CONTRACTS

UNILATERAL-BILATERAL CONTRACTS
- Bilateral Contracts- formed by mutual exchange of promises by the contracting parties. A promises B that he will sell B ten baseball cards, and B promises to pay A one dollar.

- Unilateral contract- one in which a promise is made in exchange for actual performance, as opposed to a promise to perform. A promises to pay B $100 if B paints A's home. A has asked B for a promise to paint, but rather to actually paint it. 

- Distinction btwn Unilateral and Bilateral contracts- one significant diff is the extent of the obligations they impose. 

	1.Once parties exchange promises in bilateral contracts, they are obligated to 	perform thier promises. 

	2.Nonpromising party is not obligated to perform and the promisor's obligation 	does not arise until the requested act is completed. 

1. Mututal assent
2. Consideration
3. Absence of Defenses

- Meeting of the minds. All parties should have a similar understanding of the contrac they agree to enter. To achieve mutual assent, the parties often undergo a negoatiated process whereby each makes proposals and counterproposals until they arrive at a mutually acceptable arrangement. The process ends when one side accepts the other side's offer.

- written revocation, rejection or acceptance is recieved when the writing comes into the possession of the person addressed, a person authorized by him to recieve it, or when deposited in place he has authorized as place for communication to be left.

OFFER-
- an offer is a manifestation of willingness to enter into a bargin which invites another person's assent to the bargain which assent will, in turn, conclude the arrangement ;one who makes an offer is the offeror, and the person to whom it is made is the offeree. to be a vaild offer, a manifestation of intent to enter a bargain must have "the 3 C's". -

               Commitment of promise by the offeror to enter into a contract-
               Certainty and definitiveness of essential terms-
               Communication by offeror to offeree

COMMITMENT OR PROMISE-
- The first requirement for an offer is that it embody a promise or commitment, as opposed to a statement of present intention or preliminary negotiation. Statments such as "i intend to sell you my car" or "come talk to me about buying me car" are not offers. Saying "if you pay me $100, I will sell you my car" is a vaild offer.
        
- Objective test-
          	Whether a statement is an offer depends on whether a reasonable person would so 	understand it, regardless of the parties' subjective understanding. ie: given the trade 	customs of an industry, would a reasonable person think that an offer was made? 	Court consider several factors:

            1.LANGUAGE: Have the words "offer" or "promise" been used? definitiveness 	of the terms and language of a proposal to help decide whether it is an offer. "first 	come, first served" may indicate an offer bc it provides buyers with a clear means 	of accepting by buying first.

             2.INDUSTRY CUSTOMS- courts determine whether the type of language and 	manner of the proposal is usually considered to be an offer in a specific industry.
            
	3.METHOD OF COMMUNICATION- mass media are often held to be 	invitations for offers, not actual   offers. ie: tv ad says "100 cars for $1000 each". 	the dealer did not make an offer to the entire tv audience, he invited members of 	the audience to offer to buy his car.

	             1.lefkowitz v grat mnpls surplus store- ad for fur coat to general to be 		offer. ad for stole definate and offer which ¼ accepted by the conditions 		states.

            4.PRIOR PRACTICES BTWN PARTIES- If the parties had prior transactions, 	the court will consider the significance of the questioned statements in light of 	statements made in previous dealings.
            
	5.SURROUNDING CIRCUMSTANCES- manner and context in which a 	statement was made (jest, anger) and whether it was reasonable to construe the 	statement as an offer under those circumstances.
        
	2.Price Quotations- a price quotation is not an offer to sell UNLESS:
            
	1.the quoter specifies the quanitity he is willing to sell, not merely the 		per-unit cost AND
	2.the quote is made to a specific person, not the general public.
	3. Auctions- an auctioneer solicits bids: he does not make offers.
 
CERTAINITY OF TERMS- 

- Subject matter of a proposal must be definite and certian; otherwise, a court would be unable to determine the terms if the offer evolves into an enforceable contract. The consequences of missing or vague terms are as follows:
	1.Time of Payment and performance- absence of these terms is not fatal bc the 	court can imply that performance is due within a reasonable time.
	2.Identity of the Parties and Subject Matter- These must be certian.
	3.Quantity Must be Specified- quantity is a required term except for output and 	requirement contracts. Employment contract that has no specific duration is 	considered to be terminable at will.
	4.Price- can be implied (UCC §2-305). If parties clearly show the absence of 	agreement on price, price will not be implied, and there will be no contract.
	5.Part Performance or Acceptance- vagueness and uncertianty of terms can also be 	overcome if there is part performance of acceptance.

	1. Part Performance- if parties have already begun performing the contract, the 	manner in which they acted upon vague terms can be determinative of thier 	meaning. 
            2. Acceptance- if terms are uncertian, acceptance of one possibe interpretation 	will establish the terms.
            3.Terms to be Agreed Upon- contracts that state that other terms will be agreed 	upon in the future are too vague if the omitted terms are material to the agreement 	(quantity) and a contract will not be formed even if this "offer" is "accepted".

TERMINATION OF AN OFFER
- Once an offer is made, the power of acceptance is created in the offeree; if he accepts the offer, the offeror must perform. Termination of the offer extinguishes this power. An offer can only be terminated before the offeree accepts it. 
Termination can occur by an act of either party or by operation of law.-

- an offeree's power of acceptance is teminated when the offeree receives from the offeror a manifestation of an intention not to enter into the proposed contract.

	- Revocation by the Offeror- an offeror can revoke his offer so long as it has not 	   been accepted by the offeree. An offer can be terminated in various ways: 
        	- Communication to the Offeree direct or indirect. 
	- Indirect communication may involve a 3rd party who notifies the offeree of the 	offeror's revocation.
	- The indirect communication must be correct, given by a reliable source and 	understandable to a "reasonable person". 
                       1.dickerson v dodds- 3rd person told ¼ that &#144; was selling to somene 		else. no option contract. 
	- By Publication- offers that are made in publication can be revoked by publication. 	Unlike direct or indirect communication, the revocation is effective when 	published, not when it is recieved by the offeree. 
	 	1. where an offer is made by advertisment in a newspaper or other 		general notification ot the public or to a number of persons whose identity 		is unknown to the offeror, the offeree's power of acceptance is       		terminated when a notice of temination is given publicly by advertisement 		or other general notification equal to that given to the offer and no better means of 	notification is generally available.

- Irrevocable Offers- an offeror can generally teminate his offer, even if he promised not to do so. However, offers cannot be revoked under certian circumstances. 
- Detrimental Reliance- irrevocable for a reasonable time period if the offeree relied to his detriment on the offer being held open, and it is reasonably forseeable to the offeror that the offeree would so rely. ie: a general contractor relies on a sub-contractor's offer in dertermining the costs of the overall job.
            1.unclear if offer unilateral or bilateral- if have choice btwn accepting by promise 	or performance, protected against revocation if have begun performance. (§62(1)). 	must render complete performance.
            2.bilateral contract: offeree makes preparations prior to acceptance. (§87(2))an 	offer which the offeror should know would induce action or forbearance of a 	substantial character on the part of the offeree before acceptance and which does is 	binding as an option contract to the extent necessary to avoid injustices. 
                  1. an offer is interpreted as inviting the offeree to accept by either performance
                   	or promise.  
                  2.subcontractos submission of bids to general contractor, who relies on it 	    		when figuring own bid, is held irrevocable for at least the time necessaary 		for the general contractor to obtain the job and then accept the bid. general 		is not bound to use the sub if given the job. 
                        (james baird v gimbel- old law. didn't get promissory estoppel bc one-sided 		binding of parties, court said the language was not precise. drennan v star- 		new law. relied on offer and for reasonable time was irrevocable. - gimbel 		reasons to allow sub to go around generals back and revoke contract at 		agency level. 

- Options- if the offeree gave consideration for the promise that the offer would be kept open, it must be. contract for a contract holds an option contract valid even if there is no actual consideration, so long as consideration is recited in a written and signed document.

- counter- offers do not terminate power of acceptance. humble oil v westside.

- Partial Performance of a Unilateral Contract- Traditionally, a unilateral contract was revocable at any time. only actual completion is "acceptance" of the contract. contract is formed when performance begins, provided that it is completed wihtin a reasonable time. The offeror cannot revoke, but the offeree can discontinue at any time. HOWEVER, preparation to begin perofrmance is not considered to be partial performance.
             	1.offer for a unilateral contract- the beginning of performance creates an 		option contract(once the offeree starts to perform the offer is irrevocable)  		BUT  must complete the performance in accordance with the terms of the 		offer. preliminary preparations that are not explicitly called for by the offer 		are not enough. (peterson v pattberg- ¼ said here to give you money; 		revoked (sold morgage), ¼ then tried to tender cash. the revocation came 		b4 the actual performance (tender of cash) so could revoke unilateral 		contract. 
                  2.full expectation damages are given (lost profit)
                  3.if offer itself reserves right for revocation is allowed.
                  4. an offer contemplating a series of independent contracts by separate 		acceptances may be effectively revoked so as to terminate the power to 		create future contracts, even though on or more of the contracts have 		already been formed by acceptance. 

- Firm Offers- (UCC §2-205) -A signed writing by a merchant to buy or sell goods that has firm terms and assures that the offer will be helld open is enforceable, even without consideration. DURATION:
             1.Period stated- offer will remain open stated period or 3 months, whichever is 		less. 
             2.Period not Stated- offer remains open for a "reasonable time", not to exceed 3 		months.

TERMINATION BY THE OFFEREE- 3 ways to terminate
        1.EXPRESS REJECTION- an offeree's power of acceptance is terminated unless offeror manifests contrary intention. unless offeree manifests to take under further consideration. 
        2.COUNTEROFFER- occurs when an offeree tries to add or change terms in the 	origianl offer. Rejection of the original offer, and a new offer power of 	acceptance gone unless the offeror manifests a contrary intent, or the offeree's 	counter-offer manifests a contrary intent.

- Mere Inquiry- not a counteroffer. As long as offeree suggests that he is still considering original offer, a counteroffer has not been made.
                  1.an acceptanace which requests change or addition to terms is not 			counter offer unless acceptance is conditioned on assent to the changes. 
                  2.humble oil v westside- an option contract is not void by negotiations prior to 		the date of the option as long as you accept the original offer on the 		effective date. 
                       a. if anticipatory repudiation of the option get in writing. 
                       b. power of acceptance under an option contract is not terminated                		by rejection or counter-offer, by revocation, or by death or 				incapacity of the offeror, unless the requirements are met for the discharge 		of a contractual duty.
             2.Irrevocable Offer- counteroffer does not revoke an irrvocable offer.
             3.Date effective- rejection is effective when it is received by the offeror, who then 		can extend a new offer to another party.
             4."Battle of the Forms" Exception- see acceptance below...
             5.(§59)- reply to an offer which purports to accept but is conditional on the 		acceptance of additional or different terms is counter offer.

        3.PASSAGE OF TIME- If an offer specifies a time within which it must be accepted, 		failure to accept within that time period will constitute a rejection. If no 		time period is specified, a reasonable time period is given for response.
          Time period starts when the offeree actually gets the offer.
	1.(§41)(1) an offeree's power of acceptance is terminated at the time specified in 	the offer, or if no time is given in a reasonable time
	2.(2) what is a reasonable time is question of fact, depends on circumstances
	3.(3) subject to the rules in §49 an offer sent by mail is seasonably accepted if an 	acceptance is mailed at any time b4 midnight on the day on which the offer is 	recieved.
   4.TERMINATION BY LAW-
        1.DEATH OR INCAPACITY- of either party b4 the offer is accepted will terminate 	the offer. does not have to be communicatded to the other party.  irrevocable 	offers ar not terminated by death or incapacity.
        2.DESTRUCTION OF GOODS-If the subject of the offer, such as the goods for 	sale, are destroyed prior to acceptance, the offer is terminated.
        3.ILLEGAL-If the contract becomes contrary to law prior to acceptance, the offer 	will be terminated.

ACCEPTANCE
An acceptane is a manifestation of assent to the terms of an offer in the manner required by the offer. A contract is created once an acceptance is communicated.

- an offer may invite or require acceptance to be made by an affirmative answer in words or by performing or refraining from performing a specified act, or may empower the offeree to make a selection of terms in his accpetance.- unless otherwise indicated by the language or the circumstances, an offer invites acceptance in any menner and by any medium reasonable in the circumstances.
1.- acceptance of an offer is a manifestation of assent to the terms thereof made by the offerree in a manner invited required by the offer-
2. acceptance by performance requires that at least part of what the offer requests be perfomed or tendered and includes accpetance by a performance which operates as a return promise-
3. acceptance by a promise requires that the offeree complete every act essential to the making of the promise.

To be valid an acceptance must meet the following requirement:
 1.ACCEPTOR-Only the specific person to whom the offer was made can accept. The power of acceptance cannot be assigned. EXCEPTION: an option can be assigned.
        1. the manifested intention of the offeror determines the person or persons in whom 	is created a power of acceptance
        2. an offer may creat a power of acceptance in a specified person or in one or more 	of a specified group or class of persons, acting separately or togther, or in anyone 	or everyone who makes a specified promise or renders a specified performance. 	(Ie: rewards)
 2.COMMUNICATION- acceptance of an offer for a bilateral contract is not effective until it is communicated to the offeror.
        - it is essential to a bargain that each party manifest assent with reference to the 	manifestation of the other. 
         - Objective Manifestation of Assent Required- offeree's subjective state of mind is 	irrelevant. Offeree must realize that an offer was made. Absent such knowledge, 	his acceptance is invalid.
          - where notification is essential to acceptance by promise, the offeror is not bound 	by an acceptance in equiviocal(ambigous) terms unless he reasonable understand it 	as an acceptance. 

- Acceptance Received by the Offeror- problems develop if there is a delay btwn the time the offeree accepts and the time the offeror receives the communication. 
	1.Mailbox Rule(majority)- an acceptance is effective( and contract is formed) upon 	dispatch, not the actual receipt, of the acceptance.
	EXCEPTIONS:
	1.The offer explicityly states that acceptance is not effective until actually 	received.
	2.Options- Exercise (ie: acceptance) of an option contract is only effective upon 	receipt by the offeror.

- If offeror does not specify the method of conveying acceptance then any reasoanble means is vaild.  Even if a specific method is given, an acceptance that is conveyed in a diff way is valid if it is actually received by the offeror b4 he revokes the offer or if the time frame alloted for the specific method it is effective on dispatch

- Acceptance Lost in Transmission- an acceptance that is lost in transmission is valid if it was properly sent, but may be excused if it will cause hardship to the offeror ( ie: he has already sold property) 
EXCEPTION- rejection becomes effective upon receipt, and an offer is effective upon
dispatch. BUT, where an offeree dispatches a rejection and then dispatches an acceptance, the accetpance is only effective if received b4 the rejection.
1.Rejection b4 Acceptance- an offeree mails a rejection on Monday and an acceptance on tuesday. Both letters are delivered on Wed. The Acceptance is effective only if the offeror gets it b4 he receives the rejection.
2.Acceptance B4 Rejection- offeree mails acceptance on Mon and it is delivered on Thurs. Offeree also mails a rejection on tues and it arrives on wed. 
	*Majority Rule- under mailbox rule, acceptance is mon when mailed unless the 	offeror limited the manner of conveying acceptance. BUT, the offeror may be able 	to prevent the contract under the theory of estoppel by showing that he relied on 	the rejection to his detriment.
	*Minority Rule- some courts rule that if an offeror actually receives the rejection 	first, no contract can be created.
	*rejection or counter-offer by mail or telegram does not terminate the power of 	acceptance until recieved by the offeror, but limits the power so that a letter of 	acceptance started after the sending of an otherwise effective rejection or 	couter-offer is only a counter offer, unless the acceptance is received by the offeror 	b4 he recives the rejection of counter-offer

-"Crossing" Communications- 2 parties send identical offers to each other, neither one knowing of the other's offer, a contract is not formed when the offers "cross in the mail". There must be knowledge of an offer b4 contract can be formed. (§23)-manifistation of assent.

-Mistake in Transmission- if an offer is mistakenly changed during the process of transmission to the offeree (clerical error) and the offeree does not know and could not reasonably have been expected to know of the error, then the offer can be accepted on its mistaken terms. (majority view)

EXCEPTIONS TO THE REQUIREMENT OF COMMUNICATION OF ACCEPTANCE- OTHER WAYS TO ACCEPT 
where an offeree fails to reply to an offer, his silence and inaction operate as an accetpance in the folowing cases only:
1.(a) where an offeree takes the benefit of offered services with reasonable opportuinty to reject them and reason to know that they were offered with the expectation of compensation. 
2.(b) where the offeror has stated or given the offeree reason to understand that assent may be manifested by silence of inaction , and the offeree in remaining silent and inactive intends to accept the offer
3.(c) where bc of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he doesn't intend to accept. 

KNOWLEDGE OF OFFER
1. must have knowledge of the reward. reward is to induce action and can only induce if you know about it. (EXCEPTION is govt reward don't need awareness).

TERMINATION OF OFFER
1) an offeree's power of acceptance is terminated at the time specified in the offer, or if no time is given in a reasonable time
	1.(2) what is a reasonable time is question of fact, depends on circumstances
	2.(3) subject to the rules in §49 an offer sent by mail is seasonably accepted if an 	acceptance is mailed at any time b4 midnight on the day on which the offer is 	recieved.