Contracts, Prof. Andersen, Fall 2015
Governed by Article 2 of UCC?
Was offer still in effect at moment of acceptance?
Rejection or counter-offer?
Time lapse
Subject matter is destroyed?
Did acceptance vary from the offer?
Sale of goods governed by UCC?
Consideration or valid substitute?
Parol evidence?
Defenses to contract formation and enforcement?
Does Statute of Frauds apply?
Misrepresentation or Fraud?
Public Policy?
Conditions (if any) have been satisfied or excused?
Issues of third-party beneficiaries?
Does the UCC apply?
The UCC is much more tolerant of what constitutes a contract than is the common law.
Was a contract formed?
A contract is a promise or set of promises, for the breach of which the law gives a remedy, and the performance of which the law in some way recognizes as a duty. RSC § 1.
Unilateral or bilateral contract?
A unilateral contract is one in which the offeror requests performance rather than a promise, and an offer may be withdrawn at any time prior to completion of performance, except once performance begins an option contract is created that is conditional on the offeree’s completion of performance in accordance with the terms of the offer. The offeree is not obligated to finish, but completion of performance is how he accepts an offer to a unilateral contract. When an offer is from a unilateral contract, beginning performance is acceptance and there is no need to communicate that you are performing for the contract to come into existence. Giving notice is not part of acceptance when you accept by performance. You have no obligation to complete the performance, but if you don’t then the other party is discharged.
Important Question to Keep in Mind:
Did partial performance begin, or was there merely a PREPARATION for performance? Remember, preparation for performance doesn’t trigger §45 in creating an option contract.
The traditional bilateral contract is one consisting of the exchange of mutual promises—i.e. a promise for a promise—in which each party is both a promisor and a promisee. A bilateral contract is one in which which the offeror requests a promise from the offeree to obligate himself. Typically, this is done with words—orally or in writing—but it is possible if the offeror invites it, to communicate your acceptance by performance, which if you do, you are binding yourself to perform. Your performance operates as a promise. When an offer is from a bilateral contract where the offeror asks the offeree to accept by rendering a performance (), there is no need to communicate that you are performing for the contract to come into existence. Giving notice is not part of acceptance when you accept by performance. However, if you don’t finish, then you have breached your promise and the other party is discharged. When the offer is for a bilateral contract and you accept by express promise with words, spoken or written, notice is an essential part of the acceptance.
Manner of Acceptance
Unilateral Contract
Bilateral
Words
No
Yes
Performance
Partial performance locks in the offer, but carries no implied promise (acceptance).
Yes, if so invited by the offer. And if you begin performance, then it is an implied acceptance or promise
Was there mutual assent?
The conduct of a party is not effective as a manifestation of his assent unless he has reason to know that the other party may infer from his conduct that he assents. Manifestations of assent that are in themselves sufficient to conclude a contract will not be prevented from so operating by the fact that the parties also manifest an intention to prepa
such an agreement has been made then parties are obligated to negotiate in good faith (otherwise they are not, at least in American law). An agreement to negotiate requires intent and some sort of reasonably certain or definite terms by which one may know if there is a breach to the contract (e.g. behavior term which states they must not divulge information they learn and/or must only exclusively negotiate with the other party during that period of time).
Was there a promise to contract, or merely a manifestation of willingness to contract?
Identified Offeree
Definite Terms that are Reasonably Certain
Is there a basis for determining the existence of a breach and for giving an appropriate remedy?
If the offer doesn’t include a time element for how long the offer is good, then a reasonable time will be determined. In face-to-face conversations this has been determined to be until the close of the conversation, after which it cannot be accepted.
The 7 essential terms of an offer at common law:
Subject Matter
Work to be done
Payment terms
If a term is missing, it can be reasonably implied by the court—except quantity, which must be supplied. The UCC is even more liberal, providing only that the parties manifest their intent to be bound, and that there is a reasonably certain basis on which to apply a remedy. UCC §2-204(3). The only absolutely essential term is quantity. The more terms that are left open, the less likely it is the parties intended to form a contract.
