Contract Terms Flashcards

The necessary elements of a contract are offer, acceptance, and consideration.

Mutual assent relates to the requirement that the parties agree to enter into a contractual relationship, including terms and conditions. It is usually proved by showing that one party made a valid offer and the other party made a valid acceptance.

An offer is a manifestation of present contractual intent which includes certain and definite terms; is communicated to the offeree; proposes a bargain in which the offeror's act, forbearance to act, or promise is exchanged for the offeree's act, forbearance to act, or return promise; and creates a power of acceptance in the offeree.

An acceptance is an unequivocal assent to the terms of an offer.

Consideration is that which is bargained for and given in exchange for a promise. It may be an act, a forbearance to act, or a return promise on the part of the promisee, but it must include a legal detriment to both parties in order to be valid

A bilateral contract results from an offered promise that is accepted by the giving of a return promise.

A unilateral contract results from an offered promise that must be accepted by giving the performance specified. A mere promise to perform does not constitute acceptance in such a case.

Under the mailbox rule, established in the case of Adams v. Lindsell, an acceptance of an offer for a bilateral contract, dispatched by an authorized mode of communication, is effective when mailed.

An option is a purchased right to perform or to require performance of the terms of a contract within a specified length of time.

Under the common law, a firm offer is an offer which is irrevocable because an option has been paid for by one of the parties. Under the UCC, an option need not be paid for if the firm offer will remain open for a certain or reasonable length of time not to exceed three months.

Under Caldwell v. Cline, if an offer states that it will be open for a certain number of days, the first day is the day the offeree receives the offer.

Revocation results from the canceling, annulling, or otherwise voiding of an offer. An offer may freely be revoked by the offeror unless:
1) the offer was for a unilateral contract and the offeree has
already begun performance;
2) the offer was a firm offer, in which case it terminates at
the end of the time stated without the need for further
action by any party; or
3) the offeree detrimentally relied on the offer.

A revocation is effective upon receipt by the offeree. A minority view holds that the revocation becomes effective when sent by the offeror.

The offeror in a unilateral contract may not revoke the offer for the time stated in the offer or if no time is stated in the offer, then for a reasonable length of time if the offeree begins performance.

A rejection is a manifestation by the offeree that he or she does not intend to accept the offer nor to give it further consideration.