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South Texas College of Law Houston
Carlson, Richard R.

Contracts I
Professor Carlson, Fall 2012
What are we looking at?
I.                        Modern Contract
A.     Must have Bargain for exchange
1.       A trade on both sides, either a promise for a promise (bilateral) or a promise for something immediate (unilateral)
2.       A bargain consists of an Offer and an Acceptance
a)       Offer: the offeror’s manifestation of assent. There is a five part test:
(1)    1. Did the offeree reasonably (objectively) interpret the offeror’s intentional words and acts to manifest the offeror’s intent to be bound?
(a)    Owen v. Tunison: Owen made an offer and then Tunison said he couldn't sell for less than $16,000. But that was an invitation to bargain, not an offer, because he has no reasonable assent that this was a legally binding offer.
(b)    Donovan v. RRL: misprint in the paper for the price of a jaguar. Offer seeks recession of offer based on unilateral mistake relating to the formation of the contract (not an excuse for the contract after the fact). The offeree can be forgiven for the mistake if the result is unconscionable or other party knew of error/should have known. No valid offer.
(2)    Was the offeror seeking the specific offeree’s assent to the offer?
(a)    Harvey v. Facey: Jamaica case, where harvey made an offer and Facey answered generally with a  “counter-offer” that was actually an invitation to bargain, because it was not directed to the particular offeree, but the entire city
(b)    An Advertisement is not usually an offer, because its not directed to a particular offeree, and there is an unlimited audience with a limited supply of goods. This is a presumption that may be rebutted in court by the offeree.
(3)    Are the terms sufficiently clear to be/create a contract?
(4)    Is “yes” an appropriate reply?
(a)    A quote can be an offer if its answering a request for an offer, expressing assent to be bound, seeking buyer’s assent amount and other terms are specific/ essential terms clearly stated, if “yes” is an appropriate answer
i)         Fairmont glass v. CMW:
ii)      Corinthian v. Lederle Labs:
(5)    If it’s not an offer? What is it?
(a)    Could be an invitation to bargain
b)       An Offer is good until the expressed time limit or until an implied reasonable time limit.
(1)    Death of offeree or offeror will kill the offer unless it is turned into an option contract.
(2)    Offer is no longer good after it has been rejected
(3)    An offer can be terminated by revocation: the offeror withdrawals the offer
(a)    Revocation must precede the acceptance. It is effective at the time the offeree receives it (so no mailbox rule for revocations).
(b)    An act can constitute revocation if it is inconsistent with the offer, because it is showing intent NOT to be bound.  But, this act must be manifested to the offeree either directly or indirectly through reliable indirect communication of information (Restatements §43)
i)         Dickinson v. Dodds: selling his property to another person after making an offer for Dickinson to buy was an act inconsistent to his offer to Dickinson, and Dickinson was aware of the inconsistent act (thus, the revocation).
(c)     Revocation of a general offer (like an Ad) can be revoked by general notice to the public equal to the general notice of the original offer (Ad).
c)        An offer can be made irrevocable through an “option Contract”
(1)    Must have consideration under the

r by creating the offer and its terms.
(a)    Broadnax v. Lebetter: “reward for capture contract.” When accepting an unilateral contract offer, acceptance must induce the action, so the acceptance has to be in response to the knowledge (knowing about the offer). 
(b)    Ever-Tite Roofing v. Green
(c)     Allied Steel v. Ford
(4)    Acceptance requires a duty of notice from the offeree to the offeror.
(a)    Acceptance is ineffective if the offeree fails to use diligence to notify offeror, unless the offeror receives the reasonable notice anyways (Restatements §56). (UCC §2-206(2)-failure to notify of acceptance causes lapse).
(b)    Carlill v. Carbolic Smoke ball co.: acceptance of the unilateral offer from the guarantee was through actions of buying and getting sick. Though there is usually a duty of notice of acceptance from the offeree to the offeror, but the offeror can explicitly or implicitly waive and circumstances of the offer may show that notice was unnecessary.
(c)     If an offer invites performance as acceptance (unilateral contracts), notice of acceptance is presumed to be unnecessary. If the offeror wants notice of acceptance, he must explicitly state that in the offer. 
(5)    The “Mirror Image” Rule: A non-identical acceptance (or a qualified acceptance) is a rejection NOT an acceptance, because it is assenting to different terms than those in the offer.