has received a material benefit. D's promise is enforceable, even without consideration, because D incurred a substantial material benefit from P's act, even though D did not request the act. This a quasi contract, but the court ignored the second requirement. P had no opportunity to accept or reject.

Silence as consent

Generally, silence is not consent. However, where the offeree takes the benefit of goods or services, and uses them when he had a reasonable time to reject the goods, while knowing that he will be liable for them, his silence will be deemed acceptance. Or when the offeror gives the offeree reason to understand that his silence will constitute consent, and the and the offeree remains silent, his silence will amount to acceptance.

Forbearance

Giving up something you are otherwise legally entitled to do. It is a form of detriment.

Bargain for Exchange

Good consideration exist when one refrains from doing anything he has a right.

Exception to objective interpretation

If a party knows or have reason to know of the other party's subjective interpretation of a term, the subjective interpretation will prevail. Where both parties share the same subjective understanding of the term, the subjective understanding will prevail.

Mutuality: Bilateral Contract:

If a promise constitutes consideration for another promise, a bilateral contract formed and enforceable.

McMichael v. Price -

Illusory Promise: P, a salesman of sand doing business as Sooner Sand Company, agreed to purchases all the sand he could sell for out-of-city shipment from D, who agreed to furnish all the sand P could sell for out-of-city shipment at 60% of the current market price of sand at place of destination of shipment. Rule: Where one party promises to sell to another all that the latter can use, the obligation of the parties to sell and buy must be mutual to render the contract binding. Relevant provision: UCC 2-306

Rehm-Zeiher Co. v. F.G.Walker

Illusory promise Facts: P agreed to purchase from D a given number of whisky cases a year for five years but reserved the right to refuse acceptance at any time for "any unforeseen reason." Rule: Where in a purchase agreement the buyer has reserved an alternative by which he may, at his own discretion, but nothing at all, the contract lack mutuality and may be not be enforced by either party. The contract is void for lacking mutuality. Not an illusory promise.

Wood v. Lucky, Lady Duff-Gordon

Illusory reasonable efforts implied Facts: P, in a complicated agreement, received the exclusive right for one year, renewable on a year-to-year basis if not terminated by 90-day notice, to endorse designs with D's name and to market all her fashion designs, for which she would receive one-half the profits derived. D broke the contract by placing her endorsement on designs without P's knowledge. Rule: While an express promise may be lacking, the whole writing may be instinct with an obligation-an implied promise-imperfectly expressed so as to form a valid contract.

Offer

Is a manifestation of intrntion to enter into a bargain. A reasonable person believes that it is directed to him, and if he accepts, a contract will be formed.

Part performance in Unilateral Contract

Is sufficient consideration to keep a promise open, even though the promisee is not obligated to complete performance. Once part performance is rendered, the promisor cannot withdraw his promise unless the promisee revokes.

Statutes of fraud

It covers, contractual agreements that involves, marriages, contracts for more than a year, land transactions, and sale of goods for more than 500.

Legal effects of an offer

It creates a power of acceptance in the offeree.

Enforcing a gratutious promise

Moral obligation will only be consideration for a gratuitous promise, if the promise is relied upon.

Forbearance

Not doing something that one has a legal right to do is good consideration.

UCC 2-206:

Offer and Acceptance

Mirror Image Rule (Common Law) -

Offeree's response operates as an acceptance. Acceptance must mirror the offer in every respect. Any changes is a rejection.

Mail box rule

Only effective with acceptance. The offeree accepts the offer the moment the mail is posted, providing that it has a proper address, and sufficient postage. Offerer bound even if the letter is lost, as long as there is proof of postage.

Past Consideration

Past consideration is no consideration. A new promise cannot be exchanged for some benefit that the promisor has already received.

Equitable Estoppel

Precludes a person from asserting a right when by deliberate words or actions he misled the other party into the justifiable belief that the right does not exist or would not be asserted. If a reasonably induced reliance, it does not matter whether or not there was a promise that reasonably induced that reliance (Promissory estoppel).

Implied terms

Price and other missing terms can be implied. However, if the parties clearly show the absence of agreement on price, price will not be implied, and there will be no contract.

Pre existing duty

Promise to pay a man for what he was legally obligated to do, is not consideration.

Unilateral Contract

Requires performance only from the offeree. The offeror is only bound when the offeree completes performance.

Illusory Promises lack of Mutuality

Right to opt out. A promise based on a condition that cannot occur (i.e. I will sell you my car if Elvis is returned to earth). • A promise to B $100 for his skiis, and B promises to accept unless he changes his mind.

Bailey v. West

Rule: A party who volunteers his services to another is not normally entitled to restitution for their reasonable value. Since the intent of the parties is an essential element to recovery in an "implied in fact" contract, P cannot recover. It is not a quasi contract because there is no appreciation of benefit that D is accepting and receiving services. D is not accepting the benefits because D is saying that this horse was not D's and D is sending the bills back. There is no unjust enrichment because it is not D's horse.

Forbearance of invalid claims

Rule: Forbearance to assert an invalid claim may serve as consideration for a return promise if at the time of the settlement the parties reasonably believed in good faith that the claim was valid. Facts: D promised to pay money if P would refrain from instituting paternity proceedings, but D, after blood tests, determined that P's paternity claim was invalid and refused to pay.

Communication to the Offeree

Termination of an offer can be direct or indirect. Indirect communication may involve a third party who notifies the offeree, of the offerer's revocation.

Time of Payment and Performance requirement.

The absence of these terms is not fatal because the court can imply that performance is due within a reasonable time,

Shrink wrap agreement.

The agreement is placed inside the packages, and the consume is only able to see it when he opens the package. Under the UCC, the terms of the shrink wrap agreements are mere proposals, and the offeree may either accept or reject them. P

Embry:

The appellant was employed with the appellee. Appellant had a contract that was about to expire. The appellant demanded a contract from the boss or threatened to quit. The president personally told him, not to worry, go to work. Appellant was later fired, and he brought an action for breach of contract. The court held that a reasonable person (Under the circumstances) would think that the boss intended to renew his contract for an additional year.

Adequacy of Consideration.

The court does not ordinarily examine the adequacy of consideration. Nominal or sham consideration is usually evidence that a gift is masquerading as a bargained-for exchange.

Blumenthal

The defendant told the plaintiff that he could not afford the increase of rent required for the second year as indicated in the contract. P continued to accept the normal/lower rent for a year, and then sued for deficiency. The court held that there was no consideration for the new arrangement, and therefore, the old contract remained intact.

Impossibility

The doctrine of impossibility excuses both parties from their contractual obligations, when performance has been rendered impossible through, destruction of the subject matter, death of a party , or illegality.

Interpretation

The objective reasonable meaning of a term at the time of forming the contract will control over a contrary subjective meaning of a term by one of the party.

Accord and Satisfaction

The parties may make an accord/contract, in which the creditor promises to accept substitute payment/performance, in satisfaction of the existing debt. Performance of the accord is satisfaction, and it will fully discharge the debtor from his obligations.

Certainty of Terms

The subject matter of a proposal must be definite and certain; otherwise, a court would be unable to determine the terms, if the offer evolves into an enforceable contract.

tacking Several Documents

The writing need not be one document, several documents combined will satisfy the statute of fraud.

Termination of power of acceptance

There are generally 4 ways to terminate an offer. by death or incapacity of a party, lapse of time, counter offer, and rejection.

Warranty of title

There is an implied warranty of good title to the goods, of the rightful transfer of the goods, and that no leans or other security interest are attached to the goods.

Pre-existing Duty Rule

There is no consideration if a party promises to do something that he is already obligated to do, or forbears from doing something that he is not legally entitled to do.

Writing requirement

There is no formal requirement that the agreement be fully documented. all that is required is memorandum that may be prepared either after, before, or during the formation of the contract.

Warranty of merchantability

There is warranty that guarantees that the foods are fit for the ordinary purpose for which they are being used.

promissory Estoppel

There must be a promise, the promisor foresee that the promisee will rely on the promise, the promisee must actually rely on the promise, and it will be unjust if the promise is not enforced.

Bargain

This is an agreement to exchange promises or to exchange a promise for a performance or to exchange performances

Legal Detriment

To refrain from doing something that you have a right to do, or to do something lawful that you do not have a legal duty to do.

Jones v. Star Credit

Unconscionable - unequal bargaining power; seller's knowledge of buyer's poverty. Facts: P purchased a freezer from D for $900 plus credit charges, but the actual retail value of the freezer was only $300. Rule: A court may refuse to enforce a contract for the sale of goods on the ground that an excessive price term renders the contract unconscionable.

Revocation of unilateral contract

Under the common law, the offeror can revoke a unilateral contract anytime before the completion of performance. Under the UCC, the offeror cannot revoke as long as the offeree has commenced performance.

Exception to pre-existing duty rule.

Unforeseen circumstances that gave a right to modification of the contract. It was fair and equitable to enforce the contract.

Is a promise to compensate for services performed without any prior agreement enforceable?

Unless the services were rendered at the request of the promisor, a later promise to compensate for services already performed is unenforceable.

Adequate Assurance

When a party has reasonable doubts about the ability of the other party to perform, he may make a written demand for adequate assurance of performance. Failure to respond to the demand in the 30 days is a repudiation by the non-responding party.

Can a gratuitous promise be enforced?

When a party is under moral obligation and makes a gratuitous promise, the honesty and rectitude of the promise is consideration.

Additional terms

When a transaction involves a consumer, additional terms or different terms are mere proposals for addition, and they are not part of the contract unless the offeror expressly agrees to them.

Lefkowitz: Exception to advertising rule

Where am advertisement is clear, definite and explicit, and leaves nothing to negotiate it is an offer.

Risk of loss

Where the seller sends conforming goods, the risk of loss remains with he seller, until the acceptance is cured.

Different terms

With respect to merchant agreement, such terms are knocked out, and not considered part of the contract.

Merchant and additional terms

With respects to merchant agreement, any additional terms, are automatically part of the contract unless the buyer expressly says that acceptance is limited to the terms of his offer. Or objects promptly to any additional terms, or if the additional terms will materially affect the contract.

Exception to past consideration rule

i. Pre-existing Debt A promise to repay a pre-existing debt that was excused because of a technical defense, such as the running of the statute of limitations, is enforceable without consideration. (Rest. 2d. §§ 82, 83.) ii. New Promise for benefits received A new promise to pay for benefits received will sometimes be enforceable without consideration on grounds of moral obligation to prevent injustice. (Rest. 2d. § 86.

An implied-in-law contractual obligation arises where

one party bestows a benefit on another and it is unjust for the recipient to retain the benefits without paying. Can apply irrespective of the consent of the parties.

Warranty of fitness for a particular purpose

the warranty grants that the goods being sold are fit for the purpose for which the buyer intends to use them.