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Flashcards in this deck (20)
  • What must parties manifest for a contract to be valid?

    • Agreement consideration
    • Contractual capacity
    • Consideration
    • Legality
    contracts elements
  • What are the three elements of an effective offer?

    • Serious intention to be bound
    • Reasonably certain or definite terms
    • Communication to the offeree
    offers formation
  • How is serious intent in an offer determined?

    By what a reasonable person in the offeree's position would conclude from the offeror's words and actions.

    offers intent
  • How do statements made in anger, jest, or undue excitement affect serious intent?

    Offers made in obvious anger, jest, or undue excitement do not meet the serious-objective intent test and are ineffective.

    offers intent
  • What principle was held in Lucy v. Zehmer?

    A person cannot claim mere jest when their words and conduct would lead a reasonable person to believe they intended a real agreement.

    cases intent
  • Name five situations where intent to offer may be lacking.

    • Expressions of opinion
    • Statements of future intent
    • Preliminary negotiations
    • Invitations to bid
    • Advertisements and price lists
    offers exceptions
  • Why must offer terms be reasonably definite for courts?

    So the court can ascertain the contract terms and determine if a breach occurred and provide an appropriate remedy.

    offers remedies
  • What does the communication element of an offer require?

    The offer must be communicated to the offeree.

    offers communication
  • When can an offeror revoke an offer by default?

    Unless otherwise stated, the offeror can revoke the offer if the revocation is communicated to the offeree before acceptance.

    revocation offers
  • What two ways may revocation be accomplished?

    • Express repudiation of the offer
    • Performance of acts inconsistent with the offer made known to the offeree
    revocation offers
  • What is the mirror-image rule?

    Acceptance must match the offer exactly; any change or addition terminates the offer and substitutes a counteroffer.

    acceptance mirror-image
  • What effect does a counteroffer have on the original offer?

    A counteroffer is a rejection of the original offer and simultaneously makes a new offer.

    counteroffer offers
  • List four ways an offer can be terminated by operation of law.

    • Lapse of time
    • Destruction of the specific subject matter
    • Death or incompetence of offeror or offeree
    • Supervening illegality of the proposed contract
    termination offers
  • What happens to an offer if the offeror or offeree dies before acceptance?

    The offer is automatically terminated if the specific subject is destroyed or if death or incompetence occurs before acceptance.

    termination offers
  • When does an offer terminate if the subject matter is destroyed before acceptance?

    The offer terminates if the matter of the offer is destroyed before acceptance.

    termination offers
  • How does the death or legal incapacity of a party affect the offeree's power of acceptance?

    The offeree's power of acceptance is terminated when the offeror or offeree dies or is legally incapacitated, unless the offer is irrevocable.

    termination incapacity
  • What constitutes acceptance in normal negotiations?

    Acceptance is a voluntary act by the offeree that shows assent to the terms of an offer.

    acceptance contracts
  • In what forms may acceptance occur?

    Acceptance may consist of words or conduct.

    acceptance forms
  • What requirements must acceptance meet to be valid?

    Acceptance must be unequivocal and must be communicated to the offeror.

    acceptance requirements
  • What is required to form a contract via an online offer according to the notes?

    Formation via an online offer requires acceptance of the terms and conditions.

    online contracts
Study Notes

Chapter 12 — Agreement

Overview

  • A valid contract requires agreement, consideration, capacity, and legality.

1. Elements of an Offer

  • An effective offer must meet three requirements:
  • Serious intent by the offeror to be bound.
  • Definite terms so parties and a court can determine obligations.
  • Communication of the offer to the offeree.

Serious intent

  • Determined by what a reasonable person in the offeree's position would conclude from the offeror's words and actions.
  • Statements made in obvious jest, anger, or undue excitement typically lack serious intent and are not offers.

Case: Lucy v. Zehmer (holding)

  • A party cannot claim they were only joking if their words and conduct would lead a reasonable person to believe a genuine agreement existed.

Situations where intent is lacking (not offers)

  • Expressions of opinion — no intent to bind.
  • Statements of future intent — plans or intentions to act later, not offers.
  • Preliminary negotiations — willingness to discuss, not an offer.
  • Invitations to bid — invitation to submit offers; actual bids are offers.
  • Advertisements and price lists — usually treated as invitations to negotiate, not offers.
  • Live and online auctions — solicit bids; bids are offers.

2. Definite Terms and Court Enforcement

  • Contracts must have reasonably definite terms (expressed or reasonably inferred) so a court can identify breaches and award remedies.
  • Essential terms depend on context (subject, price, parties, quantity, time).

3. Communication of the Offer

  • The offer must be communicated to the intended offeree before acceptance can occur.

4. Revocation of an Offer

  • An offeror may revoke an offer any time before acceptance, provided the revocation is communicated to the offeree.
  • Revocation can be made by:
  • Express repudiation (clear statement withdrawing the offer).
  • Inconsistent performance that is made known to the offeree (acts showing the offer no longer exists).
  • Exceptions: irrevocable offers (e.g., option contracts) cannot be revoked during the stated irrevocable period.

5. Mirror-Image Rule

  • Acceptance must exactly match the terms of the offer.
  • Any change or addition is treated as a rejection and simultaneous counteroffer.

6. Counteroffers

  • A counteroffer rejects the original offer and creates a new offer.
  • The original offeror (now offeree) can accept or reject the counteroffer; no contract exists until acceptance.

7. Termination by Operation of Law

An offer ends automatically by these events: 1. Lapse of time (expiration as stated or after a reasonable time). 2. Destruction of the specific subject matter before acceptance. 3. Death or incompetence of offeror or offeree (unless the offer is irrevocable). 4. Supervening illegality that makes performance unlawful.

8. Effect of Death or Incompetence Before Acceptance

  • If the subject matter is destroyed or a party dies/becomes legally incapacitated before acceptance, the offer terminates automatically unless it is irrevocable.

9. Acceptance: When It Becomes Effective

  • Acceptance is a voluntary act (words or conduct) showing assent to the offer's terms.
  • Requirements for valid acceptance:
  • Unequivocal assent to the terms (no material changes).
  • Communication of acceptance to the offeror, unless the offer authorizes performance as acceptance.

10. Online Offers and Acceptance

  • Forming a contract online requires clear acceptance of terms and conditions.
  • Clickwrap (explicit "I agree") generally creates binding acceptance; browsewrap (terms available by link) may be less enforceable unless notice is sufficient.

Quick Study Tips

  • Ask: Has there been a serious offer, clear acceptance, consideration, capacity, and legality?
  • Use Lucy v. Zehmer to test whether behavior would mislead a reasonable person.
  • Remember the mirror-image rule: any change usually produces a counteroffer.
  • Know the four automatic termination events (time, destruction, death/incompetence, illegality).