Midterm Notes

Midterm Notes - -Three Elements of A Contract Offer...

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-Three Elements of A Contract: Offer, Acceptance, Consideration - Always , the first step is to go to the Contract -Counter offers rejects original contract offers -An acceptance of an offer is effective when dispatched while a revocation of an offer is effective only when received . -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 acting in good faith ) -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 When accepted, a bid gives rise to a binding contract - Before bid opening, a bid can be withdrawn or modified -Clerical mistakes by the contractor are usually forgiven in a bid.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 -Parole Evidence rule: If a written contract is complete on its face, then evidence of prior oral agreements or representations is unacceptable as evidence at trial estopped -Changes Clause : 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 drafter 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
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This note was uploaded on 04/05/2012 for the course ENG 190 taught by Professor Gisla during the Winter '10 term at UC Davis.

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Midterm Notes - -Three Elements of A Contract Offer...

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