Creating Contractual Obligations
Rest.§ 24 Offer Defined– An offer is a manifestation of willingness to enter into a bargain so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.
Manifestation of willingness = the intent to be bound
Corgill’s definition: An offer is an expression of present willingness to enter into a bargain in such a way that a reasonable person standing in the shoes of the person to whom the expression is made (the offeree) would believe that he or she could conclude a bargain just by giving assent.
Rest.§ 4 – How a Promise May be Made: A promise may be stated in words either oral or written, or may be inferred wholly or partly from conduct.
Invitations to deal, acts of merely preliminary negotiations, and acts evidently done in jest (Lucy v. Zehmer) or without intent to create legal relations are not offers.
Elements of an Offer (fancy way of proving intent to be bound)
1. A communication by the offeror
2. which would lead the offeree to reasonably believe
3. that the offeree has the power to create binding contractual relations
4. with the offeror.
How an offer can be removed:
§ Death of an offeror
Offers are considered under: How to infer a promise, wholly or partly from conduct.
§ Surrounding circumstances
§ Average Reasonable Person in the offeree’s shoes
§ If it was treated as an offer
§ Communication has Contract essentials
o K Essential are:
§ Price (Terms of Payment, Amount),
§ Performance (Time, Terms, Subject)
Advertisements: are usually not offers but rather an invitation by the seller to the buyer to make an offer to purchase. (K essentials are usually indefinite i.e. parties, quantity, etc.)
Rewards: are usually considered offers because it satisfies the essential K terms.
Auctions: See chart
What to Put In Offer to Get Kind of Acceptance you want!
Make sure offeree does not go anywhere else.
Evidentiary – definite terms.
Intent to be bound.
Consideration (Something showing an exchange)
Rest. §30 Form of Acceptance Invited (Briefed by Corgill)
1. A Voluntary Act that, unless otherwise indicated by the offer, leads the offeree reasonably to believe they have exercised the power acceptance, thereby creating binding contractual relations with the offeror, AND
These two can merge in same act/promise
The offeree notifies the offeror of acceptance, UNLESS the offer dispenses with the notice.
***§1-201 (25, 26) Defines Notice + Notifies
***§30 (2) Overrules the mirror image rule.
Intent is measured by the Objective Theory – the outward Manifestations, reasonable person standard. This standard defines the standard for interpretation for reasonableness for line three. When we look at the surrounding circumstances, the court does not ask, “What did they mean by that?” The court will look to what was done not what was meant, and use the judgment of an average reasonable person in the offeror’s shoes to determine the meaning of the act, rather than judges giving it their own meaning.
Power = capacity to change a legal relationship
Whatever the offeree does for acceptance must more likely than not be understood as signaling acceptance
After the “set of legal relations” is created→ offeror is no longer free to change their mind (offeror loses power to revoke) or withdraw from the relationship without incurring liability
Offeree has the power to change the legal relationship by creating a binding contractual relationship.
There are 3 ways to Acceptance
Acceptance by Performance (unilateral K)
See Rest. §32 Invitation of Promise or Performance
See Rest. §54 Acceptance by Performance: Necessity of Notification to Offeror
See UCC §2-206(2) Offer and Acceptance in Formation of Contract
Acceptance by a return Promise (bilateral K)
See Rest. §56 Acceptance by Performance: Necessity of Notification to Offeror
Symbolic Acceptance (chicken suit, notary, etc.)
Will probably not pass giggle test for the “bargain for” part
Rest. §54 Acceptance by Perform
in the offer, an acceptance must be by reasonable means given the circumstances surrounding the offer.
*See Rest. §30 (1)
Offeror may dispense with notification requirement/ and any ambiguity in offer is construed in favor of offeree.
Evertite v. Green (roofing co. arrives at job and realizes job was given to someone else)
BLR: In the absence of specific language in an offer, the offeror must allow a reasonable amount of time for acceptance.
*See Rest. §56
The necessity of giving notice is less obvious if the offer proposes a “unilateral” contract, inviting acceptance by means of performance and not a promise.
In bilateral contracts, notification of acceptance requires the offeree to take steps to see that the promise is “in some reasonable time communicated,” to the offeror
LOOK TO THE OFFER to see if there is a prescribed means (expressly or impliedly) of
1) how to notify the offeror of the acceptance,
2) or if there is no requirement of notification, or
3) if there is actually a waiver of the requirement for notification of acceptance.
Allied Steel v. Ford (Indemnification of Allied Employee from Allied (after the allied employee sued Ford)
Rule: If an offeror merely suggests a permitted method of acceptance, other methods of acceptance are not precluded.
BLR: An offer which suggests a means of acceptance may become binding by performance by the offeree.
*See Rest. §30 (2)
Where there is a contract mixed with services and goods the court looks at which predominates:
a. Goods – UCC Applies to the whole K
b. Service – Common law applies to the whole K NOT the UCC
c. Neither- then they are treated as 2 separate K’s