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Cloned from: Contracts

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What is a contract?
A contract is a promise, the breach of which the law gives a remedy.
What law generally governs contracts?
Common Law
What is the exception to the rule that common law generally governs contracts?
Contracts for the sale of goods are governed by Art 2 of the UCC, as well as common law. Art 2 prevails where they conflict.
What are the classifications for contract formation?
Contracts may be express or implied.
What are the classifications for contract acceptance?
Contracts are either bilateral or unilateral.
What is an express contract?
An express contract is one formed by written or oral language.
What is an implied contract?
One formed by manifestations of assent other than oral or written language (eg: conduct)
What is a quasi-contract?
Where an agreement does not qualify as a contract, a quasi-contract may be used to avoid unjust enrichment.
What is a bilateral contract?
A contract that requires an exchange of promises. (contracts generally fall here)
What is a unilateral contract?
A contract that: 1) Clearly indicates that performance is the only manner of acceptance, OR 2) Is an offer to the public clearly contemplating acceptance by performance.
What are the 3 types of unenforceable contracts?
Void; Voidable; Unenforceable.
What is a void contract?
One without any legal effect from the beginning. (eg: contract to commit crime)
What is a voidable contract?
One that a party may elect to avoid or ratify (eg: a contract by a minor)
What are the 3 elements required to create a contract?
1) Mutual assent 2) Consideration 3) No defense to formation
What is mutual assent?
Offer and acceptance.
What is the standard for determining whether mutual assent is present?
Objective standard (eg: did the words or conduct manifest a present intention to enter into a contract?
What are the 3 elements of an offer?
1) expression of promise, undertaking, or commitment to enter into a contract 2) definite and certain terms 3) communicated to the offeree
What factors help distinguish a preliminary negotiation from an offer?
1) language 2) surrounding circumstances 3) prior relationship of parties 4) method of communication 5) industry custom 6)) degree of definiteness of terms
Are advertisements usually offers?
No. They are usually invitations to deal.
What are the essential terms that must be in a contract?
1) Identification of the offeree (all contracts) 2) Identification land and price terms in RE transaction 3) Quantity in a contract for the sale of goods 4) Duration of employment in an employment contract
What happens when a contract is missing terms?
Certain missing terms may be supplied by the court if consistent with the parties\' intent.
What happens if the contract terms are vague?
A vague term may defeat formation unless acceptance or part performance makes the term clear.
What is the effect of an offer providing a material term will be agreed on in the future?
Formation fails.
What are the 4 ways offers are terminated?
1) Revocation 2) Rejection 3) Lapse of time 4) By operation of law
How may the offeror revoke an offer?
1) Directly communicating the revocation to the offeree 2) Acting inconsistently with continued offer openness and the offeree is aware of this info.
When is revocation effective?
Effective when received
How may offers originally made by publication be revoked and when is it effective?
Only by use of comparable means of publication and effective when published
When can an offer be revoked?
Generally, offers can be revoked at will prior to acceptance (even if the promised not to revoke for a period of time)
When is on offeror\'s power to revoke limited?
1) There is an option contact supported by consideration 2) There is a firm offer under the UCC. 3) The offeree has detrimentally relied on the offer and the offeree could have reasonable expected it. 4) The offeree has begun performance on a unilateral contract.
What is an option contract?
The party with the power of acceptance has given consideration for the offer\'s irrevocability.
What is the NY rule regarding revocation?
If an offers is in writing, signed by the offeree, and states it is irrevocable, the offer is not revocable for the stated period or reasonable period even when not supported by consideration.
What is a firm offer?
A signed writing by a merchant promising to hold open the offer for some period of time.
How long can a firm offer be held open?
At most 3 months.
What is the effect of an offeree starting performance on a unilateral contract?
This is usually construed as an option contract giving the offeree reasonable time to complete performance.
How may an offeree reject an offer?
1) Expressly 2) By making a counter offer (more than a mere inquiry)
What is the total effect of a counteroffer?
It is both a rejection and a new offer.
When is rejection effective?
When received.
What is the effect of rejecting an option?
Rejection of an option does not terminate the offer. The offeree can still accept in the option period if offeror did not detrimentally rely.
When does lapse of time constitute a rejection?
If the offeree fails to accept within the time specified by the offer OR within a reasonable time in none was specified.
What events will terminate an offer by operation of law?
1) Death or insanity of either party; 2) Destruction of the proposed contract\'s subject matter; 3) Supervening illegality
When will death or insanity not terminate an offer?
When the offer is of the kind the offeror could not terminate (eg: option contract)
What are the 3 elements of a valid acceptance?
1) An offeree with the power of acceptance; 2) Unequivocal terms of acceptance; 3) Communication of acceptance.
Who may accept?
1) The person to whom the offer was addressed; 2) A member of the class to whom the offer was addressed.
Can the right to accept an offer be assigned?
No, but option contracts supported by consideration can be assigned.
What form must acceptance take at common law?
Acceptance must mirror the offer terms (otherwise it may be a counter offer).
What form must acceptance take under the UCC?
An acceptance need only indicate intention to enter into a contract and not be made conditional on the acceptance of new or different terms.
Under the UCC, what is the effect of new or different terms in the acceptance?
1) Where one of the parties is a non-merchant, the terms of offer control and New terms are proposals. 2) Between merchants, new terms become part of the contract unless they materially alter the agreement, the offer expressly limits acceptance to the offer\'s terms, or the offeree rejects to the terms in a reasonable time. 3) Different terms usually get \"knocked out\"
Under the UCC, what is the effect of new terms that will materially alter the agreement?
They do not prevent contract formation, but only become part of the contract if the offeror expressly assents to inclusion.
Under the UCC, what is the effect of different terms that will materially alter the agreement?
Some courts treat them like new terms, others use the knock-out rule
What is the standard for communication of acceptance?
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