-Three Elements of A Contract: Offer, Acceptance, Consideration
, the first step is to go to the Contract
-Counter offers rejects original contract offers
-An acceptance of an offer is effective when
while a revocation of an offer is
effective only when
-All provisions of a contract must be communicated
-A contract is formed when both parties mutually agree on the same reasonably specified terms.
-Be clear when establishing a contract, or else one party will think only preliminary negotiations
have occurred, while the other will think a binding contract has been formed
-Pre Existing Duty rule
: One has the pre-existing legal duty under the original contract to
complete the terms of that contract. The promise to do something that one has a PED to do does
not constitute legal consideration (This can be overcome if one of the parties is deemed to be
-An offer is only open for a reasonable time under the circumstances. Offers should specify how
long they will remain open.
-3 Criteria to evaluate bid: Lowest bid, responsive bid, responsible bidder
-Yes, a bid is an offer. When accepted, a bid gives rise to a binding contract
bid opening, a bid can be withdrawn or modified
-Clerical mistakes by the contractor are usually forgiven in a bid. However, the contractor will
have to withdraw the bid.
-Mistakes of judgment are not forgiven
-In fixed price contracts, the contractor bears the entire risk of increased material costs
If a written contract is complete on its face, then evidence of prior oral
agreements or representations is unacceptable as evidence at trial
: Entitles contractor to “reasonable compensation” for the changes and the
Buyer is obligated to pay the additional costs caused by the change, plus reasonable profit and
overhead for charged work. If there is no “changes clause,” then Buyer does not even have the
right to order changes, and Contractor doesn’t have to oblige.
-One waives the right to rely on the “changes clause” in writing if he does not follow it initially
-The contractor bears the risk of
unforeseen subsurface problems
, with the exception of
erroneous subsurface tests, concealment of test results, and commercial impractability. If the
contractor should have reasonably known about the conditions, the courts will not give him relief
even if the exceptions exist. Disclaimer clauses remove fault from the owner and differing site
conditions clause entitle the Contractor to extra compensation if more work is needed.
-To resolve ambiguity, the courts rule against the
of the contract
-When an owner interprets a contract specification for a contractor, and turns out to be wrong,
owner will have to pay contractor additional compensation
-Contractor bears the risk of loss for
Acts of God
. He has the legal duty to complete the contract
no matter what and bears the additional costs that may be incurred to complete the contract.
However, he is entitled to a reasonable extension of time to complete it. (“Time Extension clause