Process of Contract Formation - Law of Contract - Lecture Slides, Slides of Contract Law

Download Process of Contract Formation - Law of Contract - Lecture Slides and more Slides Contract Law in PDF only on Docsity! Reaching Agreement: The Process of Contract Formation C. LIMITING THE OFFEROR’S POWER TO REVOKE: THE EFFECT OF PRE-ACCEPTANCE RELIANCE 1. Under the common law, the offeror may revoke the offer anytime before acceptance by the offeree. 2. Although this is the common law approach, this rule is not a universally accepted rule regarding the offeror’s power to revoke. Under Article 16 of the Convention on Contracts for the International Sale of Goods: a. Until a contract is concluded an offer may be revoked if the revocation reaches the offeree before he has dispatched an acceptance. b. However, an offer cannot be revoked: 1. If it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable; or 2. If it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in reliance on the offer. 2. Under the common law, the offer is irrevocable only if consideration is given for the promise not to revoke. 3. Is, reliance a basis for making the offer irrevocable? Docsity.com Reaching Agreement: The Process of Contract Formation C. LIMITING THE OFFEROR’S POWER TO REVOKE: THE EFFECT OF PRE-ACCEPTANCE RELIANCE 4. James Baird Co. Gimbel Bros., Inc.. 5. Drennan v. Star Paving Co. 6. Berryman v. Kmoch 1. Under the common law, is consideration necessary to the creation of an option contract? 2. Is the Restatement (2nd) Contracts consistent with the common law rule regarding the need for consideration as condition to formation of an option contract? 7. Pop’s Cones, Inc. Resorts International Docsity.com Reaching Agreement: The Process of Contract Formation E. QUALIFIED ACCEPTANCE: “THE BATTLE OF FORMS” 3. To increase the efficiency of the contract formation process with respect to reoccurring transactions, "standard form", pre-printed contacts are utilized. a. These documents will have blanks where the name of the parties, quantity of goods sold, price, and deliver requirement will be entered. b. The balance of the agreement, often involving several pages, will contain default provisions, remedies, and other matters specific to the particular business or industry. 4. We have stated over and over again in this course a. The rules of classical contract law were fashioned on the assumption that the contract formation process follow the conventional offer-acceptance model. b. Under this model, an offer is made, after which the offeree may accept or reject it. c. If rejected, the offeree may submit a counteroffer. d. The counteroffer will itself be an offer which may be accepted or rejected by the original offeror. This may no be what generally occurs in business toady. Docsity.com BATTLE OF THE FORMS: CLASSICAL APPROACH Company Purchase of 1000 Laptop Computers Company Submits its Purchase Order Form For Purchase of 1000 Laptop Computers at a Total Price of $400,000 Sends Acceptance Form With No Additional Clauses. Is Contract Formed? Tellex, Inc. Purchase Order Form Includes Consequential Damages Clause, Making Seller Liable for Damages Proximately Caused by Failure to Timely Deliver Goods. CompUSA Docsity.com BATTLE OF THE FORMS: CLASSICAL APPROACH Company Purchase of 1000 Laptop Computers Company Submits its Purchase Order Form For Purchase of 1000 Laptop Computers at a Total Price of $400,000 Sends Acceptance Form With Additional Clauses, Limiting Liability for Late Delivery. Is Contract Formed? Is this a counteroffer? If Tellex, Inc. accepts delivery, what are the contract terms? Tellex, Inc. Purchase Order Form Includes Consequential Damages Clause, Making Seller Liable for Damages Proximately Caused by Failure to Timely Deliver Goods. CompUSA Docsity.com THE BATTLE OF FORMS CONTRACT FORMATION UNDER UCC 2-207 WHEN ACCEPTANCE VARIES TERMS OF THE OFFER Reaching Agreement: The Process of Contract Formation E. QUALIFIED ACCEPTANCE: “THE BATTLE OF FORMS” Docsity.com Section 2-207(1) of the UCC 1. ANSWERS THE FOLLOWING QUESTION: 2. IS A CONTRACT FORMED WHEN OFFEREE’S ACCEPTANCE CONTAINS TERMS THAT DIFFER FROM THE TERMS OF THE OFFER? 3. That provision provides a. A definite and seasonal expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon; b. Unless acceptance is expressly made conditional on assent to the additional or different terms. Reaching Agreement: The Process of Contract Formation E. QUALIFIED ACCEPTANCE: “THE BATTLE OF FORMS” Docsity.com BUYER FORWARDS ORDER FORM W CONSEQUENTIAL DAMAGES PROVISION SELLER SENDS ACCEPTANCE FORM W/ NEW DELIVERY PROVISION Reaching Agreement: The Process of Contract Formation E. QUALIFIED ACCEPTANCE: “THE BATTLE OF FORMS” YOU HAVE A CONTACT Docsity.com UNDER UCC 2-207(2) If the parties are merchants, The Additional Terms becomes A PART OF THE CONTRACT UNLESS CERTAIN THINGS OCCUR Docsity.com IF ANY THE FOLLOWING EVENTS OCCUR, THE ADDITIONAL TERM WILL NOT BECOME A PART OF THE CONTRACT (1) THE OFFER EXPRESSLY LIMITS ACCEPTANCE TO THE TERMS OF THE OFFER Docsity.com (2) THE ADDITIONAL TERMS MATERIALLY ALTERS THE CONTRACT Docsity.com