Chapter 10: Contract Law: Agreement, Offer, and Acceptance Principles

What is required for parties to form a contract?

A meeting of the minds through offer and acceptance.

What does an offer entail?

An act or statement proposing definite terms that allows the other party to create a contract.

What are the two questions to determine an offer?

Clear intention and definite terms.

What are examples of statements that are not considered offers?

Invitations to bargain, price quotes, letters of intent, advertisements, and placing items up for auction.

What is the exception regarding auctions?

Bidding is considered an offer.

What must contract terms be to be enforceable?

Terms must be definite; vague terms do not provide enough information.

How does the UCC address missing contract terms?

The UCC has provisions for supplying missing contract terms, such as a reasonable price based on market value.

What is an output contract?

A contract where the seller must sell all their output to one buyer.

What is a requirements contract?

A contract where the buyer must obtain all needed goods from a specific seller.

What is one way to terminate an offer?

Revocation, which is effective when the offeree becomes aware of it.

When is a revocation effective under common law?

When the offeree receives it before acceptance.

What is an option contract?

An agreement where the offeror cannot revoke the offer during the option period.

What happens if an offeree rejects an offer?

The offer is immediately terminated.

What is the effect of an expiration on an offer?

If the offer has a time limit, it is binding; if not, a reasonable period is allowed for acceptance.

What constitutes termination by operation of law?

Death or mental incapacity of the offeror or destruction of the subject matter.

What must an offeree do to accept an offer?

The offeree must do or say something to accept the offer.

What is the difference between a bilateral and unilateral contract?

In a bilateral contract, acceptance is by promise; in a unilateral contract, acceptance is by performing the act.

What is the mirror image rule?

Acceptance must be on the same terms as the offer; changing terms constitutes a counteroffer.

What are clickwraps and shrinkwraps?

Clickwraps require clicking 'I agree' to continue, while shrinkwraps contain agreements inside the package.

What does communication of acceptance involve?

The method and manner of acceptance; if a specific method is demanded, it must be followed.

When is acceptance generally effective?

Acceptance is effective upon dispatch, meaning when it is out of the offeree's control.