Select Page

St. Johns University School of Law
Laisure, Robin Boyle

Contracts I – Boyle (Summer Institute ,St. John’s University, Summer 2012 )Outline:

OFFER-  An offer is a manifestation of an intent to be contractually bound upon acceptance by another party. 


If the offer has a stated time within which the acceptance must be made, any attempted acceptance after the expiration of that time will fail and will merely constitute a counter-offer by the offeree.

If no specific time is stated within which the offeree must accept, it is assumed that the offeror intended to keep the offer open for a reasonable period of time.

General Rule: courts hold that in telephonic or face-to-face communications in which an offer is made, the offer lapses when the conversation terminates in the absence of a clear indication that the offer remains open beyond the conversation. (Akers V. Sedberry)

ACCEPTANCE-  Res 2nd 30.
1.     Acceptance can be made by an affirmative answer in words, or performing or refraining from a specified act.

2.      Unless otherwise indicated by language or circumstances acceptance can be made by any reasonable manner.

Mutual Assent:

Lucy V. Zehmer: Basically Zehmer wrote on the back of bill in bar that he would sell farm to Lucy (P) . Zehmer and wife signed the instrument.

Issue: Whether there was a binding contract when the D (Zehmer) did not intend to enter into one? But his actions and words appeared otherwise to the P (Lucy) believed he was serious.

Rule: Overhere we use Objective and Subjective standard. Objective: A person’s intention to enter into a K is measured by a reasonable standard; It does not matter what he actually intended, if he did not disclose that intent through words or actions.
—- Meaning: That if a persons words or actions would lead another person to believe that he would enter into a K , that is enough DESPITE the persons real intentions.

Subjective: A K is formed when the other party subjectively believed that the offeror was serious.

Holding: There was a binding K because the P (Lucy) believed Zehmer was serious. Because The judge says the evidence shows that the parties were not joking.  The evidence he is referring to includes:
the forty minute discussion between the two parties,
the change of the original contract to make it conform to Lucy’s request,
the discussion of what the sale would include,
the provision about title inspection and,
the fact that Lucy took the paper and Zehmer did not demand that he give it back.

Take Away Point: Mutual Assent needs to have intentions of the parties. It’s a K b/c theyre was something in writing, which was discussed about for over 40 minutes, they edited it, drafted it TWICE.

Harvey V. Facey:

Three telegrams were sent out from P to D with 2 questions.

First q:  Contained an OFFER. “ WILL YOU SELL US BUMPER HALL PEN?”
Second q: Asked for a lower price.

Theyre was only one reply from the D which answered one question which was in regards to the lowest price.

Third telegram from D: “ We agree to buy Bumper Hall Pen for the sum of nine hundred pounds” Harvey says.

Issue: Whether the reply from D about the price was an acceptance to the offer? Was there a binding agreement of sale and purchase.

Rule: K can only be complete if there was both an offer and acceptance. There was an invitation to sell and not an offer. So the lowest price which was a quotation is not an offer to sell, rather an invitation to an offer.

Reasoning: First telegram was a request for info, the D did not make a definite offer that could be accepted. No K.

Certainty of terms: Well…..

Courts generally agree that the most impt terms that absolutely MUST BE PRESENT: 1. Quantity 2. Parties 3. Price 4. Subject matter.

Other impt but not necessary 1. TIME 2. Place of performance.

Courts interpret “reasonable” to mean “fair market value”

Courts interpret Silent regarding time and place of performance, court will say that K is meant to be a reasonable time and place.

U.C.C Certainty Rules:

2-204 (3)- Even if one or more terms are left open a K for sale does not fail, if the parties have intended to make a K and there is reasonably certain basis for giving an appropriate remedy.

2-305- Open Price Term: The parties if they so intend can conclude a K for sale even thought the price is not settled. In such a case the price is a reasonable price at the time for delivery if :
A. Nothing is said as to price.

B. The price is left to be agreed by the parties and they fail to agree.

C. The price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and it is not so set or recorded.

2-308- Absence of Specified Place for delivery:

Unless otherwise agreed:

A.     The place for delivery of goods is the seller’s place of business or

because the quote was so specific in which it included “immediate acceptance” so it constituted an offer.

Take away rule:  **This is an example of when price quotes are K.!!! Price quotes are not offers, they are invitations to offers. But in cases, such as this one when they apply terms such as the “amount of money they would discount”, or “immediately accept” then its considered an exception to the rule.

Lefkowitz & Fairmount Glass cases are both exceptions to the general rules of ads, and price quotes!!!

Store Properties V. Neal:

Res. 26: Preliminary Negotiations: A manifestation of willingness to enter into a bargain is not an offer if that person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent.

Res 27: Existence of K where written memorial is contemplated:  Manifestations of assent that are in themselves sufficient to conclude a K will not be prevented from so operating by the fact  that the parties also manifest an intention to prepare and adopt a written memorial thereof; but the circumstances may show that the agreements are preliminary negotiations.

D drafted a proposal , which he included that for this to be accepted P must do specific things. P says there was an offer b/c some of these things were completed and thus there is a K. P treated a preliminary agreement (Letter of intent, proposal) as a K.

Issue: Whether a proposal to enter into a lease was  a K, because it included details and provisions.

Rule: Where a K appears to be a preliminary agreement embodying only the spirit of a contemplated supplementary K and it is perfectly clear that the minds of the parties never met upon the details then it is not enforceable.

Reasoning: Even though they stated all these things in this initial agreement, its still no K , b/c they were aware that they would draft a formal agreement in the future. à Look at Res 26-27 above.