Contract Formation

Contract Formation Offer Communicated willingness to bargain seeking another person's assent. R2 § 17: Manifestation of mutual assent & consideration Direct Indirect Uncertain Be communicated Indicate desire to enter into contract Be directed at person/ persons Invite acceptance Reasonable understanding of accept. Price Quotes Ads Usually NOT offers Invitations to offer; only offers when reasonable & specific (Carlill) Termination Rejection Absolute; might lead to counteroffer, which is a NEW offer/contract Revocation (Offer is queen) Direct = offeror explicitly cancels contract or offeror does Dickenson Indirect Lapse With time stated, or otherwise within reasonable time (Minn. linseed Oil) Death/ Incapacity Power of acceptance is terminated when offeror/offeree dies/ deprived of legal capacity to enter into contract [R2 § 48] (Paine v. Pac. Mut. Life Ins.) Acceptance (Second half of mutual assent; objectively determined) Preservation/ Option Revocable w/out consideration R2 § 87, UCC § 2-205: in writing <=3 months Effective Acc. Acc. by Performance Acc. by Silence Electronic Acc. R2 §§ 50(2), 32/UCC § 2-206: invites reasonable acc.; Dispatch Rule: acc. eff. on dispatch NOT arrival; R2 § 64 instant telecom; acc. offeror must be aware R2 § 54(2): offeror must be made aware R2 § 62: partial perform. = promissory acc.; R2 § 45 partial performance owed reasonable time to finish (Ever-Tite) Closely related to acc. by performance (Laredo Nat'l Bank); course of dealings Clickwrap Shrinkwrap Sign-In Wrap Imperfect Acc. Mirror Image Rule Battle of the Forms UCC § 2-207 Acceptance must be an unconditional expression of assent to the original terms (1) definite or written express. w/n reasonable time is acc. even w/ additional or terms UNLESS (a) offer is limited; (b) invalid if material alter.; (3) only agreed terms valid Deficient Agreements Misunderstanding Invalid if parties have diff. meanings & don't know meaning attached by other/ know other's meaning as diff. R2 § 20 Indefinite Terms (Varney; Antonelli) Term must be reasonably certain R2 § 33. Determine w/ course of perf./ dealing/ trade usage UCC § 1-303 Postponed Agree. (Walker; Mutelmud) "Agreements to agree" are generally not binding; rarely used for reliance damages/ estoppel (Garwood) Consideration "something given in exchange for the promise that is 'bargained for'." R2 § 71(1) Mutuality of Obligation: Each party is bound to the other by a promise Courts do not look into the adequacy of consideration "Something" Given That "something" can be an act, a promise to do something in the future, or a promise not to do something in the future (Hooters; Hamer v. Sidway) Illusory Promises Illusory promises are promises based on a condition that cannot occur or are based on performance that appears to be left solely to the option of the promisor (Knees v. Groupon) R2 § 89 # if modification was made in light of unforeseen circumstances and was fair & equitable. If it may be considered despite the absence of consideration (Angel v. Murray) Modification UCC § 2-209 consideration is not necessary for the modification of a contract to be valid as long as it meets the test of good faith Material Benefit Rule Past consideration (usually invalid) can be adequate when one confers material benefit on another that was not intended as a gift. If the person then promises to pay for benefit Promissory Estoppel A promise that foreseeability induces reliance on the part of promisee may be enforced despite the absence of consideration. (Waite; Garwood) i. A clear and definite promise ii. Reasonable & detrimental reliance on the promise iii. Enforcement necessary to prevent injustice