Offer and Acceptance
A landowner sends a letter to a potential buyer stating, "I am considering selling my farm for $100,000, but I am also in discussions with another party." The recipient immediately replies, "I accept." Under Lonergan v. Scolnick, no contract is formed because the initial letter was merely this
What is an invitation to bargain?
A wealthy aunt promises her 18-year-old nephew $10,000 if he refrains from drinking, smoking, and gambling until he turns 21. After the nephew complies, the aunt's estate refuses to pay. Under Hamer v. Sidway, valid consideration exists because the nephew engaged in this
What is forbearance of a legal right
A commercial bakery enters into a written agreement to purchase 500 bags of flour from a distributor. Because flour is a movable physical item, contract disputes will be governed by this body of law
What is Article 2 of the Uniform Commercial Code (UCC)?
A retail consumer orders a laptop online. The manufacturer ships the laptop with an invoice that includes a new clause requiring all disputes to be arbitrated. Under UCC 2-207(2), because the buyer is a non-merchant, this additional term is treated as this
What is a proposal for addition (which does not become part of the contract unless expressly accepted)?
A company publishes a newspaper advertisement promising $1,000 to anyone who buys and uses their medical product according to directions but still catches the flu. An individual buys the product, uses it as directed, and catches the flu. Under Carlill v. Carbolic Smoke Ball, this advertisement formed a valid contract of this specific type
What is a unilateral contract?
A seller mails an offer to sell a boat for $10,000, stating the offer will remain open for one week. On Wednesday, the buyer posts a written acceptance in the mail. On Thursday morning, before the letter arrives, the seller attempts to call and revoke the offer. Under this rule, a contract was formed on Wednesday
What is the Mailbox Rule?
A builder agrees to construct a garage for $10,000. Halfway through construction, without incurring any additional costs or scope changes, the builder refuses to finish unless the owner promises an extra $2,000. The owner agrees in writing, but later refuses to pay the bonus. The promise for $2,000 is unenforceable under this rule
What is the Pre-Existing Duty Rule?
A hospital enters into a single $100,000 contract for custom healthcare software, consisting of $85,000 for physical server hardware and $15,000 for staff training. A court deciding whether UCC Article 2 or Common Law applies will use this test
What is the Predominant Purpose Test?
Merchant A sends a purchase order for 500 barrels of oil. Merchant B sends back a confirmation stating "We accept your order," but adds a clause waiving all implied warranties. Under UCC 2-207(2)(b), this warranty waiver fails to enter the contract because it does this
What is materially alter the agreement?
A seller makes a written offer to sell real estate and explicitly states that the offer will expire on Tuesday at 5:00 PM[3]. The buyer attempts to deliver an acceptance on Wednesday morning[3]. Under Normile v. Miller, no contract is formed because the offeror is the master of the offer and can limit this power
What is the power of acceptance?
A home buyer receives a written offer to sell a house for $300,000. The buyer signs and returns the document, but changes the closing date from June 1st to June 15th. Under common law rules, this response terminates the original offer and operates as this
What is a counteroffer
A bystander rescues a homeowner’s dog from a frozen lake. The following day, the grateful homeowner promises to pay the rescuer $500 for saving the dog. Under traditional common law, this promise is unenforceable because it relies on this invalid form of consideration
What is past consideration?
Two merchants agree to a contract for the sale of 1,000 steel rods at $50 per rod. Due to market shifts, they later agree in writing to raise the price to $55 per rod. Unlike common law contracts, this modification is valid under the UCC without requiring this element
What is new (or additional) consideration?
Merchant X sends a purchase order stating: "This offer is strictly limited to the terms set forth herein." Merchant Y responds with an order confirmation adding a standard 30-day payment term. Under UCC 2-207(2)(a), the new term is automatically excluded due to this condition
What is expressly limiting acceptance to the terms of the offer?
A magazine sends out a promotional mailing stating that anyone who opens a sample envelope will win $1,000, requiring no other negotiation. Under Harris v. Time Inc., opening the envelope constitutes performance, but the offeree must provide this to bind the offeror in a unilateral contract
What is notice of performance?
A real estate broker promises an agent a $10,000 year-end bonus if she sells 20 houses. After the agent successfully sells 18 houses, the broker attempts to revoke the bonus offer. Under Cook v. Coldwell Banker, the broker cannot revoke because the agent rendered this
What is substantial performance
To make a gratuitous $50,000 promise to his daughter appear legally binding, a father insists that she pay him $1 in exchange. Because the $1 was a token pretense that did not actually induce the father's promise, it fails as this type of consideration
What is nominal consideration
A buyer and seller sign a contract for a specialized industrial machine, but leave the delivery date and payment terms open. Under UCC 2-204, the contract does not fail for this defect as long as the parties intended to make a contract and a remedy can be given
What is indefiniteness?
A buyer and seller exchange purchase orders with conflicting liability terms that never form a contract on paper. However, the seller ships the goods and the buyer pays for them. Under UCC 2-207(3), a contract is established by this, with terms consisting of agreed terms plus UCC gap-fillers
What is conduct by both parties recognizing the existence of a contract?
A homeowner makes an offer to sell a painting to an art collector. Before the collector accepts or rejects the offer, the homeowner unexpectedly passes away. The offer automatically terminates due to this event
What is death or incapacity of the offeror (or operation of law)?
A contractor signs a written contract believing it caps his liability at $5,000, but the signed text actually imposes unlimited liability. Under Ray v. William G. Eurice & Bros., the contractor is bound by the objective meaning of the written document under this doctrineWhat is the
What is the Objective Theory of Contract Law?
A producer gives away hazardous industrial ash to a contractor for free, saving the producer disposal fees while providing the contractor with free foundation material. In Pennsy Supply v. American Ash, consideration existed because the legal detriment induced the promise under this theory
What is the Bargained-For Exchange Theory?
A real estate developer and a construction firm sign a detailed "Letter of Intent" outlining a commercial project, leaving final contract details to be finalized later. Under Quake Construction v. American Airlines, whether this letter constitutes an enforceable contract depends on this factor
What is the intent of the parties (determined from language and surrounding circumstances)?
A buyer and seller exchange purchase orders with conflicting liability terms that never form a contract on paper. However, the seller ships the goods and the buyer pays for them. Under UCC 2-207(3), a contract is established by this, with terms consisting of agreed terms plus UCC gap-fillers
What is conduct by both parties recognizing the existence of a contract?
A corporate board signs an agreement stating that an executive will receive severance pay if he continues working, but the document reserves the board's right to cancel the severance obligation at any time without notice. Because the board's promise binds them to nothing, it is invalid under this doctrine
What is an illusory promise?