Term
| Restatement definition of CONTRACT |
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Definition
| A contract is a promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty. |
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Term
| UCC definition of CONTRACT |
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Definition
| A Contract is the total legal obligation that results from the parties’ agreement as determined by the UCC as supplemented by any other applicable laws |
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Term
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Definition
| a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made. |
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Term
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Definition
| the bargain of the parties in fact, as found in their language or inferred from other circumstances, including course of performance, course of dealing, or usage of trade |
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Term
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Definition
R of Ks §344:(a) his "expectation interest," which is his interest in having the benefit of his bargain by being put in as good a position as he would have been in had the contract been performed,
Cost of completion is included. Lmt by the doctrine of avoidable consequences (§348: alternatives to loss of value) |
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Term
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Definition
| R of Ks §344: interest in being reimbursed for loss caused by reliance on the contract by being put in as good a position as he would have been in had the contract not been made. (expenses from performing, preparing to perform, or forgoing other contracts) |
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Term
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Definition
§344: which is his interest in having restored to him any benefit that he has conferred on the other party.
6. puts both parties back to where they were before the contract; disgorging the unjust enrichment |
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Term
| Limitations on Recovery: Forseeability |
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Definition
§ 351 (does not apply to restitution, but can preclude recovery of reliance and expectation interests end of comment a on p.136; Ill 1 & 2)
a. Limits the damages that the breacher is responsible for to those that the breacher had reason to foresee as a probable result of the breach when the contract was formed.
b. A loss may be foreseeable if
i. It occurs within the ordinary course of events, or
ii. As a result of special circumstances, beyond the ordinary course of events, that the party in breach had reason to know. |
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Term
| Limitations on Recovery: Certainty |
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Definition
| § 352: Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty. |
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Term
| Limitations on Recovery: Avoidable Consequences |
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Definition
§ 350: Damages are not recoverable for loss that the injured party could have avoided without undue risk, burden, or humiliation.
i. Cmt. b states it is not a duty to mitigate, but failure to mitigate lessens what the non-breaching party can recover.
b. The injured party can still recover if it has made reasonable yet unsuccessful attempts to avoid the loss. |
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Term
| Agreement Process: Formation of Mutual Assent- Objective theory of assent Test |
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Definition
i.General Rule: External manifestations will be examined to determine the parties’ intent and not the undisclosed subjective/internal intentions;
ii. Correlative: A reasonable person’s understanding of the external manifestations will be used, unless
iii. Exception: the subjective intention of the parties has been disclosed, then it may be evaluated for its influence on the final agreement |
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Term
| Agreement Process: Formation of Mutual Assent-Lucy Test |
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Definition
(reasonable expectation test) – must satisfy BOTH
i. Would a reasonable person in the recipient’s positions have understood that the sender intended to enter into an agreement?
ii. Did the actual recipient understand that the sender intended to enter into an agreement?
iii. To summarize reasonable and actual belief. |
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Term
| Exception to LUCY (and formation of mutual assent in general) |
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Definition
| invalidating devices preclude the finding of a contract, even if outward manifestations would support finding a contract. |
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Term
| Intention to be legally bound |
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Definition
(§ 21c)
a. General rule: parties do not have to intend for a promise to be legally binding to form a contact
b. Exception: If parties manifest intent for the promise NOT to be legally binding, then no contract arises (Dunhill – letters of intent) |
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Term
| Murray's Contract requirements §28 |
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Definition
1. mutual assent
2. consideration or another validation device (2nd semester topic)
3. two or more contracting parties
4. Sufficient number of sufficiently defined terms (also referred to critical mass of terms)(§ 33)
5. parties have a legal capacity to make a contract
6. no legal prohibition precluding the formation of the contract (§ 12) a person cannot enter a contract if he is
a. Under guardianship
b. An infant
c. Mentally ill
d. Intoxicated (I mean shit faced) |
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Term
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Definition
i. Ambiguity in writing will be construed against the drafter.
ii. Clearly stated “not legally binding unless or until” clauses will be honored, provided that
1. The agreement, or the clause itself, are not illegal (i.e. an invalidating device intercedes).
iv. When no ambiguity is present the plain meaning of the document will be enforced, generally speaking.
v. A contract may arise prior to the written document if the document will merely serve as a “convenient memorial” to the agreement.
vi. Lack of a written memorial will not render an agreement non-binding (unless there is an enforceable “not legally binding unless or until” clause), especially in the face of a trade’s customary practice. |
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Term
| Objective Theory of Assent: Offer or Mere Invitation to Deal? |
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Definition
a. A particular expression is judged on the basis of what a reasonable person in the offeree’s position would have believed. Evaluate full conduct and all surrounding circumstances. Also, offers give rise to responsibilities - preliminary negotiations do not.
i. Language Used – primary indication of what was intended
ii. no words of promise or commitment usually constitutes an invitation
iii. Certain words are not dispositive, but must be considered in total context |
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Term
| Objective Theory of Assent: Terms |
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Definition
Definiteness of terms and identification of parties
i. specificity and number of terms
ii. quantity term is very important
iii. payment and delivery
iv. course of dealing b/w parties and trade usage
v. An offer must be communicated to the offeree |
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Term
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Definition
generally are not offers, depending on terms
i. are usually invitations to make an offer
ii. All correspondence is considered in light of previous correspondence
price quotes are not considered an offer because the terms are not defined that clearly. The less the terms the less likely there is a promissory commitment. Offers normally sent to a specific offeree. It can be that specific offers are sent to several offeree’s.
d. Lack of the word “offer” is not dispositive |
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Term
| Objective Theory of Assent: External Manifestations |
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Definition
Manifestations have to make reference to each other (§ 23 )
a. It is essential to a bargain that each party manifest assent with reference to the manifestation of the other |
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Term
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Definition
| a. An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it. |
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Term
| Power of Acceptance Created by the Offer |
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Definition
i. offeror’s control is lost upon acceptance
ii. offeree brings K into existence by accepting proposed terms
iii. no power is created and no control is lost in mere invitations; it can be revoked or changed |
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Term
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Definition
Generally not offers (Cutter Dodge and Lefkowitz)
a. The lefkowitz exception --- an advertisement can become an offer if the language is
i. clear,
ii. definite,
iii. explicit, and
iv. leaves nothing open for negotiation.
b. Headings are not dispositive
c. Are the terms sufficiently definite?
d. Does plaintiff have any reason to know the ad is not an offer?
e. Has to be specifically directed to someone (first come, first served) |
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Term
| Purchase Orders: Offer, Invitation, or Acceptance? |
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Definition
a. in most cases, quote is invitation and p.o. is offer, but not always
b. consider p.o. in light of all surrounding circumstances
c. P.O. functions
i. confirmation of an existing oral contract
ii. An offer
iii. An acceptance if the price quote was an offer.
d. Overall you have to look at the purchase order in much the same way an advertisement or price quote and look at all of the circumstances surrounding the order. |
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Term
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Definition
a. Usually offers b/c terms are sufficiently definite
b. Unilateral contract: a promise for an act |
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Term
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Definition
2d Rest §29 and §52
a. The party to whom the offer is made must be the accepting party to have an enforceable contract.
b. A promise for a promise is a bilateral contract
i. In written agreements, acceptance is effective only when document has been signed and delivered, UNLESS
ii. the parties clearly intended the verbal agreement to be binding or,
iii. The offer indicated it could be accepted by mail or was sent by mail, and the acceptance was mailed. In that case the offer was accepted when it was placed in the mail.
iv. One can only contract w/the person he intended to
v. Freedom to contract is freedom from contract |
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Term
| Use of forms/ standardized agreements |
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Definition
i. General rule: there is a duty to read before signing.
ii. Corollary: would a reasonable person accede to the terms of the form?
iii. Exception: where the maker of the form has reason to know that the signer would not sign if they knew the meaning of certain clauses.
iv. Case: BC Tire |
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Term
| Unconscionability and forms: Procedural |
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Definition
| terms tucked away in boilerplate language in FINE PRINT ON THE REVERSE OF THE 95TH PAGE IN LAWYER EASE. |
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Term
| Unconscionability and forms: Sunstantive |
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Definition
| A term that is unduly unfair and one-sided. An example would be a term that absolved all liability. |
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Term
| Unconscionability and forms: §208 |
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Definition
that if a contract of term is unconscionable at the time the contact is made a court may:
1. refuse to enforce the contract, or
2. may enforce the remainder of the contract without the unconscionable term, or
3. may limit the application of the unconscionable term to avoid an unconscionable result. |
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Term
| Condition Precedent to formation |
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Definition
2d rest 27; 5th and 6th; Dunhill
Either:
a. Keeps agreements from be formed at all
b. An agreement arises, but the legal enforceability is delayed. |
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Term
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Definition
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Term
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Definition
§ 50
• Acceptance of an offer is a manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer.
• When an offeror makes an offer to an offeree then the offer is limited to the offeree specified. (Boulton v. Jones, Guy that bought the store did not have a valid contract with the person that the previous owner had dealt with because the offer was addressed to the previous owner) |
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Term
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Definition
§ 30
o An offer may invite or require acceptance to be made by an affirmative answer in words, or by forming or refraining from performing a specified act
o Unless otherwise indicated by the language or circumstances … an offer may be accepted in any manner and by any medium reasonable in the circumstances.
o 1st Rest. § 61
• If an offer prescribes the place, time or manner of acceptance its terms in this respect must be complied with in order to create a contract. If an offer merely suggests a permitted place, time or manner of acceptance, another method of acceptance is not precluded. |
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Term
| Duration of Offers: Vaski Guidelines |
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Definition
(1) Where an offer does not specify an expiration the offer is deemed to be outstanding for a reasonable period of time.
(a) § 41 states that offer sent by mail is seasonably accepted if the acceptance is mailed anytime before midnight on the day the offer was received. Except as stated in
(b) § 49 where the communication of the offer is delayed by the fault of the offeror or the means chosen by him, and the offeree does not know or have reason to know of this delay, then a contract can still be created within the period that would have been permissible had the offer arrived on time. (The offeror bares the risk of transmission) (rule does not apply if the offeree is aware of the delay in the transmission)
(2) A reasonable time is to be decided on numerous circumstances surrounding the transaction, and it is a matter of fact to be decided by the jury. |
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Term
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Definition
| sometimes the duration of an offer is a matter of law in commercial transactions that happen the same way day after day, and present the question upon the same data in continually recurring instances. |
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Term
| UCC: Absence of specifc time |
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Definition
I. Section (1)
a. General Rule: performance is to be performed in a reasonable time
b. Exception: Unless otherwise specified by other article provisions
c. Exception: Unless otherwise agreed upon by the parties that are contracting.
II. Section (2)
a. General Rule: Contracts that are indefinite in duration are valid for a reasonable time.
b. Exception: the contract may be terminated at any time by either party
c. Exception: Unless otherwise agreed by the parties. |
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Term
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Definition
- The time of the offer does not begin until the offeree receives the letter (aka knows that the offer exists)
- Where the proposal to sell stipulates a limited time for acceptance, it is essential, to constitute a valid contract, that the acceptance be communicated to the proposer within the time limited. |
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Term
| Receipt is the general rule: Cline |
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Definition
o § 23: It is essential to a bargain that each party manifest assent with reference to the manifestation of the other
o § 40: Rejection or counter offer does not terminate the power of acceptance until received by the offeror, but limits the power so that a letter or telegram of acceptance started after sending a rejection or counter-offer is only a counter-offer unless the rejection or counter-offer has not been received.
o § 42: An offeree’s power of acceptance is terminated when the offeree receives from the offeror a manifestation of an intention not to enter into the proposed contract. (overall general rule on revocation)
o § 63: an acceptance made in a manner and medium invited by an offer is operative as soon as it is put out of the offeree’s possession, regardless of whether it reaches the offeror, but an acceptance under an option contract in not operative until received by the offeror.
o § 68: A written revocation, rejection is received when it comes into the possession of the person addressed, some person authorized to receive it for him, or when it is deposited in some place which he has authorized.
- Generally the offeror is the master or mistress of the offer, therefore any terms that are ambiguous are construed against them because they had the power to set those terms. |
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Term
| Termination of Power of Acceptance: Rejection |
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Definition
1. Chaplin (insurance lawsuit, settlement offer, rejection of settlement offer, then later attempt to accept settlement offer)
2. A counteroffer is a rejection of the offer, with the creation of another power of acceptance in the original offeror.
3. If an offer is irrevocable, if rejection is within time that the offer is irrevocable, rejection is ineffective
4. § 38: an offeree’s power of acceptance is terminated by his rejection of the offer, unless the offeror manifests a contrary intent. |
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Term
| Termination of Power of Acceptance:Acceptances |
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Definition
create contract, terminate power of acceptance by this formation of a contract
a. Acceptance by silence or dominion (§ 69) – Silence, generally, is not acceptance (Exceptions are in the Restatement) |
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Term
| Termination of Power of Acceptance: Mailbox/ Dispatch Rule |
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Definition
a. Acceptance is deemed when the letter is mailed
b. Unless mail is excluded as a mode for acceptance
c. The mailbox rule applies only to acceptance of contracts by correspondence, aka ground mail or telegram , and sometimes in fax or telephone, and telex.(Murray) Rest. 64, Corbin, Williston, and Farnsworth all say that mail box rule does not apply to fax, telephone, and telex. Only applies to bilateral contracts.
d. § 64: Acceptance by telephone or other medium of instantaneous two-way communication is governed by the principles applicable to acceptance where the parties are in the presence of each other
i. The contract is created at the place where the acceptor speaks his manifestation of assent.
e. Five separate policy reasons that we have the dispatch rule:
i. It’s predicated on the offeree’s loss of control over the acceptance once it is placed in the mail.
ii. Closes the deal more quickly
iii. The offeree needs a dependable basis as for when an offer is accepted
iv. The risk should be on the offeror because the offeror failed to allocate the risk on the offeree.
v. ??????????????????????????????????????????????
3. Variations on the Dispatch Rule
a. E-Commerce – basically, email, or any other instant communication device does not use mailbox rule, but receipt rule under the Uniform Computer Information Transactions Act (UCITA) *only adopted by Maryland and Virginia
b. The Uniform Electronic Transactions Act and (e-sign) has a provision that determines the time when an acceptance of an offer becomes effective. UETA has been ratified in 48 states |
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Term
| Termination of Power: Direct Revocation |
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Definition
b. Guidelines for revocation:
i. proposal may be revoked any time before acceptance is communicated (but not after)
ii. An offer must be revocable to be revoked
iii. Usually, offers are revocable, even if there is a duration period, unless there is consideration given
iv. Revocation is legally effective upon receipt
e. Direct revocation § 42
i. An offeree’s power of acceptance is terminated when the offeree receives from the offeror a manifestation of an intention not to enter into the proposed contract. |
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Term
| Termination of Power of Acceptance: Indirect Revocation |
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Definition
c. Indirect Revocation
i. Dickinson v. Dodds (sale of land – offer open until Friday, sells to other buyer – indirect revocation, through a third person)
ii. A clause stating that the offer will be kept open is not enough – must also have a validating device
d. Guidelines for indirect revocation § 43:
i. Offeree has to actually know that the offeror has other intentions
ii. Offeree has to receive information from a third party to that effect
iii. the offeror has to have definitely engaged in activities that the law would say manifest the intention to revoke
iv. Has to factually accurate information
v. The source of that information has to be a reasonably reliable source |
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Term
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Definition
3. Counteroffer rejects offer and puts new offer on the table – difference b/w counteroffer and rejection: counteroffer manifests the intent to continue dealing
a. Counteroffers with sidecars are still acceptances, but with requests for more information or other terms.
4. Guidelines to counteroffers:
a. judgment calls
b. conditional upon original offeror agreeing to these terms
c. Under the ‘mirror-image’ rule:
i. if acceptance does not exactly match offer, then it is a counteroffer
d. The terms of a contract made by a counteroffer are the terms in the counteroffer
5. Restatement 2d §§ 59, 61, 39
a. § 59: A reply to an offer which purports to accept it but is conditional on the offeror’s assent to terms additional to or different from those offered in is not an acceptance but a counter-offer.
b. §61: An acceptance which requests a change or addition to the terms of the offer is not thereby invalidated unless the acceptance is made to depend on an assent to the changed or added terms.
c. § 39 A counter-offer is an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer. An offeree’s power of acceptance is terminated by his making a counter-offer, unless the offeror has manifested a contrary intention or unless the counter-offer manifests a contrary intention. |
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Term
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Definition
1) The general rule the offeree must communicate his acceptance to the offeror before any contractual obligation can come into being. A mere mental intent to accept the offer is not sufficient. (objective theory of assent)
2) How this court says something is an acceptance
a. To be effective an acceptance must be definite and unequivocal
b. It is not enough that the words of a reply justify a probable inference of assent (I rest. 58
c. The acceptance of an offer may not impose additional conditions
d. The acceptance of an offer may not add limitations to the offer.
e. An acceptance that is equivocal or upon condition or with a limitation is a counteroffer.
a. Exception the conditional language in the acceptance is still acceptable as long as the acceptance is clearly independent of the new conditions.
f. When a court is called on to determine whether something is an acceptance of a counter offer it is a matter of common sense interpretation. |
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Term
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Definition
§ 48
1. An offeree’s power of acceptance is terminated when the offeree or offeror dies or is deprived of legal capacity to enter into the proposed contract |
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Term
| Making Offers Irrevocable: Protecting the justifiable reliance and expectations of the offeree-- OPTION CONTRACTS |
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Definition
2d Rest. 25
1. You must have manifested intent plus validating device ,usually consideration. Optionor forfeits power to revoke.
1. Options protect the optionor/offeror risk b/c he has frozen his position in a time where economic conditions may change
2. Option K is formed when the optionor/offeree offers to give the optionee/offeror consideration or some validating device (seal) to kept the offer open (usu. for a specified time period)
2. Time period is very common, but not required
1. If no time is specified, the optionor must keep give the optionee a reasonable time to exercise his option (2RS 41 & VASKIE)
2. contextualize all relevant facts to determine reasonable time
3. the terms are strictly adhered to, even though the optionor has assumed a risk
1. Court is conscious of optionee taking advantage of optionor
4. General rule is that rejection, counteroffer, death, incapacity will not terminate pwr. of acceptance unless requirements are met for discharge (2d Rest. 37)
(1) b/c optionor has a duty and gives up power or right to revoke (Remember that lapse of duration will!!)
(3) Remember discharge applies to K while termination of acceptance applies to offers.
5. Dispatch rule for acceptances doesn’t apply to option K’s: it must be received to be effective 2RS 63b |
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Term
| Making Offers Irrevocable: Protecting the justifiable reliance and expectations of the offeree--Right of First Refusal |
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Definition
becomes an option contract after the owner has receives a bona fide offer that they are willing to accept. At that point the right of first refusal turns into an option contract. (Moore and note 2 on page 115)
1. Elements:
1. Intent to sell on behalf of owner
2. Owner has received a bona fide offer from a third party
3. owner has duty to notify optionee of the other offer & that she may exercise her option |
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Term
| Making Offers Irrevocable: Protecting the justifiable reliance and expectations of the offeree--Irrevocability through Reliance |
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Definition
1. Detrimental Reliance/Promissory Estoppel - § 90 (Jenke)
1. Makes a promise enforceable if the promisee justifiably suffers a detriment by changing his position in reliance on the K, and the promisor should reasonably expect his promise to induce such reliance.
2. Factors:
• Definite promise was made by defendant
• Defendant had reasonable expectation that it would induce definite and substantial action by plaintiff
• Plaintiff acted in justifiable reliance upon the promise to its detriment.
• Actual inducement to act on the promise
• Screaming injustice factor -- Injustice can be avoided by enforcing the promise.
2. Option contract correlation -- § 87(2)
1. An offer which the offeror should reasonably expect to induce action of forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice. |
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Term
| Irrevocability through Part Performance |
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Definition
1. Detrimental Reliance/Promissory Estoppel - § 90 (Jenke)
1. Makes a promise enforceable if the promisee justifiably suffers a detriment by changing his position in reliance on the K, and the promisor should reasonably expect his promise to induce such reliance.
2. Factors:
• Definite promise was made by defendant
• Defendant had reasonable expectation that it would induce definite and substantial action by plaintiff
• Plaintiff acted in justifiable reliance upon the promise to its detriment.
• Actual inducement to act on the promise
• Screaming injustice factor -- Injustice can be avoided by enforcing the promise.
2. Option contract correlation -- § 87(2)
1. An offer which the offeror should reasonably expect to induce action of forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice.
d. Irrevocability through Part Performance - 1st & 2d Rest. 45
1. Theories to create relief for revocation after part performance in unilateral contracts, because technically, acceptance does not occur until the performance is complete, so the offer would be revocable until the act was completed.
a. § 45: In a unilateral contract “an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it. (the offeror’s duty is conditioned on the completion or tender of the invited performance in accordance with the terms of the offer)
b. “tender” is an attempt of performance which is frustrated by the offeror.
2. Conditional Bilateral K created upon complete performance - 1st Rest. 45
a. the offeror is bound by a K if the following are satisfied:
i. Offer for a unilateral contract
ii. Part of the consideration requested in the offer is tendered by the offeree
iii. In response to the offer
b. The offeror’s duty is conditional upon complete performance w/in the time stated in the offer, or if no time stated, w/in a reasonable time
c. Under this theory, the offeree can still refuse to complete performance w/impunity
d. No K is formed until performance is completed
3. NOTE: If you can’t recover under 45, maybe 87(2) will work. It is broad enough to address 45 b/c under 87(2), any kind of offer will work (looking to a bilateral or unilateral K). It also allows recovery for preparations. Argue w/both.
4. How to determine the distinction b/w “preparation to perform” and “beginning performance”
a. Look to terms of offer and what it invites as acceptance
b. if the actions taken by the offeree were not specifically invited as acceptance, they were probably preparations to perform
c. Mere preparations will not cause the offer to become irrevocable comment F 45; however this may constitute justifiable reliance under § 87(2)
e. Either theory of 45 may be applied to a unilateral K where there is a question of revocability |
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Term
| The Nature of Acceptance: Knowledge and Motivation |
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Definition
a. Motivation and knowledge - for an offer to be accepted the offeree must have both:
1. Knowledge of the offer and
2. The motivation to accept the offer.
3. Case: Simmons v. United States (caught prize fish w/o intent to do so but contest known to him = contract)
4. § 51 Effect of part performance without knowledge of the offer
1. Unless the offeror manifests a contrary intention, an offeree who learns of an offer after he has rendered part of the performance requested by the offer may accept by completing the requested performance.
2. Comments
a. Performance without knowledge of the offer -- generally performance completed before the offer comes to the offeree's knowledge does not have reference to the offer, and the terms are not satisfied by such action.
i. To compel completion the offeror might inform an ignorant party of the offer to induce him to complete the performance where he otherwise might not.
3. § 53 Acceptance by performance; Manifestation of intention NOT to accept
a. An offer can be accepted by the rendering of a performance only if the offer invites such an acceptance
4. Except as stated in § 69, the rendering of a performance does not constitute and acceptance if within a reasonable time the offeree exorcises reasonable diligence to notify the offeror of non-acceptance.
5. Where an offer of a promise invites acceptance by performance and does not invite a promissory acceptance, the rendering of the invited performance does not constitute an acceptance if before the offeror performs the promise the offeree manifests an intention not to accept.(this is a rebuttable presumption)
5. § 63 Effect of performance by offeree where offer invites either performance or promise.
1. Where an offer invites an offeree to choose between acceptance by promise and acceptance by performance, the tender or beginning of the invited performance or a tender of a beginning of it is an acceptance by performance.
2. Such an acceptance operates as a promise to render complete performance. |
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Term
| The Nature of Acceptance: Volition |
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Definition
1. Carbolic Smoke Ball
1. LJ Bowen guidelines:
a. Offeror ought to be notified of the acceptance as a general rule; however,
b. Offeror may dispense with that notification requirements, and additionally
c. Offeror may specify a particular manner of acceptance, or notification of acceptance, and the offeree may only accept, or notify the offeror of acceptance though these means.
2. § 54 acceptance by performance; Necessity of Notification to the offeror. (Unilateral)
1. Where an offer invites an offeree to accept by rendering performance, no notification is necessary to make such an acceptance effective unless the offer requests such a notification.
2. If an offeree who accepts by rendering a performance has reason to know that the offeror has no adequate means of learning of the performance with reasonable promptness and certainty, the contractual duty of the offeror is discharged unless
a. The offeree exercises reasonable diligence to notify the offeror of acceptance, or
b. The offeror learns of the performance within a reasonable time, or
c. The offer indicates that notification of acceptance is not required.
3. § 56 Acceptance by promise; Necessity of notification to offeror (bilateral)
1. Except as stated in § 69 or where the offer manifests a contrary intention, it is essential to an acceptance by promise either that the offeree exercise reasonable diligence to notify the offeror of acceptance or that the offeror receive the acceptance seasonably.
4. § 69 Acceptance by silence or the exorcise of dominion
1. Where an offeree fails to reply to an offer, his silence and inaction operate as an acceptance in the following cases only:
a. Where the offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive intends to accept the offer. |
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Term
| The Nature of Acceptance: Silence as Acceptance |
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Definition
Vogt v. Madden, 713 P.2d 442 (1985)
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General rule is that silence by an offeree generally does not operate as acceptance to an offer. The exceptions generally fall into two categories:
a. Those where the offeree silently takes offered benefits
b. Those where one party relies on the other party's manifestation of intention that silence my operate as acceptance.
1. General rule is that silence by an offeree generally does not operate as acceptance to an offer. The exceptions generally fall into two categories:
1. Those where the offeree silently takes offered benefits
2. Those where one party relies on the other party's manifestation of intention that silence may operate as acceptance.
** See Chart in Outline P. 20 |
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Term
| MANNER of Acceptance: UCC Switch |
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Definition
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Term
| § 1-103. Construction of [Uniform Commercial Code] to Promote its Purposes and Policies; Applicability of Supplemental Principles of Law. |
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Definition
A) The UCC must be liberally construed and applied to promote its underlying purposes and policies which are:
1) To simplify, clarify, and modernize the law governing commercial transactions;
2) To permit the continued expansion of commercial practices through
a. custom,
b. usage, and
c. agreement of the parties; and
3) To make the law uniform
B) The principles of law and equity, including the law relevant to
a. Merchants
b. capacity to contract
c. Principle and agent
d. Estoppel
e. Fraud
f. Misrepresentation
g. Duress
h. Coercion
i. Mistake
j. Bankruptcy
k. And other validating or invalidating causes
The law of all of these areas supplements the UCC unless the UCC has specific provision displacing it.
General rule- is that you can leave the code and refer to common law.
Exception -- if the code displaces common law.
1-103(b) is common law gap filler rule( if not defined or included in UCC – can flip out to common law to fill gaps) |
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Term
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Definition
| involves definitions and distinction from Lease and security interest |
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Term
| § 1-305. Remedies to be Liberally Administered. |
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Definition
(a) The remedies provided by [the Uniform Commercial Code] must be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed but neither consequential or special damages nor penal damages may be had except as specifically provided in [the Uniform Commercial Code] or by other rule of law.
(b) Any right or obligation declared by [the Uniform Commercial Code] is enforceable by action unless the provision declaring it specifies a different and limited effect. |
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Term
| § 2-204. Formation in General. (THE SUN) |
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Definition
1) A contract can be made in any manner sufficient to show agreement, including conduct by both parties.
2) An agreement may be sufficient to constitute a contract even if the “magical moment” of formation is undertermined.
3) Terms can be missing as long as:
a. There are enough terms to give the appropriate remedy
b. There is enough terms to show that the parties intended to form a contract (critical mass) |
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Term
| § 2-205. Firm Offers (PLANET) |
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Definition
1. Firm Offers- UCC 2-205
1. For merchants only: If offer is in a signed writing which says the offer will be held open (no need for consideration), then it is not revocable during the time stated or, if no time is stated, for a reasonable time (no longer than 3 months). If form is made by offeree it must also be signed by offeror.
2. UCC 2-205 Broken down.
a. Offer--2d Rest. 24
b. Merchant --UCC 2-104
i. A person who deals in goods of the kind or otherwise holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction
c. Sale of goods (and services) UCC 2-105
i. Sale: passing of title from seller to buyer for a price 2-106
ii. Goods: all things which are movable other than money/securities
d. Signed Writing UCC 1-201 39
i. Signed: any symbol executed or adopted by a party w/present intention to authenticate a writing
ii. Writing: includes printing, typewriting, or any other intentional reduction to tangible form
e. Intent to leave offer open
f. Time Element – may be stated but if not, a reasonable time not to exceed three months
i. can renew (make another firm offer) for an additional three months ( comment 3)
*Note: no consideration required under the statute |
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Term
| § 2-206. Offer and Acceptance in Formation of Contract.(PLANET) |
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Definition
1) Unless otherwise unambiguously indicated by the language or circumstances,
a. An offer invites acceptance in any manner and medium reasonable in the circumstances; (1(b) and 2 are “gimmicks”) |
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Term
| § 2-207. Additional Terms in Acceptance or Confirmation.(PLANET) |
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Definition
1) An acceptance that contains different or additional terms still operates an acceptance if
a. It is either a definite and seasonable expression or
b. Written confirmation sent within a reasonable time
c. UNLESS acceptance is expressly made conditional on assent to the aditonal or different terms
What is reasonable depends on the nature, purpose, and circumstances of the action
An action is Seasonable if it is taken at or within the agreed time OR if no time is given a reasonable time (§1-105)
2) The additional terms will be:
a. Proposals for addition to the contract (non-merchants)
b. Will become part of the contract( Merchants) UNLESS
i. Offer expressly limits acceptance to the terms of the offer
ii. Terms materially alter the contract (Material altered terms result in surprise or hardship if incorporated into the contract without express awareness by the other party.)
iii. Notifications of the objection to the additional terms has already been given or is given within a reasonable time after notice of them is received.
3) IF the writings of the parties do not establish a contract – conduct of the parties will be sufficient to establish a contract.
a. Terms are the terms that the parties agree on
b. ALL other terms that are opposed are knocked out
c. Gaps are filled with the UCC
d. 1-103(b) common law gap filler rule( if not defined or included in UCC – can flip out to common law to fill gaps) |
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Term
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Definition
(Princess Cruises)
1. In mixed transactions you must first determine whether it is primarily for the sale of goods or services. In order to make this determination. The following factors are significant in determining the nature of the contract:
1. The language of the contract,
2. The nature of the business of the supplier, and
3. The intrinsic worth of the materials. (Weigh the worth of the goods vs. the services to determine which one is the primary interest in the contract.) |
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Term
| Four prong evaluation of contract |
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Definition
1. What's the subject mater of the transaction ( if it is goods -ucc; not goods general contracts law; mixed - used test)
2. If it is mixed used predominant purpose test
3. Based on outcome of step two apply UCC or General contracts law.
4. Take that law and apply it |
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Term
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Definition
1. Last shot rule
1. If a purported form acceptance has all the same dickered terms but does not include the same boilerplate language then under the mirror image rule the acceptance is really a counter-offer, and if the party to whom it is sent does notice the new terms and performs, then the new offer is deemed to be accepted. Thus, the last party to send the form has their terms as the terms of the contract (last shot) |
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Term
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Definition
1. Since 2-207 is addressing classical contracts and uses the terms “offer” and “acceptance” it is ok to flip-out to the classical definitions of offer and acceptance. Unless the cases is under 2-207.
2. Sub one three chunks gate keepers - predicates- if all three don't apply then go to 2-204
3. No forms 2-207 not in the ball park
4. Different term modifies a term that was already included within the offer
5. Additional adds terms that were not present in the original offer.
Second chunk
o The mere presence of additional or different terms does not preclude acceptance Rest 61 there can be acceptance even if there are additional terms as long as they are only suggestions
Third junk
o There is equivalent language in 59 and 61
o The mere presence of additional or different terms does not prevent acceptance
• the unless clause is triggered if it is a conditional acceptance
• If the unless clause is not triggered we have to go to section 2 to determine what additional terms are allowed into the contract (Unilateral offer to modify) |
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