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MS 331 Ch8

Business Law: Ch 8 Contracts: Agreement in Traditional and E-Contracts

What are the four requirements for a contract? Agreement, Consideration, Capacity, and Legality
Define: agreement Parties must mutually assent to the same terms
What are the two components of an agreement? Offer and acceptance
Define: Offeror party making the offer
Define: Offeree party the offer is made to/reciever
Define: Offer a promise to do or to not do something in the future
Common law requires 3 elements [offer] offeror's serious intention; reasonably certain terms; communication of offer to offeree
Assuming the other two elements exist [capacity and legalilty], once the ____ is communicated, _______by offeree creates a binding contract offer; acceptance
Intenion [to make an offer] must have the offeror's ____, ______ intention serious, objective
OFFER: What does serious, objective intention include? reasonable person standard, not subjective i.e. beliefs or assumptions, not met with offers made in anger, jest, excess excitment
T or F ex of Serious Intention: Expressions of opinion (i.e. doctor opinion a leg will probably heal in a few weeks) False
T or F ex of Serious Intention: Statement of future intent False
T or F ex of Serious Intention: Preliminary negotiations, or invitation to negotiate Flase
T or F ex of Serious Intention: Advertisements False - generally not offer (invitations to negotiate)
T or F ex of Serious Intention: Price lists/prices subject to change False - generally not offer (invitation to negotiate)
AUCTIONS: Invitations to submit ______ by bidders offers (bidders are offerors)
AUCTIONS: Bidders can _______ before auctioneer yells “sold” or auction “ends,” auctioneer can __________ revoke bids; reject bids as well
AUCTIONS: Once auctioneer accepts bid (usually highest)_____________________ . All other bids rejected / terminated contract is formed with that high bidder
AUCTIONS: What is an auction without reserve? highest bidder wins, seller cannot reject high bid
AUCTIONS: What is an auction with reserve? Seller sells only if reserve price bid or decides to sell
What are Agreements to Agree? Occurs in ongoing negotiations, parties agree on some terms, not all yet.
Are agreements to agree enforceable? Yes, it can be enforceable if parties intend to be bound
OFFER: Define: reasonable certain terms Terms definite enough so a court can tell if a breach occurred
OFFER: Generally required defined terms (expressly or inferred) include [4 required components]: Identification of the parties; Identification of the concerned subject matter; What consideration given; Time of payment, delivery, and/or performance
OFFER: Define: Communication of offer to offeree Made directly by offeror or through agents
What are the ways that an offer can be terminated? [2 different ways] Termination by action of the parties; or termination by operation of law
What are the 3 ways an offer can be terminated by action of the parties? 1. Revocation of the offer by offeror 2. Rejection of the offer by the offeree 3. Counteroffer by offeree
[OFFER] Define: Irrevocable Offers An offer that once made, cannot be revoked if offeree has acted on justifiable reliance of the offer (changed legal position)
[OFFER] Define: Option Contract Offeror promises to hold offer open for a length of time in return for consideration (payment) -Often used with real estate
[OFFER] Define Revocation: The offeror’s act of withdrawing an offer
[OFFER] Define: Counteroffer Rejection of the original offer (termination) and the simultaneous making of a new offer
[OFFER] Define: Mirror Image Rule Common law concept defining what is acceptance of an offer vs. a counteroffer ---- terms of acceptance must "mirror" the offer terms
[Mirror Image Rule] Terms of acceptance must “____” the offer terms, if they are “_____” different, then the “______” is not a true acceptance, but a counteroffer mirror; materially; acceptance
Can revocation only be written to terminate an offer? No, can be made by communication (oral/written) or performance inconsistent with the existence of the offer
What are the 4 ways an offer can be terminated by Operation of Law? 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
Describe termination of an offer -- Lapse of time Offer terminates by law when specified (in offer) time period has elapsed
If there is no specified time period to accept the offer then, _______ before the offer is terminated a "reasonable" time has passed
Describe termination of an offer -- Destruction of the specific Subject matter of the offer 1. SM of contract destroyed before offer was accepted 2. SM of contract destroyed shortly after acceptance
Describe termination of an offer -- DEATH or incompetence of offeror or offeree Upon death, offer terminates
Is there an exception to termination of an offer due to death or incompetence? Yes. Irrevocable offers (can pass onto heirs)
Describe termination of an offer -- Illegality Legislature (state / fed) could make something relevant to contract illegal --- terminates relevant part of contract
Describe termination of an offer -- Revocation by offeror Offer can be withdrawn anytime before offeree accepts the offer
Describe termination of an offer -- Rejection by offeree Rejection of offer by “words or conduct” of offeree terminates the offer
Describe termination of an offer -- Counteroffer by offeree Rejection of the original offer (termination) and the simultaneous making of a new offer
Does inquiry about the offer constitute rejection? NOPE - reasonable person standard, would the words/conduct be a rejection (i.e. "can you go any lower?)
Define: Acceptance A voluntary act by the offeree which shows assent (agreement) to the terms of an offer
[Acceptance] Generally, _____ must accept not _____ oferee; 3rd parties
[Acceptance] (Generally) Is silence considered acceptance? No. An offeree should not be legally obligated to affirmatively reject offers
[Acceptance] Is silence considered acceptance even if the offeror has term "silence is acceptance"? No
[Acceptance] Is silence considered acceptance if the offeree has a duty to speak? Yes. Offeree takes services offered with the opportunity to reject (and knows payment was expected) - EX: Prior deals with offeror
[Acceptance] Define: communication of acceptance in a Bilateral Contract Communication of acceptance is necessary because there is a mutual exchange of promises
[Acceptance] Define: communication of acceptance in a Unilateral Contract Acceptance is evident by performance, notification not necessary
[Acceptance] General rule: in bilateral contracts, acceptance is timely if ______________ it is made before offer is terminated
[Acceptance] The mailbox rule: acceptance is effective when __________________ offeree uses authorized means of acceptance (express in contract or implied) ----- US mail; when placed in control of U.S.P.S.
[Acceptance] What are exceptions to the mailbox rule? (3) If Offeror specifies that acceptance will not be effective until it is received If acceptance is sent after rejection, whichever is received by Offeror first takes precedence Dealings in person, phone, or fax
[Acceptance] Can the mailbox rule apply to emails? Yes. If: Parties agree to conduct transactions electronically; UETA applies (most states adopted in some form)
[Acceptance] Describe authorized means of communication Can be expressly authorized by the Offeror or implied by facts surrounding the situation
[Acceptance] Acceptance sent by means not expressly or impliedly authorized, acceptance is not effective until __________________ received by the Offeror
[Acceptance] Describe substitute method of acceptance Effective if substitute serves the same purpose (FedEx vs. UPS) --also not effective until received by offeror
Agreement in e-contracts: Usually involve ___________________________ sale of goods or licensing of software
Electronic contracts will require the elements of a contract, which are ___ intent, agreement, consideration, capacity, and legality
Online offers --- Seller’s website should include a hyperlink to __________ full contract –readable form (font size and clear terms)
Online offers: Should include: ____ (7) 1.Acceptance of terms – how to show acceptance, “I accept” checkbox 2. Payment method 3.Return policy 4.Disclaimer - of liability 5.Limitation on remedies if goods are defective 6.Privacy policy 7.Dispute resolution
What are the 3 types of online acceptance? 1.Click on agreements 2.Shrink-wrap agreements 3.browse-wrap terms
[Online Acceptance] Describe: Click on agreements Agreements made when you click “I agree” such as before the install of new software, upgrades, etc.
[Online Acceptance] Describe: Shrink-wrap agreements Contract terms are inside the box; Party opening box agrees to terms by keeping merchandise
[Online Acceptance] Describe: browse-wrap terms Like click-on agreements, can occur over a website; Unlike click-on agreements, browse-wrap agreements do not require assent to use product/software and are usually unenforceable
[Online Acceptance] Describe: E-signature technologies 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
T or F: Law requires parties to read all the terms of the contract to be enforceable False
T or F: Browse-wrap terms are usually enforced False; usually unenforceable
T or F: e-signatures are enforceable True --- For an e-signature to be enforceable, the contracting parties must have agreed to use electronic signatures
[UETA] What is the UETA? Uniform Electronic Transactions Act
[UETA] Describe the impact of the UETA on e-commerce Proposed law for adoption by states with the purpose of removing barriers to e-commerce – to treat electronic records the same as paper documents
[UETA] A _____ is information that is inscribed on a tangible medium or stored in electronic or other medium that is retrievable in visual form record
[UETA] ________provides that if a state passes UETA (unmodified), it is not preempted by the______ act (state law will govern) E-SIGN; E-SIGN
[UETA] Agreement: UETA only applies if __________ both parties have agreed to conduct transactions by electronic means, but may be implied by conduct
[UETA] T or F: UETA applies to wills and testamentary trusts FALSE :D
[UETA] Define Attribution Refers to the procedures that may be used to ensure the person sending an e-record is the same person whose e-signature is on the record
T or F: A typed name at the bottom of an e-record qualifies as a signature True
Created by: savelae