REVIEW SESSION -CONTRATCS-
REVIEW SESSION -CONTRATCS-
Disclaimer: You are all probably smarter than We are. - These
slides were not originally created by usOur TA for contracts (Mr.
Lance White) created this and we thought it was really good.
However, we have made some slight changes to reflect what in our
opinion are the essentials that you need not just to pass but to
distinct yourself in Prof. Meggetts contract class and in the BAR
exams. (Call this the Q-source).
1BIG PICTUREApplicable Law? Always common law. (lucky you) (2)
What is a Contract? (3) VALID Contract? Offer Acceptance
Consideration No Valid Defense thus making it enforceable What is a
contract?A contract is a promise or set of promises that the law
will enforce; It is an exchange relationship created by an
agreement between two or more parties containing at least one
promise and recognized as enforceable in law.Valid Enforceable
Contract? In order to have a valid contract, there must be an: (1)
Offer(2) Acceptance (3) Consideration(4) No Valid Defenses
4Is there an Offer?An offer is an objective manifestation of
present intent to enter into a contract.Demonstrated by : Promise,
undertaking or commitment;Clear and Definite Terms;Communicated to
the Offeree; and Gives the Offeree the power to accept; Ex. I will
sell you my car if youll pay me $2,000 cash. This is an offer
because it expresses a willingness to conclude the deal if the
other party pays the required $2,000. Ex. Yes , Id be willing to
sell your car, but what are you willing to pay for it? IS THIS AN
OFFER? Why? Why not?
Objective Theory of an Offer (1) Objective reasonable personAsk
yourself, would a reasonable objective third party believe the
person making the offer actually intended to make a contract. IF
the answer is yes, then (2) Subjective Whether the person receiving
the offer actually believed that there was a valid offer as well.
IF the answer is yes, then We have a valid offer that is ripe for
Acceptance EXAMPLE: A seemingly serious offer to sell real property
made in secret jest is nonetheless an offer. Price Quotes Is it an
Offer? General Rule: Price quotes are not considered offers.
Exception: If the price quote appears to have sufficient
information, is clear and definitive, and seems to have the other
objective manifestations of intent to be bound, it could be deemed
an offer. Would a reasonable objective person believe it to be an
offer? Advertisements Is it an Offer? General Rule:Advertisements
are not offers.Exception: Advertisements may be deemed an offer if
it is sufficiently clear, definite and leaves nothing open for
negotiation. Would a reasonable objective person think the
advertisement is an offer?
Rewards Is it an Offer? General Rule: Reward offers are treated
as offers because they are considered communications that promise a
bounty in exchange for the performance of a specified task.
Exception (limitation of acceptance): Those who have a pre-existing
duty cannot accept the offer.
Auctions an Offer? General Rule: The general rule is that the
auctioneer is inviting offers, and the responsive bids are the
offers. Exception: Where the auction is without reserve, then the
auctioneer is making an offer to sell to the highest bidder
TERMINATION OF AN OFFER(1) Lapse of TimeAn offerees power of
acceptance terminates at the time stated in the offer. If the offer
does not specify the time of termination, then the power of
acceptance will terminate after a reasonable time. The reasonable
time determination is based on the following factors: Subject
matter and market conditions; and The degree of urgency
communicated by the means of transmission. Face to Face
ConversationsAn offer made by one to another in a face to face
conversation is ordinarily deemed to continue only to the close of
the conversation. TERMINATION OF AN OFFER(2) Death or incapacity of
either partyThe supervening death of either the offeror or offeree
will terminate the power of acceptance with respect to the offer.
The supervening incapacity of either the offeror or the offeree, as
evidenced by adjudication or the appointment of a guardian, will
terminate the power of acceptance. Incapacity has to go to the
ability to understand the nature and consequences of the
transaction. TERMINATION OF AN OFFER(3) Revocation The offeror is
free to revoke an outstanding offer, terminating the offerees power
of acceptance, at any time and for any reason, so long as the
revocation: Occurs prior to acceptance; and Is effectively
communicatedDirect Revocation: Revocation occurs and terminates the
offerees power of acceptance when the offeror communicates directly
with the offeree and advises the latter that the offer has been
revoked. Indirect Revocation: In some cases, the offeree will learn
of the offerors intentions to abandon the deal from a third party
source, and this will also terminate the offerees power of
acceptance where two conditions are met: The offeror has taken
definite action inconsistent with the intention to enter the
proposed contract (such as selling the offered real estate to a
third party); and The Offeree acquires reliable information of the
offerors inconsistent action (such as learning of the sale from a
real estate broker)
TERMINATION OF AN OFFERRevocation of the offer in a Unilateral
ContractAn Offeror may not revoke his offer once the offeree begins
performance. An Offeror may revoke his offer where the offeree has
engaged in mere preparation. TERMINATION OF AN OFFEROption Contract
Irrevocable Offer Enforceable options contract when: (1) An
Offer(2) A subsidiary promise to keep the offer open; and (3)
Consideration for time.MUST BE EXCHANGED/Not a simple recitation of
the consideration (minority). Termination of Options Contract(1)
Option period lapse(2) Acceptance********Rejection, revocation,
death or capacity will not terminate the offer during the option
period. TERMINATION OF AN OFFER(4)Rejection by Offeree Power of
acceptance can also be terminate if the offeree refuses to accept
the offer. (1) Outright RejectionThe offeree has the power to
accept the offer, but the offeree cannot change his mind and try to
accept the offer once he has rejected it. (2) Rejection via
Counteroffer in this situation the parties switch roles. Offeror
becomes offeree and vice versa. A counteroffer made on the same
subject matter operates to simultaneously reject the initial offer.
Revival of OfferThe maker is the master of the offer. An offeror
has the power to revive an offer that the offeree has rejected, and
with it the offerees power of acceptance, and he can likewise
revive an offer that has lapsed; all he must do is communicate the
revival to the offeree. This can be accomplished by restating the
offer or giving the offeree more time to make a decsion.
AcceptanceAcceptance of an offer is the objective manifestation
of assent to the terms thereof made by the offeree in a manner
invited or required by the offer. Manner of AcceptanceOfferor is
king of the deal, therefore the offer determines how acceptance
must be made. An Offer can require acceptance by either a promise
(Bilateral Contract) or a performance (Unilateral Contract). If it
is unclear which mode (promise or performance) is needed to accept
= Offeree may accept by promise or performance. If the offer does
not provide for a specific manner or medium in which it must be
accepted, then the offer may occur in any manner and medium which
is reasonable.
Manner of Acceptance (1) Bilateral Contract - Promise (2)
Unilateral Contract Performance (3) Silence (1) Promissory
Acceptance PROMISE FOR PROMISE to do something in the future.
Requires the offerees promissory acceptance be communicated to the
offeror or an authorized representative of the offeror to be
effective.
Mailbox RuleMailbox rule? The Mailbox rule applies to
acceptances sent by any means of transmission that involves a
foreseeable delay between the time of dispatch by the offeree and
the time of receipt by the offeror. The parties are bound, even if
the acceptance is lost in transmission and the offeror has no
knowledge of that acceptance. The Offeror may not revoke an offer
once acceptance has been dispatched. EX. While B was considering As
Offer, A had a change of heart and sent a revocation, but B
dispatched his acceptance before receiving As revocation. The
parties have a contract because As revocation was not effective
until receipt by B, and Bs acceptance was effective upon dispatch
and thus prior to receipt of the would-be-revocation.
Mailbox RuleWhen does it not apply? The Mailbox rule is only a
default rule, meaning that it only applies if the offeror is silent
on the question of when acceptance will be effective. As always,
the maker is the master of the offer, and thus the offeror is free
to establish his own rules for effective acceptance. Telephone,
Instant messaging, texting and other means of communications that
are instantaneous. Acceptance of Options ContractsRevocation
affective upon receipt. A letter that is misaddressed or fails to
include proper postage. H/w if it is misaddressed/the offeree uses
the wrong method/the Offeree doesnt use proper postage/or the
offeree just botches it but it nevertheless reaches the offeror in
a seasonable time then such acceptances is deemed accepted upon
dispatch.
22(2) Acceptance by PerformanceA unilateral contract calls for
performance by the offeree. Acceptance by performance requires that
at least part of what the offeror request be performed or
tendered.Performance acts as an options contract. Offeror must keep
the offer open long enough for the offeree to perform. Mere
preparation is not enoughThe offeree is not required to notify the
offeror of their performance (acceptance) UNLESS the offeree has
reason to know the offeror wont find out about that
performance.
(3) Acceptance by SilenceGeneral Rule: An offerees silence in
response to an offer cannot constitute acceptance. Exception: (1)
Where the offeree takes the benefit of the offerors services with a
reasonable opportunity to reject them and with reason to know the
offerors intention; (2) Where the offeror has given the offeree
reason to understand that acceptance may be communicated by
silence, the offerees silence will operate as acceptance if he
intends as such; and (3) Where, because of previous dealings or
other circumstances, it is reasonable that the offeree should
notify the offeror if he does not intend to accept, his silence
will operate as acceptance. Mirror Image RuleMirror Image
acceptance must mirror the terms of the offer. General Rule:
Acceptance that do not mirror the offer is an implied
rejection/counter offer. Modification exception in some
jurisdictionsAcceptance can contain deviations so long as the
deviations do not materially alter the offer, and is not
conditional.
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