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What means may be used for acceptance?
Any reasonable means may be used unless the offer unambiguously limits acceptance to particular means.
What is the mailbox rule?
If acceptance is by mail or similar means it is effective upon dispatch if properly addressed and stamped.
What are the limitations on the mailbox rule?
1) Does not apply if the offer stipulates that acceptance is not valid until received. 2) Does not apply if an option contract is involved.
What happens if the offeree sends a rejection and an acceptance?
Whichever arrives first is effective.
What happens if the offeree sends an acceptance and then a rejection?
The acceptance is effective unless rejection arrives first and the offeror detrimentally relied upon it.
What happens if acceptance is transmitted by unauthorized means?
It is effective if actually received by the offeree while the offer is still open. * *i.e., no mailbox rule.
Under what circumstance may an offer be accepted without communication?
An executory contract may be formed without communication where 1) there is an express waiver of communication in the offer; 2) the offer requires an act as an acceptance; OR 3) the offer silently take the offered benefits.
What is the role of consideration?
A contract is only enforceable if supported by consideration or a substitute.
What are the 2 elements of consideration?
1) Bargained-for-exchange 2) Legal value
What constitutes a bargained-for -exchange?
The parties must exchange promises in bilateral contract or a promise for an act in unilateral contract.
Is there a bargain involved when one party gives a gift?
No. But an act or forbearance by the promisee will be sufficient if it benefits the promisor.
Must the exchange have economic value?
No. Peace of mind or gratification in exchange for something may be enough to establish a bargain.
Can past or moral consideration satisfy the bargain requirement?
Generally, it cannot.
What are the exceptions for past or moral consideration?
1) Past obligation unenforceable because of a technical defense will be enforceable if a new promise is made in writing or is partially performed; 2) A new promise to pay for past act performed at the promisee\'s request will be enforceable.
What is the NY rule regarding past consideration?
It is binding if: 1) The promise is in writing; 2) The past consideration is expressly stated; 3) The consideration can be proven; and 4) The writing is signed by the promisee.
Will courts inquire into the adequacy of consideration?
Generally not, unless it is token or sham consideration.
Can a pre-existing legal duty constitute sufficient consideration?
Generally not. * *Different from past consideration because not act is yet to be performed.
When can a preexisting legal duty constitute valid consideration?
1) New or different consideration is offered; 2) The promise is to ratify a voidable obligation; 3) The duty is owed to a 3rd person rather than the promisor; 4) There is an honest dispute about the duty; or 5) The are unforeseen circumstances sufficient to discharge the party.
What is the UCC rule regarding contract modification?
A good faith agreement to modify needs no consideration to be binding.
How can preexisting debts be discharged?
Although payment of a smaller sum than due on existing debt is generally not sufficient consideration for a promise to discharge, court will try to avoid this result through the exceptions.
Can forbearance to sue constitute valid consideration?
Yes, provided the claim is valid or the claimant in good faith believed the claim valid.
What is the requirement of mutuality?
Consideration must be given on both sides of the contract.
What is an illusory promise?
A promise that is unenforceable because only one party is bound to perform.
What are some examples of courts implying promises to infer mutuality?
1) Requirements and output Ks 2) Conditional promises, unless the condition is entirely in promisor\'s control 3) K\'s where a party has the right to cancel if it is somehow restricted (eg: notice) 4) Voidable Promises 5) Unilateral and option Ks
When is a promise to chose among several alternative means of performance no illusory?
1) every alternative involves legal detriment to the promisor; 2) At least one alternative involve legal detriment and the power to chose rest with the promisee or 3rd party; or 3) A valuable alternative is actually selected.
What are the 4 substitutes for consideration?
1) Promissory estoppel or detrimental Reliance. 2) Modification under UCC 3) Promises to pay legal obligation barred by law. 4) Seal.
What is promissory estoppel?
A substitute for consideration where 1) the promisor should reasonably expect her promise to induce action or forbearance, 2) of a definite and substantial nature, and 3) such action or forbearance is in fact induced
What is UCC rule regarding modification?
Consideration is not necessary to a good faith written modification.
What is the rule regarding promises to pay legal obligations barred by law?
If a legal obligation is not enforceable under law, a new promise to fulfill the legal obligation is enforceable if in writing. NOTE: Only enforceable according to the new terms, not the original terms.
What the NY rule regarding seals?
In NY and many other states, as well as under the UCC, a seal is no longer a substitute for consideration.
What are the 2 defenses to contract formation?
1) Absence of mutual assent (mistake and misrep); 2) Public policy defenses.
When does mutual mistake constitute absence of mutual assent?
Where 1) The mistake contains a basic assumption on which the contract was made; 2) Mistake has a material adverse effect on the agreed upon exchange; and 3) The adversely affected party did not assume the risk of mistake.
How does a party assume risk?
When the party knows that their assumption is doubtful, they are deemed to assume the risk that their assumption is wrong.
Can a mistake in value constitute the defense of mistake?
No. Courts presume parties assume the risk of determining value. Exception where the parties rely on a 3rd party to determine value
When can a unilateral mistake constitute an absence of mutual assent?
Where the nonmistaken party knew or should have known of the mistake, the contract is voidable by the mistaken party.
Can a mistake by a transmitting intermediary constitute an absence of mutual assent?
Not unless the party receiving the message should have been aware of the mistake.
What is misrepresentation?
A party induces another to enter into a contract by using fraudulent misrepresentation or by using nonfraudulent material misrepresentation.
What is the effect of misrepresentation?
The contract is voidable by the innocent party if he justifiably relied on the misrepresentation.
When is public policy (illegality) a defense to contract formation?
1) If the consideration or subject mater is illegal, the contract is voidable. 2) If the purpose is illegal, the contract is voidable by a party who was either unaware of the purpose OR aware of the purpose but did not facilitate the purpose and the purpose does not involve serious moral turpitude.
What are the defenses based on lack of capacity?
1) Infancy (except for contracts involving that party\'s necessities). 2) Insanity 3) Intoxication (If the other party knew of the intoxication) 4) Duress.
What is the effect of a lack of capacity defense?
The contract is voidable by the party that lacked capacity.
What constitutes duress?
Usually requires more than one party\'s taking economic advantage of another.
Can an infant affirm his contract?
Yes, upon reaching the age of majority. Failure to disaffirm in reasonable time after turning 18 constitutes affirmance.
What are the NY exceptions to infants\' lack of capacity?
Infants cannot void contracts in the following situations: 1) 14.5 years or older who contracts for life insurance; 2) Educational loans by those 1 6) or older; 3) All contracts by 18 year olds; 4) Realty contract related to marital home; and 5) Contracts for artistic or athletic services.
What are the defenses to enforcement?
1) Statute of frauds 2) Unconscionability
When is the statute of frauds applicable?
MY LEGS M - Marriage Y - Year L - Land E - Executor G - Goods S - Surety
What are the requirements of the statute of frauds?
The writing must contain the following: 1) Identity of the parties sought to be charged 2) Id of the contract\'s subject matter 3) Terms and conditions 4) Recital of the considerations 5) Signature of the party to be charged.
Must the writing for statue of frauds be a full-fledge contract?
No and it need not even be on one piece of paper.
Who needs to sign the writing to satisfy the SOF?
Only the party to be charge (i.e. the party being sued).
What are the exceptions to the SOF?
1) For a sale of goods, part payment or acceptance of part of the goods take the contract of the statute to the extent of the partial payment or acceptance. 2) For a sale of land most states do not apply the statute if performance unequivocally indicates that the parties contracted for sale. 3) Courts occasionally use promissory estoppel to remove the contract where it would be inequitable to allow the SOF to defeat a meritorious claim.
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