FORMATION
Offer – offeror is the master of his offer
An offer is an expression by one party of her assent to be bound to certain definite terms. An offer needs to be clear, explicit, and leaves nothing open for negotiation.
UCC: General rule is that if goods are advertised for sale at a certain price, it is not an offer but merely an invitation to bargain. If it is open to an unlimited number of people, then it is more likely to be an invitation for quotation.
Termination: R2d 36 (a) revocation (need not to be manifest by words), (b) rejection/counter offer, (c) lapse of time (reasonable), (d) death of either party. When 2 parties are in each other’s presence, and one makes an offer to the other without indicating any time for acceptance, it is reasonable to infer the offer expires at the time such meeting ends.
Acceptance
R2d:Mirror image rule. an offeree’s response operates as an acceptance only if it is the precise mirror image of the offer, if new terms are add, it in fact manifest a counter offer. However, an acceptance may be valid despite conditional language if the acceptance is clearly independent of the condition.
1. When the method is not specified, the acceptance may be given in any reasonable method.
2. Unilateral Contract – Can only be accepted by full performance (offer temporary irrevocable)
3. Offer invites either promise or performance – Offeree can accept by either method.
4. Notice of acceptance of unilateral contract is often required after the offeree performs the act.
5. Acceptance by Silence – only when offeror has reason to know/prior course of dealing/received the benefit of service when he has reasonable opportunity to reject them/receives the goods and keeps them.
UCC Section 2-206(1)(a) – Unless otherwise unambiguously indicated by the language or circumstances, an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstance
Battle of Form
UCC 2-207: rejects the mirror image rule – any expression of acceptance or written confirmation will act as an acceptance even though it states terms that are additional to or different from those contained in the offer.
UCC 2-207(1): An expression of acceptance does not form a contract if it is expressly made conditional on assent to additional or different terms.
Additional terms:
– If at least one party is not a merchant, the additional term does not prevent the offeree’s response from gibing rise a k, but it only becomes part of k if the offeror explicitly assent to it.
– If both parties are merchants, then the additional term automatically become part of K unless the additional term (1) materially alters the contract (such as disclaimers) or (2) the offeror objects the additional term
Conflict Terms: Court will generally apply the knock out rule so that neither enters the k. The missing term will be applied by UCC gap fillers.
UCC 2-207(3): allows a k to be formed on parties’ conduct. The missing terms fill by gap fillers
Option K – A promise meets the formation of a k that limits the offeror’s power to revoke.
R2d 87: Sign by offeror, recite purported consideration, within a reasonable time. R2d 37: offeree’s power of acceptance is not terminated by stated in 36.
R2d 87(2): General contractor v. Sub contractor – if an offer SC’s should reasonable expect to induce action or forbearance of substantial character on the part of offeree before acceptance, it becomes temporarily irrevocable. Only sub is bound to general since sub has no real reliance interest
R2d 45: An offer for a unilateral k becomes an option k when the offeree tenders the performance. A promise to perform is not sufficient to render the offer irrevocable.
UCC 2-205: an offer made by merchant in a signed record (by the offeror) that it will be held open is not revocable regardless of the existence of consideration. Can’t exceed 3 months w/o consideration, but can exceed 3 months with consideration. If the firm offer is on the form drafted by the offeree, it is only irrevocable if the firm offer clause is separately signed by the offeror.
Mail-box Rule
An acceptance is effective upon proper dispatch (if properly dispatched, then it does not matter whether the acceptance is lost in transaction. However, if it is not properly dispatched, then it will only become effective upon dispatch if it is received within the time which a properly dispatched acceptance would normally have arrived.).
A rejection is effective only upon received.
An accep
e parties have unrestricted pleasure to withdrawn from a promise, the promise is deem illusory.Lack mutuality of obligation.Distinguish from output K.
However, there is an implied promise of good faith, if P has certain duties to obtained profit, then it becomes enforceable
Output contractAn agreement in which a producer agrees to sell its entire production to the buyer, who in turn agrees to purchase the entire output, whatever that is. This is enforceable under UCC and UCC 2-306 states that good faith is implied in the determination of the output.
Contract Modification
Under CL, k modification requires (1) new Consideration for modification, and (2) mutual Assent – both parties have to agree to the new term.
Pre-existing duty rule – if a party does or promises to do what he is already legally obligated to do, or if he forbears or promises to forbear from doing something which he is not legally entitled to do, there is no consideration to support that promise.
Exceptions
– If (1) the promise modifying the original contract was made before the contract was fully performed on either side, and (2) the modification is fair and equitable in view of (3) circumstances not anticipated by the parties when the k was made. Angel R2d 89(a)
– If the party assumes additional duties
– If both parties consent to rescind the k and execute a new K before fully performance on either side. Schwartzreich
UCC 2-209: Modification of contract under UCC does not require new consideration, but requires good faith, and if any no oral modification clauses exist, must be in writing.
n Commercially reasonable standard of fair dealing in the trade. E.g. market shift that would cause a loss may provide sufficient reason
n Objectively demonstrable reason for seeking a modification
