CONTRACTS
PROFESSOR KETTLE
FALL 2013
Contract Terms
Acceleration clause: making the entire amount due on any late payment
Acceptance: Manifestation of assent to the terms made by the offeree in a manner invited by the offeror. R§50, UCC §2-206. MOO can specify how he wants acceptance to be made.
Acceptance, electronic commerce: Offeror must make it clear to a reasonably prudent Internet user that by clicking download button, they are accepting T’s & C’s. (see click wrap agreement).
Acceptance by performance: When acceptance by performance is stipulated in K, there is no need to notify of acceptance, unless requested. R§54.
Also valid by conduct if there is an intent to accept through that conduct. R§19
Acceptance by part performance: When offeree invites acceptance through either performance or promise, beginning of the invited performance is an acceptance by performance, and operates as a promise to render complete performance. R§62
Acceptance by promise: An offeror can revoke his offer until acceptance is communicated to him. The offeree must exercise a reasonable diligence to notify the offeror of the acceptance. R§56
Acceptance by silence: Effective through silence ONLY (a) where an offeree takes the benefit with reason to know that they were offered with the expectation of compensation (b) offeror gave notice that assent by silence was acceptable and offeree so intended, (c) because of previous dealings R§69
Acceptance, conditional: Not really an acceptance because it requires other conditions if it is made to depend on assent to the changed or added terms. See “counteroffer”.
Acceptance Which Requests Change of Terms: An acceptance which requests a change or addition to the terms of the offer is not thereby
invalidated unless the acceptance is made to depend on an assent to the changed or added
terms. R 2nd §61
Acceptance of goods under UCC: An offer to buy goods can be accepted by seller in 2 ways: either by a promise to ship or by shipment of conforming or non-conforming.
*The shipment of non-conforming goods by seller is an acceptance as well as a breach of the K unless the seller seasonably notifies the buyer that a shipment of non-conforming goods is offered only as an accommodation. In this case seller's accommodation is not an acceptance of seller's offer, but a counteroffer which buyer can accept or reject. If buyer does reject, the shipper is not in breach and may reclaim the accommodation goods. If buyer accepts the parties will have a K. If seller accepts with a promise and then delivers non-conforming goods as an accommodation, seller will be in breach bc this is not acceptance by shipment bc the promise came 1st. UCC 2-206 (b)
*Buyer acceptance when accepts good, conforming or non-conforming, and fails to make effective rejection, accepts any part of the commercial unit. UCC §2-606
Acceptance, power of: created in offeree by offeror. Power that offeree exercises to create a K. R§35
Acceptance takes effect: When it leaves offeree’s control, MBR, even if never reaches offeror. For Option K, not operative until it reaches the offeror. R§63
Acceptance, termination of power of: Offeror must revoke the offer himself, or by someone within the scope of authority. Must be revoked before accepted and in same way it was offered (through ad in paper, etc). Cont’d next page…..
Modes of termination: rejection, counter-offer, lapse of time, revocation, death or incapacity of either party. R§36. Indirect notice OK by definite action inconsistent with offer and reliable information. R§43
Accommodation: Is a counter-offer, normally non-conforming goods. The recipient can accept or reject the goods. Once goods are accepted by offeree, it is a binding contract. UCC2-206(b).
Accord and Satisfaction: For unliquidated debt, only. Parties agree that debtor will give and creditors will take less than originally agreed upon. Creditor is prevented from coming back and asking for previously owed money. R§281 Has to be in writing that it’s meant to resolve disputed debt.
Additional Terms in Acceptance or Confirmation: If one party adds or changes terms, they still have a K unless there was language of condition in latter communication, terms materially alter, terms are rejected, MOO stated no added terms in offer UCC 2-207
1. Valid acceptance even if it states additional or different unless acceptance is expressly made conditional on assent to the additional or different terms.
2. The additional terms are proposals for addition to the K; such terms become part of K unless: (a) the offer expressly limits acceptance to the terms of the offer; (b) they materially alter it; or (c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
3. Conduct by parties which recognizes the existence of a K is sufficient to establish a K for sale although the writings do not otherwise establish a K. Terms of the K will consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act.
Advertisement: Generally not an offer, but a mere invitation. R§26, comment b. If the ad is clear, definite, and explicit, can be deemed an offer. (Lefkowitz- mink scarves). An offer can be to more than one person R§29.
Agreement to Agree: If term left open is material, then the K is not enforceable. If the term is sufficiently certain to determine breach and remedies, then K may be upheld. R§33 (certainty). If the term is not material, courts can fill in the gaps. Open price valid, can be set by agreed method or reasonable market value. UCC 2-305 (open price term).
Agreement, Independent: Something separate that is normally not included in the agreement. Best way to establish this is to make it a separate K with separate consideration
Allocation
feree in a definite and timely acceptance does not constitute a rejection and counteroffer, but rather is effective as an acceptance, unless the acceptance is expressly made conditional on assent to the additional or different terms UCC 2-207 (1)
*If the acceptance is expressly made conditional on assent to the additional or different terms, it is a rejection of the offer, NOT a counteroffer. It can be considered a counter offer only if original offeror expressly assents to new terms. If the parties ship or accept goods after a conditional acceptance, their conduct forms a K but the new terms are not included and the K will consist of the terms they agreed to and anything supplemented by the UCC. UCC 2-207 (3)
*If the parties begin to perform although their forms are different: CL says that last communication sent is counteroffer and performance is acceptance. UCC says that conduct by both parties that recognizes the existence of a contract is sufficient to establish the K. UCC 2-207 (3).
*If any party to the K is not a merchant, the additional or different terms are considered to be mere proposals to modify the K that do not become part of the K unless the offeror expressly agrees. UCC 2-207 (2)
*If both parties to the K are merchants, additional terms in the acceptance will be included in the contract unless: they materially alter the original terms of the offer, the offer expressly limits acceptance to the terms of the offer or the offeror has already objected to the particular terms or objects within a reasonable time after notice of them is received. UCC 2-207(2)**
*knock out rule: conflicting terms in the offer and acceptance are knocked out of the K bc each party is assumed to object to the inclusion of such terms in the K. Under this rule, gaps left by knocked out terms are filled by the UCC.
*Another approach is to treat different terms like additional terms between merchants **
BOB (Benefit of the Bargain): Expectation Remedy. You get what you would have gotten, had the bargain gone through.
Best efforts: Implied in K. UCC 2-306. (Wood v. Lucy, Lady Duff Gordon). See “Good Faith”. R§205. (measured by industry custom and practice)
Bid Shopping: after you win K, you can look around and see if you can get an even lower bid; illegal by statute in most jurisdictions or when winning bid constitutes promise to use subcontractor’s bid.
