EXAM REVIEW TOPICS CHAPTER 9 Mailbox Rule what is it how does it work How does it work when the offer is revoked Mailbox Rule A rule providing that an acceptance of an offer becomes effective on dispatch on being placed in a mailbox if mail is expressly or impliedly an authorized means of communication of acceptance to the offeror o It has to go through the common law o Common law Put acceptance in mailbox and properly addressed That s the only way it can be accepted o Under this rule if the authorized mode of communication is the mail then an acceptance becomes valid when it is dispatched placed in the control of the U S Postal Service not when it is received by the offeror o If the offer stipulates when acceptance will be effective then the offer will not be effective until the time specified Elements of an offer Have to have all 4 o 1 Identify party who o 2 Price what o 3 Performance where when o 4 Subject matter why Has to assume common law so have to have all four elements General rules of communication of offers acceptance by someone other than the offeree Offer is only good to the person on the other side The offer must be communicated to the offeree because it deals with communication Detrimental reliance Offer made and one person does something reliant that will make the other person know that the deal will go through It forces another to perform their obligations under a contract Legal detriment as consideration Consideration is usually defined as the value such as cash given in return for a promise in a bilateral contract or in return for a performance in a unilateral contract o Bilateral contract example Promise to paint fence for cash o Unilateral contract example Cash is received after the fence is painted Have to paint the whole entire fence for the cash not valid if only half of the fence is painted Consideration is broken down into two parts 1 something of legally sufficient value must be given in exchange for the promise 2 usually there must be a bargained for exchange Example Giving up the right to gamble etc to establish a contract relationship o Don t drink before 21 doesn t count as a legal detriment as consideration because it s not a valid consideration since there s already a law about it Unilateral mistake mutual mistake consequences of each Unilateral mistake occurs when only one of the contracting parties is mistaken about a material fact A unilateral mistake does not afford the mistaken party any right to relief from the contract Mutual mistake When both parties are mistaken about the same material fact the contract can be rescinded by either party Normally the contract is voidable by the adversely affected party o Deals more with material fact Mistake of value the mutual mistake concerns the future market value or some quality of the object of the contract the contract can normally be enforced by either party o Generally not a defense and leaves the contract intact o Example Tiffany vase for 1 and person thinks it s worth thousands o Deals more with market value Offers counteroffers acceptance rejection mirror image rule Offers A promise or commitment to perform or refrain from performing some specified act in the future Counteroffer An offeree s response to an offer in which the offeree rejects the original offer and at the same time makes a new offer Acceptance The offeree s notification to the offeror that the offeree agrees to be bound by the terms of the offeror s proposal Rejection An offeree s express or implied manifestation not to accept an offer In the law governing contract for the sale of goods a buyer s manifest refusal to accept goods on the ground that they do not conform to contract specifications Mirror image rule Acceptance of offer acceptance has to match all terms of the offeror s offer If not all terms are met it s a counteroffer Fraudulent misrepresentation in the factum in the inducement in the execution Fraudulent misrepresentation Any misrepresentation either by misstatement or omission of a material fact knowingly made with the intention of deceiving another on which a reasonable person would and does reply to his or her detriment Fraud in the factum Misrepresentation that causes one party to enter into a contract without realizing the risk duties or obligations incurred o People have no idea that they are entering into a contract o Example Making someone sign a document for a contract when they have no idea what they re signing Fraud in the inducement Both parties understand they are undertaking contract sell a car give you a motorcycle etc but there s some intentional misconduct by one of the parties to encourage the other party to make a deal fraud by one party o Example I m going to sell you a car and if you buy it I m going to throw in a free motorcycle When it comes down to it you don t get the motorcycle Pull rug out last minute Fraud in execution Person doesn t know they re being bound into a contract i e Forged signature What is the statute of frauds and what types of contracts does it cover at common law Statute of Frauds common law Certain contracts need to be in writing to be enforceable Can t enforce oral contracts unless certain requirements are met 6 types of contracts to be in writing o 1 Contracts that cannot be performed in a year o 2 Contemplation of marriage Prenuptial etc o 3 Suretyship Promising to answer in debts to another o 4 Executive promises Promising to answer for someone that is dead o 5 Sale of goods 500 or more o 6 Sale of real properties or land Sufficiency of consideration preexisting duty past consideration Past consideration Something given or some act done in the past which cannot ordinarily be consideration for a later bargain o They are not sufficient consideration Preexisting duty Under most circumstances a promise to do what one already has a legal duty to do does not constitute legally sufficient consideration Peppercorn rule Unless it looks fraudulent the smallest value that will work Void and voidable contracts Cannot be said illegal acts Void contracts A contract having no legal force or binding effect o Contract that violates usury laws Cannot be enforced Voidable contracts A contract that may be legally avoided cancelled or annulled at the option of one of the parties o A voidable contract looks bad but can be saved Only one person can be involved o No minors can escape because they lack capacity to form contract If you enter into contract and then later say you don t want to
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