Contract Law Exam Study Guide: Updated A+ Score
Guide Solution
Predominant Purpose Test - ANSWERWhether a particular transaction is governed by
the UCC rather than CL hinges on the predominant purpose of the transaction
whether the k primarily concerns the furnishing of goods or rendering of services.
3 factors of the predominant purpose test - ANSWER(1) language of the K, (2) the
nature of the business of the supplier and (3) the intrinsic worth of the materials.
[language of K is least important factor]
Mutual Assent - ANSWER[did they intend for their agreement to have legal, binding
effect]: for a contract to be formed, the parties must both intend to contract, and
they must agree on at least the main terms of the deal.
subjective theory of contracts and mutual assent - ANSWERmeeting of the minds
that looks at actual intention of the party rather than the party's conduct
objective theory of contracts and mutual assent - ANSWERa party's intentions are
measured by what a reasonable person in the position of the other party would have
thought the first party intended based on their conduct and statements.
Offer - ANSWERthe manifestation of willingness to enter into a bargain, which
justifies another person in understanding that his assent can conclude the bargain.
An offer is something that creates the power of acceptance.
Preliminary Negotiation - ANSWERA party desiring to reach a contract may make a
statement which is not an offer but rather a solicitation of an offer with the other
party
Such statements cannot be accepted
exchanging communications of a more or less detailed nature about the type of
exchange of performances to which each would be willing to agree
RST2§26: - ANSWERa manifestation of willingness to enter into a bargain is not an
offer if the person to whom it is addressed knows or has reason to know that the
person making the manifestation does not intend to conclude a bargain until the
maker has made a further manifestation of intent.
RST2§26(b) on advertisements - ANSWERin newspapers, magazines, etc. are not
offers but merely invitations for an offer. To make an offer by advertisement there
must ordinarily be some language of commitment or some invitation to take action
without further communication.
,How to make an advertisement an offer - ANSWERdefinite, specified
number/quantity, "first come first serve". Look at variables in pyramid.
exceptions to advertisement as not an offer - ANSWER(1) if there is a particular
number of units to sell or they will be sold in a particular manner, there may be an
offer. Lefkowitz v. Great Minneapolis Surplus Store: Mink coat case
(2) If an offer is conveyed by the objective reading of an advertisement, it does not
matter that the advertiser may subjectively not intended it to constitute a binding
offer (Izadi)
(3) Unilateral advertisements have been held to constitute offers where they invite
the performance of a specific act without further communication and leave nothing
for negotiation. [Sateriale v. Reynolds]
Price Quotes - ANSWERIt is a frequent business practice for one person to request a
'quote' from another.
Price Quote is typically an invitation to the buyer to submit an offer [prelim.
negotiation]
Sometimes, a price quote could be an offer if there is a clear quantity, addressed to a
particular person, and is called the offer. However, if it reserves to the proposer the
power to close the deal, it is not an offer.
Seller Response to an Inquiry - ANSWERIf a seller responds to an inquiry from a
customer about whether the seller has a particular quantity of items for delivery at a
particular time, the seller's response with details of what she has for sale is likely to
contain enough to be an offer.
Offers Made in Jest - ANSWERAn offer which the offeree knows or should know is
made in jest is not a valid offer. Thus, even if it is accepted, no k is created. (Lucy v.
Zehmer)
RST1§45 - ANSWERprovides protection to the offeree against revocation of an offer
to enter into a unilateral contract when the offeree has relied on the offer by
beginning the requested performance [Cook v. Caldwell banker]
Baird v. Gimbel Bros. [sub old rule] - ANSWERpromissory estoppel could not apply,
because there was no binding promise of an irrevocable offer and there was no
consideration for such a promise. Nor was court willing to treat subs bid as an option
Drennan & RST2§87 [sub new rule] - ANSWERSub bound to do work at the price
quoted to general contractor, but the general contractor is not bound to award job
to sub even if GC gets job.
,Limitations to Drennan Rule - ANSWERIf offeror subcontractor makes explicit that it
is freely revocable, then court will respect that in most cases.
Court on application of mistake doctrine harm falls on the party who made the
mistake unless the party knew or had reason to know of the mistake
bid shopping [trying to find another subcontractor who will do the work more
cheaply while continuing the claim that the original bidder is bound] and bid
chopping [attempt to renegotiate with the bidder to reduce the price] are mitigating
factors
Offeree Reliance on Unaccepted Offer - ANSWERSituation: no option contract.
Nonetheless, offeree delays accepting, in the belief that the offeror will not revoke
his offer, and in the mean-time takes various actions in reliance on her expectation
that offer will remain open.
Old, Minority Rule: Promissory estoppel claim must be based on a clear and definite
promise
Majority Rule Pop's Cones/Hoffman Case [low bargain power]: a promise or offer will
be sufficient for a promissory estoppel claim without any heightened requirements
of proof.
Acceptance - ANSWERAfter an offer is made, the offeree now has the 'power of
acceptance.' With this power the offeree can (1) accept (2) make a counter offer (3)
reject (4) offer can terminate
RST2§58 (or 57) - ANSWERan acceptance must be unequivocal and unqualified in
order for a contract to be formed (Beastie Boys).
RST2§29: - ANSWERAn offer may be accepted only by a person in whom the offeror
intended to create a power of acceptance.
Acceptance by Silence (classical doctrine) - ANSWER"he who is silent does not give
his consent"
RST2§69: acceptance by silence - ANSWERsilence by the offeree rarely amounts to
acceptance, but in some limited circumstances an offeree's silence may result in
formation of a contract.
Ok if parties mutually agreed silence=assent
Course of dealing
Someone takes offered services with a reasonable opportunity to reject them, and it
is reasonable for the person to understand that services are offered with expectation
of payment
, Counter Offer - ANSWEROffer made by an offeree to his offeror relating to the same
matter as the original offer and proposing a substituted bargain differing from that
proposed by the original offer.
The offeree's power of acceptance created by an offer will be terminated when there
is a counter offerRST2§36. A counter offer is simultaneous rejection + new offer.
Mirror Image Rule [Classical Contract Law] - ANSWERif an offeree's acceptance is not
the mirror image of the offer it is essentially a counteroffer and not an acceptance so
not valid contract - acceptance cannot add anything to the offer. (If say "I accept
and..." then have rejected the offer)
Counter Offer RST2§39 - ANSWER(1) same matter as the original offer but proposing
a substituted bargain
(2) An offeree's power of acceptance is terminated by his making of a counteroffer,
unless the offeror has manifested a contrary intention or unless the counteroffer
manifests a contrary intention of the offeree.
Qualified Acceptance - ANSWERa 'varying acceptance' = counter-offer
Comment a RST2 §59: BUT a definite and seasonable expression of acceptance is
operative despite the statement of additional or different terms if the acceptance is
not made to depend on assent to additional or different terms. See §61.
The additional or different terms are then to be construed as proposals for
modification of the contract. See UCC §2207(2)
Last Shot Rule [Classical Doctrine]- - ANSWER.
(mere performance is assent to all terms in the counter offer)
A party impliedly assented to and thereby accepted a counter-offer by conduct
indicating lack of objection to it. [usually favors seller] Princess Cruises. &RST2§19
Method of Acceptance - ANSWEROfferor is the master of his offer and may prescribe
the method by which it may be accepted.
(even the right to suspend mailbox rule)
Acceptance Method Unspecified - ANSWERIf the offer does not specify the mode of
acceptance, the acceptance may be given "in any manner and by any medium
reasonable in the circumstance" RST2§30(2)
If promise OR performance invited, offeree can choose RST2§32.
Acceptance by Performance - ANSWERIf offeror's offer proposes that the offeree
accept by performing an act, rather than by making a promise. Such an offer looks to
a unilateral contract.
Guide Solution
Predominant Purpose Test - ANSWERWhether a particular transaction is governed by
the UCC rather than CL hinges on the predominant purpose of the transaction
whether the k primarily concerns the furnishing of goods or rendering of services.
3 factors of the predominant purpose test - ANSWER(1) language of the K, (2) the
nature of the business of the supplier and (3) the intrinsic worth of the materials.
[language of K is least important factor]
Mutual Assent - ANSWER[did they intend for their agreement to have legal, binding
effect]: for a contract to be formed, the parties must both intend to contract, and
they must agree on at least the main terms of the deal.
subjective theory of contracts and mutual assent - ANSWERmeeting of the minds
that looks at actual intention of the party rather than the party's conduct
objective theory of contracts and mutual assent - ANSWERa party's intentions are
measured by what a reasonable person in the position of the other party would have
thought the first party intended based on their conduct and statements.
Offer - ANSWERthe manifestation of willingness to enter into a bargain, which
justifies another person in understanding that his assent can conclude the bargain.
An offer is something that creates the power of acceptance.
Preliminary Negotiation - ANSWERA party desiring to reach a contract may make a
statement which is not an offer but rather a solicitation of an offer with the other
party
Such statements cannot be accepted
exchanging communications of a more or less detailed nature about the type of
exchange of performances to which each would be willing to agree
RST2§26: - ANSWERa manifestation of willingness to enter into a bargain is not an
offer if the person to whom it is addressed knows or has reason to know that the
person making the manifestation does not intend to conclude a bargain until the
maker has made a further manifestation of intent.
RST2§26(b) on advertisements - ANSWERin newspapers, magazines, etc. are not
offers but merely invitations for an offer. To make an offer by advertisement there
must ordinarily be some language of commitment or some invitation to take action
without further communication.
,How to make an advertisement an offer - ANSWERdefinite, specified
number/quantity, "first come first serve". Look at variables in pyramid.
exceptions to advertisement as not an offer - ANSWER(1) if there is a particular
number of units to sell or they will be sold in a particular manner, there may be an
offer. Lefkowitz v. Great Minneapolis Surplus Store: Mink coat case
(2) If an offer is conveyed by the objective reading of an advertisement, it does not
matter that the advertiser may subjectively not intended it to constitute a binding
offer (Izadi)
(3) Unilateral advertisements have been held to constitute offers where they invite
the performance of a specific act without further communication and leave nothing
for negotiation. [Sateriale v. Reynolds]
Price Quotes - ANSWERIt is a frequent business practice for one person to request a
'quote' from another.
Price Quote is typically an invitation to the buyer to submit an offer [prelim.
negotiation]
Sometimes, a price quote could be an offer if there is a clear quantity, addressed to a
particular person, and is called the offer. However, if it reserves to the proposer the
power to close the deal, it is not an offer.
Seller Response to an Inquiry - ANSWERIf a seller responds to an inquiry from a
customer about whether the seller has a particular quantity of items for delivery at a
particular time, the seller's response with details of what she has for sale is likely to
contain enough to be an offer.
Offers Made in Jest - ANSWERAn offer which the offeree knows or should know is
made in jest is not a valid offer. Thus, even if it is accepted, no k is created. (Lucy v.
Zehmer)
RST1§45 - ANSWERprovides protection to the offeree against revocation of an offer
to enter into a unilateral contract when the offeree has relied on the offer by
beginning the requested performance [Cook v. Caldwell banker]
Baird v. Gimbel Bros. [sub old rule] - ANSWERpromissory estoppel could not apply,
because there was no binding promise of an irrevocable offer and there was no
consideration for such a promise. Nor was court willing to treat subs bid as an option
Drennan & RST2§87 [sub new rule] - ANSWERSub bound to do work at the price
quoted to general contractor, but the general contractor is not bound to award job
to sub even if GC gets job.
,Limitations to Drennan Rule - ANSWERIf offeror subcontractor makes explicit that it
is freely revocable, then court will respect that in most cases.
Court on application of mistake doctrine harm falls on the party who made the
mistake unless the party knew or had reason to know of the mistake
bid shopping [trying to find another subcontractor who will do the work more
cheaply while continuing the claim that the original bidder is bound] and bid
chopping [attempt to renegotiate with the bidder to reduce the price] are mitigating
factors
Offeree Reliance on Unaccepted Offer - ANSWERSituation: no option contract.
Nonetheless, offeree delays accepting, in the belief that the offeror will not revoke
his offer, and in the mean-time takes various actions in reliance on her expectation
that offer will remain open.
Old, Minority Rule: Promissory estoppel claim must be based on a clear and definite
promise
Majority Rule Pop's Cones/Hoffman Case [low bargain power]: a promise or offer will
be sufficient for a promissory estoppel claim without any heightened requirements
of proof.
Acceptance - ANSWERAfter an offer is made, the offeree now has the 'power of
acceptance.' With this power the offeree can (1) accept (2) make a counter offer (3)
reject (4) offer can terminate
RST2§58 (or 57) - ANSWERan acceptance must be unequivocal and unqualified in
order for a contract to be formed (Beastie Boys).
RST2§29: - ANSWERAn offer may be accepted only by a person in whom the offeror
intended to create a power of acceptance.
Acceptance by Silence (classical doctrine) - ANSWER"he who is silent does not give
his consent"
RST2§69: acceptance by silence - ANSWERsilence by the offeree rarely amounts to
acceptance, but in some limited circumstances an offeree's silence may result in
formation of a contract.
Ok if parties mutually agreed silence=assent
Course of dealing
Someone takes offered services with a reasonable opportunity to reject them, and it
is reasonable for the person to understand that services are offered with expectation
of payment
, Counter Offer - ANSWEROffer made by an offeree to his offeror relating to the same
matter as the original offer and proposing a substituted bargain differing from that
proposed by the original offer.
The offeree's power of acceptance created by an offer will be terminated when there
is a counter offerRST2§36. A counter offer is simultaneous rejection + new offer.
Mirror Image Rule [Classical Contract Law] - ANSWERif an offeree's acceptance is not
the mirror image of the offer it is essentially a counteroffer and not an acceptance so
not valid contract - acceptance cannot add anything to the offer. (If say "I accept
and..." then have rejected the offer)
Counter Offer RST2§39 - ANSWER(1) same matter as the original offer but proposing
a substituted bargain
(2) An offeree's power of acceptance is terminated by his making of a counteroffer,
unless the offeror has manifested a contrary intention or unless the counteroffer
manifests a contrary intention of the offeree.
Qualified Acceptance - ANSWERa 'varying acceptance' = counter-offer
Comment a RST2 §59: BUT a definite and seasonable expression of acceptance is
operative despite the statement of additional or different terms if the acceptance is
not made to depend on assent to additional or different terms. See §61.
The additional or different terms are then to be construed as proposals for
modification of the contract. See UCC §2207(2)
Last Shot Rule [Classical Doctrine]- - ANSWER.
(mere performance is assent to all terms in the counter offer)
A party impliedly assented to and thereby accepted a counter-offer by conduct
indicating lack of objection to it. [usually favors seller] Princess Cruises. &RST2§19
Method of Acceptance - ANSWEROfferor is the master of his offer and may prescribe
the method by which it may be accepted.
(even the right to suspend mailbox rule)
Acceptance Method Unspecified - ANSWERIf the offer does not specify the mode of
acceptance, the acceptance may be given "in any manner and by any medium
reasonable in the circumstance" RST2§30(2)
If promise OR performance invited, offeree can choose RST2§32.
Acceptance by Performance - ANSWERIf offeror's offer proposes that the offeree
accept by performing an act, rather than by making a promise. Such an offer looks to
a unilateral contract.
