Week 2

Agreement Invalid Assent

Agreement

The manifestation (or indication) of mutual assent by the parties.

Objective Standard

An objective standard is used to determine whether parties had a “meeting of the minds”.

Looks to what a reasonable person would believe, based on the circumstances.

Offer

An indication of current willingness to enter into a contract, communicated by the person making the offer.

Consideration

Something promised, given, refrained-from, or done that has the effect of making an agreement a legally enforceable contract.

Open Terms

Under the UCC a contract may form despite a failure to specify certain terms

Also called “gap-filling”

Revocation

Under common law, an offer that is not, in itself, a contract, can be revoked at any time before acceptance (unless promissory estoppel applies).

Firm Offer

A UCC rule under which no consideration is required to hold offer open between merchants.

Rejection

Offeree terminates offer If an offeree rejects an offer, the

rejection terminates the offer and any subsequent attempt to accept is an offer.

Counter Offer

Offeree responds to offer with an offer.

Acceptance

Acceptance is compliance or agreement by one party with the terms and of another’s offer so that a contract forms.

Implied Acceptance

Normally, “pure” silence does not operate as acceptance

Acceptance can be implied based on behavior, partial performance, or past dealings

Mailbox Rule

Common law rule Acceptance occurs when dispatched

by appropriate means

Mirror Image Rule

Common law rule Acceptance must be identical to offer

Battle-of-the-Forms Rule

UCC rule Overrides mirror image rule when

merchants use forms

Invalid Agreements

When does offer plus acceptance not equal a contract?

Apparent agreements may be invalid because of duress, fraud, mistake, or misrepresentation

Fraud

Fraud is a false statement of material fact, made with intent to deceive, on which another reasonably relies, to his or her detriment.

Misrepresentation

Misrepresentation is a false statement made without intent to deceive, upon which a party justifiably relies to his or her detriment.

Mistake

The concept of mistake is generally limited to mutual mistakes about the “basic assumptions” of fact in cases where the parties have not specifically allocated risk with respect to assumptions.

Duress

Duress is a wrongful threat, intended to induce action by the other party.

Undue Influence A special relationship can give one

person undue influence over another. If the dominant party takes

advantage of that position in entering a contract, the agreement may be voidable.

Often, undue influence involves a fiduciary relationship —a relationship in which one party is obliged to act in the best interest of the other party.

Unconscionable

A contract that is so unreasonable that it is “shocking”.