(thing) by Loon Sun Dec 03 2000 at 9:23:22
The basic formula for the formation of a contract is: Contract = Offer + Acceptance + Consideration + No Defenses

Some definitions:
-Unilateral contract: A promise for an action.
-Bilateral contract: A promise for a promise.


  1. The first question to ask when discussing contracts is, "What law applies?"
    1. Uniform Commercial Code (UCC): Generally under the UCC's jurisdiction when there is a transaction of goods.
    2. Common law: This applies to basically everything else.
  2. Offer: Was it a unilateral offer, bilateral offer or an offer under the UCC?
    1. Was there commitment?
      1. Prior dealings: Look at the history between the offeror and the offeree. Had they done this sort of thing before? If so, then there is evidence of commitment.
      2. Industry norms: What does the industry do? If the offer is similar to what the industry usually does, there's another vote for commitment being present.
      3. Circumstances: What circumstances was the offer made? Was the offeror drunk or mentally incapacitated? If the circumstances were normal, then that points towards commitment.
      4. Language: The language of the offer is also important in that it is clear.
    2. Was the offer communicated to the offeree?
      1. Actual communication: This is where the offeror sees that the offeree knows about the offer.
      2. Attempted communication: You know what it means.
    3. Does the offer contain definite terms?
      1. For real estate: Only need description (location usually) and price.
      2. For goods: Only need a quantity.
      3. For service: Define a duration or a specific task.
    4. Termination of the offer.
      1. Counteroffer: When the offeree wants to change the terms of the offer, the original offer is terminated and a new offer stands.
      2. Death/incapacity of offeror/offeree: When either the offeror or offeree is dead or incapacitated, the offer is terminated.
      3. Lapse of time: There is implied rejection if the offer is left unanswered, usually around one month unless otherwise specified in the original offer.
      4. Express rejection: When the offeree says, "No."
      5. Destruction of subject matter: If the subject of the offer is destroyed, then the offer no longer stands.
      6. Expressed Revocation: When the offeror says, "I don't want to offer this anymore," and there is no clause in the offer saying that the offeror cannot revoke the offer.
      7. Implied Revocation: This is when through actions, it is clear that the offer no longer stands. Example: John offers to sell Tanya a car for $5,000. Tanya does not give an answer yet. Tanya sees Monica driving John's car around. There is implied revocation of the offer because John can no longer sell his car to Tanya because he's already sold his car to Monica.
      8. Illegality: If the offer asks for an illegal act, then the offer is void.
  3. Acceptance
    1. Unilateral contract: Acceptance through actions.
    2. Bilateral contract: Acceptance through a promise.
    3. UCC: Acceptance through eitheran action or a promise. However, if the action is a shipment, but the shipment will take a long time, then a promise will do.
    4. Mirror image rule (common law): The acceptance must have the same exact terms as the offer, or else a counteroffer exists.
    5. New terms allowed: Some allow that new terms can be made conditions to the original offer. There is acceptance of the original offer, and each additional condition will be treated as a separate offer.
    6. Mailbox rule: The offer is accepted when the offeree's acceptance letter is handled by a postal worker.
  4. Consideration
    1. Exists when the following conditions are met:
      1. There is a bargained-for exchange.
      2. There is a legal detriment or benefit.
      3. The contract cannot be illusory; it must be binding and obligatory.
  5. No defenses. Some defenses are as follows:
    1. Statute of Frauds: Says that the contract should be in writing to prevent any dispute.
    2. Misrepresentation: There must be no misleading or incorrect information in the contract, unless it was a typographical mistake in the contract.
    3. Fraudulent misrepresentation: This is the intentional purveying of false information to one party, and that party justifiably relies on this misrepresentation.
    4. Mutual mistake: When both parties are under the same false belief regarding the terms of a contract.
  6. Performance
    1. Full performance requires full payment.
    2. Substantial performance only requires "substantial" compensation.
    3. No performance requires no payment.

Okay, got that? Great. Be careful making contracts--don't let yourself get fucked.

I like it! 1 C!