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My page summary of contracts law, updated in , is below. Here are the links to my Contracts diagrams:. I highly recommend Understanding Contracts by Jeffrey T.

Like the other books in the Understanding series, this volume provides a clear and concise explanation of the law. I referred to it regularly in studying for the bar exam and in creating these diagrams, and as usual, I learned much more from the Understanding book than I did from my casebook. I also recently came across a very detailed Contracts flowchart by Jeremy Modjeska that may be helpful to you. Click the image below to visit his site and view the chart.

My summary of contracts law is available as a downloadable PDF and as text below. When viewing the PDF on a computer, you can navigate by clicking on entries in the table of contents and on page headings. All contracts involving the sale of goods are governed by Article 2 of the Uniform Commercial Code. UCC rules do not differ greatly from common law rules, but they do differ.

In UCC cases, common law principles may still be applied in interpreting the law. Some transactions involve both the sale of goods and the sale of services.

Courts will apply one of two tests to determine whether UCC or common law rules apply to the case:. Predominant purpose test: In this, the more common test, a court will determine what the predominant purpose of the contract is. If I have washed and detailed your car, the contract was primarily one for the sale of my services to you; the small amount of sealant that I applied to the car is technically a good that I sold to you, but that sale was not the predominant purpose of the contract.

In this example, if this test is used, the court will apply common law rules to the case. Gravamen test: Courts will sometimes apply this test, in which they determine what the conflict is primarily about. If the sealant I used on your car caused the paint to peel away, then the gravamen of the case is that good that I sold to you.

In this example, if this test is used, the court will apply UCC rules to the case. A contract exists when two or more parties agree on promises to exchange things of value. Every contract must include a valid offer, acceptance, and consideration.

The offer represents the content of the agreement, the acceptance represents the fact of agreement itself, and the consideration represents the exchange of value. The offer represents the content of the agreement. The offer also conveys power of acceptance to the offeree. A valid offer must contain clear and definite terms and must convey power of acceptance to the offeree. Clear and definite terms: A valid offer contains clear and definite terms.

In the classical model, the offer contains all of the above, and the acceptance is merely an expression of assent. There are many exceptions to this, but before addressing them, one must analyze an offer for clear and definite terms, and weigh the importance of their inclusion or omission. For instance, the omission of time for the contract to be performed will usually not make an offer invalid. Our example above does not indicate when the car will be delivered or when the thousand dollars will be paid.

Missing terms will be filled in by what is determined to be reasonable. If the offeror refuses to sell the car, their claim that they meant that they would sell the car five years from now, will not be judged to be reasonable. Other terms, such as price and quantity, are more important. Conveyance of power of acceptance: A valid offer conveys power of acceptance to the offeree. In other words, a simple expression of assent by the offeree will conclude the bargain. An offer made in jest: An offer which the offeree knows or should know is made in jest is not a valid offer.

Solicitations of offers: One must often determine whether a proposal is a solicitation of an offer, or an offer, especially in the case of advertisements. Make me an offer. Advertisements will normally be construed by courts to be invitations to the public to make offers. However, an advertisement may be construed to be an offer if it would lead a reasonable prospective buyer to believe that an offer was intended. This would be so if the advertisement contains the elements of an offer: clear and definite terms, and apparent conveyance of power of acceptance to the offeree.

Putting an item up for auction is a solicitation of offers. UCC rules may mirror common law rules, or they may be quite different. In the realm of the offer, the UCC differs in that less emphasis is placed on identifying the offer and acceptance as separate elements.

UCC section states that a contract may be made in any manner sufficient to show agreement, including conduct by the parties; a contract may be found even though the moment of its making is undetermined; and a contract will not fail for indefiniteness even though one or more terms are left open, as long as the parties intended to make a contract and there is a reasonable basis for a remedy.

It represents agreement, and it creates the contract. To be valid, the acceptance must be knowing, voluntary, and deliberate. In determining whether a valid acceptance has been made, the proper focus is on whether a reasonable offeror would understand that the offeree had accepted. In other words, it does not matter what the offeror and offeree actually intended their words or actions to mean the subjective test , it matters how a reasonable person would have interpreted them.

Communication to the offeror: When communication is instantaneous, such as face-to-face or by telephone, a cceptance is valid when it is received by the offeror.

W hen the communication is through the mail or by another means that involves a time delay, then the mailbox rule applies, and acceptance is valid upon dispatch. However, there is an exception for option contract s: acceptance is valid upon receipt, not upon dispatch.

Accord with the substantive terms of the offer: The acceptance must be in accord with the substantive terms and the procedural requirements of the offer. The response would be a counteroffer rather than an acceptance. Modernly, minor variations will not invalidate the acceptance. Accord with the procedural requirements of the offer: If the offer states a particular way that the offer must be accepted, then any other method of acceptance is invalid.

When such acceptance is possible, but performance cannot be accomplished instantaneously, then we must examine the duties of the offeror and offeree once partial performance has begun. Partial performance: When acceptance may be by performance, and the performance cannot be accomplished instantaneously, the offeror may not revoke the offer once performance has begun.

This duty of the offeror exists any time acceptance may be by performance. The duty of the offeree, on the other hand, depends on what type of contract the offeror intended to create. Bilateral contract: If the offeror intended to create a bilateral contract a promise in exchange for a promise , then beginning performance constitutes an implied promise.

It is a valid acceptance and the offeree is obligated to finish performance. Unilateral contract: If the offeror intended to create a unilateral contract, then acceptance is made when performance is finished. The offeree has no obligation to finish performance once they have begun. Modernly, courts will only find intention to create a unilateral contract when express language exists. Implied-in-Fact Contract: A contract or contract term may be construed even when there are no explicit words, if there is an unambiguous offer and acceptance, mutual intent to be bound, and consideration.

Rewards: An offer of a reward made to the public is an executory offer of a unilateral contract. In order to collect the reward, the person performing must have known about the offer. Such an offer may be revoked by publishing the revocation with the same notoriety as the original offer. It does not matter if the notice actually reaches one who attempts acceptance. Exception: Note that when such an offer can only be accepted by one person e.

This means that if the person who eventually becomes the offeree by completing performance, had started to perform before the revocation was made, then the revocation was ineffective.

Effective date of acceptance: An acceptance takes effect when it is dispatched to the offeror. On the telephone , dispatch and receipt of the acceptance are simultaneous. In the mail, acceptance may be dispatched within the time required by the terms of the offer, but received too late. Knowledge of the offer: The offeree cannot accept an offer they do not know exists. In the case of rewards offered for taking certain actions, the offeree must know about the reward offer before they take the action.

Silence as acceptance: Generally, silence or inaction cannot serve as acceptance. Exception s to this are i f the offeree takes the benefit of the offer, or indicates that silence will operate as acceptance.

Only the offeree has power of acceptance: Only the offeree, as designated by the offeror, may accept the offer. Revocation: A revocation is effective when it is communicated to the offeree or the offeree learns of an act by the offeror that is wholly inconsistent with the offer, such as learning that the offeror has sold the item in question to someone else. Rejection: When the offer is for the sale of a number of items, acceptance of one or more of them may function as a rejection of the offer to purchase the rest of them.

Lapse of the offer: The offer may lapse after a stated time has passed, or after a reasonable time. Counteroffer: A counteroffer always includes a rejection of the original offer. If the counteroffer is not accepted, the original offer cannot now be accepted unless it is offered again. A firm counteroffer may be distinguished from an exploration, in which the offeree wishes to explore the possibility of different terms but may still wish to accept the original offer.

The revocation is only effective once it has been communicated to the offeree. This communication may be indirect, as when the offeree reliably learns, perhaps from a third party, that the offer is no longer open. Death or mental disability of either party : No contract may be formed if either party has lost the ability to form contractual intent before acceptance.

Acceptance under the UCC has its own set of rules. First, the UCC is generally more flexible than the common law in finding agreement between contracting parties. Under the UCC, courts are more likely to find that two parties did in fact have an agreement, though the terms of the agreement are not clear.

UCC section provides that unless otherwise stated, an offer invites acceptance in any reasonable manner; an offer to buy goods invites acceptance by promise or by shipment of conforming or non-conforming goods, except that a shipment of non-conforming goods may be offered only as an accommodation and then does not constitute an acceptance; and part performance does not constitute acceptance if the offeror is not notified within a reasonable time.

Nonconforming goods: When a buyer receives nonconforming goods and rightfully rejects them, they are entitled to damages for nondelivery. Such damages consist of the difference between contract price and market price at the time the buyer learned of the breach. UCC is intended to resolve situations in which a buyer and seller use standard forms that include terms that conflict with each other. The UCC, unlike the traditional common law, will find a contract. What becomes of the additional or different terms?


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