i. O defined: The expression of one party’s assent to be bound to certain definite terms if the other party assents to the same terms
ii. Objective theory of K formation, look at acts and words and interpret them in eyes of reasonable person (unexpressed reservations or meanings irrelevant under objective theory of K formation)
iii. Elements: Objective manifestation on part of one of the traders of a present intention to form a present K. So, reasonable person in shoes of the prospective offeror, objective test.
1. Intent can be knocked out by: state of mind fact pattern: Jest, anger, or hysteria=could they have objective manis….Where O is clear, definite, explicit, and leaves nothing open to negotiate=O which can be accepted.
2. Content: need essential terms or it’s preliminary. Parties, subject matter of proposed exchange, mode + time of performance, and price (she says Q can never be filled in). CL reform: if total silence by traders with respect to one of essential terms, court will attempt to salvage bargain by treating mutual total silence as objective manifestation of intent to trade on reasonable term.
a. UCC: Gap fillers: 2-204 conduct, time of K undetermined, K sale does not fail for indefinitness if intent to K. 1-205: course of dealing and usage of trade: done business before, etc. 2-305 imply reasonable price (intent) at time of delivery as long as (in book). 2-208: course of performance, evidence of parties intent, performance that is accepted or acquiesced relevant in determining agreements meaning, express terms control course of performance, course of performance controls over both course of dealing and usage of trade, may show waiver or modification of term, use it, also some construction stuff
b. Key: our key meaning might not be trade’s key meaning
c. Law will not imply K for perpetual performance 2-309: absence of termination, specific time; reasonable time, terminated by either w/ reasonable notice 2-310:time and place of delivery
3. Communication: of that intention and those terms who is intended to be the offeree
iv. Invitation to make an offer? Intention of parties and surrounding circumstances. Not an O if custom is to qualify for a rate, or “I have O, can you beat it” or price quotation alone (but with circcs it can be) or “I’m asking for a price + mentions other os
v. Can be made to more than 1. Can be communicated through conduct (Watts)
vi. Agreements to agree (screwed with expenses and risks): obligation to negotiate in GF. Look at if intended to enter into binding agreement. Tribune test: language of agreement, context of negotiations, existence of open terms, partial performance, necessity to put agreement in final formà Look at all that, intent, if missing material terms. Martin: Can’t enforce a nebulous promise, agreement to agree leaving material term to future negotiation is unenforceable
b. Offer outstanding? Offor is master of offer, control terms upon which she would create power of A. Power of A is limited by those terms. Check out SoL
i. O is open for reasonable time, which depends on what’s O’ed (death, destruction of subject matter, supervening illegality revokes by matter of law). O terminated by rejection or revoked. Inherently revocable even if A is said to be left open, can’t revoke if supported by C, save 3 exceptions:
1. Purchase an option: 5 bucks if you keep that offer open 1 week for me to buy house. An option is always a K with its own O, A, and separate C though usually of nominal value. O irrevocable
a. You can have equitable doctrine that C was sham (gross imbalance, time)
b. R. 2nd 87 (1) O binding as Option K: writing, signed by O’er, reciting C, exchange on fair term within reasonable time or irrevocable by statute
2. Cut of power of revocation on theory of estoppel: O is open 1 week, I change positions in foreseeable reliance, many court would estopp him from revoking O b/c foredetrel
3. UCC2-205:Merchants firm O: Only offeror has to be merchant for this rule: If goods are subject matter, than offer in writing by merchant trader irrevocable according to terms. (“Says 30 days, I have it, don’t need reliance, 90 days is the maximum. Not revocable for lack of C
4. Cases: Getting work on bid aint A. look to custom. They weren’t asking for perf, they were asking for promise. General rule, no K formed by listing subK in general K’s bid. However, sub may be bound to general based on PE….partial performance creates offee’s interest in offor’s performance…detrimental reliance creates interest in offor’s perf that precludes revocation of the offer…but…offer of performance is not sufficient to terminate power to revoke where perf is required, even where revocation frusterates offee’s attempt to perform acts.
c. If you have still outstanding O, look at response of Offeree, defective? CL needs present unconditional unequivocal assent to each and every term of O [Mirror Image Rule].
i. Reasonable manner of A can be implied. Must be overt A can be silent under R. 2d 69: offee takes benefit, previous dealings, intends A. R. 32: In doubt, O is interpreted as inviting offee to either accept by promise to perform or perform. But 2-206 says reasonable manner of A, with shipment it can be promise to ship or shipment
ii. Mail
. 2rules protect against revoking:
1. Rules of construction: Courts like bilateral, UCC likes bilateral.
2. Supplementary rule to completion rule that says: once offee begins subs perf does not form K but cuts of power of offeror to revoke, gotta give reasonable time to complete. Also, offee is never obliged to finish it.
a. R.45 gives equitable interest in offee’s performance.
b. However, preparation to perform doesn’t count
e. Mutual Assent: parties intended to make agreement? Must be meeting of minds regarding the material terms of the agreement. MA relates to misunderstanding because each party understands what they intend, but does not understand what other intends. If you don’t agree to same terms, no MA. A K cannot be formed if 1) parties each have different subjective belief about term of K 2) that term is material one; and 3) neither party has reason to know of misunderstanding. R 201 does this, 3 scenarios. Intention corresponds to reasonable meaning of words and acts, writings, role of industry and custom. Reasonable person standard, objective manifestations of intent, which should be viewed from vantage point of reasonable person in position of other party. But if one party knows or should know misunderstanding…
f. Ambiguity (Misunderstanding) of Language or mistake of traders, can preclude formation.
i. Ambiguity: language betrays 2 types in CL, either type, if infects essential term, precludes formation.
1. Latent, hidden(extrinsic fact or extraneous evidence creates necessity for interpretation or choice among 2 or more possible meanings): if at formation stage, neither recognizes that term (seems to recognize Raffles) which they are employing to describe one of the essential terms is reasonably susceptible of more than one meaning, and each party subjectively has attached a different def to the term, bargain is flawed by fatal latent hidden ambiguity. No K here b/c reviewing court has no basis to prefer subjective reasonable interpretation being given by the buyer to the very different subjective but equally reasonable interpretation given by seller. NO MA
