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CONTRACTS ONE SHEET FREQUENTLY TESTED TOPICS: formation of contracts, performance and breach OFFER AND ACCEPTANCE Offer = outward manifestation (oral, written, conduct), signal that acceptance will conclude deal.
? Commercial advertisement = invitation for an offer, except when language identifies who receives limited supply
? Auctions = invitation for an offer, except when held "without reserve."
? If open offer to multiple offerees and someone performs without knowing about the offer - not entitled to promise in the offer To Terminate Power of Acceptance
? Lapse - to determine reasonable time, consider market conditions, urgency, means of transmission.
? Revocation: must be revoked before acceptance and communicated to offeree (okay if offeror takes action inconsistent with intention to continue sale and offeree learns from reliable source). o If multiple offerees: revoke in functionally equivalent way offer was made. Valid regardless of offeree's knowledge. o Dickinson v. Dodds - offeror can revoke regardless of express promise to keep offer open (absent consideration) o Prevented by: Option K, Firm Offer o Applied to Unilateral Ks
? Common law: offeror free to revoke up until moment of full completion
? Modern/Restatement: once offeree begins performance (not prep), option K is created and offeror may not revoke. (even court split)
? Rejection: Under common law: nonconforming acceptance is a rejection. Mirror image rule. Common Law Option Contract: underlying offer + promise to keep offer open + enforceability (consideration).
? Majority: false recital = rebuttable presumption of consideration
? Minority: false recital = irrebuttable presumption of consideration (K will be enforced)
? Promissory estoppel: sometimes courts will enforce subsidiary promise if there has been detrimental reliance
? Construction Ks: subcontractor's option K enforceable without consideration if general contractor relied on estimate in submitting bid UCC Firm Offer: Section 2-205. Merchant can make irrevocable offer without consideration when: 1) offer made by merchant; 2) offer made in writing, signed by merchant; and 3) offer expressly states by its terms that it will be held open.
? Offer remains open for term stated in K or reasonable time if not term stated. Offeree's negotations do not revoke the firm offer.
? Shelf life: 3 monts. If longer, need Common law option K Common Law Acceptance: 1) mirror terms of offer (de minimis variation may be okay, especially if contesting party brings it in bad faith to get out of the K); and 2) communicated to offeror (by means used/equivalent to means used by offeror, or customarily used in similar transactions) 1
Acceptance by silence: when offeree takes benefits of offeror's services despite reasonable opportunity to reject and reason to know compensation expected; or offeror gives reason to understand that acceptance okay through silence (offeree must have intent to accept); previous dealings Unilateral: acceptance only through performance Mailbox rule: acceptance effective on dispatch if properly addressed. Offeror bound even if mail lost. Can K around.
UCC Acceptance: 1) promise to ship goods conforming to offer terms; 2) prompt shipment of goods conforming; 3) shipment of nonconforming goods (breach if no accommodation) UCC Battle of the Forms - 2-207
? Transaction w/ consumer: additional and different terms are mere proposals
? Transaction between merchants: o Additional terms automatically become part of K (unless express language in offer, offeror's prompt rejection, or material alternation); o Different terms: Majority = knockout rule; Minority = mere proposals for addition
? Written confirmation: because the K has already been formed, parties are bound, regardless of differing versions of written confirmation o If there's a non merchant, additional/different terms are mere proposals o If both merchants - additional are automatically added (unless prompt rejection or material alteration). Differing terms are mere proposals (unless both write confirmations - then knockout rule)
? Conditional Acceptance = made expressly conditional on assent to additional or different terms. Counter offer, not K. o Majority: Conditional acceptance even when located in boilerplate o Minority: Conditional acceptance must be clear communication to offeror that offeree is unwilling to proceed until offeror agrees.
? Ks formed through conduct (offer, conditional acceptance, no communication, seller ships, buyer accepts = writings do not form K, but conduct does) o Terms of K = common terms + UCC default terms
? Shrinkwrap: Majority = applies 2-207 so that terms are mere proposals; Minority = consumer accepts terms if she retains and uses goods CONSIDERATION AND PROMISSORY ESTOPPEL Consideration
? INSUFFICIENT CONSIDERATION = NO CONSIDERATION/ inadequate = bad deal o Promise to drop legal claim that bargainer knows to be invalid = INSUFFICIENT
? Illusory promise = leaves performance to discretion of promising party = not enforceable
? False recital = not enforceable (minority: enforceable in option K)
? Past or Moral Consideration: promise for something already given/performed not consideration. Exceptions: 1) written promise to pay debt barred by statute of limitations or after bankruptcy; 2) Modern, but minority - Material Benefit test (not to third party, not already K'd for) Promissory Estoppel = recoverable when: promise + foreseeable reliance + actual reliance + injustice without enforcement STATUTE OF FRAUDS 2
? Year: measured from date of making K, not date beginning performance. Whether it's possible. If it takes longer than a year actually, it won't fall within the statute. If it was predicted to take longer than a year but actually takes less, it won't fall within the statute. Lifetime/permanent employment does not fall within statute because it's possible to die within year.
? Land: present conveyance of land for money, real estate brokerage agreement, (some jx) leases under a year ? fall outside of statute.
? Guaranty/Suretyship: exceptions = 1) creditor discharges original debt in reliance on third party's promise; 2) main purpose doctrine Common Law Writing Requirement
? Memo okay. Written offer okay. Signed by party K being enforced against.
? Required terms: identity of parties, nature and subject matter of K, essential terms of agreement (price, date of performance)
? Land - traditionally need legal description, modern jx allow address/reasonable description Performance to Satisfy SoF: only satisfies SoF in land Ks, one-year Ks, sale of goods
? Land: requires at least 2: payment of all/part of purchase price; taking possession; making substantial improvements
? One-year: if fully performed, oral K becomes enforceable
? Sale of goods: part performance okay UCC Statute of Frauds
? Only term required in writing: quantity (or requirement/output K, or express way of measuring quantity). Must afford basis for believing oral evidence rests on real transaction. (Check "for boat" =
? Written offer insufficient - because doesn't show that a K has actually been made. Exception: written firm offer enforceable against offeror.
? Merchant's confirmation okay, if sent within reasonable time of K formation. Recipient must sned written notice of objection within 10 days to keep SoF defense.
? Admitting Memorandum satisfies SoF against sender. So does in-court admission (only enforceable up to quantity admitted)
? Partial performance satisfies UCC SoF when good or payment sent and accepted. If K involves indivisible goods, partial performance renders K fully enforceable.
? Specially manufactured goods: SoF satisfied as long as: 1) goods specially made for buyer; 2) goods not suitable for sale to others in ordinary course of seller's business; 3) seller substantially began manufacture or made commitments related to manufacture before receiving buyer's revocation Promissory Estoppel
? Common Law o Always applies when party relies on other's promise to satisfy statute by drafting K o When reliance on substance of K only: slim majority = PE available if strong evidence of reliance; substantial minority = PE preempted by SoF
? UCC o Majority: PE available when strong evidence; Minority: PE preempted by SoF o Gen Ks always protected from Sub Ks 3
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