Contracts Midterm Contracts – Days 1 – 12; UCC & Restatements

Question Answer Define Contract -promise or set of promises-if breached, the law gives remedy-law recognizes performance as a duty Promisor person manifesting the promise Promisee person to whom the promise is manifested Beneficiary the person (other than the promisee) who the performance will benefit Agreement -mutual assent Bargain -agreement to exchange promises, OR-exchange a promise for a performance How is a promise made? -may be stated in words (oral or written)-may be inferred wholly or partly from conduct What are the requirements of a bargain? -bargain in which there is manifestation of mutual assent to exchange-needs consideration What is the manifestation of mutual assent? Is an exchange that requires each party make a promise. How may someone show mutual assent? -by words (written or oral)-acts (or non-acts)-Conduct is not effective unless he knows or has reason to know that the other party may infer from his conduct that he assents-Conduct may manifest assent even if he does not assent Must parties show an intent to be bound? Yes, parties must show an intent to be bound. What is the mode of assent? Offer and acceptance. Define offer. -manifestation of willingness to enter into a bargain.-communicates to another person that his assent is invited & will conclude the bargain Define option contracts. -promise meets the requirements for the formation of a K-limits power of offerer to revoke the offer. Elements of Auction. -auctioneer invites offers from successive bidders-auctioneer may accept or reject Auction without reserve. -auctioneer makes an offer to sell at any price by the highest bidder.-after the call for bids, the goods cannot be withdrawn unless no bid is made w/in reasonable time. May a bidder withdraw his bidder prior to the conclusion of the auction? Yes, prior to the auctioneer's announcement of the completion of the sale. How may acceptance be invited? -affirmative answer in words-performing (or refraining from performing) a specified act-may empower the offeree to make a selection of terms in his acceptance-offer invites acceptance in any manner & by any medium reasonable in the circumstances Define the offeree's power of acceptance. -offerer gives offeree the power to complete the manifestation of mutual assent by acceptance of the offer Methods of Termination of the Power of Acceptance. -rejection or counter-offer by the offeree-lapse of time-revocation by the offeror-death or incapacity of offeror or offeree-non-occurence of any of the terms as stipulated by the offer Define rejection of an offer. -offeree rejects the offer, -manifestation not to accept the offer, unless the offeree manifest an intention to take it under further advisement. Time when rejection of counter-offer terminates the power of acceptance. -rejection/cnter-offer by mail/telegram doesn't terminate the power of acceptance until received by the offeror**acceptance started after sending rejection/counter-offer and acceptance is received by the offeror prior to receiving the rjction/cntr offer What is the lapse of time for an acceptance? -power to accept terminated by the time specified in the offer, or-at the end of a reasonable amount of time Describe revocation by communication from offeror received by offeree. An offeree's power of acceptance is terminated when the offeree receives from the offeror a manifestation of an intention not to enter into proposed contract. Describe an indirect communication of revocation of an offer. An offeree's power of acceptance is terminated when the offeror take definite action inconsistent with an intention to enter into the proposed contract & the offeree recieves reliable information to that effect. What happens when the offeror or the offeree dies prior acceptance? 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. Define acceptance to an offer (generally). It is a manifestation of assent to the terms. The manifestation of assent is made by the offeree. Define acceptance by performance. Acceptance by performance requires that at least part of what the offer requests be performed or tendered and includes acceptance by a performance which operates as a return promise. Define acceptance by a promise. Acceptance by a promise requires that the offeree complete every act essential to the making of the promise. Who may accept an offer? An offer can be accepted only by a person whom it invites to furnish the consideration. When is it appropriate to exercise acceptance by performance? Acceptance by performance is acceptable only if the offer invites such an acceptance. Does the offeree need to notify the offerer of acceptance if the nature of the offer is such to invite acceptance by performance. No, typically the offeree need not inform the offeree of accptance. If the offerer cannot find out about acceptance by performance in a reasonable amount of time, his obligation is discharged, unless… -the offeree must notify the offeree of performance, or-the offeror learns of the performance in a reasonable amount of time-offerer indicates that notification of acceptance is not required. Must an acceptance comply with the terms of an offer? Yes, an acceptance must comply with the terms of an offer. Describe the effect of performance by offeree when offer invites either performance or promise. -tender of either promise or performance is acceptable-both of these show an intention to render complete performance What is the time when acceptance takes effect? Unless the offer provides otherwise:-acceptance is made in the medium invited by the offer & completes manifestation of mutual assent AS SOON AS PUT OUT OF THE OFFEREE'S POSSESSION!-different w/ option contracts – no acceptance until with offeror How is acceptance by phone or instant message applied? Acceptance given by telephone or other medium of substantially instantaneous two-way communication is governed by the principles applicable to acceptances where the parties are in the presence of one another. How does custom apply to the reasonableness of the medium of acceptance? A medium of acceptance is reasonable if it is one used by the offeror or one customary in similar transactions at the time and place the offer is received. Must the offer be properly dispatched? Yes, an offer must be properly dispatched. What constitutes receipt of revocation, rejection, or acceptance? A written revocation, rejection, or acceptance is received when the writing comes into the possession of the person addressed or deposited in some place he has authorized. Discuss acceptance by silence. Is allowable when:-when an offeree takes the benefit of offeror's services & knows that offeror expects compensation-where the offeror has given reason that silence is an acceptable mode of assent-previous dealings Describe bargained-for exchange. In consideration, a performance or a return promise must be bargained for. Describe the exchange of promises. A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise. Describe what a promise to perform may consist of. -act other than a promise-a forbearance-the creation, modification, or destruction of a legal relation. Can performance of a legal duty be construed as consideration? No, performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest dispute is not consideration Describe the exchange of promise for promise. A promise which is bargained for is consideration if, but only if, the promised performance would be consideration. Is a conditional promise consideration? A conditional promise is not consideration if the promisor knows at the time of making the promise that the condition cannot occur.*unless the condition is also a part of the promise* What are the two conditions which make an option contract binding? -in writing, cites the consideration, fair terms w/in reasonable amount of time-is made irrevocable by statute. Describe expectation interest. being put in as good as position as he would have been in had the contract been performed. Describe reliance interest. reimbursement for the loss caused by reliance on the contract by being put in as good of position as he was prior to the K Describe restitution interest. an interest in having restored to him any benefit that he has conferred on the other party. Describe how damages are awarded. Injured party has a right to damages for any breach by a party against whom the contract is enforceable. Can nominal damages be awarded. Yes, nominal damages can be awarded if the breach caused no loss or if the amount of the loss is not proved. Describe expectation interest damages. -the loss in value to the breachee-incidental or consequential loss-balanced by any costs he has not received b/c he need not perform Must the damages have been foreseeable? Yes, damages must be foreseeable by the parties prior to the breach. Are punitive damages available in Contracts? No, punitive damages are not available, unless they are in conjunction with a tort. May specific performance or an injunction be ordered in a Contracts case? Yes, specific performance and injunctions are available remedies.

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