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MODULE 23 CONTRACTS 12
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C. Discussion of Essential Elements of a Contract

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a. May be either ~I). or.2!!! (or sometimes by actions) wltardrL -( , '/~
EXAMPLE: Offeror takes can of soup to check out stand and pays for it without saying anything.
Based on intent of offeror I J. L. I..L _.PI. /e' I P
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(1) Courts use€bjective tesS'to determine intent t./rt ( . b A f).'
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(a) That is, would reasonable person think that offer had been intended CJ tr:'c u/-e. et.
(2) Subjective intent (what offeror ac~ intended or meant) is~onsidered
(3) Promises made in apparent iestar not offers
?liJ !/()j-- /'Ca) Promises that objectively appear real are offers '.
,L d. '/},.u-? EXAMPLE: S says, "I offer to sell to you, B, my car for $5,000." This is an offer, even though S may be
(e;rg/G 'fl- actually joking, as long as given the way it was said, a reasonable person would think that S did intend to
make the offer to sell his/her car.
)4) Statements of opinion or of intent are@offers
EXAMPLE: A doctor tells a patient that he will fully recover in a couple of days, but it actually takes two
weeks. This is a statement of opinion, fJ!11 an offer. -
EXAMPLE: "I am going to sell my car for $400." This is a statement of intent, not an offer.
;{S) Invitations to negotiate (preliminary negotiations) are@ffers (e.g., price tags or lists, auc-
tions, inquiries, general advertisements)
EXAMPLE: A says: "What would you think your car is worth?" B says: "About $5,000." A says: "I ac-
cept your offer so I'll buy itfor $5,000." B never gave an offer. However, when A said that he would accept,
this is actually an offer that B may then accept if she wishes.
(a) When forming preliminary negotiations or preliminary agreements, courts will typically
. find a contract has been formed when all of the essential terms of an agreement are present
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3. Offer must be definite and ~ as to what will be agreed upon in contract under common law
(1) Courts allow some reasonable terms to beleft open ifcustomary to do so
EXAMPLE: C calls P, a plumber, to come and fIX a clogged drain. No price is mentioned. However, upon
P's completion of the work, he has the right to collect customary fee from C.
(2) Under UCC, output or requirements contracts are considered reasonably definite because out-
put is based upon actual output that does occur in good faith and requirements are actual good-
faith requirements .
d. Must be communicated to offeree by offeror or his/her agent . t ...•
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(1) Offeree may learn of a public offer (e.g., reward) in any way; s/he merely needs knowledge of
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e. Unilateral offer is one that expects acceptance by ~ction rather than with promise
. EXAMPLE: M says he will pay J $5 if she will mow his lawn. M has made a unilateral offer that is accepted when
J mows the lawn. If J never mows the lawn, there is no contract and therefore no breach of contract ..
y/fr.1) Unilateral contract contains o~ promise (offer by offeror) and acceptance by action
4. Bilateral offer is one that expects acceptance by a promise from
offeree
(1) Bilateral contract is formed when offeree accepts with a promise
EXAMPLE: R says to E, "Will you agree to workfor mefor three months at $5,000 per month?" This is a
(2) Bilateral contract
bilateral offer. contains twa..?promises
Mistakes in transmission of offer are deemed to be offeror's risk because s/he chose method of
communication; therefore, offer is effective as transmitted
5. Rejection by offeree
Termination of offer
(1) (a) Must be communicated to offeror to be effective
(b) Rejection is effective when received by offeror