Contract Essay Rule Statements

What is a legally enforceable contract?

Created through mutual assent (offer and acceptance) and consideration (benefit, legal detriment, or both), provided no valid defense to contract exists.

Define an offer.

An objective manifestation of a willingness by the offeror to enter into an agreement that creates the power of acceptance in the offeree.

How do you distinguish an offer from an invitation to deal?

The more definite the statement, the more likely it is to be an offer. Advertisements are usually mere invitations to deal.

Can an advertisement constitute a valid offer?

Yes, if it is sufficiently definite — e.g., it contains a description of the property and a definite price.

What does a counter-offer do to the original offer?

Acts as a rejection of the original offer and also creates a new offer.

When can an offeror revoke an offer?

An offer can be revoked by the offeror at any time prior to acceptance, even if the offer states that it will remain open for a specific amount of time.

How must a revocation be communicated?

In any reasonable manner and by any reasonable means, as long as it is communicated to the offeree.

What is an option?

An independent promise to keep an offer open for a specified period of time.

What is required to make an option enforceable?

The offeree must generally give separate consideration for the option to be enforceable.

Does a deadline in an offer (without separate consideration) create an option?

No — a requirement that the offeree accept by a certain date is not a promise to keep the offer open and is not supported by separate consideration, so it does not create an option.

What does a counter-offer do to the offeree's power of acceptance?

A counter-offer terminates the prior offer — once the offeree counter-offers, she can no longer go back and accept the original offer.

Define acceptance.

An objective manifestation by the offeree to be bound by the terms of the offer.

Does silence operate as acceptance?

No — silence does not operate as acceptance. The offeree must communicate the acceptance to the offeror.

What conduct is required to show acceptance by conduct?

There must be sufficient conduct to show an objective manifestation of the intent to be bound. Merely taking possession of a check, not cashing it, and voiding it is insufficient.

Who is the master of the offer?

The offeror — the offeror can dictate the manner and means by which an offer may be accepted.

If an offer specifies a particular method of acceptance, what happens if the offeree uses a different method?

The offeree has not properly accepted — acceptance must comply with the method specified by the offeror.

What is the Mailbox Rule for acceptance?

An acceptance that is mailed is effective when sent (not upon receipt), unless the offer provides otherwise.

What is the Mailbox Rule for revocation?

A revocation is not subject to the mailbox rule and is effective only upon receipt.

If an offeree signs an acceptance but does not mail it, is acceptance effective?

No — the acceptance must actually be dispatched (mailed/sent) to trigger the mailbox rule. Signing without mailing is not effective acceptance.

What happens if an offeree mails acceptance before receiving a revocation?

The acceptance is effective as of the date mailed — the offeree can validly accept despite the offeror's prior attempt to revoke, as long as the acceptance is dispatched before the revocation is received.

What contracts fall within the Statute of Frauds?

Contracts within the Statute of Frauds are unenforceable unless evidenced by a writing signed by the party to be charged and containing all essential elements of the deal.

What are the essential terms for a land contract under the Statute of Frauds?

The parties, the subject matter (description of the property), and the price.

Who must sign the writing under the Statute of Frauds?

The party to be charged — i.e., the party against whom enforcement is sought.

What is the part performance exception to the Statute of Frauds in Florida?

Florida requires ALL THREE elements: (1) payment of all or part of the purchase price, (2) possession by the purchaser, AND (3) substantial improvement of the property by the purchaser.

When is specific performance available?

When damages are an inadequate remedy. Damages are always inadequate in contracts involving an interest in real property because every parcel of land is unique.

Can specific performance be ordered against a subsequent bona fide purchaser?

No — a subsequent purchaser without notice of a prior sale cannot be required to specifically perform the contract.

How are expectation damages calculated for a failed real estate sale?

Measured by the difference between the contract price and the market value of the property.

What does the Parol Evidence Rule prohibit?

Prevents a party to a written contract from presenting prior extrinsic evidence that contradicts the terms of the contract as written.

What is a total integration and what is its effect?

If a record is a total integration, the parties cannot introduce extrinsic evidence of prior or contemporaneous understandings or negotiations — not just contradictory terms, but any outside terms.

What makes a contract a total integration?

A merger clause stating that the written contract represents the entire agreement of the parties.

Does the Parol Evidence Rule bar evidence of a defense to contract formation?

No — the parol evidence rule does not prohibit evidence of a defense to contract formation, such as mutual mistake of fact.

What is mutual mistake?

Occurs when both parties are mistaken as to an essential element of the contract at the time it was formed. The contract may be voidable by the adversely affected party.

What are the four elements of mutual mistake?

(1) A mistake of fact existing at the time the contract was formed; (2) the mistake relates to a basic assumption of the contract; (3) the mistake has a material impact on the transaction; and (4) the adversely affected party did not assume the risk of the mistake.

When might a buyer be found to have assumed the risk of a mistake about property?

When the buyer had the ability and responsibility to investigate the relevant issue (e.g., zoning restrictions) before contracting.

What is required to modify a contract at common law?

Modification of an existing contract must be supported by consideration.

What are the three exceptions allowing modification without additional consideration at common law?

(1) Rescission of the existing contract followed by a new contract where a party must perform more; (2) unforeseen difficulties; (3) new obligations on both sides.

What is rescission?

The canceling of a contract so as to restore the parties to the positions they had before the contract was made.

How can rescission occur?

By the mutual agreement of the parties.

What is the consideration for a rescission by mutual agreement?

The surrender of rights under the original contract by each party.

When is a rescission NOT valid?

When one party's benefit under the contract remains the same — if neither party is required to perform more than under the original contract, there is no adequate consideration for rescission.

Does the Statute of Frauds apply to oral modifications of real estate contracts?

Yes — any agreement to transfer an interest in real property is subject to the Statute of Frauds. An oral modification of a real estate contract is unenforceable.

What duties does a lawyer owe a client?

A basic duty of loyalty and independent professional judgment.

What is a conflict of interest between a lawyer and a client?

A conflict-of-interest may constitute a breach of the lawyer's duties of loyalty and independent professional judgment.

What does the Florida Rules of Professional Conduct prohibit regarding litigation subject matter?

A lawyer is prohibited from obtaining a proprietary interest in the subject matter of litigation in which a client is represented.

What are the only two exceptions to the prohibition on acquiring interest in litigation subject matter?

(1) Acquiring a lien to secure payment of a fee; (2) contracting for a reasonable contingent fee.

Can a client waive the prohibition on a lawyer acquiring a proprietary interest in litigation subject matter?

No — the protection cannot be waived by the client.