Contracts

Who sets the terms of the offer?

The offeror is the master of the offer

Elements of an offer

(1) manifestation of willingness to enter a bargain; (2) invites assent; (3) assent will conclude the deal; (4) Essential terms

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 the general rule for acceptance and revocation/rejection?

Acceptance upon answer, revocation/rejection upon receipt.

Termination of the power of acceptance

(a) Rejection or counter-offer by the offeree; (b) lapse of time; (c) revocation by the offeror; (d) death or incapacity of the offeror or offeree

Preliminary negotiations

Purported offeror must make a further manifestation of assent

Ads (Advertisements)

Generally, ads are not offers but invitations to make offers. Exceptions to this rule are (1) the ad invites acceptance without further negotiations in clear, definite, express, and unconditional language; and (2) if the ad is deceptive

Mailbox rule

Unless the offer provides otherwise, an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree's possession, regardless of whether it reaches the offeror

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 time.

Indirect revocation

An offeree's power of acceptance in 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 is reliable

Direct revocation

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

Rejection

An offeree's power of acceptance is terminated by his rejection of the offer

What is a counteroffer

A counteroffer is an offer made by the offeree to his offeror that changes the terms of the original offer, and the original offer can no longer be accepted.

Option contract

An option contract requires mutual assent and consideration, and the consideration, which can be nominal, must be conveyed to the promisor. A valid option contract prevents the offeror from revoking their offer.

Consideration

Something of value given in exchange of a promise

Types of consideration

(1) A return promise; (2) an act; (3) forbearance

Test for consideration

Requires either a benefit to the promisor or a detriment to the promisee that is bargained for. Bargained for means the promise induces the consideration and the consideration induces the promise.

What is not consideration

(1) Moral obligation; (2) past performance; (3) a gratuitous promise.

Adequacy (Peppercorn theory)

Mere inadequacy of consideration will not void a contact, gross inadequacy may be evidence of wrongdoing.

Illusory promise

Makes performance entirely optional with the promisor and does not lead the promisee to have an expectation of performance (Maybe I will, maybe I won’t)

Preexisting duty rule

Consideration cannot be something you are already legally required to do, but if you do something slightly different, that can count as consideration

Actual authority

Principal tells the agent the agent can do the act in question

Apparent authority

Principal has said or done something that leads a third party to believe that the agent has the power to do the act in question

Inherent authority

By virtue of the agent's position, the agent has the power to do the act in question

Ratification

Approval of act in question by principal after the act occurs

Promissory estoppel

(1) needs a promise; (2) promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person; (3) which does induce such action or forbearance; (4) the promise is binding if injustice can be avoided only by enforcement of the promise, the remedy granted for breach may be limited as justice requires

UCC vs. Common law

The UCC governs the sale of goods, which are tangible moveable property. Common law governs everything else

Restitution

1) P conferred a benefit on D by rendering services; 2) P conferred the benefit with a reasonable expectation of being compensated for its value; 3) D knew or had reason to know of P’s expectation; and 4) D would be unjustly enriched if it were allowed to retain the benefit without compensating P

Express contracts

Written or stated verbally with words

Implied in fact contracts

Circumstances and facts of the parties’ interaction indicated there is an actual contract

Implied in law contracts

Not an actual contract because mutual assent is missing, but the law is implying a contract to prevent injustice or unfairness

What are other terms for implied in law contracts?

Quasi contracts, restitution, unjust enrichment, quantum meruit