Contracts Midterm

Manifestation

The expression or indication of intent to enter into a promise or contract.

Objective Reasonable Expectation

The belief of the promisee that a commitment has been made, based on how a reasonable person would interpret the situation.

Contract Formation

A legal promise creates an enforceable contract when elements of the contract are met (offer, acceptance, consideration) without any defenses or excuses.

1. offer
2. acceptance
3. consideration

Offer Elements

1. Manifestation of present intent to enter a bargain; 2. Stated in certain and definite terms; 3. Communicated to a specific person; 4. Reasonably understood that acceptance would result in a contract.

UCC Approach to Offer

An offer to buy goods invites acceptance.

Acceptance Elements

1. Manifestation of assent; 2. Assent to all terms of the offer; 3. In a manner invited or required.

Consideration Elements

1. Bargained for exchange of promises; 2. Those promises must have legal value ON BOTH SIDES OF THE EXCHANGE

Bargained for Exchange

1. the promise must induce the detriment of(promisee motive)
2. the detriment must induce the promise (promisor motive)

Legal Value

1. benefit to the promisor (i .e., getting money for the car)
2. detriment to the promisee (i.e., giving up the money to get the car)

Mutual Assent

The agreement between parties, consisting of offer and acceptance.

Defenses and Excuses to Formation

1. Incapacity; 2. Duress; 3. Undue Influence; 4. Misrepresentation and fraud; 5. Nondisclosure; 6. Unconscionability; 7. Public Policy; 8. Mistake.

Common Law

The body of law developed through court decisions rather than legislative statutes, often applies to contracts for services.

UCC

Uniform Commercial Code, primarily governs contracts for the sale of goods.

Sale

The passing of title from the seller to the buyer for a price.

Good

1. Tangible; 2. Moveable; 3. Identifiable at the time of sale.

Predominant Purpose Test

Determines the main purpose of the contract, whether it is for services with goods incidentally involved or for goods with services incidentally involved.

Gravamen Test

Determines the main issue of the complaint, whether it arose from services or from the goods sold.

Bilateral Contract

A contract that may be accepted either by verbal agreement, writing, or by performance.

Unilateral Contract

A contract that can only be accepted by fully performing the actions specified.

Acceptance by Performing (Bilateral Contract CL)

The beginning of performance constitutes acceptance, binding the offeree to complete performance.

Mailbox Rule

Acceptance is effective upon dispatch when sent through the mail.

Option Contract (irrevocable)

-separate from the original offer/contract
-the option contract is to keep the contract open for a specified time, supported by consideration (money)

Conditional Contract (irrevocable)

-two parties enter into a bargain where they agree that:
1. a contract will form according to the timer of an offer.
2. if and only if a condition (i.e., event) occurs.

Promissory Estoppel (irrevocable)

1. a legal promise
2. to reasonably expect the promisee to do or not do something
3. the promisee actually does it (action or forbearance)

Merchant's Firm Offer (UCC, irrevocable)

An offer by a merchant to buy or sell goods in a signed writing that is irrevocable for the time stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror

Battle of the Forms (CL approach)

Uses the Mirror Image Rule and Last Shot Doctrine to determine contract terms.

UCC Section 2-207

Allows for a contract to be formed through acceptance even with additional or different terms unless stated otherwise.

Executed Promise/Gift

-a promise that has been executed
-now, the promisor can not
take it back once it has been executed

Executory Promise/Gift

-a promise of a gift
-this means the gift has not yet been given
or completed. (i.e., unexecuted)

Acceptance under UCC

An acceptance may be made in any reasonable manner, including prompt shipment or conduct recognizing a contract.

Battle of the Forms (UCC Approach)

UCC Section 2-207

Has a contract been formed under UCC Section 2-207(1)?

yes if the following are proven:
a. a definite and seasonable expression of acceptance, or
b. a written confirmation sent in a reasonable time
THEN:
c. the offer's acceptance forms a contract though there are additional or different terms

Are the varying terms incorporated into the contract?

if yes, they are varying terms are just proposals

Are both parties merchants? (UCC)

if yes, then the varying terms are included in the contract UNLESS
a. the offer expressly limits acceptance to the terms of the offer
b. they materially alter it
c. objection to the terms within a reasonable time

What do you apply if additional terms?

UCC Section 2-207(2)

What do you apply if different terms?

knockout rule in UCC Section 2-207(3)

Knockout Rule

there is a contract through performance only, but the terms are different, then they are knocked out since performance already started and formed the contract

Do we have a contract under UCC 2-207(1)?

yes if there is:
1. definite and seasonable expression of acceptance
2. or a written confirmation
3. sent out in a reasonable time
4. even though it states terms that are additional or different from those ordered or agreed upon
UNLESS:
5. acceptance is made conditional on assent to the additional or different terms

Between merchants, additional or different terms become part of the contract UNLESS:

1. the offer limits acceptance to the terms of the offer,
2. they materially alter it, or
3. there is an objection has been given or will be given within a reasonable time after notice of them is received

When does the UCC govern?

sale of goods

When does the CL govern?

everything else (real estate or a service)

What is a good?

1. moveable
2. tangible
3. identifiable at the time of sale

Part performance of a Unilateral contract

-an option contract is created when the offeree begins the invited performance
-the contract prevents the offeror from revoking the offer for the time stated
in the offer or a reasonable time

Merchant definition

a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill

What do you apply when the contract is mixed (both service and a good) in the majority district?

Predominant purpose test

What do you apply when the contract is mixed (both service and a good) in the minority district?

Gravamen test

Predominant Purpose Test?

determines whether the predominant purpose of the transactions is either a service, with good incidentally involved, OR a sale of a good, with a service incidentally involved.

Gravamen's Test?

looks to what the main issue of the complaint is.

Sub-Rule to Offer?

must be more then just a mere inquiry or negotiation

Mirror Image Rule (Acceptance Sub-Rule)?

acceptance must match all the terms of the offer

What are counter-offers considered? (Acceptance Sub-Rule)?

counter-offers are rejections of the offer, and replace that offer with a new one

Battle of the Forms Under CL (Acceptance Sub-Rule)?

when parties terms do not create a contract but their performance does, courts use the Mirror Image Rule and Last Shot Doctrine to determine that the last unobjected terms control

Bargained For Exchange? (Reciprocal Promises)

each promise must be induced by the other

Promise Elements

1. a manifested intent
2. to act or refrain from acting
3. understood to be a commitment induced to persuade or influence someone to do something

Detriment

refers to the return promise from the promise in a bilateral contract

Legal value rule?

1. a detriment to the promisee OR
2. a benefit to the promisor

UCC Section 2-207 BOTF

a definite and seasonable expression of acceptance or a written communication sent within a reasonable time that operates as acceptance even though it states additional or different terms from those offered or agreed upon UNLESS stated otherwise

UCC 2-207(1) Conditional Acceptance (Sub-Rule)?

if the counter-offer had an express conditional acceptance then 2-201 does not apply or no K is formed.

UCC 2-207(2)?

-if one party is a merchant: the additional terms are to be construed as proposals for addition to the K.
-if both parties are merchants: the additional terms become part of the K UNLESS:
a. the offer expressly limits acceptance to the terms of the offer
b. they materially it, or
c. there is a notification of objection to the terms given within a reasonable time after bring received

UCC 2-207(3)?

conduct by both parties which recognize the existence of a K is sufficient to establish a contract for sale although the writings of the parties do not establish a K.

Knock Out Rule is under what?

UCC Section 2-207(3)

What happens during knockout rule?

contradicting terms are knocked out and UCC gap filler will govern.

Acceptance under UCC (UCC Section 2-206)

UCC Section 2-206

an acceptance may be made in any manner and by any medium reasonable in the circumstances, a promise or prompt shipment of goods, or conduct recognizing a contract

Where do you put promise elements on a contract essay?

In consideration

Objective theory rule

a party's manifestation of assent is judges by the objective reasonable interpretation of their outward expression of consent and not by their subjective intent. 1. Courts typically favor the objective reasonable meaning of a parties of a party's outward expression of intent rather than their inward subjective expression of intent