CONTRACTS, Kurlantzick, Fall 2014
Kind of contracts
Unilateral – Promise for performance: one person is making an offer open to anyone who performs, where only the promising party is obligated to perform if the performance is met
-preparation is not start of performance
Bilateral – promise for promise agreement (2 parties each promise the other something)
Need INTENT to Offer and INTENT to Accept = mutual assent= meeting of minds
-Revocable until acceptance
-Must be unequivocal
· Was there an expression of a promise, undertaking, or commitment to enter into a contract?
o Not just a mere invitation to begin preliminary negotiations
§ There must an intent to enter into a contract
· Was there certainty and definiteness in the essential terms?
· Was there communication of the above to the offeree?
Interpretations of an offer
Objective Standard: Would a reasonable person think that there was an agreement? Relies on Jury to determine truthfulness of witnesses
Lucy v. Zehmer (an old friend had a contract written on the restaurant receipt for buying a land from the owner of the restaurant who with his wife signed that paper. Acts/words could be reasonable interepted by Lucy as an offer to sell.
– In determining whether a party has made a valid offer, the words and actions of the party are interpreted according to objective standard
– not to their secret and unexpressed subjective intent, but whether a reasonable person would conclude that the party’s words and actions constituted an offer.
Language of offer:
must express the will or intention to allow an offeree to reasonably believe that the power to create a contract exists. Does not include evidence of intent to deal or open negotiations.
– advertisements, price lists, quotes, estimates, no offer
o unless a specific term is included to limit the number of people who can accept!
-Otherwise, an advertisement is an invitation for an offer.
o §32: if doubt then invitation for an offer
– MUST INCLUDE TERMS
o don’t need all the terms but should be evidence of some watch out for vague terms: reasonable, fair, appropriate
o UCC 2-204 (3)- even though one or more terms are left open on contract for sale does not fail for indefiteness if parties intended to make a contract and there is a basis for giving an aproporiate remedy
o MUST SHOW INTENT TO MAKE A DEAL
o §33 requires that terms be reasonably certain
o if terms uncertain may show that manifestation of intention is not there
– statement of minimum price is not an offer
1) Pepsi in commercial offered jet to clients. No reasonable person would believe that can be true. No contract. The deal cannot be too good to be true and without terms. Also Pepsi ad did not say anything on how to accept the offer. (unlike in 1$ fur coat case, where the offeror said first come first get the deal)
Owen v. Tunison (Plaintiff sent a letter to Defendant asking to buy a certain property for $6000. Defendant wrote a reply that described that “it would not be possible to sell unless I was to receive $16,000 cash.” Plaintiff then sent a message that he accepted the offer to buy for $16,000.) Willingness to offer is not an offer
Fairmount Glass Works v. Crunden-Martin Woodenware Co. (P sent a telegram to defendant (D) asking for the lowest price for ten car loads of Mason green jars. D sent a telegram back on April 23rd stating the prices for “immediate acceptance” . P accepted this offer on same day and sent in the specifications that called for “strictly first quality goods”. D responded that it cannot meet P’s order because output is all sold out) Court confirmed it was an offer and therefore enforceable
Lefkowitz v. Great Minneapolis Surplus Store (Defendant advertised the sale of three fur coats and three fur stoles for $1.00 a piece. The advertisement said “first come, first serve”. Plaintiff arrived at Defendant’s store wishing to buy the garments. Defendant refused, saying the sale was only for women.) The advertisement clearly stated that Defendant would sell the fur garments at a definite price to the person who came first. Plaintiff arrived first, thus, accepted the offer.
The “house rule” was not mentioned in the advertisement. While offers can be modified, one cannot, after acceptance, impose new, arbitrary conditions.
Termination of an offer
– Revocable by offerer until acceptance or after reasonable lapse in time
o Depends on the market you are in
o must be unambiguous
o communicated by words or actions §43
o Oferror’s death terminates the offeree’s power of acceptance if no consideration to keep open
o Oferree needs to have received the revocation for it to be allowable
– UCC 2-205: terminates after a reasonable time ie 3 months
– Not a revocation unless offeree receives notification of revocation or learned of revocation from reliable and reasonable source.
o Reliance on the offer was reasonably forseeable ( always get restitution)
o Option Contracts= downpayment to keep the offer open= consideration
o Firm Offers= UCC 2-205: if put forth by a merchant and in writing and during reasonable time
o Unilateral Contracts
§ Start of performance- option contract is formed and offeror can’t revoke
· Mere preparation is not start of performance
o Irrevocable by statute
Mistake of offer
§153: Mistake of one party makes contracts voidable when:
· When mistake has material effects and
o Enforcement would be unconscionable OR
o The other party had reason to know of the mistake or caused the mistake
§87: (1) An offer is binding as an option contract if it:
o Is in writing and signed by the offeror, recites a purported consideration for the making of the offer, and proposes an exchange on fair terms within a reasonable time OR
o Is made irrevocable by statute
(2) An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the party of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extend necessary to avoid injustice
Elsinore Union Elementary School District v. Kastorff
UCC 2-207 abolishes this mirror image approach and allows for some changes
o (1) A definite expression of acceptance or a written confirmation, which is sent within a reasonable time, operates as an acceptance even if it states terms additional to or different from those offered or agreed upon, unless the acceptance is expressly made conditional on assent to the additional or different terms.
o (2) The additional terms are considered proposal for the additional to contract and between merchants are part of the contract unless
§ offer expressly limits acceptance to the terms of the offer
§ terms material alter contract
§ notification of objection to those terms had already been given or is given reasonably after notice received
o (3) Conduct by 2 parties which recognizes the existence of a contract is enough to establish a contract although the writings do not establish it.
§ such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act.
o DON”T SAY this is sale of goods so 2-207 applies
o Only applies with additional terms in acceptance
Silence as acceptance
o General Rule: Silence alone is not ordinary acceptance usually exceptional
· where the the party to which offer is presented silently takes benefits,
· those where one party relies on the other party's manifestation of intention that silence may operate as acceptance.
· History of where no notification of acceptace was required
§69. ACCEPTANCE BY SILENCE
(1) Where an offeree fails to reply to an offer, his silence and inaction operate as an acceptance in the following only:
(a) Offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation.
(b) Offeror has stated or given the offeree reason to understand that assent may be manifested by silence and the offeree in remaining silent and inactive intends to accept the offer.
(c) Where because of previous dealings it is reasonable that the offeree should notify the offeror if he does not intend to accept.
(2) An offeree who does any act inconsistent with the offeror's ownership of offered property is bound in accordance with the offered terms unless they are manifestly unreasonable. But if the act is wrongful as against the offeror it is an acceptance only if ratified by him.