Contracts

-Bilateral – two promises (pay for a service), Unilateral – one promise (pay whoever does the act)
-Formation of contract requires Offer, Acceptance, Consideration, Lack of defenses
-Definite terms (may be implied) – price, parties, nature, quantity, time for performance
-Intent to make offer. Advertisement has no intent unless specified scope
-Communicated to offeree – constructively received when available to offeree
-Terms of offer must be definite. Can be implied by behavior/conduct
-Implied in law (quasi)– court decides parties should be treated as if they had a contract (Dr. fooled into free services)

Acceptance- Mirror image rule and early acceptance rule

-Mirror image – must accept all terms without alteration, otherwise it is a counteroffer
-Early acceptance – acceptance is effective when transmitted unless specified by offerer
-Conditions precedent – accept that cites events outside the contract is an acceptance (will buy house if loan approved)
-Unilateral requires performance, bilateral can have merely a promise

Sales contracts
-Sale of goods (tangible personal property that is movable) NOT REAL PROPERTY/SERVICES
-Must still have Offer, Acceptance, Consideration

Offer – can be based on standard trade practice or past experience

-Only type & quantity must be explicit. NOT price/delivery date/etc.
-Output contract – buyer agrees to buy as much as seller can produce in certain time, buyer sells all output to buyer
-Requirements contract – seller agrees to supply all needs of buyer for certain time, buyer buys all from seller only
-Liable for extra needed if could be reasonably forseen
-Firm offer – cannot be revoked, even if no consideration. Firm if signed, under 3 months, made by a merchant
-Merchant – someone who deals in the goods on a regular basis

Acceptance – can have minor variations from offer (payment terms, warranty change, no mirror offer rule)
-Auction is an invitation to offer, bid is the actual offer
-Reserve – can withdraw goods before acceptance. Without reserve – sold to highest bidder
-Merchants do not require consideration for contract change. Must object to buyer changes or assumed accepted

-Statute of frauds (UCC) – certain contracts must be in writing

-Unique goods requested by buyer, performance has already occurred, admitted in court,

Title & Risk of Loss Transfer – Title is whose books the asset is on at YE, Risk is who bears risk of loss if goods are lost
-Goods must exist and be identified by contract
-Contract terms determine title/risk, if not contract then shipping terms determine
-Shipment contract – title and risk transfer when placed with carrier
-Destination contract – title/risk transferred when tendered to the buyer
-Not a common carrier – buyer picks up goods, then title passes when contract formed,
-Merchant – risk changes when received by buyer, Non Merchant – risk changes when tendered
-Common carriers are liable for losses regardless of negligence, not liable if by natural disaster
-Risk moves to buyer when seller delivers goods to the first carrier to buyer
-Change of title & risk (Override all other issues)
-No title nor risk can pass until the goods exist and are identified by the contract
-Conditional sales – buyer is given option to cancel the deal and return the goods
-Sale on approval – buyer gets goods, may decide to buy them or not later – title/risk transfer when accepted
-Sale or return – buyer buys for resale, can return if don’t sell. Title/risk based on shipping terms.