Contract Basics
Explain when communication between parties becomes a legally enforceable contract.
A communication becomes a legally enforceable contract when there is mutual assent (offer + acceptance) and consideration.
Describe the legal requirements for a valid offer.
A valid offer requires a manifestation of willingness to enter a bargain such that the offeree reasonably believes their assent will conclude it. It must contain sufficiently certain terms (QTPPPS), be objectively identifiable as a commitment, and be communicated to the offeree. Offers must be clear, definite, and reasonably understandable as intending legal obligation.
Describe the mailbox rule and its exceptions.
The mailbox rule makes acceptance effective upon dispatch, not receipt. Exceptions:
Option contracts—acceptance must be received.
When the offer states acceptance is valid only upon receipt.
If the offeree sends a rejection and acceptance, whichever arrives first controls.
It applies only to acceptance, not revocations.
Discuss the application of UCC §2–207(1) and explain when a written response constitutes acceptance even with additional or different terms.
Under §2-207(1), a definite and seasonable expression of acceptance forms a contract even if it includes additional or different terms, unless acceptance is expressly made conditional on assent to those terms. This rejects the common law Mirror Image Rule and allows contracts despite discrepancies.
Explain what constitutes valid consideration and how courts determine whether a bargain exists.
Consideration requires a bargained-for exchange: the promisor seeks the promisee’s performance or promise in return. There must be legal detriment on both sides — giving something up or undertaking an obligation. Courts do not evaluate adequacy, only legal sufficiency. Gifts disguised as bargains (sham consideration) do not count.
Describe how courts determine whether parties manifested mutual assent.(element 2 offer)
Courts apply the objective reasonable person standard—asking whether a reasonable person in the other party's position would interpret the words and actions as showing agreement. They examine: (1) language used, (2) parties’ conduct, (3) tone and nature of the transaction, and (4) relationship of the parties. Secret intent does not matter; outward manifestations control.
Explain under what conditions an advertisement becomes an offer and why this is an exception.
Ads are generally invitations to make offers; however, an ad becomes an offer when it is clear, definite, explicit, and leaves nothing open for negotiation, such as specifying quantity, price, and terms. This is an exception because most ads lack commitment and are addressed to broad audiences
Explain how acceptance operates differently in unilateral and bilateral contracts.
In bilateral contracts, acceptance is a promise in return for a promise. (option K= $$) In unilateral contracts, acceptance occurs only through performance. Once performance begins, an option contract arises preventing revocation; however, preparation to perform does not constitute acceptance.
Explain how additional terms become part of a contract between merchants under UCC §2–207(2), including exceptions.
Between merchants, additional terms become part of the contract unless:
the offer expressly limits acceptance to its terms;
the term materially alters the contract (causes surprise or hardship);
the offeror objects within a reasonable time.
If any exception applies, the additional term becomes only a proposal.
Discuss the preexisting duty rule, its justification, and its exceptions.
Under the preexisting duty rule, promising to perform an existing legal or contractual duty is not consideration. This prevents coercive modifications. Exceptions include unforeseen circumstances outside parties’ control making original performance more burdensome, or mutual rescission and new consideration. UCC has its own rules for modifications.
Discuss how a court distinguishes preliminary negotiations from an actual offer.
Preliminary negotiations lack language of commitment and occur when the offeree has reason to believe the offeror does not intend to conclude a deal without further manifestation of assent. Courts look for certainty of terms, definite language, and signals of final commitment. If a communication is merely an invitation to bargain, or suggests further approval is needed, it is not an offer.
Discuss all ways an offer may be terminated prior to acceptance.
lapse of time, revocation, rejection/counteroffer
Discuss the rules governing silence as acceptance and when silence can create contractual liability.
Silence is not acceptance unless:
The offeree takes benefits with reasonable opportunity to reject and reason to know compensation was expected.
The offeror indicates silence may be acceptance and the offeree intends to accept by silence.
Prior dealings make silence reasonable to assume acceptance unless notified otherwise.
These exceptions turn silence into assent.
Describe how a contract may be formed under UCC §2–207(3) even when the parties' writings do not establish a contract.
When the parties’ conduct — such as shipping, accepting goods, or paying — recognizes a contract, a contract is formed under §2-207(3) despite inconsistent writings.
Analyze when forbearance constitutes consideration and when it does not.
Forbearance is valid consideration when the promisee gives up a legal right in exchange for the promisor’s promise. It must be contemporaneous with the bargain. However, past forbearance or refraining from something with no legal right to do (invalid claims lacking honest belief) does not count.
Ads are usually not offers, but they become offers when they satisfy this heightened requirement.
What is being clear, definite, explicit, and leaving nothing open for negotiation?
Explain the difference between a counteroffer, a rejection, and a mere inquiry.
A counteroffer proposes a substituted bargain and terminates the original offer. A rejection indicates intent not to accept. A mere inquiry asks for clarification or discusses terms without proposing new ones, and does not terminate the offer. Distinguishing them requires analyzing language, context, and intent to negotiate.
Describe the Mirror Image Rule and its consequences for attempted acceptance.
Under the Mirror Image Rule, acceptance must exactly match the offer. Any change, additionno matter how small—constitutes a counteroffer, which terminates the original offer. Only implied or clarifying inquiries do not violate the rule.
Analyze the difference between a term that materially alters a contract versus one that does not under §2-207.
A materially altering term creates hardship or surprise for the other party, changing the nature of the bargain significantly. Minor terms or customary business terms (like shipping location or invoice format) typically do not materially alter the contract. Courts consider the fairness, context, and commercial expectations to decide.
Explain the doctrines governing invalid claims, including both the Restatement approach and the Maryland rule.
Under the Restatement, an invalid claim can be consideration if the claimant has either:
an honest (good faith) belief, OR
a reasonable belief in the claim’s validity.
Under the Maryland rule, both honest belief AND reasonable belief are required. If neither exists, the claim is invalid and cannot support consideration.
Under what circumstances can terms be considered sufficiently definite to create contractual obligations?
Objective/Not Subjective; Outward expression/ NOT secret intent ; Words and Acts= Certainty of term (Q.T.P.P.P.S)- quantity, time for performance, parties to the contract, price, place for performance, and subject matter of conduct and words reasonably definite and certain.
Difference between indirect and direct revocation
Indirect revocation occurs when:
(1) the offeror takes definite actions inconsistent with an intent to enter the bargain, and
(2) the offeree learns of this from a reliable third party.
The third party must be credible, and the action must clearly show non-intent to follow through. Once the offeree learns this, the offer is revoked even without direct contact.
Explain how commencement of performance affects acceptance and option contract formation in unilateral contracts.
In unilateral contracts, beginning performance creates an option contract, preventing revocation. Performance must be actual performance, not preparation. Once the offeree starts performing, the offeror cannot revoke. Under §51, if performance starts without knowledge of the offer, acceptance may occur if the offeree learns of the offer before completing performance.
go through the steps of proviso clause vs. no proviso clause
proviso clause- 2-207(1) and (3)
No proviso clause- 2-207(1)-(3)
Discuss when moral obligation can create a binding promise and the limits of the material benefit rule.
Moral obligation is generally not consideration. However, under the material benefit rule, a subsequent promise is enforceable if:
a substantial benefit was previously conferred on the promisor,
at the promisor’s request or under circumstances where recipients would normally pay, and
the benefit was not a gift.
It is limited to extreme cases to avoid turning every moral duty into a legal contract.