Contracts Midterm
Promise Elements
1. manifestation
2. to act or refrain from acting
3. promisee is justified in understanding a commitment has been made (objective reasonable expectation)
When does a legal promise create an enforceable contact?
Elements of the contract are met (offer, acceptance, consideration) AND no defense or excuses to the formation
Offer Elements
1. manifestation of present intent to enter a bargain
2. stated in certain and definite terms
3. communicated to an identified person or persons
4. so that an offer can reasonably understand that a contract would result if accepted
UCC approach to offer
an offer to buy goods=invites acceptance
Acceptance Elements
1. manifestation of assent
2. assent to all the terms of the offers
3. in a manner invited or required
Consideration Elements
1. bargained for exchange of promises
2. those promises have legal value
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
offer and acceptance
Objective theory
how a reasonable person in the same or similar circumstances would interpret a party's words and actions
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
What does the seller want to apply?
common law
What does the buyer want to apply?
UCC
UCC Article 2: Definition of a "sale"
A “sale” consists in the passing of title from the seller to the buyer for a price…
UCC Article 2: Definition of a "good"
-Element 1: tangible
-Element 2: which are moveable
-Element 3: at the time of the contract formation
Predominant Purpose Test (mixed service and sale of goods)
what was the purpose at the time the contract was performed?
Gravamen Test
-does not care about intent
-did the complaint arise from the performance or services or from the goods sold?
Bilateral Contract
can either accept by agreeing verbally or in writing OR by performance
Unilateral Contract
can only accept by fully performing
Acceptance by performing: Bilateral Contract (CL)
the beginning of performance is deemed the acceptance, and the offeree is contractually bound to complete performance
Acceptance by shipping: Bilateral Contract (UCC)
prompt shipment shall be constructed as inviting acceptance either by a prompt promise to ship or by its current shipment
The power of acceptance can be terminated by:
1. rejection by the offeree
2. counteroffer by the offeree
3. revocation by the offeror
4. lapse of time
5. death or incapacity of either offeror or offeree
Mailbox Rule
when sent through the mail, an acceptance is effective on dispatch
Mailbox Rule: Acceptance then rejection
since the acceptance came first, under the mailbox rule, the contract was formed when the acceptance was dispatched
Mailbox Rule: Rejection then acceptance
if the rejection is received first, then the offeree's power of acceptance is terminated, and the mailed acceptance is ineffective for that contract and is now a new offer
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.
Part Performance of a Uni Contract (irrevocable)
-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
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 which by its terms give
assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is 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
Define: Merchant
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
Battle of the Forms (CL approach)
1. Mirror Image Rule
2. Last Shot Doctrine
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
Executory Promise/Gift
-a promise of a gift
-this means the gift has not yet been given
or completed. (i.e., unexecuted)
Executed Promise/Gift
-a promise that has been executed
-now, the promisor can not
take it back once it has been executed
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
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's 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.
Contract Formation
1. offer
2. acceptance
3. consideration
Offer Elements
1. communicated to person or persons
2. stated in definite and certain terms
3. a manifestation to willingly enter into a bargain and be bound
4. so that it would be reasonable for the offeree to know a K is formed if accepted
Sub-Rule to Offer?
must be more then just a mere inquiry or negotiation
Acceptance Elements
1. manifesting of assent
2. assent to all the terms
3. in a manner invited or required by the offer
Sub-Rule to Acceptance
acceptance must be:
1. sufficiently clear
2. unequivocal
3. unambiguous
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
Consideration Elements?
1. bargained for exchange
2. for legal value
ON BOTH SIDES OF THE EXCHANGE
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
CL Approach to the Battle of the Forms
1. Mirror Image Rule
2. Last Shot Doctrine
UCC Approach to the Battle of the Forms
UCC Section 2-207
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
Merchant?
a person who deals in goods of the kind
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)
Knock out 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!!