(M-Ks1) Formation & Interpretation

1) Offer, and an acceptance of that offer;
2) Consideration or a substitute;
3) Legal capacity of the parties ; and
4) A legal objective.

A consensual agreement that fails to express the agreement of the parties in its entirety.
Example: To pay "reasonable value" of services rendered or of goods delivered where price is not discussed by the parties in advance.

An equitable imposition of a would-be contract.
Arises when one party bestows a benefit on the other.

An implied-in-Iaw obligation is also commonly referred to as a quasi-contractual obligation or a restitutionary obligation. The party conferring the benefit is entitled to collect the fair value of the services rendered.

If necessary services are rendered to a person at a time when he lacks the mental capacity to request such services (e.g., a surgeon who perfo rms emergency surgery on an unconscious patient), there is an implied-in-Iaw contract to pay for them.

1) an outward manifestation that
2) signals that acceptance will conclude the deal.

The general rule for auctions is that the auctioneer is inviting offers, and the responsive bids are the offers . The exception to this rule is where the auction is "without reserve ." In that situation , the auct ioneer is making an offer to sell to the highest bidder.

1) Lapse of time;
2) Death or incapacity of either party;
3) Revocation by offeror;
4) Rejection by offeree.

Offeror: Revoke

Offeree:
1) Accept
2) Reject
3) Counteroffer
4) Inquiry

The supervening death of either the offeror or the offeree will terminate the power of acceptance with respect to the offer.

The offeror is free to revoke an outstanding offer, terminating the offeree's power eof acceptance, at any time and for any reason, so long as the revocation occurs prior to acceptance and is effectively communicated.

Unilateral contracts - Real estate brokerage agreements

When an offer is made by advertisement in a newspaper or other general notification to the public or some segment thereof, the power of acceptance is terminated when the notice of revocation is communicated by advertisement or other general notification equivalent to that used for the offer and no better means of notification is reasonably available (Functional Equivalents Rule).
In such a case, a particular offeree loses the power of acceptance even if he is utterly unaware of the revocation.

1) an offer;
2) a subsidiary promise to keep the offer open;
3) some valid mechanism for securing enforcement of the subsidiary promise (i.e., consideration ).

Majority Rule: IF a general contractor uses a particular subcontractor's bid to formulate his own, THEN an implied contract is created via promissory estoppel.
This prevents the subcontractor from revoking the bid despite the fact that the subcontractor hasn't promised to keep the bid open nor has the general contractor provided any consideration to keep the bid open.

A merchant can make a firm offer (an irrevocable offer) to either buy or sell goods without consideration so long as
1) the offer is made by a merchant,
2) the offer is made in writing and is signed by the merchant , and
3) the offer expressly states by its terms that it will be held open.

A counteroffer made on the same subject matter operates to simultaneously reject the initial offer.

An offeree may test the waters by making a "mere inquiry" about the offeror's willingness to negotiate without creating a counteroffer and terminating the power of acceptance

An offer seeking performance in return is an offer to enter into a unilateral contract.
Under a unilateral contract, the offeror is bound only when the offeree completes performance.
The offeree is never bound to perform because she has never promised to do so.

The offeror offers to pay a reward for the successful performance of some act.

A promise by the owner of real estate to pay a fee in exchange for the actual sale of the property, which would constitute performance .
In a real estate brokerage agreement, the offer is automatically revoked by the seller's acceptance of an offer to purchase the property from a buyer not produced by the broker.

The modern rule is that once the offeree begins performance, an option contract is created and the offeror may not revoke.

Unilateral Contract: Offeror makes an offer that calls for performance
Looking for action

Bilateral Contract: Offeror and offeree exchange mutual promises
Looking for promise

Acceptance MUST
1) mirror the terms of the offer (under the mirror image rule), AND
2) be communicated to the offeror.

Acceptance must be on the same terms as the offer. Any changes, additions, or subtractions from the terms of the offer operate to make the attempted acceptance a "counteroffer" which, in legal terms, is a rejection of the offer and the making of a new offer.

Generally, an offeree 's silence in response to an offer cannot constitute acceptance.

1) where the offeree takes the benefit of the offeror 's services with a reasonable opportunity to reject them and with reason to know the offeror's intention;
2) where the offeror has given the offeree reason to understand that acceptance may be communicated by silence , the offeree 's silence will operate as acceptance if she intends as such; and
3) where because of previous dealings or other circumstances, it is reasonable that the offeree should notify the offeror if he does not intend to accept, his silence will operate as acceptance.

The offeree must know of the offer in order to accept. Thus, when offers cross in the mail, there is no contract.

In two situations the UCC rejects the common-law mirror image rule and recognizes a binding contract, despite the presence of non-conforming acceptance
1) the shipment of non-conforming goods AND
2) the so-called "battle of the forms. "

IF a contract is formed by an offer followed by a nonconforming acceptance (an acceptance containing terms that are "additional to or different from" those in the offer)
THEN the treatment of additional or different terms depends on the identities of the parties.

The "additional or different" terms that appear in the acceptance are not part of the contract and are instead mere proposals for addition to the contract, which the other party is free to accept or reject.

The additional and different terms are considered part of the terms of the contract unless they meet one of three exceptions in which case the terms are excluded from the contract:
1) the offer expressly limits acceptance to the terms of the offer, for instance, 'This order expressly limits acceptance to the terms stated herein";
2) the additional terms would materially alter the contract, as a provision negating warranties would; or
3) the offeror objects to the additional terms within a reasonable time.

Mistake is when a party or parties made a faulty assumption about the present circumstances, and thus enter a contract on that basis .

Occurs when only one party to the contract is operating under a faulty assumption about material facts as they exist at the time of contracting.
Unilateral mistake does not excuse the mistaken party's contractual duty to perform, unless the other party knew or had reason to know of the party 's mistake, or the mistake was based on a clerical error.

Occurs when both parties have labored under a common faulty assumption regarding the present facts.
The contract will be voidable by the disadvantaged party where both parties were mistaken, and the disadvantaged party does not bear the risk of mistake under the part ies' agreement.

The default rule for a missing price term is a reasonable price at the time established by the contract for the delivery of goods.

The party entitled to determine the particular quantity of goods to be sold - either the buyer demanding delivery of his requirements or the seller demand ing purchase of her output - must make that determination in good faith.

Extrinsic evidence of trade usage or of a course of dealing will be available as an additional means of filling contractual gaps or resolving contractual ambiguities.

IF parties have
1) adopted a writing as their agreement, AND
2) intend that the writing represent their full agreement,
THEN no evidence can be admitted to ALTER, VARY,or CONTRADICT the writing.

Evidence is admissible to EXPLAIN, SUPPLEMENT, or INTERPRET the writing.

General policy - courts are liberal in allowing PE to show the parties attached a special meaning to a term.

Fraud
Mistake
Illegality
Duress
Partial Integration
Conditions precedent

The parol evidence rule does not apply to agreements entered into subsequent to the execution of the written document, so evidence of such agreements would be admissible.

Despite the inapplicability of the parol evidence rule to subsequent agreements, evidence of such agreements may be barred by the inclusion of a "no oral modifications" clause in the original agreement.

Under the UCC, clauses prohibiting subsequent oral modifications are presumptively valid.
An oral modification made in violation of such a clause may nevertheless be enforceable if the disadvantaged party relies on the modification or the parties perform in accordance therewith.

Parol evidence is admissible to explain or interpret the terms of a written contract or ambiguous terms.
Parol evidence is admissible to show that the parties used words in a nontraditional manner or spoke in code.

Evidence that the parties
1) orally agreed to a condition precedent to the contract taking effect, and
2) further evidence that the condition failed,
would not be barred by the parol evidence rule, where both parties' obligations would be discharged by the failure of that condition.

Evidence that the written agreement was formed from mistake, fraud, or duress may be admissible to prove that there was never a contract.