Law Chap 9

Law Chap 9 - Law Chap 9 Definition of a Contract:...

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Law – Chap 9 Definition of a Contract : Blackstone: ―an agreement, upon sufficient consideration, to do or not to do a particular thing. Restatement: ―a promise or a set of promises for the breach of which the law gives a remedy. A contract is the legal relationship that consists of the rights and duties of the contracting parties growing out of promises. Not all promises are enforceable contracts; only the ones that meet all of the required elements for a valid contract covered below. ELEMENTS OF A CONTRACT Offer and Acceptance : An agreement means a mutual understanding between the parties as to the substance of the contract. Agreement is reached through a process of offer and acceptance. The Offer —An offer is a promise to do or refrain from doing some specified thing. The party making an offer to another party to enter into an agreement is called the offeror. The offeree is the party to whom the offer is made. To be an effective offer, three requirements must be met: clear manifestation of intent, definite terms and conditions, and communication of the offer. Manifestation of Intent. In making the proposition, the offeror must have the intent to be bound to the contract, and that intent must be clearly manifested. Preliminary negotiations are not an offer. Intent is tested by an objective standard. Definite Terms and Conditions. The terms of the offer must be sufficiently detailed so that each party’s promises are reasonably certain. An offer that has ambiguous or missing terms cannot serve as the basis for a contract. [Under the UCC, if the parties clearly intend to make a contract, an offer or a contract for the sale of goods does not fail for indefiniteness of terms even though one or more terms are left open.] Communication of the Offer. An acceptance requires knowledge of the offer by the offeree. Accidental compliance with terms of an unknown offer does not form a contract consistent with the terms of offer. Terminating an Offer : Termination of an offer can occur by action of the parties (withdrawal, rejection, counteroffer, lapse of time) or by the operation of law (intervening illegality, destruction of the subject matter of the offer, or death or insanity of the offeror or the offeree). [Note that the UCC provides that a merchant’s firm offers cannot be revoked until that stated time period expires. The UCC’s firm offer is similar to option contract under the common law.] An option contract requires the offeror to hold open an offer for a specified time. Termination by the Parties. Withdrawal of an offer is a revocation. It must be communicated to the offeree. If the offeree rejects the offer or makes a counteroffer
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the offer is terminated. If a reasonable length of time passes (when no time is specified), the offer expires. Termination by the Operation of Law. An offer may terminate by intervening illegality; a court decision or new law that makes the offer illegal. Destruction of the subject matter terminates the offer as does death or insanity of either party. The Acceptance
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Law Chap 9 - Law Chap 9 Definition of a Contract:...

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