Contracts

Definition & Types of Consideration

Something of value given in exchange for a promise.

Consideration can be:

1. A return promise

2. An act

3. A forbearance

4. Creation, modification, or destruction of a legal relation

Hamer v. Sidway; Pennsy

Consideration Test & What does “bargained for” mean?

Test: Benefit to promisor OR detriment to promisee

Refers to reciprocal conventional inducement, which means each for the other—the promise induces the consideration, and the consideration induces the promise.

Hamer v. Sidway

Neither Pennsy nor 71 (Consideration) requires actual negotation or talking about consideartion; instead, they use the term:

bargained for

Mailbox Rule

Generally, acceptance is effective when sent, regardless of whether it reaches the offeror.

Mnemonic for the Mailbox Rule

Acceptance on answer; revocation on receipt

Under the Mailbox Rule, a lost acceptance

Is still an acceptance

_______ of an offer via mail is trumped by an earlier __________

Revocation; acceptance

Ads are generally invitations to make offers. What are the two exceptions?

1. The ad invites acceptance without further negotiations in clear, definite express, and unconditional language

2. The ad is deceptive.

Definition of Preliminary Negotiations

A manifestation of willingness to enter into a bargain is NOT an offer if the person to whom it’s addressed knows or has reason to know that the offeror doesn’t intend to conclude a bargain until he has made a further manifestation of assent.

What are the elements of an offer?

1. Manifestation of willingness to enter into a bargain

2. invites assent

3. assent will conclude the deal, and

4. essential terms

Lonergan v. Scolnick

What are the elements of acceptance?

1. A manifestation of assent by the offeree to the terms of the offer

2. either in a manner invited or required by the offer or, if none are stated, in a manner and medium that are reasonable.

What is an option contract, and what does it require?

A promise that limits the offeror’s power to revoke the offer.

Requires mutual assent and consideration, and the consideration must be conveyed to the promisor.

43: Indirect Revocation Elements

An offeree’s power of acceptance is terminated

1. when the offeror takes definite action inconsistent with an intention to enter into the proposed contract;

2. the offeree acquires information to that effect; and

3. the information and source are reliable

Dickinson v. Dodd

17: Requirement of a bargain

The formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange, and consideration.

38: Rejection

An offeree’s power of acceptance is terminated by his rejection of the offer, unless the offeror has manifested a contrary intent.

41: Lapse of time

An offeree’s power of acceptance is terminated at the time specified in the offer or, if no time is specified, at the end of a reasonable.

39: Counter-offers

Made by an offeree to his offeror relating to the same matter as the original offer and proposing a substituted bargain different from that proposed by the original offer.

21: Intention to be Legally Bound

Neither real nor apparent intention that a promise be legally binding is essential to the formation of a contract, but a manifestation of intention that a promise shall not affect legal relations may prevent the formation of a contract.

22: Mode of Assent: Offer & Acceptance

1. Manifestation of mutual assent to an exchange ordinarily takes the form of an offer or proposal by one party followed by an acceptance by the other party.

2. A manifestation of mutual assent may be even though neither offer nor acceptance can be identified and even though the moment of formation cannot be determined.

32: Invitation of Promise or Performance

In case of doubt, an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requrests or by rendering the performance, as the offeree chooses.

33: Certainty

1. Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain.

2. the terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appopriate remedy.

3. the fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or an acceptance.

36: Methods of Termination of the Power of Acceptance

An offeree’s power of acceptance may be terminated by:

1. rejection or counter-offer by the offeree (Normile v. Miller), OR

2. Lapse of time, OR

3. revocation by the offeror, OR

4. death or incapacity of the offeror or offeree.

Additionally, an offeree’s POA is terminated by the non-occurrence of any condition of accpetance under the terms of the offer.

42: Direct Revocation of an Offer

An offeree’s power of acceptance is terminated when the offeree receives from the offeror an manifestation of an intention not to enter into the proposed contract.

45: Option Contract Created by Part Performance or Tender:

1. Where an offer invites an offeree to accept by rendering a performance, and does not invite a promissory acceptance, an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it.

2. the offeror’s duty of performance under any option contract so created is conditional upon completion or tender of the invited performance in accordance with the terms of the offer.

Cook v. Coldwell/Laiben (Real Estate)

59: Purported Acceptance which Adds Qualifications

A reply to an offer which purports to accept it but is conditional on the offeror’s assent to terms additionally to or different from those offered is not an acceptance, but a counter-offer.

Normile v. Miller

Ray v. Eurice

If you signed it, you’re bound by it. A unilateral mistake means that the contract is still enforceable.

73: Performance of a Legal Duty

Performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest dispute is not consideration; but a similar performance is consideration if it differs from what was required by the duty in a way which reflects more than a pretense of bargain.

79: Adequacy of consideration/Peppercorn theory

If the requirement of consideration is met, there is no additional requirement. Mere inadequacy of consideration will not void a contract; however, gross inadequacy may be evidence of wrongdoing.

Agency Rules

1. Actual authority: principal tells the agent to do the act in question.

2. Apparent authority: principal has said or done something that leads a third party to believe the agent has the power to do the act in question.

3. Inherent authority: by virtue of the agent’s position, the agent has the power to do the act in question.

4. Ratification: approval of the act in question by the principal after the act occurs.