Objective Theory of Contracts Flashcards

Formation of Contracts

• A contract requires mutual assent and consideration to form.
• Mutual assent is demonstrated through an offer and acceptance.

Offers

• An offer indicates a willingness to enter a bargain that invites acceptance.
• R2d 24 defines an offer as a manifestation that justifies the other party's belief in a binding agreement.

Acceptance

• Acceptance is the offeree's assent to the offer, as per R2d 50, and must mirror the original offer.
• Acceptance can occur in any reasonable manner unless specified otherwise.

Termination of Acceptance

• Acceptance can be terminated by rejection, counteroffer, lapse of time, revocation, or death/incapacity.
• Under an option contract, acceptance remains valid even after rejection or counteroffer; only time can terminate it.

Mailbox Rule

• Acceptance is effective upon mailing, not upon the other party’s receipt.

UCC Provisions

• UCC 2-205: Firm offers by merchants, made in signed writing, cannot be revoked during the stated time or for a reasonable period (max three months) without consideration.
• UCC 2-207 allows for acceptance of additional or differing terms unless explicitly conditioned upon assent.

Misrepresentation

• A contract is voidable if consent is induced by fraudulent or material misrepresentation.
• Key elements of misrepresentation include the existence of a misrepresentation and reliance on it by the affected party.

Mistakes

• Mutual mistake arises when both parties share a false belief regarding a fundamental assumption, rendering a contract voidable if it materially affects the exchange.
• Unilateral mistake involves one party's error, significant to the agreement, where the other party is aware of the mistake.

Statute of Frauds

• The statute requires certain contracts to be in writing: land sales, suretyships, contracts not performable in one year, and sales of goods over $500.
• Exceptions include the main purpose rule and reliance for promises expected to induce action, even if unwritten.

UCC 2-201 Writing Requirements

• A valid written contract must include a quantity term, be signed by the charged party, and indicate that a contract exists.

Merchants' Exception to UCC 2-201

• A written confirmation sent by a merchant constitutes acceptance of an oral contract unless objected to in writing within 10 days.

Additional Concepts

• Promissory estoppel enforces a promise expected to induce action, preventing injustice.
• An illusory promise fails to restrict the promisor's actions or obligations effectively.
• UCC 2-306 outlines good-faith outputs or requirements in contracts with defined quantities.

Influence and Duress

• Undue influence occurs when one party unfairly persuades another under their domination or expectations of welfare.
• Duress involves wrongful acts that compel a party to act against their free will, including traditional violence and economic pressures.

Non-disclosure and Concealment

• Non-disclosure involves failing to reveal material facts that the party had a duty to disclose, which the other party relied upon to their detriment.
• Concealment includes active efforts to hide facts from another party, causing reliance and damage due to the omission.

Test your understanding of the objective theory of contracts with these flashcards. Each card highlights key concepts such as mutual assent and the definition of an offer. Perfect for law students or anyone interested in contract law.