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Basic requirements for formation
- No valid defenses
Unsolicited and voluntarily sent goods are considered unconditional gifts in NY.
Def of Offer
Communication that gives power to reecipient to conclude contract by acceptance. Must show present intent to contract, and must include essential items in definite terms.
Termination of offers
- Lapse of time in offer
- Death or mental incapacity of offeror
- Destruction or illegality of offer's subject matter
- Revocation - part performance on unilateral contract bars revocation
UCC Firm offer rule
A UCC offer to buy or sell goods is irrevocable if:
- offeror is a merchant
- there are assurances that the offer will remain open
- the assurance is contained in an authenticated writing
Mirror image rule and UCC Battle of forms rule
Mirror image rule
: Acceptance must mirror the offer. Modifications act as a rejection and new offer.
UCC Battle of the forms rule
- Between non-merchants, or merchant and non-merchant - Acceptance need not mirror offer. Modifications are treated as a proposal for addition to the contract that must be accepted or rejected separately by the original offeror.
- Between merchants - Knockout rule applies
NY Rules: Promise of reward and options
Promise of reward for finding lost property will be enforceable if in writing or otherwise caused to be published.
Option: If offer is made in writing, signed by offeror, and contract specifies offer is irrevocable, then may not be revoked during the stated time period. Consideration is not required to keep offer open. Does not apply to offers by merchants to buy or sell goods.
Def of consideration
Legal detriment that was bargained for. Must be something of substance
- promise for promise to do something
- promise for promise to refrain from doing something
- promise for performance
- promise to refrain for promise to do.
- Warranties on transfers of real property do not need to be supported by consideration if written into the deed or conveyance and recorded.
- Past or executed consideration will be valid basis for contract if the past consideration is (1) expressed in writing, (2) proved to have been given or performed, and (3) would been valid consideration at the time given or performed.
Promises that are binding without consideration:
Promise to pay debt barred by statute of limitations
Promise to perform a voidable duty
Promise to pay a fixed amount for benefits received
Enforces a promise not supported by consideration where:
- promisor should reasonably expect promise to induce action on part of promisee
- promise does induce such action
- injustice can be avoided only by enforcement of the promise.
Excuses for contract
- Misrepresentation (fraudlent or nonfraudulent misrepresentation or nondisclosure)
- Undue influence (special or confidential relationship)
Defenses to formation
- Lack of capacity (infancy, mental illness, guardianship, intoxication, corporate incapacity)
- Public Policy
- Infancy NOT a defense for contracts involving marital homes, artistic or athletic services, student loans (for 16 years and older), and life insurance contracts (for 14 1/2 years or older)
- Usury is available for contracts that include interest rates of more than 25%.
- Exculpatory clauses limiting liability can be applied to negligence claims, but are unenforceable against gross negligence claims. BUT not available even for ordinary negligence in construction, repair, and maintenance contracts, and those pertaining to pools, gyms, and places of public amusement.
- Pay if Paid Contracts - agreements in which subcontractors are not paid unless general contractor is paid are unenforceable.
Implied in fact contract
Conduct indicates an agreement between parties
Without paying, B joins a tour group. The tour guide can charge B the fee for the tour because B’s conduct of joining the group implied agreement with the contract.
Contract implied in law
- plaintiff has measurable benefit from defendent
- plaintiff acted with gratuitous intent
- it would be unfair for the defendent not to have to pay for the benefit (e.g., defendent had opportunity to decline benefit, or plaintiff had reason for not seeking approval before offering the benefit
Types of warranties provided in sale-of-goods contracts
- Express warranty
- Implied warranty of merchantability (only where seller is a merchant)
- Implied warranty of fitness for a particular use (seller need not be a merchant)