Ch 12: Agreement in Traditional and E-Contracts

Agreement
An essential element for contract formation by which the parties must agree on the terms of the contract and manifest to each other their mutual assent to the same bargain.
Objective theory of contracts
Theory by which a party’s words and conduct are held to mean whatever a reasonable person in the offeree’s position would think they meant.
Offer
A promise or commitment to do or refrain from doing some specified action in the future.
Elements necessary for an offer to be effective (3)
1) The offeror must have a serious intention to become bound by the offer.
2) The terms of the offer must be reasonably certain, or definite, so that the parties and the court can ascertain the terms of the contract.
3) The offer must be communicated to the offeree.
Types of statements that are NOT offers because intent is lacking (8)
1) Expressions of opinion
2) Statements of future intent
3) Preliminary negotiations
4) Advertisements
5) Online auctions
6) Live auctions
7) Auctions with and without Reserve
8) Agreements to agree
9) Preliminary agreements (sometimes)
Necessary components of a contract in order to indicate definite terms were expressed (4)
1) The identification of the parties
2) The identification of the object or subject matter of the contract (also the quantity when appropriate), including the work to be performed, with specific identification of such items as goods, services, and land.
3) The consideration to be paid
4) The time of payment, delivery, or performance
3 Ways an offer can be terminated
1) Revocation
2) Rejection
3) Counteroffer
Revocation
An offeror’s act of withdrawing an offer. Usually the offer can be withdrawn as long as it is communicated to the offer before the offer accepts. It becomes effective upon being physically received.
2 Ways revocation may be accomplished
1) Express repudiation of the offer (such as “I withdraw my previous offer of October 17”)
2) Performance of acts that are inconsistent with the existence of the offer and are made known to the offeree (such as selling the offered property to another person in the presence of the offeree).
Option contract
A form of irrevocable offer. It is created when an offeror promises to hold an offer open for a specified period of time in return for a payment (consideration) given by the offeree. This action takes away the offeror’s power to revoke the offer for the period of time specified in the option.
Counteroffer
A rejection of the original offer and the simultaneous making of a new offer.
Mirror image rule
A common law rule by which the offeree’s acceptance is required to match the offeror’s offer exactly.
Cases for termination by law of the offeree’s power to transform the offer into a binding legal agreement (4)
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. ( A statute or court decision that makes an offer illegal automatically terminates the offer.)
2 Ways by which an offer can be terminated
1) By action of the parties
2) By operation of law
Acceptance
A voluntary act by the offeree that shows assent (agreement) to the terms of an offer. It can be words or conduct.
Circumstances in which silence may constitute acceptance (2)
1) When an offeree takes the benefit of offered services even though he or she had an opportunity to reject them and knew that they were offered with the expectation of compensation.
2) When the offeree has had prior dealings with the offeror.
Mailbox rule
Also known as the deposited acceptance rule. Says that acceptance takes effect, thus completing formation of the contract, at the time the offeree sends or delivers the communication via the mode expressly or impliedly authorized by the offeror. This means that if the authorized mode of communication is the mail, then an acceptance becomes valid when it is dispatched (placed in the control of the US Postal Service) – not when it is received by the offeror.
E-Contracts
Electronic contracts, or contracts formed online.
The minimum provisions for an online contract (7)
1) Acceptance of terms
2) Payment
3) Return policy
4) Disclaimer
5) Limitation on remedies
6) Privacy policy
7) Dispute resolution
Forum-selection clause
A clause contained in many online contracts which indicates the forum, or location, in which contract disputes will be resolved.
Choice-of-law clause
Clause included in many online contracts which specifies that any contract dispute will be settled according to the law of a particular jurisdiction, such as state or country.
Restatement (Second) of Contracts
A compilation of common law contract principles. It states that parties may agree to a contract “by written or spoken words or by other action or by failure to act.”
Click-on agreement
The agreement resulting from the act of clicking on a box indicating “I accept” or “I agree” to accept an online offer.
Shrink-wrap agreement
An agreement for which the terms are expressed inside the box in which the goods are packaged.
Browse-wrap terms
Terms which occur in transactions conducted over the internet and do not require Internet users to assent to the terms before downloading or using certain software. These terms are often unenforceable because they do not satisfy the agreement requirement of contract formation.
E-signature
An electronic sound, symbol, or process attached to or logically associated with a record and executed for adopted by a person with the intent to sign the record.
Partnering agreement
Agreement in which a buyer and seller who frequently do business with each other agree in advance on the terms and conditions that will apply to all transactions subsequently conducted electronically.
Record
Information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.