Glossary of Contract Law
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- Offer (UCC)
- Under contract law an OFFER is a manifestation of present contractual intent communicated to the offeree sufficiently certain as to terms that that an objective person would reasonably believe assent would form a bargain. Under the UCC an offer is sufficiently certain if it specifies the parties and quantity, and UCC "GAP FILLERS" may be used to determine additional terms.
- Consideration (UCC)
- Under contract law every valid contract must be supported by CONSIDERATION, a bargained for exchange of value posing sufficient legal detriment that the law will enforce the agreement. However, under the UCC a contract supported by legal consideration may be MODIFIED without additional consideration.
- UCC 2-207 (UCC):
- An acceptance containing varying terms is an effective acceptance, but the varying terms will NOT be included in the contract where 1) the offer expressly limited acceptance and the offeror does not agree to the new terms, OR 2) the parties are not both merchants, OR 3) if they are both merchants the varying terms materially alter the contract OR 4) if not a material alteration the party to be bound expressly and timely objects in writing to the change in contract terms
- Does the UCC apply?
- Under contract law the UCC controls contracts for the sale of GOODS. Goods are all things that are movable and identified to the contract at formation. Otherwise the common law controls.
- Are the parties merchants?
- Under the UCC a MERCHANT is a person who trades in or otherwise holds himself out as knowledgeable about the goods of the contract.
- Sections of the UCC to memorize
- We suggest you memorize four sections that all start with "2-20". These are sections 2-201, 2-205, 2-206 and 2-207. All you have to remember is 1 followed by 5-6-7.
- UCC 2-201 (UCC):
- A contract for goods worth $500 or more must be in writing, signed by the party against whom the contract is to be enforced. But between merchants a sales confirmation by one listing quantity will bind both parties if the receiving party does not object within 10 days. Further, the rule does not apply to 1) custom made goods, 2) where there is an admission by the party to be bound in a legal setting that there had been an agreement, or 3) where there has been partial performance of the contract by acceptance of payment or goods.
- UCC 2-205 (UCC):
- A firm offer in a signed writing by a merchant that by its terms assures it will be held open creates an option that does not require consideration for the stated time, or if no time is stated for a reasonable time not to exceed three months.
- UCC 2-206 (UCC):
- Unless the offer clearly demands otherwise, an acceptance may be made in any reasonable manner, including a promise to ship or shipment of either conforming or non-conforming goods, but a shipment of non-conforming goods as an express accommodation is not an acceptance.
- Enforceable Contract?
- The essential common law requirements to creat an enforceable contract are offer acceptance and consideration.
- Revocation prior to acceptance?
- As a general rule, an offer may be revoked by the offeror (the party who makes the offer) a any time until the offer has been accepted.
- Revoking offers made to multiple persons?
- When an offer is made to a number of persons, such as by a newspaper ad, that offer may be revoked by giving notice that the offer has terminated by some means of equal publicity.
- When does revocation take effect?
- Once the offeree received an actual notice of the revocation, the revocation is effective at that time.
- An offer exists if a party communicates to the other party an expression of intention to be bound to the terms of the offer and inviting the other party to accept those terms. The expression of intention to be bound must contain the essential terms of the agreement.
- Offer supported by detrimental reliance?
- UCC: Merchant's firm offers may be made without consideration.
At common law, the offeree has to five consideration to the offeror to ind the offeror t any promise to keep an offer open for any stated period of time. However, an offer may also become irrevocable under the doctrine of promissory estoppel. If an offer is made shich the offer knows (or reasonably should know) will induce the offeree to believe that the offer is irrevocable for a period of time, then that offer will be detrimenal reliance by the offeree.
- Acceptance - unilateral or bi-lateral?
- The offeror is the "master of the offer" and may specify the precise acts or words the offeree must perform or use to properly accept the offer. An offer that expects a performance as acceptance is a unilateral contract. However, the law favors bilateral contracts (offer seeking a retun promise) and will interpret ambiguous offers as seeking a return promise.
- Consideration exists if both parties engage in a bargained for exchange of acts or promises and both parties incur new legal detriment as a result of the contract.
- Contract formed?
- The rights and remedies of the parties here depend on whether they had a valid contract. A contract is a promise or set of promises the performance of which the law will recognize as a duty and for the breach of which the law will provide a remebdy. A valid contract is based on an offer, acceptance and consideration for a legal purpose for parties of legal capacity.-
- When does the statute of frauds apply?
- Contracts must be in writing if they are:
a contract for Marriage (or Divorce)
a contract that must take more than a Year to complete from the date of execution,
a contract for conveyance of an interest in Land (rental agreements, sales, easements)
a contract by an Executor of the estate of a deceased, and
a contract by a Guarantor of a debt (remember the main purpose rule)
- Under the common law MIRROR IMAGE RULE an acceptance is an unequivocal assent to an offer However, acceptance can be implied by silent performance. Under the MAILBOX RULES an acceptance is effective when dispatched, if dispatched in the manner specified in the offer, or by the same or faster means the offer was transmitted where the offer does not specify a means of communication.
- Under contract law every valid contract must be supported by CONSIDERATION, a bargained for exchange posing sufficient legal detriment that the law will enforce the agreement.
- Under contract law an OFFER is a manifestation of present contractual intent communicated to the offeree and sufficiently certain that an objective person would reasonably believe assent would form a bargain.
- Ads are usually not considered offers but merely invitations to negotiate. Ads generally lack an express or implied promise to be bound to the terms in the ad and will not sufficiently demonstrate the advertiser's intent to enter into a contract, unless an ad is very specific as to quantity and number of offerees such that someone who read the ad could reasoably assume the ad was intended to give them the power to accept.
- Material elements of an offer
- Under common law an offer must specify the parties, subject matter, quantity, price, and time of performance in order to be enforceable.
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