Understanding, Creating, and Implementing Contracts

Week 2
 Agreement
 Invalid Assent
 The manifestation (or indication) of
mutual assent by the parties.
Objective Standard
 An objective standard is used to
determine whether parties had a
“meeting of the minds”.
 Looks to what a reasonable person
would believe, based on the
 An indication of current willingness to
enter into a contract, communicated
by the person making the offer.
 Something promised, given,
refrained-from, or done that has the
effect of making an agreement a
legally enforceable contract.
Open Terms
 Under the UCC a contract may form
despite a failure to specify certain
 Also called “gap-filling”
 Under common law, an offer that is
not, in itself, a contract, can be
revoked at any time before
acceptance (unless promissory
estoppel applies).
Firm Offer
 A UCC rule under which no
consideration is required to hold offer
open between merchants.
 Offeree terminates offer
 If an offeree rejects an offer, the
rejection terminates the offer and any
subsequent attempt to accept is an
Counter Offer
 Offeree responds to offer with an
 Acceptance is compliance or
agreement by one party with the
terms and of another’s offer so that a
contract forms.
Implied Acceptance
 Normally, “pure” silence does not
operate as acceptance
 Acceptance can be implied based on
behavior, partial performance, or past
Mailbox Rule
 Common law rule
 Acceptance occurs when dispatched
by appropriate means
Mirror Image Rule
 Common law rule
 Acceptance must be identical to offer
Battle-of-the-Forms Rule
 UCC rule
 Overrides mirror image rule when
merchants use forms
Invalid Agreements
 When does offer plus acceptance not
equal a contract?
 Apparent agreements may be invalid
because of duress, fraud, mistake, or
 Fraud is a false statement of material
fact, made with intent to deceive, on
which another reasonably relies, to
his or her detriment.
 Misrepresentation is a false statement
made without intent to deceive, upon
which a party justifiably relies to his
or her detriment.
 The concept of mistake is generally
limited to mutual mistakes about the
“basic assumptions” of fact in cases
where the parties have not
specifically allocated risk with respect
to assumptions.
 Duress is a wrongful threat, intended
to induce action by the other party.
Undue Influence
 A special relationship can give one
person undue influence over another.
 If the dominant party takes
advantage of that position in entering
a contract, the agreement may be
 Often, undue influence involves a
fiduciary relationship —a relationship
in which one party is obliged to act in
the best interest of the other party.
 A contract that is so unreasonable
that it is “shocking”.