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Contracts
Temple University School of Law
Myers, Eleanor W.

I. Introduction
A) There are 2 key elements to a K
1) A promise or set of promises; AND
2) Enforcement
B) Contract needs 2 things
1) Exchange
2) bargain
C) Hill v. Gateway à 7th Cir. Easterbrook Opinion (Box Wrap case)
o A contract need not be read to be effective
o Customers bound by terms in the box
o Those who accept an offer take the risk that unwelcome terms may be unfavorable
o This case is an exception, typically issues of formation are note litigated, most claims that go to court deal with interpreting the terms / will the law enforce

II. The Process of Reaching an Agreement

A) Determining Mutual Assent

* a K is formed when the parties have manifested “mutual assent”

I. Objective Theory of Contract Formation à looks to outward manifestations of the parties
a. Two components à RST § 24
i. Would reasonable person in position of offeree believe from offeror’s conduct an “intent to be bound”
ii. Did offeree actually believe offeror intended to be bound
b. The method used to illustrate mutual assent is a two step process consisting of an Offer and Acceptance
c. Lucy v. Zehmer [p40] à ∏ claims that while drinking some beers ∆ agreed to sell him his farm when the two signed a K on diner napkin.
i. Must look to outward expression of a person as manifesting intent as opposed to secret intention à the law imputes to a person an intention corresponding the reasonable meaning of his words and acts
ii. Meeting of minds not required; undisclosed intent immaterial
iii. Cannot claim jest when reasonable person would believe agreement is real
d. Leonard v. Pepsico [p51] à pepsi points for a harrier jet
i. Objective Reasonable Person Standard
1. Would RP know offer “evidently in jest”
a. Look to tongue in cheek humor; absurdity
b. Commercials are ads not unilateral offers

B) OFFER

1) Offer Defined
i) RST 24 à “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 the bargain is invited and will conclude it.”
ii) If person to whom a manifestation of intent is made knows or should have reason to know that the person making it does not intend it as an expression of his fixed purpose until he has given further expression of assent, then he has not made an offer à RST 26
(1) Lonegeran v. Scolnick [p67] àad in newspaper for farm, ∏ misconstrues as offer
(a) newspaper ad typically not an offer, it is usually an invitation to offer
iii) Price quotes are typically not an offer, unless they include specific language such as “agree” or “offer” which manifest intent to be bound
(1) Fairmount Glass v. Grunden-Martin [p71] à price quote included “for immediate acceptance”, held to constitute offer.
(a) Each case must turn largely upon the language used à see UCC Article 2 (specifically 1-301(3)) for how to interpret terms in a K
iv) Advertisements and order forms are considered mere notices or solicitation for offers which create no power of acceptance in recipient
(1) Exception if “clear, definite, explicit, and leaves nothing open for negotiation” à Leonard v. Pepsico
v) A manifestation does not have to be written or clearly spoken, an offer may be express or implied-in-fact (hot dog vendor holds out hd)

2) Destruction of the Offer
i) There are 4 ways to terminate an offer [ RST 36(1)] (1) Rejection (by the offeree) RST 38
(a) Counter offer counts as rejection à RST 39 “mirror image”
(2) Lapse RST 41
(a) Offeror is “master of offer” and is able to set the time limit
(b) If no time specified, offer terminated and end of a reasonable time
(c) Minnesota Linseed v. Collier [p82] à did ∆ send telegram in reasonable time to constitute acceptance?
(i) When dealing with commodities that fluctuate rapidly, reasonable time is rather short
(ii) Mailbox Rule – contract concluded when acceptance deposited in mailbox
(3) Death or Incompetence of Offeror
(4) Revocation
(a) Direct Revocation
(i) “Offeror is King” à unless there is an Option K, offeror is free to revoke at any time before acceptance
(ii) RST 42 à “Revocation by Offeror does not become effective until received by the Offeree”
(b) Indirect Revocation RST 43
(i) If offeror behaves in a manner inconsistent with his intention to enter a K, and the offeree indirectly acquires reliable info, then the offer is revoked
1. Dickinson v. Dodds [p93] à ∏ had been offered chance to buy ∆’s house, but while deci

ion (regardless of whether or not it reaches the offeror) à RST 63
(a)Mailbox Rule reflected here
v) Acceptance by Performance (unilateral contracts)
(1) It is a universally accepted principle, that when performance is invited as a mode of acceptance, the offeree does not have to give notice of his intention to accept. Acceptance occurs thru performance of the act specified by offeror.
(a)RST 54 à no notice, unless offer requests notification
(2) Courts and Commentators disagree over whether once performed, offeree must notify the offerror
(a)RST 54 and UCC are of the view that after performance offeree must give notice if he knows offeror has no adequate means of learning about the acceptance

3) Electronic Acceptances
i) Electronic contracts are considered valid
ii) Law is very ambiguous, none of the proposed statutes (E-Sign, UETA) have been adopted, so common law principles must be adjusted.
iii)E-Contracts raise issues of assent to terms à Click-Wrap
(1) Sprect v. Netscape handled this issue by creating an exception to the general rule “that you are bound to the unread terms you assent to” because of policy reasons. These agreements typically bind to arbitration agreements, which the court felt should not be buried in EULA where there is not likely to be mutual assent.

4) Acceptance that Deviates from the Offer
i) Common Law à adheres to the “Mirror Image Rule”
(1) Acceptance must be an unconditional assent to the terms of the offer
(2) The Restatement follows the mirror image rule
(a) A counter offer terminates an offeree’s power of acceptance à RST 39
(b) Acceptance must comply with requirements of the offer in regards to the promise to be made or performance rendered à RST 58
An acceptance which purports to accept but is conditional on