Glossary of Contracts - Mutual Assent
- civil procedure
- mutual assent
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- What is the tentative working guide for an offer?
- A definite, conditional promise manifesting a present intent to enter into a binding, final agreement.
- What are the issues around the finality of an offer?
- - The words used in the offer
-- "quote" vs. "offer", words that are only invitations to an offer)
- The context of the proposal
-- Real property agreements have higher standards; agreements to agree no good)
-- Dealings with third party indicate that offer hasn't been made
-- Closeness of relationship between P and D
-- Proposals made in jest/anger/at social engagements
- The size of the class of offerees
-- Generally, advertisements to a large group of people are not an offer.
-- However, if ad is definite (first come, first served, quantity and time), then may still be offer.
- Contemplation of subsequent formalities
-- Generally, extended negotiations do not require formal paperwork
-- Except when explicitly called for by one party
- What are considered material terms of an offer?
- Material terms are: Quality, Quantity, Price, Terms of Payment, Terms of Delivery.
- How does the UCC step in on various Definiteness issues?
- Generally, UCC relaxes the definiteness standards (intention of the parties + method of determining the remedy is enough):
- Gap Fillers: Give default values if unsettled in the offer. Notably, Quality and Quantity are not covered.
- Quantity in reference to something else is okay (Output/Requirements Ks)
- Terms to be specified by one party are okay, as long as that party specifies terms that are commercially reasonable and in good faith.
- How can indefiniteness in an offer be mitigated?
- - Expert testimony
- Industry Norms
- Incorporation of terms by reference
- Employment contracts can often be terminated at will; no duration term is necessary.
- How much time until an offer terminates?
- -- Explicit duration, if given. Otherwise, "reasonable" depending on subject matter, rate of price fluctuation, etc.
-- Face-to-face offer usually terminates at end of conversation.
-- Extensions: depend only on offeror's subjective desire. Do not require that offeree knew.
- What is the SoA on how the superveining death or mental incapacity of the offeror affects the validity of the offer?
- Terminates the offer.
Majority: notice to offeree not required.
Minority: notice required.
- How can an offeror revoke the offer?
- Directly: Language interpreted loosly, in favor of offeror.
Indirectly: If offeree hears that the offer is no longer available, it is terminated. However, stricter standard:
- some communication of intent to revoke
- communication is a true one
- communication comes from a reasonable source
- tenor of the communication must destroy all reasonable expectation of performance
- What are the offeree's methods of terminating the offer?
- - Outright rejection
- Outright counter-proposal
- Qualified Acceptance
Remember, language is key. Language that inquires into the possibility of a change of terms does not count as a counter-proposal.
- What limits might there be on the power to revoke an offer?
- - Option Contracts supported by consideration
- Part Performance by the offeree
- Promissory Estoppel
- UCC 2-205: Offers by merchants are forced to remain open
- How can an option contract be terminated?
- higher standards than normal offer:
- Death of offeror/offeree
- express rejection by offeree
- What is the tentative working guide for an acceptance?
- An eligible offeree with knowledge of the offer and intent to accept gives the requested return, unconditionally.
- What is an "Eligible Offeree"? What is an exception to the rule?
- Generally, the offeree indicated by the offeror.
Option contracts are transferable, however.
- What are the methods of termination of an offer?
- - Supervening Death or Mental Incompetancy of the Offeror (SoA)
- Offeree's Supervening Death or Incompetency
- Lapse of Time
- Revocation by Offeror
- Termination by Offeree
- Supervening Illegality
- Does the acceptance have to be at the forefront of the offeree's mind for the acceptance to be valid?
- What are the rules for acceptance if the offeree is silent?
- Generally, silence means no acceptance.
There are exceptions, however.
- If there was active solicitation and a substantial delay, the offer is considered accepted.
- Accepting goods, keeping them without saying anything, or exercising dominion over them in any way is an acceptance.
- UCC: Receiving goods for use is acceptance. Use includes holding for resale.
- What are the requirements for the offeree "giving the requested return"?
What is the legal status of a given method of acceptance?
- - Making a promise (bilateral K)
- Performing an act (unilateral K)
If, the method is:
- Required, then must use that method.
- Suggested, then this method is valid. Acceptance on dispatch
- Reasonable, then Majority say effective on dispatch. Minority say effective on receipt.
- Unreasonable, then effective on receipt.
- What are the rules for determining whether the offeree must communicate the acceptance?
- If expressly required by the offer, then that is honored.
If not expressly required:
- Bilateral Ks generally require communication of the acceptance. Specific language can negate this requirement.
- Unilateral Ks do not require communication if performance itself will notify the offeror in a reasonable period of time.
- What are the rules for determining the method that the offeror must use to communicate the acceptance?
- Common Law:
Required means only that method.
Suggested means that any reasonable method is okay.
Reasonableness means a mode of acceptance similar or faster than the mode of the offer.
UCC: relaxes this further. Even if mode was unreasonable, if the acceptance arrives in a reasonable amount of time, it's valid.
- When is an acceptance or a rejection valid: on dispatch or receipt?
- If the method was unreasonable, then valid on receipt.
If reasonable, then Mailbox Rule: Rejections are valid on receipt, Acceptances on dispatch. Exceptions to the Mailbox rule:
- Exlplicit language in the offer to the contrary.
- Improper dispatch (e.g. wrong address) means that acceptance is valid on receipt. Again, UCC allows it to be effective on dispatch if it arrives in the same amount of time.
- Legally overaking Acceptance (SoA)
- Physically overtaking Rejection (SoA))
- What are the opinions on Legally Overtaking Acceptances?
- - The acceptance is effective only on receipt. Thus, either party can walk.
- The K is voidable by the innocent party.
- The Mailbox Rule is applied mechanistically. Thus, the acceptance is effective, having been dispatched first. Exception only if innocent party has detrimentally changed position.
- What are the opinions for a Physically Overtaking Rejection?
- If offeror didn't detrimentally change position, then the Mailbox Rule is applied. Acceptance is binding.
If the offeror did detrimentally change position, then the K is voidable by the offeror.
- What is the common law view on whether an acceptance is unconditional?
If it was conditional, what are the legal consequences?
- An acceptance is conditional if there is a difference in terms that is:
- Express (not implied)
- Insisted upon (no precatory language)
Any difference meeting these criteria is a condition; substantive of procedural.
If it was conditional, it kills the original offer. It may in of itself consitutite a valid counteroffer (evaluate.)
- What are the "last shot" and "escape hatch" problems?
- These are are problems with the CL mirror-image analysis of offer acceptance. Often, there is a series of document exchanges with varying terms. The timing of performance can determine an unfair advantage to one party or another:
If there's a falling out before performance, the offeree can point to any small difference to invalidate the acceptance.
If there's a falling out after performance has commenced, the offeror gets all of the terms of his document incorporated.
The UCC addresses these issues (for goods only, of course)
- Describe how UCC 2-207 works.
- 1) If there was a written response that has differing terms, it may still be an acceptance:
- any dickered terms must match
- it must not expressly require acceptance of the differing terms
If criteria are met, go to 2)
Failing this, go to 3)
2) For a layperson the new terms are not added to the contract.
For merchants, the new terms are added, unless:
- the original offer expressly forbids new terms
- the new terms materially alter the K
- notification of objection to the new terms is given in a timely manner
3) Even failing 1), a K is formed if the conduct of the parties recongnizes the K. In this case, the K is the terms upon which the two docs agree, plus gap-fillers for the rest.
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