1 Agreement A meeting of two or more minds in regard to the terms of a contract; usually broken down into two events-

an offer and an acceptance 2 Offer A promise or commitment to perform or refrain from performing some specified act in the future 3 For an offer to be effective... 1. There must be a serious, objective intention by the offeror 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 oferee 4 An offer can be terminated by the action of the parties... By revocation, by rejection, or by counteroffer 5 Revocation In contract law, the withdrawal of an offer by an offeror... Unless the offer is irrevocable, it can be revoked at any time prior to acceptance without liability (as long as the revocation is communicated to the offeree before the offeree accepts) even if he or she has promised to keep the offer open 6 Option contract A contract under which the offeror cannot revoke the offer for a stipulated time period. During this period, the offeree can accept or reject the offer without fear that the offer will be made to another person. The offeree must give consideration for the option (the irrevocable offer) to be enforceable 7 Mirror image rule A common law rule that requires that the terms of the offeree's acceptance adhere exactly to the terms of the offeror's offer for a valid contract to be formed 8 The offeree's power to transform an offer into a binding, legal obligation can be terminated by operation of law if ANY of the 4 conditions occur: - Lapse of time - Destruction of the specific subject matter - death or incompetence of the offeror or offeree - supervening illegality of the proposed contract 9 Mailbox Rule or Deposited Acceptance Rule

A rule providing that an acceptance of an offer becomes effective on dispatch (on being placed in an official mailbox), if mail is, expressly or impliedly, an authorized means of communication of acceptance to the offeror 10 The common law recognizes the following implied authorized means of acceptance: 1. The offeror's choice of a particular mode of communication in making the offer implies that the offeree is authorized to use the same mode or a faster one for acceptance 2. When two parties are at a distance, mailing is impliedly authorized 11 One of the three basic exceptions to the rule that a contract is formed when acceptance is sent by authorized means are: 1. If the acceptance is not properly dispatched (incorrectly addressed, for ex, or lacks sufficient postage), in most states it will not be effective until it is received by the offeror 12 One of the three basic exceptions to the rule that a contract is formed when acceptance is sent by authorized means are: 2. The offeror can stipulate in the offer that an acceptance will not be effective until it is received (usually by a specified time) by the offeror 13 One of the three basic exceptions to the rule that a contract is formed when acceptance is sent by authorized means are: 3. Sometimes an offeree sends a rejection first, then later changes their mind and sends an acceptance. In such situations, the law cancels the rule of acceptance on dispatch, and the first communication received by the offeror determines if a contract is formed 14 Consideration Generally, the value given in return for a promise; involves two elements- the giving of something of legally sufficient value and a bargained-for exchange. The consideration must result in a detriment to the promisee or a benefit to the promisor 15 Forbearance The act of refraining from an action that one has a legal right to undertake 16 Recission A remedy wherby a contract is canceled and the parties are returned to the positions they occupied before the contract was made; may be effected through the mutual consent of the parties, by the parties' conduct, or by court decree 17 Past Consideration An act that takes place before the contract is made and that ordinarily, by itself, cannot be consideration for a later promise to pay for an act- past consideration is no consideration 18 Claims are commonly settled through an _____ and two other often used methods are _____ Accord and satisfaction, in which a debtor offers to pay a lesser amount than the creditor purports is owed Two other methods often used are: the release, and the covenant not to sue

19 Accord and Satisfaction A common means of settling a disputed claim, whereby a debtor offers to pay a lesser amount than the creditor purports is owed. The creditor's acceptance creates an accord (agreement), and when the accord is executed, satisfaction occurs 20 Liquidated debt A debt for which the amount has been ascertained, fixed, agreed on, settled, or exactly determined. If the amount of the debt is in dispute, the debt is considered unliquidated. If it is a liquidated debt, then accord & satisfaction cannot take place. 21 Release A contract in which one party forfeits the right to pursue a legal claim against the other party 22 Releases will generally be binding if they are 1. Given in good faith 2. Stated in a signed writing (Required by many states) 3. Accompanied by consideration 23 Covenant not to sue An agreement to substitute a contractual obligation for some other type of legal action based on a valid claim 24 Promissory Estoppel (detrimental reliance) A doctrine that applies when a promisor makes a clear and definite promise on which the promisee justifiably relies. Such a promise is binding if justice will be better served by the enforcement of the promise. 25 Estopped Barred, impeded, or precluded. When the doctrine of promissory estoppel is applied, the promisor (the offeror) is estopped from revoking the promise. 26 Requirements for the doctrine of Promissory Estoppel to be applied 1. There must be a clear and definite purpose 2. The promisee must justifiably rely on the promise 3. The reliance normally must be of a substantial and definite character 4. Justice will be better served by the enforcement of the promise