Contract Formation and UCC vs Common Law
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What must be established for a valid offer according to the principles of contract law?

  • It should be communicated verbally.
  • It must include a specific time frame.
  • It must leave room for negotiation.
  • It must contain reasonably certain terms. (correct)

    • Under what condition is a contract considered irrevocable by the offeror in accordance with option contracts?

  • When the offeree begins to perform as part of the agreement. (correct)
  • When a reasonable time has passed since the offer was made.
  • When the offer is accepted verbally.
  • When the offeror receives a counteroffer.

    • In which situation might silence be interpreted as acceptance of an offer?

  • The offeree performs the offered services and does not reject them, knowing payment is expected. (correct)
  • The offeree has rejected the offer but subsequently agrees verbally.
  • The offeree asks for more information but does not respond subsequently.
  • The offeree’s silence is explicitly stated as acceptance in the offer.

    • What is required for a valid contract to be formed, according to the common law principles?

    <p>An offer, acceptance, and consideration must all be present.</p> Signup and view all the answers

    Under which circumstances is a contract NOT enforceable due to the Statute of Frauds?

    <p>An oral agreement for the sale of real estate.</p> Signup and view all the answers

    What must be established for a contract to be valid under Common Law?

    <p>Consideration is required.</p> Signup and view all the answers

    Which of the following would constitute a quasi-contract?

    <p>A situation where one party benefits at another's expense without a contractual agreement.</p> Signup and view all the answers

    What primarily distinguishes an acceptance from a counteroffer under the mirror image rule?

    <p>An acceptance must unconditionally agree to the exact terms of the offer.</p> Signup and view all the answers

    Which of the following represents an excuse to perform under a contract?

    <p>The inability to obtain necessary materials due to unforeseen circumstances.</p> Signup and view all the answers

    Which statement best captures the implications of Rule 2-207 regarding responses to offers?

    <p>A response that includes additional terms can still be an acceptance.</p> Signup and view all the answers

    In what scenario can a contract still be enforceable despite some terms being left open?

    <p>If the parties have intended to form a contract with the open terms serving as placeholders.</p> Signup and view all the answers

    What action does NOT contribute to terminating an offer?

    <p>Acceptance of the offer by the offeree.</p> Signup and view all the answers

    What best describes 'manifestation of mutual assent' in contract formation?

    <p>Actions or words that clearly show agreement can confirm a contract formation.</p> Signup and view all the answers

    Under what circumstances is an offer irrevocable under the concept of an option contract?

    <p>When a separate contract with consideration exists to keep the offer open for a specified time.</p> Signup and view all the answers

    What must happen for an offer to be considered accepted under the Restatement of Contracts?

    <p>The offeree must manifest assent in a manner invited by the offer.</p> Signup and view all the answers

    In the case of unilateral contracts, when is acceptance achieved?

    <p>When the offeree begins performance of the requested act.</p> Signup and view all the answers

    Which of the following accurately describes a firm offer according to UCC 2-205?

    <p>An offer made by a merchant in a signed writing that assures it will be held open for a maximum of three months.</p> Signup and view all the answers

    What happens to the power of acceptance if the offeror dies before the offer is accepted?

    <p>The offer automatically becomes void.</p> Signup and view all the answers

    Under what condition can silence and inaction be treated as acceptance of an offer?

    <p>When the offeror explicitly states silence signifies acceptance.</p> Signup and view all the answers

    What happens if an offeree learns about an offer after beginning to perform the requested act?

    <p>The offeree may accept by completing the requested performance.</p> Signup and view all the answers

    Which of the following statements regarding the necessity of notification upon acceptance by performance is true?

    <p>Notification is not needed unless the offer explicitly requests it.</p> Signup and view all the answers

    When an offeree partially performs a request that does not specify acceptance methods, what is created?

    <p>An option contract that requires completion of the performance.</p> Signup and view all the answers

    What is required for an offeree's performance to effectively operate as an acceptance where an offer invites both performance and promise?

    <p>The beginning of the invited performance suffices as acceptance.</p> Signup and view all the answers

    What occurs when an offeree accepts an offer by rendering a performance?

    <p>The underlying contract becomes valid upon completion of the performance.</p> Signup and view all the answers

    Which of the following can discharge the duty of the offeror when the offeree accepts by performance?

    <p>The performance is not adequately communicated to the offeror.</p> Signup and view all the answers

    Under UCC 2-207, additional terms in an acceptance are treated how between merchants?

    <p>They are considered proposals to add to the contract unless certain exceptions apply.</p> Signup and view all the answers

    What principle states that conflicting terms from both parties' documents do not become part of a contract?

    <p>Knock Out Rule</p> Signup and view all the answers

    What does reliance on an offer typically protect in the context of contract law?

    <p>The offeree from unexpected revocation after changing their position.</p> Signup and view all the answers

    What is required for a contract to be deemed formed under 2-207(1)?

    <p>A definite and seasonable expression of acceptance by the offeree</p> Signup and view all the answers

    Under section 2-207(2), when both parties are merchants, how are additional terms in the acceptance treated?

    <p>They become part of the contract unless they materially alter its terms.</p> Signup and view all the answers

    Which situation would result in the use of the knock-out rule according to 2-207?

    <p>Both parties present conflicting terms in their writings.</p> Signup and view all the answers

    When a contract's acceptance contains different terms from the original offer, what must be determined under section 2-207(3) if one party is not a merchant?

    <p>If the additional terms are significant enough to be considered a counter-offer.</p> Signup and view all the answers

    How does a material alteration of terms affect a contract when both parties are merchants under section 2-207(2)?

    <p>The altered terms are removed and replaced with gap fillers.</p> Signup and view all the answers

    Under UCC, what action is taken when two parties' writings contain conflicting terms during contract formation?

    <p>Conflicting terms cancel each other and UCC gap fillers apply.</p> Signup and view all the answers

    How does the UCC treat terms that are left open or uncertain in a proposed contract?

    <p>They indicate that a manifestation of intention may not be a valid offer or acceptance.</p> Signup and view all the answers

    Which of the following is NOT a requirement for consideration to be present in a contract?

    <p>At least one party must derive profit from the exchange.</p> Signup and view all the answers

    In a case of mutual misunderstanding where both parties attach materially different meanings to a term, what is the outcome under R2d20?

    <p>No contract is formed due to lack of mutual assent.</p> Signup and view all the answers

    What must be demonstrated to establish reliance on a promise leading to enforceable quasi-contract obligations?

    <p>The promise must induce some action or forbearance by the promisee.</p> Signup and view all the answers

    Study Notes

    Contract Formation

    • Contract: A legally enforceable agreement creating foreseeable obligations and legal remedies.
    • Purpose: Provides assurances in life, allowing for predictable relationships.
    • UCC (Uniform Commercial Code) vs. Common Law: Used to determine which set of rules applies. UCC applies to tangible, movable goods; common law for everything else. If both apply, prioritize the more prominent aspect of the contract.
    • Formation Steps (General):
    • Has a contract been formed? (offer, acceptance, consideration)
    • What are the material terms? (essential pieces of the agreement)
    • Have the material terms been performed?
    • Has performance been excused?
    • Has there been a breach of material terms?
    • Remedies for breach
    • Quasi-contract and remedies

    Key UCC and Common Law Definitions

    • "Goods": Movable items in a sales contract, excluding money, securities, and certain intangible items. Includes unborn animals and growing crops.
    • "Merchant": Person who regularly deals in goods of a certain type or holds themselves out as having specific knowledge/skill in a transaction.

    Case Example: Lucy v Zehmer

    • UCC/Common Law: Common law applied because land is involved (not movable).
    • Formation Issues: Contract formed despite one party's claimed lack of intent. Objective outward expression (signing) trumps subjective intent.
    • Objective Theory of Contracts: A contract is formed based on the outward expressions of intent, not the hidden thoughts of the parties involved.
    • Mutual Assent: Both parties must understand that they're entering into a legally binding agreement.

    Contract Formation: Elements

    • Offer: A clear statement of willingness to enter into a bargain, inviting acceptance.
    • Acceptance: Manifestation of agreement to the terms of the offer.
    • Consideration: Something of value exchanged between the parties (promise, act, forbearance). Generally required under common law. Not required under UCC for sale of goods.

    Offer Termination

    • Rejection/Counteroffer: Offeree rejects or proposes different terms.
    • Revocation: Offeror retracts the offer before acceptance.
    • Direct Revocation: Explicitly stating the withdrawal of the offer.
    • Indirect Revocation: Offeror's actions communicating the offer is no longer available. (Example: Dickinson v. Dodds)
    • Lapse of Time: Offer expires due to a passage of time (stated or implied).
    • Death/Incapacity: Offeror or offeree dies or becomes incapacitated.

    Acceptance

    • Mailbox Rule: Acceptance is effective upon dispatch (mailing) unless otherwise specified.
    • Mirror Image Rule (Common Law): Acceptance must mirror the offer exactly; any change is treated as a counteroffer and rejection of the original offer.
    • UCC 2-207 (Battle of the Forms): A response with additional or different terms is typically an acceptance, unless express conditioning on those terms.

    Battle of the Forms (UCC 2-207)

    • Additional Terms: Treated as proposals; become part of the contract unless they materially alter it, are specifically rejected, or the offer expressly limits acceptance to its original terms.
    • Different Terms: "Knock-out Rule": Conflicting terms cancel each other; UCC gap fillers are used instead.
    • Conduct Recognizing Contract (2-207(3)): If writings don't form a contract, conduct showing agreement is enough for formation.
    • Key: Determining whether additional or different terms are part of the contract, considering if between merchants.

    Misunderstanding

    • R2d20: Parties attach different meanings to material terms, often leading to no contract if both know about the different meanings, or a court determining the meaning from an innocent misunderstanding.
    • Importance of Language: Carefully consider words to avoid ambiguity in terms.

    Consideration

    • R2d71: Something of value must be exchanged for a promise or performance. A performance or return promise must be bargained for.
    • Illusory Promises: Promises without any real commitment; unenforceable (no consideration).
    • Past Consideration: Does not count as consideration; something done before the current agreement.
    • Modifications: Generally do not need consideration under the UCC. (R2d89 & 2-209)

    Statute of Frauds (MY LEGS)

    • Common law and UCC requirements for certain types of contracts to be in writing, including:
    • Marriage
    • Years (performance exceeding a year)
    • Land
    • Executor (answering for a decedent's debt)
    • Goods over $500 (UCC 2-201)
    • Surety (answering for another's debt)

    Fraud and Misrepresentation

    • R2d164: Misrepresentation (fraudulent or material) inducing assent makes the contract voidable.
    • Fraud: Intentional misrepresentation.
    • Material Misrepresentation: Misrepresentation likely to induce a reasonable person to enter into the contract, even if unintentional.
    • Non-disclosure: Can be considered a misrepresentation in specific circumstances.

    Capacity, Duress, Undue Influence

    • Lack of Capacity: Certain groups (minors, mentally impaired) may have their Ks deemed voidable (or unenforceable).
    • Duress: Contract entered due to wrongful threat, leaving no reasonable alternative.
    • Undue Influence: Persuasion overcoming free will; often involve exploitation of a vulnerable position.

    Illegality, Unconscionability, and Mistake

    • Illegality: Contracts with illegal subject matter are void.
    • Unconscionability: Extremely unfair contract terms, making the contract voidable. (R2d208 & 2-302)
    • Mistake: A belief not in accord with the facts; can render a contract voidable (mutual or unilateral).

    Interpretation of Contracts

    • R2d203: Interpretation preferences (reasonableness, lawful meaning, etc.)
    • R2d206: Interpretation against the draftsman, favor reasonable meaning, not harsh meaning.

    Warranties (UCC)

    • Express Warranties (2-313): Explicit statements or promises made by the seller.
    • Implied Warranties: Not stated but assumed to be part of the contract.

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    Description

    This quiz explores the essential aspects of contract formation, including the differences between the Uniform Commercial Code and Common Law. It covers the steps involved in forming a contract, the definitions of key terms, and remedies for breaches. Test your understanding of legally enforceable agreements and their implications.

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