Contracts Outline
I. Offer (objective theory of Contracts) should a reasonable person standing in the position of the offeree understand that an offer has been made
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
i. Manifestation of willingness—shown by words, action and conduct
ii. To enter into a bargain—contract
iii. So made as to justify another person—r-person in offeree’s position
iv. In understanding that his assent to that bargain is invited—r-person’s understanding that agreement to bargain is extended, that offeree has been invited to deal
v. And will conclude it—closing the deal, making an agreement
b. Definite enough and will buyer conclude that their yes will conclude the deal
c. Offeror—makes the offer
d. Offeree—has the power of acceptance
i. Rule: An Ad is generally NOT an offer (no power to accept)
ii. Exception: an ad is an offer if:
1. Clear, definite and explicit and nothing left open for negotiation
iii. Rule: Form letter is NOT an offer
1. Must be tailored and specific to one person to be an offer
iv. Rule: A price quote is NOT an offer
v. Anything that leaves a lot up to negotiation is NOT an offer
e. How long does the offer last?
i. Until stated OR a reasonable time
1. can be withdrawn before end of stated time
ii. Until rejection (valid upon receipt)
1. an offer proposed may be withdrawn before its acceptance and that no obligation is incurred thereby
a. can be withdrawn before end of stated time
2. counteroffer is a rejection
a. inquiry is not rejection (offer alive)
i. would you thinking about $5
iii. Revocation (valid upon receipt)
1. when received it kills the offer
2. If the offeror says I revoke before offeree accepts than no matter how brief the time there is no K (Petterson)
3. AV
a. Under the Code, buyers and sellers may freely exchange purchase orders, faxes, and telephone calls relating to a proposed transaction without incurring contractual obligations unless and until the essential requirement for contract formation is satisfied — i.e. that there be an objective manifestation of mutual assent by the parties (sometimes referred to as a “meeting of the minds”).
b. Sharp alleges that AV made offer over phone which Sharp accepted
i. Does not hold, not a binding contract merely an invitation for offer
c. It would bring an end to the competitive practice of shopping products if every quotation exposed the “quoter” to an enforceable contract on whatever terms the “quotee” chose, regardless of product availability
d. Typically a Quote is invitation for offer, PO is offer and then seller must accept
iv. Death of the offeror
f. Rejection as a counter offer
i. Common law
1. mirror image rule—acceptance must exactly mirror the offer
a. if not exact it constitutes a counter offer
2. Rule: A reply to an offer which purports to accept but is condition on the offeror’s assent to terms additional to or different from those offered is not an acceptance but a counter offer
ii. UCC 2-207 Battle of the forms
1. Acceptance with a little extra could be acceptable
a. a definite and seasonable expression of acceptance (I accept) =acceptance
b. even though additional or different terms
c. unless acceptance is made conditional on assent to additional terms
2. The additional terms are in unless:
a. Offer expressly limits acceptance of terms
b. Materially alter it
c. Notification of objection has been given
3. Idaho Power
a. There was an agreement btn the parties 2-207(2) says those terms become part of contract
4. Glass Robots
a. Because the parties performance establishes acceptance there was a contract
i. Commencement of performance, payment
b. Flexibility in 2-207 allows parties to commence w/o all details worked out
c. SBG conduct constituted a definite and seasonal expression of acceptance
d. There were refs to Orgalime (binding arbitration)
e. Incorporation by reference is proper where K makes clear ref
5. Textile: contract was based on express assent to additional terms
a. Acceptance operates as a counteroffer
b. Offeror must give specific and unequivocal assent to terms
c. Because Textile did not give specific assent (even though terms stated 24 hours constituted assent) there was no acceptance
d. Because no K was formed agreement is guided by 2207 (3) which examines conduct of parties to determine whether a contract for sale has been established and the terms thereof
i. Under 2-207 (3) the unagreed upon terms simply “drop out”
1. Thus the terms drop out and no arbitration in GA
g. Certainty of an Offer/Insufficiency
s by performing, the way in which the offeree accepts is to perform or commence performance
ii. Bilateral—promise for a promise, I will pay you a $1K if you promise to paint my house, notification to offeror of acceptance
c. Modes of acceptance:
i. Performance (unilateral)
1. at least part of what the offer requests to be performed or tendered and includes acceptance by a performance which operates as a return promise
2. no notification unless offer requests such
ii. Promise (bilateral)
1. offeree complete every act essential to the making of the promise
2. offeree exercise reasonable diligence to notify the offeror of acceptance or offeror receive the acceptance seasonably
iii. Commencement (EverTite)
iv. Silence
1. generally silence is not acceptance
2. BUT when an offeree remains silent (as to acceptance) it may constitute acceptance of the offer, if there is a history of dealings between the parties.
a. Ex. If you always ordered and the stuff showed up a week later, then acceptance by silence is valid
d. Non-conforming goods (UCC)
i. Shipment of nonconforming goods is not an acceptance it is an accommodation if stated
1. if not stated as accommodation it can be acceptance
e. After acceptance
i. No more rejection
ii. No more revocation
1. offer cannot be withdrawn after acceptance has a occurred and a contract has been concluded (Ever Tite)
f. Mailbox rule
i. If acceptance is invited by mail (previous dealings by mail)
1. acceptance becomes valid by dispatch
g. How does it occur?
i. Invited by the offeror = master of offer
ii. Performance or Promise (CL)
iii. In any reasonable manner (UCC)
iv. Silence (CL, exception)
III. Consideration
