1. Describe the formation of binding contract. Consider each of the elements involved.
Define: legally binding agreement between two parties who agree to/not perform now/future
Function: provide stability, predictability, certainty (social implications)
Contract: con – tract = to go along together
Requirements for valid contract:
Agreement: offer and acceptance
Consideration: something of value received/promised
Contractual Capacity: competent parties
Legality: legal, not against public policy
Defense of Enforcement: genuineness of assent (not fraud, mistake) & form (in writing)
Types:
Bilateral: “promise for a promise”; no performance needed
Unilateral: “promise for an act”; offeree can accept offer by completing performance
Unenforceable Contract: ex. oral real estate contract (must be in writing)
Offer:
Requirements:
- Offerer must be serious
o Intention: must be objective
NOT offers: opinions, future intents, advertisements (offer to negotiate), auctions (offer for you to make offer)
- Terms must be certain
- Must be communicated
Termination Aspects:
- Revocation: if not yet accepted, offerer can withdraw if communicated
- Irrevocable Offers:
o An Option: pay offerer to keep open offer
o Detrimental Reliance: the offeree relies on an offer to his detriment
o Promissory Estoppel: offeror is barred from revoking the offer
- Offeree rejects offer OR counter-offers
- Offer dies when…
o Elapse of time: specified or reasonable
o Subject matter destroyed before acceptance
o Offerer/Offeree dies
o Superceding illegality
Acceptance:
Requirements:
- Unequivocal acceptance; definite, certain
- Agree with offer; cannot change terms
Acceptance by silence (instead offeree acts)
Communication of acceptance is key
- Communication is required in bilateral contract
- Communication is unnecessary as the act is the acceptance in unilateral contract
Time
- Accepted in reasonable time
- Mailbox rule
Reasonable...