EXAM REVIEW TOPICS CHAPTER 9 Mailbox Rule what is it how does it work How does it work when the offer is revoked Definition Acceptance is effective on dispatch when sent by whatever means is authorized by the offeror If the authorized mode of communication is the mail then an acceptance becomes valid when it is dispatched placed in the control of the US postal service NOT when it is received by the offeror Unless the offer instructs when acceptance is effective Revocation must be communicated to the offeree before the offeree accepts and only becomes effective when the offeree s agent actually receives it Therefore a letter of revocation mailed on April 1 becomes effective when received on April 3rd Elements of an offer An offer is a promise or commitment to do or refrain from doing some specified action in the future Under common law there are 3 elements for an offer to be effective 1 The offeror must have a serious intention to become bound by the offer 2 The terms of the offer must be reasonably certain or definite so that the parties and the court can ascertain the terms of the contract 3 The offer must be communicated to the offeree Once an effective offer has been made the offeree s acceptance of the offer creates a legally binding contract providing the other essential elements for a valid and enforceable contract are present MUST HAVE ALL 4 It must Identify the parties involved Identify the time for performance Identify the price Identify the subject matter General rules of communication of offers acceptance by someone other than the offeree General rules of communication of offers Acceptance by someone other than the offeree the general rule is that the offer is only good as to the person who is on the other side an offer to one is not an offer to all Unilateral mistake mutual mistake consequences of each Unilateral mistake when only one of the contracting parties is mistaken about a material of fact Usually does not afford the mistaken party any right to relief from the contract Exceptions to this general rule include 1 If the other party to the contract knows or should have known that a mistake of fact was made the contract may not be enforceable 2 When a unilateral mistake of fact was due to a mathematical mistake in addition subtraction division or multiplication and was made inadvertently and without gross extreme negligence the 2 exceptions must still involve some material fact Bilateral Mistake a mutual misunderstanding concerning a basic assumption on which the contract was made The contract can be withdrawn from either party A word or term in a contract may be subject to more than one reasonable interpretation and may allow the contract to be deleted because there is no true meeting of the minds A piece of information in the contract was mistakenly presented such as a statistic or a survey number Offers counteroffers acceptance rejection mirror image rule Offer is a promise or commitment to do or refrain from doing some specified action in the future Counteroffer a rejection of the original offer and the simultaneous making of a new offer Mirror image rule requires that the offeree s acceptance to match the offeror s offer exactly to mirror the offer Any change in or in addition to the terms of the original offer automatically terminates that offer and substitutes the counteroffer Acceptance is a voluntary act by the offeree that shows assent agreement to the terms of an offer May consist of words or conduct silence communication of acceptance must occur in the case of bilateral contracts Must be unequivocal and must be communicated to the offeror Rejection the offer is terminated if the offeree rejects the offer by words or by conduct Any subsequent attempt by the offeree to accept will be construed as a new offer giving the original offeror now the offeree the power of acceptance Fraudulent misrepresentation in the factum in the inducement in the execution Although fraud is a tort it also affects the authenticity of the innocent party s consent to a contract and can avoid the contract because the party has not voluntarily consented to its terms Fraudulent misrepresentation only to misrepresentation that is consciously false and is intended to mislead another The person making the fraudulent misrepresentation knows that the assertion is false or knows that they don t have a basis stated or implied of assertion Consists the following elements 1 A misrepresentation of a material fact must occur 2 There must be intent to deceive 3 The innocent party must justifiably rely on the misrepresentation To collect damages a party must have been harmed as a result of the misrepresentations Can occur by words actions but it must be a material fact Misrepresentation also arises when a party takes specific action to conceal a fact that is material to the contract a buyer prevents a buyer from learning of some fact that is material to the contract such behavior constitutes misrepresentation by conduct In the Factum when one of the parties is completely unknowing as to the fact that he is entering a contract example signing a contract you thought was one thing of little importance but it turns out you were signing the deed to your house away In the Inducement parties understand that they are entering into a contract of some sort but there is intentional misconduct by one party to try and get the other party to accept for example a car salesman lies to you saying if you buy the car you will get a 1 000 gift card but after does not give you one In the Execution example forged signature What is the statute of frauds and what types of contracts does it cover at common law Statue of fraud denies enforceability to certain contracts that do not comply with its requirements Statues vary from state to state but all states require certain types of contracts to be in writing or evidenced by a written or electronic memorandum signed by the party against whom enforcement is sought unless certain exceptions apply Types of contracts that must be written include 1 Sale Real Property 2 1 yr more 3 Surety ship 4 Promises of an executor 5 Prenuptual agreements 6 Sale of goods 500 or more Types of contracts it covers at common Note Numbers in parenthesis referring to list above that fall under these contracts 1 Involving interests in land 1 2 Cannot by their terms be performed within one year from the day after the date of formation 2 3 Collateral or secondary contracts such as promises to
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