Contract Formation

Formation

Mutual Assent

Offer Acceptance

Consideration

Bargained for Exchange

Promissory Estoppel

Restitution/Quasi

Contract

Defenses to Formation

Mutual Assent

Offer Still Open/UCC 2-205

Merchants Firm Offer

Offer Made

Objective intent to be bound

Contains all material terms

Communicated to Identified Offeree

Acceptance

Common Law Mirror Image

UCC 2-207 Additional Terms Contained in the

Acceptance

UCC2-206 Shipment of Non-

Conforming Goods

Mutual Assent

Is The Offer Still Open? The Mailbox Rule

Rules: 1.  An ACCEPTANCE is effective upon DISPATCH 2.  A REVOCATION or REJECTION is effective upon RECEIPT

Mail Acceptance

Call to Reject Offer or Revoke

Acceptance

(call received after letter sent but

before received.)

There is a Contract:

Acceptance was dispatched before

Revocation or Rejection Received.

Always Look to See what Came First: Acceptance or Rejection/Revocation. As long as the Acceptance was dispatched before the rejection/revocation was received, the acceptance will take precedence. EXCEPTION: If the rejection was received prior to the acceptance and relied upon, it will take precedence over the otherwise effective acceptance.

What Happens If Additional Terms Are Included in the Acceptance of a Contract for the Sale of Goods?

Apply UCC 2-207 and Ask Yourself Two Questions:

1=Yes 2=No contract formed

by the communications

between the parties

1. Is the potential acceptance a definite and seasonable expression of acceptance?

2. Is the potential acceptance expressly conditioned on agreement to the additional or different terms? IF YOU ANSWER:

Then Look to 2-207(2) to see what happens to the Additional Terms. If You Answer in ANY OTHER COMBINATION, then no contract arises from the communications between the parties, and you need to look at 2-207(3) to determine the outcome.

ACCEPTANCE CONTAINS ADDITIONAL TERMS: 2-207(2)

If You Answered Yes to Question 1 and No to Question 2, then a contract is formed by the communication of the parties. 2-207(2) now lets you know what happens to the additional terms in this situation.

Are Both Parties Merchants?

Yes

Additional or different terms automatically become part of

the contract UNLESS

The offer express limits acceptance to the original

terms

Or: The additional or different terms material alter the contract

Or: The offeror objects to the additional or different terms within a

reasonable time

No

Additional terms will NOT become part of the contract unless the offeror ASSENTS

1. Is the potential acceptance a definite

and seasonable expression of

acceptance? IF YOU ANSWER

YES or NO

2. Is the potential acceptance expressly

conditioned on agreement to the

additional or different terms? IF YOU

ANSWER:

YES

No Contract arises from the

communications of the parties.

Acceptance Contains Additional Terms: UCC 2-207(3)

If the conduct of the parties is sufficient to indicate the existence of the parties then a contract will exist, and the terms of the contract will consist of any terms upon which the communications agree while conflicting terms are knocked out. Any gaps in the terms of the contract will be filled using UCC gap-filler rules.

Contract Modifications UCC 2-209

What is Required for a valid modification?

Under The Common Law?

Under the UCC?

Is Mutual Assent Required?

Yes Yes

Is Consideration Required?

Yes (Look out for Unanticipated Difficulties Exception.)

No, as long as the modification is requested in good faith.

If the Contract states that it can only be modified in writing, is oral modification allowed?

Yes, unless the contract as modified falls within the Statute of Frauds. In this case, it must be in writing or otherwise satisfy the statute.

No. (also, if the contract as modified falls within the Statute of Frauds, it must be in writing or otherwise satisfy the statute.