Term
| Basic Law Contract Example |
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Definition
Bob and Steve agree
Bob will sell steve his watch
Steve will pay Bob $200 |
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Term
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Definition
A LEGALLY ENFORCEABLE
Promise or set of promises
For which the court allows recovery
(Generally money damages/ paying a financial penalty for doing things you're nto supposed to do) |
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Definition
Offer
Acceptance
Consideration
Capacity
Legal Purpose |
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Definition
PROMISE for an ACT
I will pay you $500 if you wash my car tonight-- Accept by doing th act |
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Definition
A PROMISE for a PROMISE
I promise to pay you $500 if you promise to wash my car tonight-- You accept by promising |
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Definition
What we want
Has all 5 elements (offer, acceptance, consideration, capacity, legal purpose) |
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Definition
| Has all 5 elements but NOT enforceable in court |
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Definition
ONE party has the right to cancel
-age
-mental condition
-intoxication |
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Definition
Where we DO NOT want to be
Missing at least one of the 5 elements
Creates no legal obligation
Not enforceable in court |
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Definition
| -A set of statutes that is much more flexible than common law |
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Definition
The person who initiates or makes an offer
Controls terms- what, when, and how much |
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Definition
The recipient of the offer
Can accept/ reject the offer, THAT'S IT
THe minute you start changing the terms, you are making a NEW OFFER |
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Definition
Definite Terms
Communication to the offeree
Intent to Contract
Definiteness Standards Under the Common Law |
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Definition
| Have to know what we're talking about |
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Term
| Communicatino to the offeree |
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Definition
If David walks into the room and announces that he will sell a watch for $50, did he make an offer? NO have to make communication to offeree
Have to understand the terms communicated in an offer (letter, email, phone)
Ex. "I'll sell you my watch for $50, exchange to occur on Friday"-- offer
-If spoken now and we hear it-- the offer occured TODAY
-If written today, put in mailbox tomorrow, and it was received the next day, the offer occurs the day it was received |
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Term
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Definition
| Present Intent- have to look at the words and at the person to see if their words and actions really intend to make an offer |
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| Definiteness Standards Under the Common Law |
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Definition
Courts enforce, not create, contracts
You and I have to make the contracts, the court tells us how we handle it.
-General rule: when you have definitenes of terms in addition to having present intent and communication to make an offer, we have to know what we're dealing with:
--Subject Matter-- WHAT you are selling or giving up (I wan't to sell my watch)
--Parties- have to be able to tell who the parties are-- who's the offeror and who's the offeree
--Date of Exchange-Have to know when I'm going to give you the watch and when you'll give me the money
--Financial terms- Payment over time? Interest? Etc. |
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Term
| Special Problem Areas of Communication |
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Definition
Advertisements- are NOT offers- they are invitations for offers
Rewards- Generally treated as offers. EX. David goes home after class and his wife is gone. So he decides to go to the newspaper and publishes an ad, "$5000 reward to return wif." Sunday, he rethigns things and decides he doesn't want his wife returned. Next day a guy shows up at the door and has his wife. we have moved from a regular advertisement to a reward.
--You accept by doing the act
--They must reward..
Auctions: Since the offers are so quick, it is often difficult to determine the actual offeror and offeree. General rule determines that the BIDDER is the OFFEREE and the SELLER is the OFFEROR
Without reserve auction: The BIDDER is the OFFEREE and the SELLER is the OFFEROR
With reserve auction:(REVERSE)
The BIDDER is the OFFEROR and the SELLER is the OFFEREE |
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Term
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Definition
Lapse of Time
Terms of the Offer
Revocations of Bilateral
Time of Effectiveness of Revocations
Rejections
Destruction of the Subject Matter |
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Term
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Definition
After a long period of time, the offer expires
September 29,2010- "I'll sell you my watch for $50"
Accept October 15, 2035
If the offer is gone, this "acceptance" is really a new offer |
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Term
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Definition
If terms are changed, the offer is terminated
Ex. "I'll sell you my watch for $50, this is good until Oct. 1, 2010"
--Offeree accepts on Oct. 9, 2010
---This is NOT acceptance, the original offer is terminated.
---It becomes a NEW offer (b/c the original offer disappeared on Oct. 1) |
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Term
| Time of effectiveness of revocations |
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Definition
Offer for a bi-lateral (promise for a promise) contract may be revoked by the offeror any time prior to acceptance
Revocation is effective when received |
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Term
| Offers for Unilateral (promise for an act) Contracts and performance has begun |
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Definition
If offeree has started to perform the requested act BEFORE offeror revokes, must be given reasonable opportunity to complete the act
Ex. Make an offer to, @ 11o'clock, climb to the top of the bell tower, in my bathing suit, cluck like a chicken, for 5 minutes-- I'll give you $1,000.
--I decide to do it, and I get there and there are 200 other people with t.v. stations
--Contract was accepted by doing the act
--37 seconds left, he picks up the bull horn and says, "I'll withdraw the offer"
--Is this allowed?
--No, b/c I have to do the act for 5 minutes and must be given ample time to do so after I started |
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Term
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Definition
Simply choosing to not accept an offer
Ex. "I'll sell you my watch for $50.
--8/20/10-- "No thanks"
--9/30/10-- "I accept the offer"<--- new offer is NOT acceptance
--If the offer was rejected, the offer is gone |
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Term
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Definition
Simply choosing to not accept an offer
Ex. "I'll sell you my watch for $50.
--8/20/10-- "No thanks"
--9/30/10-- "I accept the offer"<--- new offer is NOT acceptance
--If the offer was rejected, the offer is gone |
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Term
| Destruction of the subject matter |
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Definition
Makes the offer go away
Ex.
June 1--" I'll pay you $1000 to paint my house
June 4-- The house is destroyed
June 6-- "I accept the contract"
Prior to acceptance, the subject matter of contract is destroyed; offer terminated; the offer ends when the subject matter is destroyed. |
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Term
| When do you officially have acceptance? |
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Definition
There has to be an OFFER
INTENT to accept the offer
On TERMS proposed by the offeror
COMMUNICATED acceptance |
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Term
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Definition
| Am I really intending to accept this offer? |
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| Terms proposed by offeror (in acceptance) |
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Definition
| Term's can't change, otherwise it is a NEW offer, not acceptance |
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Definition
It is not about HOW it's communicated, it's about WHEN it was communicated.
Driven by a TIME or a DATE |
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Definition
--"Sell you my watch; $50; exchange on 10/3/10 at Bank Midwest in Maryville
--We have a valid offer ON THESE TERMS
--"I accept; will buy your watch; pay $50; exchange on 10/4/10 at First Bank in Maryville"
--Did he accept the contract?
---NO, because he changed the terms (date and location) |
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Term
| Common Law Intent to Accept: Mirror Image Rule |
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Definition
Acceptance must be
an IDENTICAL match
Otherwise, NEW OFFER
ex. Can't accept the offer if David shows up to pay me if he's wearing a superman outfit when the terms were for him to show up in a spiderman costume.
(NOT THE SAME RULES FOR UCC) |
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Term
| Intent to Accept: Battle of the Forms Rule (UCC) |
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Definition
Designed to make the creation of contracts easier
A contract may be formed
Even if there is a variance or change
UCC acceptance Ex.
"I'll sell you my car for $5000; exchange on 10/3/10
-"I accept, I'll buy the car; Pay $5000; but do it on 10/4/10, when I get paid"
(In COMMON LAW we DON'T have a contract but in UCC we do UNLESS:
--Offer forbids any change or modification
--Materially changes the offer (would it make a difference?)
--Offeror objects within reasonable time |
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Term
| Under the UCC, if terms change, the contract is valid UNLESS: |
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Definition
-Offer forbids any change or modification
-Materially changes the offer (does it make a difference?); Wouldn't have entered into the contract if you had known that; price is ALWAYS material; cannot have acceptance if you change the price
-Offeror objects within reasonable time |
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Term
| Operation of the "Mailbox rule" under the common law |
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Definition
Acceptance of the
authorized means
is valid when dispatched or sent
If you decide to accept by an unauthorized means, effictive upon RECEIPT if the offer is still open.
If it never arrives- there is no acceptance |
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Term
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Definition
The way you can accept or respond to an offer
Ex.
-"Authorized means is"--mail, carrier pigeon, fax
-"You MAY accept by"-- (still indicates authorized means)
If it DOESN'T tell you, the authorized means is the way the offer was made
Ex. Offer sent by mail; authorized means is mail- if you accept by authorized means the acceptance is valid when sent |
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Term
| If you accept by authorized means, when is the acceptance valid? |
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Definition
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Mailbox Rule Example: Offer made June 18 by fax; "may accept by mail" (C/L)
-Bill accepts June 22 by mail and it is received on the 24th
-Carol accepts June 20 and uses deliveryman and it arrives on the 23rd
-Derek accepts June 21 by mail but it never gets there
-Ed accepts June 20th by carrier pigeon and arrives on June 29th
Did they Accept by authorized means?
What day is the acceptance valid? |
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Definition
-Bill: Yes, 22nd
-Carol: NO, 23rd
-Derek: Yes, 21st
-Ed: NO, 29th
Derek wins b/c he was first in time; doesn't matter if it was within authorized means or not |
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Term
| Operation of the "mailbox rule" under the UCC |
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Definition
| Unless the offer states the authorized means, any REASONABLE means of communication/ acceptance is effective when DISPATCHED/SENT |
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Mailbox Rule Example: Offer made June 18th by Fax (UCC)
-Bill accepts June 22 by mail and it is received on the 24th
-Carol accepts June 20th and uses deliveryman; it arrives on the 23rd
-Derek accepts June 21 by mail but it never gets there
-Ed accepts June 20 by carrier pigeon and arrives on June 29th
Do they accept under reasonable means?
What date are they valid? |
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Definition
Bill: Yes, 22nd
Carol: NO, 20th
Derek: Yes, 21st
Ed: NO, 29th
Carol Wins |
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Term
| Stipulated Means of Communication |
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Definition
It is MANDATORY (it is the ONLY way you can accept)
Acceptance by a stipulated means is effective upon dispatch
Ex. The ONLY acceptance is by carrier pigeon and it was sent by mail; NO acceptance |
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| Acceptance in Unilateral Contracts |
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Definition
Accept by DOING THE ACT
Acceptance complete performance of the requested act
Ex.
Offer? Tonight
Contract? Tonight
Acceptance? When act is completed
Must give reasonable time after acceptance is begun |
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Term
| Elements of Consideration |
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Definition
It is NOT the payment of money
You must either giving or giving up
Something of legal value
in exchange for an act or promise
Ex.
David: "I'll give you my shoestring for $100." Me: "Okay"
Contract: Yes
Consideration: No (i'm giving nothing up) |
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Term
| Adequacy of Consideration |
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Definition
Paying more for something than it's worth
Courts generally do not consider this issue
Not concerned with actual value |
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Term
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Definition
Doesn't mean you don't have a contract, it just means you can't count these
-Preexisting duties
-Past consideration (consideration from a previous contract) |
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Definition
Doesn't mean you don't have a contract, it just means you can't count these
-Preexisting duties
-Past consideration (consideration from a previous contract) |
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Definition
Agreeing to perform
a pre-existing duty
is not consideration
(if it is something they are already required to do)
Ex.
Fireman can't personally charge me for putting a fire out in my house |
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| Pre-existing contractual duty |
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Definition
Modify an existing contract
must have new consideration
to be enforeable |
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Definition
Pay same amount or less (NOT CONSIDERATION)
Pay more- (CONSIDERATION)-(ex. pay more in contract 2 than in contract 1)
Pay earlier- (CONSIDERATION) |
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Term
If authorized means says: Mail, when is acceptance valid under:
C/L:
UCC:
Offer is sent by mail but doesn't state authorized means; offer is valid under:
C/L:
UCC: |
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Definition
If authorized means says: Mail, when is acceptance valid under:
C/L: Mail- accepted when sent
UCC: Mail- accepted when sent
Offer is sent by mail but doesn't state authorized means; offer is valid under:
C/L: Mail- accepted when sent
UCC: any reasonable means- accepted when sent
(if not reasonable; accepted when received) |
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