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Business Law Ch 8

Summary of slides for Chapter 8 of Fundamentals of Business Law

What must a contract have? Agreement, Consideration, Capacity, and Legality
What is an agreement? How many parts are to an agreement? Parties mutually assent to the same bargain; 2
What is/are the component(s) to an agreement? Offer and Acceptance
Offeror party making the offer
Offeree party receiving the offer
Offer Promise to do or not to do something in the future
What 3 elements does common law require for an offer to be valid? 1. Offeror's serious intention 2. Reasonably certain terms 3. Communication of offer to Offeree
What must intent be? reasonable, serious, and objective. follows the reasonable person standard
When is the intention requirement for a contract usually not met? When offer is made in anger, jest, or excess excitement
Is an expression of opinion an offer? No
Is a statement of future intent an offer? No
Are preliminary negotiations or invitations to negotiate an offer? No
Are advertisements an offer? Generally not
What are agreements to agree? Parties agree on some terms but not all yet.
Can agreements to agree be enforceable? Yes, if the parties intend to be bound
What are reasonably certain terms? terms definite enough so that a court can tell if a breach occurred
What are generally required defined terms in a contract (whether expressly stated or inferred)? 1. identification of the parties 2. identification of the concerned subject matter 3. what consideration was given 4. time of payment, delivery, and/or performance
How is the communication of offer to offeree performed? when the offer is made directly by offeror or through agents
How can an offer be terminated prior to acceptance? termination by action of the parties or by termination as an operation of law
What is termination by action of the parties? Revocation by the offeror, revocation, irrevocable offers, option contract, rejection of the offer by the offeree, and couteroffer by the offeree
Under revocation of the offer by offeror, the offer can be withdrawn when? anytime before the offeree accepts the offer
When is revocation by the offeror effective? when communicated to offeree or offeree's agents
What is revocation? the offeror's act of withdrawing an offer
How can a revocation be made? through communication (oral/written) or by performance inconsistent with the existence of the offer
How can an offer made to the general public be revoked? In the same manner that the offer was made
What are irrevocable offers? offers that, once made, cannot be revoked if the offeree has acted on justifiability of the offer (???)
What is an option contract? where an offeror promises to hold offer open for a length of time in return for consideration (typically payment)
How can an offeree terminate an offer? Through rejection of offer by "words of conduct"
When does the rejection of an offer by the offeree become effective? when the rejection is received by the offeror or their agents
Does inquiry about an offer constitute as rejection? no
What is a counteroffer by the offeree? when the offeree rejects the original offer while simultaneously making a new offer
Mirror Image Rule terms of acceptance must "mirror" the offer terms; if they are "materially" different, then the "acceptance" is actually a "counteroffer"
Where is the mirror image rule used and why? Used by common law to define what is acceptance versus a counteroffer
How can an offeree's power to turn an offer into a binding contract be cut short? 1. Lapse of time 2.Destruction of the specific subject matter of the offer 3. Death or incompetence of the offeror or the offeree 4. Supervening illegality of the proposed contract
After what period of time does an offer run out? usually a specified time period; if no specified time period, then after a "reasonable" amount of time has passed as determined by the subject matter of the contract, market conditions, etc
What is an exception to death terminating an offer? an irrevocable offer (passing onto heirs)
What is acceptance? An unequivocal, voluntary act by the offeree which shows agreement to the terms of an offer
Can a 3rd party accept for an offeree? Typically not.
Is "I accept" or "I accept if..." an unequivocal acceptance? Only the first option is unequivocal acceptance
Can silence be acceptance? Only if the offeree has a duty to speak (reject)
If an offeror has a term stating that silence is acceptance, is silence acceptance? Not necessarily
How must acceptance be communicated in a bilateral contract? Through direct communication because there is a mutual exchange of promises
How must acceptance be communicated in an unilateral contract? Notification isn't necessary; acceptance is evident by performance
When is acceptance "timely" for bilateral contracts? If made before offer is terminated
Mailbox rule acceptance is effective when offeree uses authorized means of acceptance (express in contract or implied)
If no means are specified, how can acceptance be communicated or delivered? Though any reasonable means
What are exceptions to the Mailbox rule? if offeror specifies that acceptance will not be effective until received; if acceptance is sent after rejection, whichever is received first by offeror takes precedence; dealings in person, phone, or fax; emails if parties agree
What are authorized means of communication of acceptance? methods expressly authorized by the offeror or implied by the situation
When acceptance is sent by means not expressed or implied, when does acceptance become effective? Once it is received by the offeror
What are electronic contracts? contracts involving the sale of goods or licensing of software
What do electronic contracts require? same as normal contract: intent, agreement, consideration, capacity, legality
How should online offers be made? By displaying the offer. The seller's website should have a hyperlink to a full contract in a readable form.
What terms should be in a contract for an online offer? Acceptance of terms, payment method, return policy, disclaimer, limitation on remedies (if goods are defective or contract is breached), privacy policy, and dispute resolution
How do click-on agreements work? When you click "I agree" you are accepting the terms of the contract
If someone does not read all the terms of an agreement before clicking "I agree" online, is the contract still enforceable? YES
Shrink-Wrap agreements contract terms are inside the box; by opening the box the party agrees to terms and will keep the merchandise
Are the terms in shrink-wrap agreements enforceable or unenforceable? It's debated often, due to the inability to read terms prior to opening
Browse-Wrap terms do not require assent to use product/software
Are browse-wrap contracts enforceable? Usually not
What is an E-signature? an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record
What is a digitized signature? graphical image of a handwritten signature
What act gives e-signatures and e-documents legal force? E-SIGN act (2000)
In order for e-signatures to be enforceable, what must the contracting parties have agreed to use? electronic signatures
What are partnering agreements? Parties frequently do business together and agree to the terms in advance in order to create efficiency
Uniform Electronic Transactions Act (UETA) proposed law for adoption by state to treat electronic records the same as paper documents
What is a "record"? information that is inscribed on a tangible medium or stored in electronic or other medium that is retrievable in visual form
If a state passes the UETA unmodified, does it have to follow E-SIGN? No; state law governs
If a state passes the UETA with modifications inconsistent with E-SIGN, does it have to follow E-SIGN? Yes; E-SIGN will be preempted
What are the requirements for states to enact alternative e-record and e-signature statutes? the statutes must be consistent with E-SIGN act provision, they cannot give greater legal status to any one technology, and if created after 2000 the statute must refer to E-SIGN act
What is an agreement under the UETA? agreed to conduct transactions by electronic means, but may be implied by conduct (ie an email address on a business card)
Under UETA, if a party has previously agreed, can they withdraw consent? Yes; they can opt out
Does the UETA apply to wills or testamentary trusts? No
What is attribution under UETA? procedures to ensure the person sending an e-record is the same person whose e-signature is on the record
Under the UETA, does typing your name at the bottom of an email count as a signature? Yes
If a persons name is not on the record, can it still have a legal effect binding the person under the UETA? potentially; courts look at surrounding circumstances
Does the UETA control issues regarding agency, fraud, authority, forgery, and contact information? No; state laws control these
Can notaries sign electronically under the UETA? yes
Created by: fredrickss