Contract Law: Offers and Termination

Offers: Elements

• There are five essential elements to an offer.
• These include serious intent by the offeror to be bound, reasonably definite terms, and communication to the offeree.
• The offeror's outward manifestation of intent is what matters, not their internal feelings.
• Courts interpret words and actions as a reasonable person would.
• All material terms must be included in the contract.
• Communication must be open and directed to the offeree or their agent.

Offers: Termination

• An offer can be terminated for five reasons.
• Termination can occur due to revocation by the offeror, rejection/counteroffer by the offeree, death/incapacity of the offeror, illegality, or lapse of time.
• The offeror can revoke the offer at any time, as they are the master of the contract. Revocation is effective upon receipt by the offeree, ideally hand-delivered.
• An offer cannot be revoked if the offeree has detrimental reliance on it, invoking promissory estoppel. In that case courts can prevent the revocation.
• The offeree can reject the offer, terminating it immediately, but cannot later change their mind.
• A counteroffer from the offeree terminates the original offer and creates a new one.
• The offer terminates immediately upon the offeror's death.
• The offer terminates immediately if the subject matter is destroyed or becomes illegal.
• If the offer specifies an expiration time, it terminates then; otherwise, it terminates after a reasonable time.

Acceptance: Elements

• Acceptance elements should mirror the offer's elements.
• These include manifestation of intent, definite and certain terms, and communication to the offeror.
• Offeree can show intent through performance or a return promise.
• The offeree must demonstrate intent through actions or words.
• The mirror image rule applies to bilateral contracts, requiring the acceptance terms to mirror the offer terms exactly.
• The offeror controls the means of communication and should specify the preferred method; otherwise, any form is acceptable.

Acceptance: Mailbox Rule

• The mailbox rule states that acceptance is valid when the offeree puts the acceptance in the mailbox.
• Revocation is effective only when received by the offeree.
• A promise has to actually be a promise for it to be enforcable.

Consideration: Elements

• Consideration is what a person receives in return for performing a contract obligation.
• Consideration types include a benefit to the promisee, a detriment to the promisor, a promise to do something, or a promise to refrain from doing something.
• Bilateral contracts require a promise for a promise.
• Unilateral contracts involve one party's promise as consideration and the other party's act as consideration.
• Promissory estoppel is the legal enforcement of an otherwise unenforceable contract due to one party's detrimental reliance, requiring a promise that the promisor should reasonably expect to induce reliance, actual reliance by the other party, and injustice avoidable only by enforcing the promise.
• Courts generally do not care if someone has made a "good" bargain or not
• Past consideration is no consideration.
• Performing a pre-existing duty is not good consideration.
• Partial payment of debt may or may not be valid consideration.
• In a liquidated debt there is no disagreement about money owed or how much, you are obligated to pay off your debt in full
• In unliquidated debt, the parties disagree about the money owed and how much.
• Accord and satisfaction which must meet these three requirements: the debt is unliquidated, the CREDITOR accepts payment as less than what was originally required to be owed, and the debtor pays the amount agreed upon.
• ACCORD means new agreement and SATISFACTION is the amount paid

Capacity & Legal Object: Minors

• Minors can enter into voidable contracts, but emancipated minors have full legal capacity.
• Contracts entered into by minors can be voided until they reach majority age or within a reasonable time afterward.
• Only the minor has the right do disaffirm their contract
• Minors can disaffirm the entire contract with an expression of intent and notification to the competent party.
• Minors cannot disaffirm contracts for life insurance, health insurance, counseling, education loans, marriage contracts, enlisting contracts, etc.
• Minors can ratify contracts after reaching the age of majority through express or implied actions.
• Express ratification involves oral or written agreement to be bound.
• Implied ratification occurs when the minor takes action to show intent to be bound.
• Parents typically aren't liable for their children's contracts unless they cosign, but are required to provide necessities.
• Parents may or may not be liable for a minor's torts, depending on the state.

Capacity & Legal Object: Intoxication

• Contracts entered into by intoxicated individuals are generally voidable, with exceptions.
• If intoxication causes poor judgment, contracts are voidable unless the other party exploited that poor judgement.
• When sober, an intoxicated person can ratify or disaffirm the contract made while under the influence.
• The contract will not be voidable if the other party did not know they were intoxicated

Capacity & Legal Object: Generally

• Contracts must have legal subject matter and be capable of legal performance to be enforceable.
• Contracts violating state or federal law are void.
• Severable contracts with both legal and illegal parts will have the illegal parts voided, while the rest remains valid.

Legal Assent: Mistake

• One or both parties may be mistaken about the contract.
• A mistake of fact is an erroneous belief about the contract facts at the time of conclusion.
• Unilateral mistakes (made by one party) are generally not void unless one party knew of the mistake and took advantage, the mistake was caused by clerical error, or the mistake is outrageous.
• Mutual mistakes (made by both parties) allow either party to rescind the contract, given a basic assumption about the subject matter, a material effect on the agreement, and an adverse effect on a party that did not agree to bear the risk.

Legal Assent: Misrepresentation

• Misrepresentation is an untruthful assertion of a material fact.
• Innocent misrepresentation involves unknowingly spreading false material facts, allowing the misled party to rescind but not sue for damages.
• Negligent misrepresentation involves a false statement about a material fact that could have been proven false with reasonable care, allowing the misled party to rescind and sue for damages.
• Fraudulent misrepresentation is a consciously false statement of material fact intended to mislead, requiring a false statement about a past or existing material fact and intent to deceive.
• Fraudulent misrepresentation can also arise from concealment, not just assertion of fact.

Legal Assent: Duress

• Duress arises when one party is forced into an agreement by the wrongful act of another party.
• Duress occurs when one party threatens physical harm, threatens a criminal lawsuit, or threatens another's economic interests to gain consent.

Legal Assent: Unconscionability

• Cases where one party had much more bargaining power

Statute of Frauds: Generally

• The Statute of Frauds is state legislation that addresses the enforceability of contracts that don't meet its requirements.
• This statute eases contract negotiations by demanding reliable evidence.
• Prevents unreliable oral evidence from interfering with agreements.
• Prevents parties from entering into contracts they don’t agree to

Statute of Frauds: Elements

• Contracts that fall under the Statute of Frauds include those whose terms prevent performance within a year, promises made in consideration of marriage, contracts of one party to pay another's debt, and contracts involving interest in land.
• Contracts exceeding $500 for the sale of goods must have a written agreement stating the buyer, seller, price, and payment method.
• Exceptions to the Statute of Frauds include admission (a statement made in court), partial performance (significant improvement on a piece of land), and promissory estoppel (detrimental reliance on the contract).
• The Parol Evidence Rule states that oral evidence made before or as the contract was being finalized is not taken into consideration.

Damages & Equitable Remedies: Purpose

• A party can be discharged after performance indicated in a contract is completed, or happening of a condition, fail for it to occur, material breach, agreement of parties, or operation of law
• Conditional contracts contain conditions affecting the performance obligations of parties.
• A condition precedent is a particular event that must arise for a party's duties to arise.
• A condition subsequent is a future event that terminates a party's duties.
• Concurrent conditions occur when a party's performance is conditioned on another.
• Express conditions are stated in the contract and use conditional phrases.

Damages & Equitable Remedies: Types of damages

• Monetary damages include compensatory, consequential, punitive, nominal, and liquidated damages.
• Compensatory damages aim to put the plaintiff in the position they would have been in if the contract had been fully performed.
• Consequential damages are foreseeable damages resulting from special facts and circumstances outside the contract.
• Punitive damages punish and deter the defendant from repeating the behavior.
• Nominal damages are awarded when no actual damages resulted.
• Liquidated damages are specified in the contract as compensation for a breach.

Explore the essential elements of an offer in contract law, including intent, definite terms, and communication. Learn about offer termination through revocation, rejection, death, illegality, and lapse of time. Understand the conditions under which an offer can be terminated.