CHAPTER 11

1.On behalf of Meadows Edge Golf Course & Club, Norton signs and returns a letter from Oralee, referring to her services as a resident golf pro and their price. When Norton attempts to complete the deal, however, Oralee refuses,
claiming that they have no contract. Norton claims that they do. What standard determines whether these parties have a contract? The objective theory of contracts is the standard to determine whether the parties have a contract. Under
this standard, if a reasonable person would have thought that the offeree (Norton) accepted a legitimate offer by the offeror (Oralee) when the offeree signed and returned the letter, a contract was made, and both parties are bound. This assessment
is determined, in part, by what was said in the letter (did the letter constitute a valid offer?) and what was said in response (did the response constitute a valid acceptance?). Under any circumstances, the issue is not whether either party subjectively
believed that they did, or did not, have a contract.

2.On May 1, Bobbi-Ann, a real estate agent, and Corporate Properties, Inc., a commercial property owner, sign an agreement about the sale of Corporate Properties office building. Under the terms, if a buyer makes a serious offer
within sixty days, Corporate Properties must pay Bobbi-Anns commission. Bobbi-Ann puts for sale signs on the building, places ads in real estate pamphlets and one a locally focused Web site, and features the property in a
walking tour online. On June 1, Corporate Properties tells Bobbi-Ann that it is canceling their arrangement. Ten days later, Corporate Properties closes a sale on the building without Bobbi-Anns participation. Bobbi-Ann files
a suit against Corporate Properties for the amount of her commission. In whose favor is the court likely to rule, and why? The court is likely to issue a judgment in Bobbi-Anns favor on the basis that the parties in this situation had agreed
to a unilateral contract. The court would likely reason that Bobbi-Ann had begun performance under this contract by putting up the signs, placing the ads, and featuring a tour of the building on the Internet. Under the present-day view of unilateral
contracts, once a party to such a contract has begun performance, the other party cannot legitimately revoke or otherwise cancel the deal. Thus, Corporate Properties attempted revocation in this problemwhich was probably based on a desire
to avoid paying a commission to Bobbi-Annwould constitute a breach of its contract with Bobbi-Ann, and Corporate Properties would owe Bobbi-Ann her commission even though Bobbi-Ann did not participate in the closing of the sale on the
property.The problem does not mention whether Bobbi-Ann found the buyer, but Corporate Properties would most likely be liable for the payment of the commission under the terms of the contract with Bobbi-Ann even if Corporate Properties found
the buyer herself.

Chapter 12
1.Isabel owns a house, which she advertises for sale for $300,000. On April 1, Jon-Pierre offers Isabel $280,000 for the house. On April 5, Isabel has delivered to Jon-Pierre at his office a form that includes additional terms but
does not state a price. At 9 A.M. on April 6, Jon-Pierre signs the form and gives it to Karla, his administrative assistant, with instructions to mail it. At 10 A.M., Isabel calls to tell Jon-Pierre that the deal is off. The next day, Karla
mails the signed form to Isabel. When Isabel refuses to sell the house to Jon-Pierre, he files a suit against her, alleging breach of contract. Isabel claims that there was no contract. What are arguments supporting each partys
position? What is the court likely to rule? Explain. Jon-Pierre might assert his intent to accept and point to his signature on Isabels form as proof of the assertion. He might claim that he accepted Isabels counteroffer (including the additional
terms) before it was revoked. He might argue that he put his acceptance into the stream of commerce, or the route of response, or the transmission of delivery, or some similar phrase, when he gave it to Karla, his administrative assistant.
Isabel might contend that there was no contract because she revoked the offer before the acceptance was received. Isabel might argue that Jon-Pierre did not place his acceptance into any mode of dispatch because Jon-Pierre could still control
the formhe had only given it to his administrative assistant, who did not mail it until the next day, long after Isabel had revoked the offer.The court would most likely agree with Isabel and hold that the acceptance was not effective. Jon-Pierre still
controlled his acceptance at the time that Isabel revoked the offer. Jon-Pierres acceptance was mailed too late.

2.Business Solutions Corporation (BSC) sells business application softwarewage, price, and inventory coordinating programs, for examplein different combinations and packages, at different prices, downloadable online. To
complete a deal, a purchaser clicks on a button that, with reference to certain terms, states, I agree. What is this sort of agreement called? Do the parties have a binding, enforceable contract that includes the terms? Explain.
This is a click-on agreement, which occurs when a buyer, to complete a transaction on a computer, indicates his or her assent to be bound by the terms of an offer by clicking on a button that says, for example, I assent, or, in this question, I
agree. Such an agreement is likely to be enforceable if the party who agreed to the terms had an opportunity to read them before the contract was made (unless the terms are objectionable on grounds that apply to contracts generally). If the
terms were not revealed until after the agreement was made, however, they are unlikely to be considered part of the deal, as in cases involving shrink-wrap agreements. In this question, the parties would probably have a binding contract that
includes the terms. The question states that the button referred to the terms, meaning that the buyer knew, or should have known, what he was agreeing to.

Chapter 13
1.In May, Zach agrees to work for Affordable Plumbing Supplies Company at $800 per week for a year beginning June 1. The following January, Budget Pipes & Fittings, Inc., offers Zach the same work at $900 per week. Zach tells
Affordable Plumbing about the offer. Affordable Plumbing offers to enter into a new contract with Zach at $875 per week. If Zach agrees, is the new Affordable Plumbing contract enforceable? Why or why not?Zachs new contract
with Affordable Plumbing is enforceable. Because the original contract had not been fully performed, it was executory. Affordable Plumbings offer and Zachs acceptance to agree to a new contract could operate as a rescission of the original
contract. If Zach had broken the original contract to accept the offer from Budget Pipes, or if he breaks the new contract to accept that offer, he might be held liable to Affordable Plumbing for damages for the breach.

2.Chris promises Doreen $40,000 if she graduates from Eagle College. Doreen enrolls in Eagle, attends full-time for four years, and graduates. When Doreen asks Chris for $40,000, Chris says, I dont remember promising you
$40,000. But if there was a promise, its not enforceable, because we didnt bargain for it. And even if there was a promise that would otherwise be enforceable, I revoke it now. Can Doreen enforce Chriss promise? Why or why
not?Chriss promise is binding, and Doreen is entitled to payment without regard to whether their performance was bargained for.Under the doctrine of promissory estoppel (or detrimental reliance), a person who relies on the promise of another
may recover in the absence of consideration if (1) the promise was clear and definite, (2) reliance on the promise was justifiable, (3) the promisor knew or had reason to believe that the promisee would rely on the promise, (4) the reliance induced
a change of a substantial and definite character, and (5) justice would be better served by enforcement of the promise. In this question, there was a promise on which the promisee relied, the reliance was substantial and definite (the promisee
went to college full-time for four years, incurring considerable expenses, and graduated), and it would only be fair to enforce the promise.

CHAPTER 14
1.Games Galore Corporation hires Haley, a minor, to create new customized game software for certain clients. Haley signs a contract that requires her to work for Games Galore for eighteen months. Before beginning work,
however, Haley tells Games Galore that she will not create new software for Games Galore and that she is going to work for Ideal Worldcraft, Inc., a Games Galore competitor. Is Games Galores contract with Haley enforceable?
Why or why not?The contract is not enforceable. Haley is a minor, so any contract that she enters is voidable by her. In other words, Haley had the option to disaffirm the contract.
A contract entered into by a minor can be disaffirmed at any time during minority, or for a reasonable time after the minor comes of age. Haleys announcement that she would not be bound by the contract was sufficient to disaffirm it. Haley had
not received anything under the contract with Games Galore, so there is nothing to return under a duty of restitution. Also, there is no significance to Haleys agreeing to work for Ideal Worldcraft, Games Galores competitor.
2. Global Airline, Inc., is a commercial passenger airline. Global Airline includes on its tickets a clause stating that the airline is not liable for any injury to, or the death of, any passenger caused by its, or its employees,
negligence. A Global Airline flight from Los Angeles to New York crashes into Long Island Sound, resulting in the deaths of all passengers. The accident is found to be due to Global Airlines negligence. Based on the clause on
its tickets, can Global Airline avoid liability?Global Airline cannot avoid liability for the deaths of the passengers in an accident that is found to be due to the airlines negligence.A clause that attempts to absolve a party of negligence or some
other wrong, such as the one in this problem, is known as an exculpatory clause. Generally, an exculpatory clause is not enforceable if the party seeking its enforcement is involved in a business important to the public as a matter of practical
necessity. Such businesses include airlines. Because of the essential nature of their services, airlines have an advantage in bargaining strength and could insist that anyone contracting for their services agree not to hold them liable.

CHAPTER 15
1.Niles, an accountant, certifies several audit reports on Optimal Operational Processes, Inc., Niless client, knowing that the company intends to use the reports to borrow money from Prime Business Lending Company to buy
new equipment. Niles believes that the reports are true and does not intend to deceive Prime Business, but does not check the reports before certifying them. Can Niles be held liable to Prime Business?Yes. In this situation, Niles
may be liable on the ground of negligent misrepresentation. Negligent misrepresentation occurs when a person misrepresents a material fact by failing to exercise reasonable care in uncovering or disclosing the facts, or by not using the skill and
competence that his or her business or profession requires. In effect, the negligence is given the same weight as scienter, or an intent to deceive, and the case is treated the same as a case involving fraudulent misrepresentation.

2. Floramaria is an elderly woman who lives with her niece Galaxy. Floramaria is dependent on Galaxy for support. Galaxy advises Floramaria to invest in Galaxys professional gambling venture, or Galaxy will no longer
support her. Floramaria liquidates her other investments and signs a contract with Galaxy, to whom Floramaria gives the funds. Can Floramaria set aside this contract?This situation describes undue influence, which arises from a
relationship in which one party can, through unfair persuasion, influence or overcome the free will of another.Other examples of such relationships include business partners, attorney-client, and doctor-patient. A contract entered into under undue
influence lacks genuineness of assent and is voidable. In this problem, the influence of Galaxy over Floramaria is buttressed by Floramarias reliance on Galaxy for support. Floramaria does not have a claim for duress, but Galaxys influence over
Floramarias investment decision is an exercise of undue influence. The contract is primarily for the benefit of Galaxy, and Galaxy used unfair persuasion in securing Floramarias funds. Floramaria can avoid the contract.

Chapter 16
1.Raconteur Data Analysis Corporation in Seattle, Washington, offers a job to Trista, who lives in Utah. Trista orally agrees to work for Raconteur for two years. She moves her family to Seattle and begins work. Three months
later, she is fired for no stated cause. She files a suit against Raconteur for reinstatement or pay. Raconteur pleads the lack of a written contract. In whose favor is the court likely to rule, and why? The court might conclude that
under the doctrine of promissory estoppel, Raconteur is estopped from claiming the lack of a written contract as a defense. This oral contract may be enforced because Raconteur made a promise on which Trista justifiably relied in moving, her
reliance was foreseeable, and injustice can be avoided only by enforcing the promise. If the court strictly enforces the Statute of Frauds, however, Trista may be without a remedy because a contract that cannot be performed within one year from
the day after its making must be in writing to be enforceable.
2.In a transaction for the sale of an auto painting facility, Bright Auto Colors Company tells Custom Cars Corporation that the paints and other supplies on-site are included. The contract says nothing about the supplies on-site,
but does state, This document supersedes all oral promises relating to the sale. Are the supplies part of the sale? Why or why not?No, the supplies are not part of this deal.Under the parol evidence rule, if a writing that is integrated,
or constitutes the parties entire agreement, includes a clause stating that no oral statements are incorporated, then no evidence of prior negotiations, prior agreements, or contemporaneous oral statements may be used to change the terms. In
other words, a party cannot introduce in court evidence of any contradictory negotiation or agreement that occurred before the contract was formed or any contradictory oral agreements that were made at the time the contract was formed. Thus,
in this case, because the written contract did not mention the supplies and the clause in the document stated that it superseded any oral promises, the parties do not have a deal for the supplies.

Chapter 17
1.Motors Repair Company contracts to sell a car to Nikki for $3,500. Nikki gives Motors Repair a worthless check for the price. Nikki assigns her right to the car to Opie. If Motors Repair refuses to deliver the car to Opie and Opie
sues, can Motors Repair raise Nikkis fraud as a defense against delivery of the car to Opie? Explain.Yes. An assignee takes only those rights that the assignor originally had, and those rights are subject to any defenses that the obligor has
against the assignor. In this problem, Motors Repair is the obligor, Nikki is the assignor, and Opie is the assignee. Nikkis delivery of a worthless check to Motors Repair means that Motors Repair has a right to refuse to deliver the car to Nikki.
Motors Repair can also refuse to deliver the car to Opie, for the same reason.
2.Greensward Landscaping Company enters into a contract with Kent to landscape Hillview Country Clubs golf course, using Intown Nursery to supply trees and shrubbery. Jonas owns a lot next to Hillviews course that will
benefit from the improved landscaping. The landscaping is a gift from Kent, a wealthy club member, to Hillview. What type of beneficiary is Hillview? What type of beneficiary is Jonas? What type of beneficiary is Intown Nursery?
If Greensward refuses to do the job, who can enforce the contract against it? Hillview is an intended, donee beneficiary. Greensward and Kent entered into the contract with the express purpose of benefiting Hillview. Jonas is an incidental
beneficiary. Jonass property value will go up once Hillviews property is improved, but that is not the intent of the parties to the contract. Intown Nursery is also an incidental beneficiary, because it will also benefit from the contract between
Greensward and Kent, but that is not the intent of either contracting party. If Greensward subsequently refuses to do the job, Kent or Hillview can enforce the contract against the landscaper. In Hillviews situation, when a contract is made for the
express purpose of giving a gift to a third party, the third party (Hillview, the donee beneficiary) can sue the promisor (Greensward) directly to enforce the promise. Kent can enforce the contract, of course, because he is a party to it.

1.Able Builders, Inc., contracts with Beach Assets Company to build a Cool Juice stand near Divers Beach. The work is to begin on April 1 and be done by June 1, so that the stand can open for the summer. Able Builders does
not finish until June 14. The stand opens but Beach Assets loses two weeks early summer sales due to the delay. Is Beach Assetss duty to pay for the construction of the stand discharged?
No. Able Builders substantially performed its duties under the contract with Beach Assets. Assuming the performance and the delay was in good faith, Able Builders could successfully sue Beach Assets for the value of the work performed if Beach
Assets attempts to avoid paying under their contract. For the sake of fairness, Beach Assets will be held to the contractual duty to pay, but may be able to deduct reasonable damages for the missed contract deadline.
2.Franz, the owner and manager of Greens Grocery Store, contracts to buy sixty crates of fresh peaches from Holly, the owner and manager of Ideal Farms. Suppose that Holly dies before she can harvest and deliver the peaches.
How does Hollys death affect their contract? If Holly does not die, but does not deliver, and Franz suffers a loss, is there any limit to the time within which Franz can file a suit against Holly for breach of contract? If so, how might
Franz extend this time?Hollys death, before fulfilling the contract, discharges both the contract and Hollys estates liability for her nonperformance. If Holly does not die, but does not deliver, there is a limit on how long Franz has to file a suit for
breach of contract. Statutes of limitations limit the period during which a party can sue on a cause of action. The running of a limitations statute does not extinguish the contractual obligation, howeverthe obligor can revive it by making a new
promise to perform. Thus, if the time has run out, the breaching party can make a new promise to perform, for which it can be held liable.

1.Lunch Trucks, Inc., contracts to deliver and serve Meals Catering Services products to its clients for $5,000 per event, payable in advance. Meals Catering pays the money, but Lunch Trucks fails to perform. Can Meals Catering
rescind the contract? Can Meals Catering also obtain restitution? What does it mean to rescind a contract? How is a contract rescinded? What is restitution? How is restitution accomplished? Explain.Yes, Meals Catering can
rescind the contract and obtain restitution.A breach of contract by a failure to perform entitles the nonbreaching party to rescind, or cancel, the contract, and the parties must make restitution, which is the returning of whatever benefit they conferred
on each other. These remedies are particularly available when the breaching party would otherwise be unjustly enriched, as in this question. Rescission is an action to cancel a contractto return the parties to the positions they were in before the
transaction. It is also available in cases involving fraud, mistake, duress, or failure of consideration. To rescind, a nonbreaching party must give prompt notice to the breaching party. Both parties must then make restitution to each other by returning
whatever was conveyed in execution of their contract. If the goods or property conveyed can be returned, they must be. If the actual items cannot be returned, an equivalent amount in money must be paid.

2.Medical Eye Clinic Corporation enters into a contract with local musician Natalie, who agrees to perform for a meeting of Medical Eyes personnel to be held in its main office building. Before the date of the meeting, Natalie
refuses to perform, citing a higher-paying gig. Meanwhile, Medical Eye contracts to sell the building to Optical Center, Inc., but before the transaction is complete, Perfect Vision Company offers to pay a higher price. Medical Eye
refuses to transfer the building to Optical Center. In separate suits by Medical Eye against Natalie and by Optical Center against Medical Eye, each plaintiff seeks specific performance. How might the court rule in each case, and
why? Generally, the equitable remedy of specific performance will be granted only if two requirements are met: damages (money), under the circumstances, must be inadequate as a remedy, and the subject matter of the contract must be unique.
The basic requirements for specific performance are usually not met in cases involving personal service contracts. If the identical service is readily available from others, the service is not unique, and damages for nonperformance are adequate.
If, however, the services are so personal that only the contracting party can perform, the subject matter of the contract satisfies the test of uniqueness. Nevertheless, a court may refuse to grant specific performance if (1) enforcement of an order
of specific performance requires involuntary servitude, which is prohibited by the Thirteenth Amendment to the U.S. Constitution, or (2) it is impractical to impose an order of meaningful performance on someone against his or her will. In the case
of the artist, specific performance is likely not an appropriate remedy. n a sale of land, the buyers contract is for a specific piece of real property. The land under contract is unique, because no two pieces of real property have the same legal
description. In addition, damages would not compensate a buyer adequately, as the same land cannot be purchased elsewhere. In the case of Optical Center, specific performance would be an appropriate remedy.

Issue: Begin your answer by stating the issue presented by the essay question. Sometimes the question will provide the issue for you. If not, then ask: What is the legal question that, when answered, determines the result of
the case? The issue should be stated in the form of a question in a specific, rather than general form: Is there an agency relationship if there was no compensation paid? would be an acceptable issue. Will the plaintiff win?
would not be acceptable. Note that the issue may be case specific, mentioning the parties names and specific facts of the case. Example: Did Jones have an agency relationship with XYZ Corp. due to his acting on behalf of
XYZ and following its instructions? The issue can encompass all cases which present a similar question. Example: Is an agency created whenever there is an employment relationship? Most cases present one issue. If there
is more than one issue to address, then you must write a separate IRAC analysis for each issue.
Rule: The rule describes which law or test applies to the issue. The rule should be stated as a general principal, and not a conclusion to the particular case being briefed. Example: An agency relationship is created when
there is an agreement that the agent will act for the benefit of the principal at the principals direction or control regardless of whether compensation is paid would be an acceptable rule. The plaintiff was the defendants
agent would not be an acceptable rule. Do not use parties names or specific facts from the case. Hint: Frequently, the rule will be the definition of the principle of law applicable in the case. Example: An agent may not use
or disclose confidential information acquired through the agency absent an agreement to the contrary.
Analysis: The analysis is the most important, and the longest, part of your answer. It involves applying the Rule to the facts of the problem or question. You should use the facts to explain how the rule leads to the conclusion.
Discuss both sides of the case when possible. Important: Do not merely state a conclusion without also stating reasons for it. A conclusion without reasons or explanation means that you have not used the rule and the facts to
analyze the issue. Hint: The rule can be used as a guide in your discussion. Example: Suppose the issue is whether A is an independent contractor. Using the facts of the case, explain whether or not they fit into the definition
of what is an independent contractor: In this case, A was told by the foreman what to wear, how to operate the machine, and when to report to work each day, giving her little control over the job. If the rule is a test with
multiple factors, then you must analyze each factor by pointing out how the facts do (or do not) fulfill each factor.
Conclusion: The conclusion is your answer to the Issue. State the result of your analysis. Examples: Smith is liable for negligence or Therefore, no valid contract was formed between X and Y. If there are multiple issues,
there must be multiple conclusions as well.
Chapter 11
What is a contract? The law of contracts is covered in two different ways. One is by common law and the other is by statutory law. For the most part, common law contracts, the part that well cover at the first of this unit, are the laws that have been handed down over
the years and years and years as far as what a contract is, whats required for a contract, and how to enforce it. The other part is the Uniform Commercial Code which well cover in the last part of this unit. 1 The Uniform Commercial Code covers the sale of goods. So,
any time youre doing an analysis of a contract problem, you need to determine first and foremost, is this the sale of goods covered by the Uniform Commercial Code, or is this something else and covered by common law contract? Because the rules are a little bit
different.
What is the definition of a contract? A promise or a set of promises for the breach of which the law provides a remedy or the performance of which the law in some way recognizes as a duty.
The courts view contracts with whats called the Objective Theory of Contracts and that is what a party says, their outward actions, their appearance is what determines whether or not the terms of the contract or the requirements or elements of the contract have been
met. And as youll see in the first case you brief that what one secretly believes when they write a contract or sign a contract really doesnt matter. What matters is what one says and does and what is written in the contract.
First of all, elements of a contract: agreement which consists of an offer and acceptance. Each of the parties have to reach an agreement, otherwise known as a meeting of the minds. Next element is consideration. Consideration does not mean that you consider
something, that you think about something. Consideration means there is a bargained-for exchange between the parties. A legal benefit and a legal detriment. Without the bargained-for exchange, theres no contract. Third element, contractual capacity: the parties have
to have the capacity to enter into a contract. Thats usually a pretty easy thing to determine over 18 and not subject to a guardianship in the courts or something of that nature. Legality: the contract has to be for a legal purpose. You cannot legally contract to do
something that is illegal in itself
There are several different types of contracts. Contracts as illustrated in the diagram here: you can have a bilateral or unilateral contract, a formal or informal contract, express or implied contract
the bilateral contract. The offeree must only promise to perform and theres a promise for a promise. As opposed to a unilateral contract where the offeree can accept the offer only by completing the contract. If performance is the completion of the contract, then it can
be a unilateral contract.
A formal contract must be in writing and when we talk about the statute of frauds, well talk about which contracts must be in writing. Informal contracts are all other contracts.
the express contract as opposed to the implied, or implied in fact, contract. Express is oral or written where theres an intent to make a contract and its expressed. Implied is where theres an attempt to make a contract, but its implied by ones actions
Contract performance can be looked at in two ways: executed and executory. Executed, a contract that has been fully performed, its been executed and executory, a contract that has not been fully performed, that theres been something that is incomplete.
Contracts, on their face, can be in three different types of enforceability: a valid contract, a void contract, or a voidable contract.
Quasi-contracts are contracts that are implied in law, otherwise known as quantum meruit. Theyre contracts which may lack some element, but in the interest of fairness and justice, the courts will imply that there is an actual contract.
Concerning the interpretation of contracts, the courts use whats called the Plain Meaning Rule, which, good for us, means what it says. The courts will apply the plain, dictionary meaning to the terms of a contract unless some other meaning would be indicated as in a
technical term or something of that nature. If the terms in the contract are unambiguous, the court will not allow extrinsic or other testimony or evidence to explain the intent of the contract. Its understood on the face and additional evidence is not allowed. This is called
the Parole Evidence Rule. If there is an ambiguity in the contract, that is a word that can be taken this way or that way, then the courts may allow some extrinsic evidence to explain what the intent of the parties was at the time they entered into the contract.
And any specific terms that are negotiated would be given greater weight than those that arent. Things that are handwritten, as opposed to type, would be given greater weight and maybe one of the more significant aspects is that if there is an ambiguity, the courts will
interpret that ambiguity in favor of the party that did not draft the contract. The reasoning of the court is that the party that wrote the contract had the greatest opportunity to write the contract in a way that was clear and unambiguous, and therefore they should be the
ones to suffer if there is an ambiguity in the contract
Chapter 12
An essential element for contract formation is agreement. The parties must agree on the terms of the contract and manifest to each other that mutual assent or agreement. Mutual assent is divided up into two events: one is offer and two is acceptance.
Expressions of opinion do not make an offer. Expressions of an interest to enter into a contract 2 in the future usually do not make a contract. Preliminary negotiations are usually only an invitation to enter into a contract and not a binding contract themselves.
Now there can be an agreement to agree. Parties can agree that they have a contract, but the specific terms will be worked out according to some formula at a future date at which point there is a valid contract. Advertisements are generally considered an invitation to
negotiate and then in auction, the offer is accepted when the auctioneer strikes the hammer. Before the fall of the hammer, a bidder may revoke, or take back, his or her bid and reject that contract.
A contract itself must have definiteness of terms. This is the second requirement for an effective offer. Generally a contract must include the following terms either expressed in the contract or capable of being reasonably inferred from it: 1) the identification of the
parties, 2) the identification of the object or subject matter of the contract, 3) the consideration to be paid, and the time of payment, delivery, or performance.
Courts are sometimes willing to supply a missing term in a contract when the parties have clearly manifested an intent to form a contract, although still all of the elements of a contract must be present for the court to consider supplying some missing term as noted above
under Definiteness of Terms. The next case, Case 11.2 Baer v. Chase, is a good discussion of definiteness of terms and when there is a contract and when there isnt. The contract in this case was Chase would take care of Baer and renumerate Baer in a manner
commensurate to the true value of his services. The court determined this was too vague, ambiguous, and lacking in essential terms to be enforceable.
The third requirement of an effective offer is communication. The offer must be communicated to the offeree or there is no contract
First of all, well go over the requirement of an offer. An offer is a promise or a commitment to do or refrain from doing some specified thing in the future. Under common law, three elements are necessary for an offer to be effective. One, offeror must have a serious
intention to become bound by the offer. Two, the terms of the offer must be reasonably certain or definite so that the parties in the court can ascertain the terms of contract. Three, the offer must be communicated by the offeror to the offeree, resulting in the offerees
knowledge of the offer
An offer can be terminated by the action of the parties in any of three ways: 1) revocation, 2) rejection, and 3) counteroffer. And it is important to note that a counteroffer is a termination of the existing contract and an offer to enter into a new contract.
So first, revocation of the offer by the offeror. The offeror usually can revoke the offer as long as the revocation is communicated to the offeree before the offeree accepts. Once the offeree has accepted an offer, then it cannot be revoked; it cannot be changed. The
general rule followed by most states is that a revocation becomes effective when the offeree or the offerees agent actually receives it. Next, we cover detrimental reliance or promissory estoppel. It is covered both here and later on in the subsequent chapters. Promissory
estoppel comes into play. To estop means to bar, impede, or preclude someone from doing something. Thus, promissory estoppel means that the promisor, the offeror, is barred from revoking the offer. In this case, because the offeree has already changed her actions in
reliance on the offer. Many courts will not allow the offeror to revoke the offer after the offeree has performed some substantial part of his or her duties
Concerning the rejection of the offer by the offeree, any subsequent attempt by the offeree to accept will be construed as a new offer giving the original offeror now the offeree the power of acceptance. A rejection is ordinarily accomplished by words or conduct,
evidence seen in intent not to accept an offer. As with revocation, rejection of an offer is effective only when it is actually received by the offeror. A little bit later well go into the Mailbox Rule which covers acceptance of an offer.
A counteroffer occurs when the offeree rejects the offer and simultaneously makes a new offer. 5 If the offeree makes any change to the offer, it becomes a counteroffer and he has not accepted the first offer. At common law, the Mirror Image Rule requires the offerees
acceptance to match the offerors offer exactly. The Mirror Image Rule is applicable to common law contracts; it is not applicable to Uniform Commercial Code contracts. This first section on contracts deal with common law contracts. There are substantial differences
between a common law contract and a Uniform Commercial Code contract, which well get into a little bit later. Concept summary 11.1 provides a nice table with a succinct statement as to the method of termination and the basic rules that are applied regarding
contracts
In a bilateral contract, communication of acceptance is necessary because acceptance is in the form of a promise and the contract is formed when the promise is made.
And now we get into the Mailbox Rule. An acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offerees possession without regard to whether it ever reaches the
offeror. This is known as the Mailbox Rule. What does it mean? It means that when an offeree puts his acceptance in the mailbox, it is accepted; thats when there is a valid contract. Not when the acceptance is received by the offeror. It is a valid contract as soon as the
offeree no longer has possession or the ability to change his acceptance, and that can be by email, that can be by any other method of transmission, but once its out of his hands then it is an effective contract regardless of when it is received by the offeror
Mailbox rule
There are three exceptions to this principle. One, if the acceptance is not properly dispatched by the offeree. In most states, it will not be effective until it is received by the offeror. Or two, the offeror can stipulate in the offer that an acceptance will normally not be
effective until it is received by the offeror. And three, sometimes an offeree sends a rejection first, then later changes his or her mind and sends an acceptance. Obviously, the contract no longer exists 8 once the rejection is sent, thus there is no contract to accept.