Contracts Hypo Notes - WIP Flashcards
Under Article 2, when an offeree proposes additional or different terms during acceptance, the court will apply __________ to determine whether the additional or different terms become part of the contract.
The battle of forms provision.
The BoF provision of Article 2 lists specific rules for determining what terms are included in a contract when the terms of acceptance do not match the terms of the offer.
Article 2 has abandoned the mirror image rule, which requires an absolute and unequivocal acceptance of each and every term of the offer.
Under Article 2, when an offeree proposes additional or different terms as part of an otherwise valid acceptance, the acceptance __________.
Is effective, unless the acceptance is expressly made conditional on assent of the additional different terms.
Article 2 battle of the forms provision provides that the proposal of additional or different terms by the offeree in a definite and timely acceptance is effective as an acceptance, unless the acceptance is expressly made conditional on assent to the additional or different terms. Whether the additional or different terms become part of the contract depends on whether or not both parties are merchants.
Under the Article 2 battle of the forms provision, whether additional or different terms proposed by the offeree during acceptance ultimately become part of a contract depends on whether or not __________.
Both parties are merchants.
Which of the following best states the result when, in a contract between merchants for the sale of goods, the acceptance does not match the terms of the offer?
Additional terms that do not materially alter the original terms of the offer will be included in the contract, but different terms may be knocked out of the contract.
A letter of revocation of an offer becomes effective at the moment it is __________.
Received by the offeree.
At common law, a written communication is considered to have been “received” when it comes into the possession of the person addressed (or of someone authorized by him to receive it) or when it is deposited in some place authorized as the place for this or similar communications to be deposited.
A letter of acceptance of an offer becomes effective at the moment it is _________.
Dispatched. (The Mailbox Rule)
Under the mailbox rule, if the offeree dispatches an acceptance before he receives a revocation sent by the offeror, a contract is formed.
If a rejection letter is dispatched first, following by a change of heart and an acceptance letter, which rule applies?
The Mailbox Rule DOES NOT apply when rejection is mailed before acceptance. In this case, whichever is received first controls.
What is the relation between the Mailbox Rule and option contracts?
Mailbox Rule does not apply to option contracts. An acceptance under an option contract is effective only upon receipt.
If acceptance is not received within the time stated under the option contract, the offer is terminated.
A merchant who offers to buy or sell goods in a signed writing that gives assurances that the offer will be held open is offering:
A merchant’s firm offer.
Under Article 2, a merchant’s firm offer arises when a merchant offers to buy or sell goods in a signed writing that gives assurances that the offer will be held open. If no specific time frame is stated in the offer, a merchant’s firm offer will remain open for a reasonable time (but in no event may such period exceed three months).
What is an option contract?
An option contract is a distinct contract in which the offeree gives consideration for a promise by the offeror not to revoke an outstanding offer for a period of time.
What is an offer for a unilateral contract?
One that can be accepted only by full performance.
Note that the beginning of performance may create an option so that the offer is irrevocable. However, the offeree is not obligated to complete performance merely because he has begun performance, as only complete performance constitutes an acceptance of the offer.
What is a confirmatory memo?
A method of satisfying the SoF in contracts between merchants. The rule states that if one party, within a reasonable time after an oral agreement has been made, send to the other party a written confirmation of the understanding that is sufficient under the SoF to bind the sender, it will also bind the recipient if:
1) He has reason to know of the confirmation’s contents, and
2) He does not object to it in writing within 10 days of receipt.
What is required for a merchant’s firm offer under Article 2?
A written assurance signed by the offeror.
An option contract is a distinct contract in which __________ a promise not to revoke an outstanding offer.
…an offeree gives consideration for…
An offer normally can be revoked at will by the offeror. An option contract is a distinct contract in which an offeree gives consideration for a promise by the offeror not to revoke an outstanding offer.
What is the difference between a firm offer and an option contract?
An option contract requires that the offeree give consideration to keep the option open, whereas a merchant’s firm offer does not (only requires written assurance)
When a contractor is under a contractual duty to construct a building and the building is destroyed by an act of nature while it is still a work in progress, the destruction __________.
Will not discharge the contractor’s duty to perform, but will extend the date of performance.
A building that is the subject of a contract between its owner and a contractor is completely destroyed by an act of nature.
If the contractor was working on a renovation, the destruction _____________; if the contractor was constructing the building, the destruction ________________.
Discharges the contractor’s duties by impossibility; does not discharge the contractor’s duties.
When is a contractual duty to perform discharged without fault from either party?
When there is an OBJECTIVE impossibility of performing (no one could have performed).
No discharge if there is only a subjective impossibility (defendant could not have performed), because steps could have been taken to remedy and prevent breach.
What happens if, during the duration of a contract for the sale of goods, the goods are destroyed?
If the risk of loss has not yet passed to the buyer, the buyer avoids the contract and doesn’t have to pay.
Risk of loss for a nonmerchant buyer does not pass to the buyer until tender of the goods purchased.
What is the preexisting legal duty rule?
The promise to perform, or the performance of, an existing legal duty is not consideration.
How can one avoid the preexisting legal duty rule?
By modifying the original consideration slightly.
Courts are anxious to avoid the preexisting duty rule, which states that the promise to perform, or the performance of, an existing legal duty is not consideration. Thus modifying the original consideration, even slightly, is generally enough to avoid the rule.
What would be sufficient consideration for a promise by a creditor to discharge an existing debt?
An alternative method of payment, such as payment in a different medium, payment to one other than the creditor, or payment before maturity.
When the proposed consideration is in any way new or different (e.g., an alternative method of payment), there is usually sufficient consideration to change a preexisting duty, such as discharging an existing debt.
Generally speaking, a promise to perform an existing legal duty is _____________.
Not consideration.
A promise to perform an existing legal duty is not valuable consideration, unless an exception to the preexisting legal duty rule applies, e.g., new or different consideration is promised, or a minor’s ratification of a voidable contract upon reaching the age of majority.
Past consideration, which is also not sufficient consideration, is based on something already given or performed, not a promise to perform based on a preexisting legal duty.
