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26 terms

Chapter Thirteen: Formation of Contracts

STUDY
PLAY
Offer
expresses enthusiasm of offeror to enter into a contractual agreement
To make an offer
the offeror must appear to intend to create a binding obligation
When a social invitation is made or when an offer is made in obvious jest or excitement
There is no contract
An advertisement in a newspaper is considered
an invitation to negotiate and is not an offer that can be accepted
An offer, and the resulting contract
must be definite and certain
If an offer is indefinite or if an essential provision is lacking
no contract arises from an attempt to accept it
If minor, ministerial, and nonessential terms are left for the future determination
the agreement is not to vague
When contract is to indefinite to be enforced
a court finds the intent of the parties and reaches conclusion that the contract is not indefinite
An offer and the resulting contract appearing indefinite may be made definite
by reference to another writing
An agreement may also be made definite
by reference to prior dealings of the parties and to trade practices
Some omitted terms may be
implied by law
A duty defined only in terms of best efforts is
accepted and is not to indefinite to be enforced
Divisible Contracts
when agreement consists of two or more parts and calls for corresponding performance of each part by the parties
Indefinite terms often tied to concept of
good faith performance or to independent factors that will be ascertainable at some time in the future
The indefinite term might be tied to
market price, cost to complete, production, or sales requirement
The law recognizes binding contracts in the case of a
requirements contract
Requirements contract
contract to buy all requirements of the buyer from the seller
The law also recognizes as binding an
output contract
Output contract
contract of producer to sell the entire production or output to given buyer
Sometimes offeree performs the act called for by the offeror
without knowing of the offer's existence
Offers may be terminated by
revocation, counteroffer, rejection, lapse of time, death or disability of a party, or subsequent illegality
Offeror can revoke offer
before it is accepted
Ordinary offer may be revoked
at any time before it is accepted even if stated period has not expired
Revocation of offer is effective
only when it is made known to offeree
Written revocation is effective when
it is delivered to offeree
Option Contracts
a binding promise to keep an offer open for a stated period of time or until a specific date