Contract Law: Offer and Acceptance

Offer and Acceptance

• Offeror: Party making the offer
• Offeree: Party receiving the offer
• Offers can be revoked if a "meeting of the minds" isn't reached during negotiations.
• Precise offers increase the likelihood of valid contracts.
• All terms and conditions must be clearly specified. Include an expiration date that explicitly states "time is of the essence".
• Without an expiration date, acceptance must occur within a reasonable time, which varies.
• Offerees can accept, counter, reject, or ignore offers.
• Acceptance is unconditional agreement to all terms, counteroffers change terms thus reversing the roles of offeror and offeree.
• Acceptance must be by the same method (oral/written) as the offer.
• Unilateral offers are accepted through performance.
• Real estate contracts require written acceptance with delivery.
• Oral communication can be constructive notice, creating binding contracts.
• Electronic signatures are legally equivalent to handwritten ones (since 2000).

Acceptance Details

• Counteroffers are a rejection and a new offer.
• Modifications to an offer are counteroffers, not acceptances.
• Terminations of an offer can arise due to acceptance, counteroffer, rejection, expiration, revocation, death/incapacity, destruction of subject property, improper acceptance.
• Revocation is possible until acceptance is communicated.
• A contract's formation occurs when acceptance is communicated.

Contract Conditions

• Contract conditions (action, deed, event) affect a party's performance obligations.
• Condition precedent: Must happen before performance.
• Condition concurrent: Occurs simultaneously.
• Condition subsequent: Ends an obligation.
• "Time is of the essence" and deadlines affect contractual duties.

Condition Classifications

• Express condition: Explicitly stated in the contract.
• Implied condition: Implied by law.
• Constructive condition: Enforced by courts for fairness.

Contract Language

• Precise language (e.g., "when," "if," "unless") regarding conditions is crucial.
• Courts interpret ambiguous contract language in favor of the non-drafting party.

Contract Preparation

• Contract laws vary by state; some require pre-printed forms.
• Addenda add new information, amendments change existing information.
• Fill in all blanks, clearly stating "n/a" for inapplicable ones.
• Support for electronic records and signatures.
• Avoid creating contracts from scratch without legal guidance.

Court Interpretation

• Courts do not correct invalid contracts.
• Courts only consider the written document (four corners rule).
• Courts examine parties' intentions (during creation).
• Courts interpret ambiguous language in favor of the non-drafting party.

Contract Legal Status

• Valid contract: Meets essential elements for legal enforcement.
• Unenforceable contract: Potentially valid but lacks legal force.
• Void contract: Invalid from inception, lacks legal effect.
• Voidable contract: Potentially valid but one or more parties can rescind.

Implied Contracts

• Established by actions, not explicit documents.
• Legally binding like express contracts.
• Examples: Doctor visits, restaurant meals, taxi rides, barber services.
• Social conventions play a role.
• Professionals clarify implied contract terms (e.g., posted rates).

Express Contracts

• Explicitly stated intentions and expectations of parties.
• All terms and conditions are agreed upon.
• Opposite of implied contracts.
• Common in real estate (listing agreements, sales contracts).
• Easier to seek damages if a party doesn't perform.
• Written form is crucial for resolving disputes.

Bilateral Contracts

• Both parties make promises to perform actions.
• Creates reciprocal obligations.
• Common in business transactions.

Unilateral Contracts

• One party makes a promise in exchange for an action by the other party.
• The second party isn't obligated but can accept.
• Two parties, but one promise.
• Offeror is obligated upon acceptance.
• Lack mutuality.

Executed Contracts

• All terms are fulfilled by both parties.
• Ceases to exist after fulfillment.
• No further legal power to bind parties.

Executory Contracts

• Not fully performed.
• Identifies a contract's completion stage.
• Usually aims to be fully executed.
• Courts are less inclined to entertain arguments about a breach of a non-complete contract.
• Ongoing contracts are an exception; arguments about breach can arise at any time.
• Oral real estate agreements (not considered executory).

Contract Classifications

• Express, implied, unilateral, bilateral, executory, executed.

Legal Status of Contracts

• Valid, void, voidable, unenforceable.

Valid Contracts

• A valid contract meets all legal requirements, ensuring binding agreement.

Void Contracts

• Void contracts lack legal standing, even if parties intended fulfillment.

Voidable Contracts

• A voidable contract allows one or more parties to cancel without penalty (in specific circumstances).

Unenforceable Contracts

• Valid but enforcement is prohibited (statute of frauds, limitations).

Statute of Frauds

• Some contracts must be written to be enforceable under state law.
• Examples in Pennsylvania include real estate contracts, property conveyance, leases exceeding a year, and agent compensation.
• Prevents fraud with oral contracts, does NOT prevent contract validity.

Statute of Limitations

• Sets time limits for legal actions.
• Pennsylvania: Four years after a breach or default.
• Circumstances can influence these time limits.

Doctrine of Laches

• Courts refuse dated claims due to unreasonable delay in asserting legal rights.
• Case-specific; differs from statute of limitations.

Essential Elements of a Valid Contract

• Offer and acceptance (mutual agreement).
• Consideration (something of value exchanged).
• Legally competent parties (of legal age and mental capacity).
• Reality of consent (agreement made willingly without fraud).
• Lawful objective (contract's purpose is legal).

Additional Considerations

• Types of fraud (actual, constructive)
• Types of mistakes (fact, law).
• Possibility of contract completion; supervening illegality.