Professor Marotta-Wurgler Contracts, Fall 2011 Elements of a Contract 1. Mutual Assent a. Objective b. Serious (Lucy v. Zehmer, Leonard v.

Pepsico) 2. Offer a. Expiry with the passage of time b. Termination of the offer before its expiry (R36) i. Rejection ii. Counteroffer iii. Offerors death or mental disability iv. Revocation (unless an option) Only effective when it is communicated to the offeree by a. Offeree received notice of revocation, or b. Offeree has learned from other reliable sources (Dickenson v. Dodds) 3. Acceptance a. Offeror has the power to prescribe the form & method, offeree manifests assent b. Mirror image rule (material changes to the offer is not OK) i. Exception: Standard form (UCC 2-207) c. Did the offeror specify a form of acceptance is mandatory and exclusive? i. Yes: offeree must comply exactly ii. Specify but not exclusive: reasonable method that is consistent with the prescribed mode and provides offeror the same level of protection iii. No: any manner reasonable under the circumstances Mailbox rule: acceptance takes effect as soon as it is put out of the offerees possession (if the form is valid) a. Offeror bears the risk of uncertainty b. BUT: if acceptance follows a counteroffer or rejection, it is effective on receipt d. Acceptance by promise for future actionBILATERAL CONTRACT i. Both parties have outstanding promises to be performed in the future e. Acceptance by complete act of performance UNILATERAL CONTRACT i. Offeror has outstanding promise f. Acceptance by future action OR performanceBilateral OR unilateral i. Ex: seller offers land if you come in with $ on Friday, you give written acceptance on Monday ii. Ex: seller offers $ if someone will accept job to cut trees, you cut tree (limit: timebarred, cant perform way later) g. Acceptance by performance that cannot be accomplished instantly

i. R2 62 (when offer does not mandate acceptance by performance): commencement of performance constitutes an implied promise to complete the performancebilateral contract was formed upon commencement ii. R 2 45: (when offer calls for performance as the exclusive mode): commencement of performance creates an option, offer becomes irrevocable. If offeree fails to complete performance before the option lapses, no paymentunilateral contract h. Notice when offer is accepted by performance i. If performance is rendered directly to or in the presence of the offerorordinarily the offeree has no duty to notify ii. If nom and the offeror has no reasonably prompt and reliable of learning itduty i. Acceptance of unknown terms (Terms are available after acceptance) i. Terms are no included as part of the contract b/c offeror cannot unilaterally impose terms on the offeree after the contract was formed ii. Terms are standard and are applicable if reasonably expected iii. Delivery of the terms is the offer and buyer accepts if he does not reject within a reasonable time ProCD: buyer accepted by using the software, terms expressly allowd the buyer to return for refund iv. Looks at the term to see if offeree had a reasonable opportunity to become aware of it, and if the term is fair and within reasonable expectation Carnival Cruise: as a matter of policy, forum selection clause reduces cost to travellers and limits liability to cruise line 4. Counteroffer a. R2 39: offer by the offeree to the offeror, relating to the same matter as the original offer and propsing a different substitute bargain i. Both a rejection and a new offer