· Classic Rules
· no offer is made until one receiving offer makes further expression of assent if he knows or has reason to know that it is the intention of the one making the offer (Lonergan v. Scolnik)
· Mailbox rule: Anglo-American common law traditionally held that mailing of written acceptance = acceptance has occurred.
· Deposited acceptance rule under the Contracts for the International Sale of Goods (CISG):
o Article 16 (1): generally adopts the mailbox rule,
o Article 18(2): modifies the common law mailbox rule, by placing the risk of non-arrival of acceptance on the offeree rather than the offeror.
§ to effectively conclude the bargain, acceptance must REACH the offeror in timely fashion.
o CISG’s rule places risk of lost communication on party who can best prevent that loss by choosing a more reliable means of communication
· What is an offer?
o last communication from one party.
o either party can make offer.
· 3 factors determining what an offer is (likelihood, not certainty)
Specificity (how specific is it in terms of the transaction)
Where are we in negotiations? The further along you are, more likely to be an offer.
· Communications take effect when they are received by the other party.
o default rule says, offer in effect when received by other party, but acceptance in effect as soon as it is mailed out.
§ Risk of delay on offeror, because offeror controls the offer and can protect self, but offeree needs to be protected.
· To revoke an offer, must communicate to the offeree of revocation
o It is enough that the offeree receives reliable information, even indirectly, “that the offeror had taken definite action inconsistent with an intention to make the contract.” (restatement 43)
§ Why this rule? If offeree is reasonably on notice, offeree can always inquire to the offeror.
· Hypo: Was there an enforceable contract when the supermarket put up a sign for 6 zucchini/$1?
Sign “6 for 1”: solicitation to purchase
Store’s offer(probably not in the US, maybe in a civil law system)
Get in checkout line
Hand to checker: express interest
Ring up: store’s offer to sell at 1/$1
Store’s acceptance or counteroffer
Pay: accept or reject, counteroffer
acts. But lawyers eventually caught on and included terms in contract to prevent that from happening. When enough people catch on to that and there’s no more wiggle room, THEN make new rules)
· So, step one: wiggle room
· Step 2: new rule
· Responding to concerns about good faith and fair dealing, drafters of the Restatements created a rule that provided protection to the offeree under a unilateral contract.
· Restatement (Second) section 45: when a offeree tenders or begins the requested performance under a unilateral contract, the offeror becomes bound and cannot revoke his offer so long as the offeree completes performance in accordance with the terms of the offer.
If an objective reasonable person would observe, see acts performed and words spoken, and say there was a contract, this is sufficient to hold parties accountable for the contract.
Hypo: in a bar drank half a dozen beer each…offer to sell car for $10. Paid on the spot. Later, offeror says he was just kidding. Contract or not?
o No contract, b/c a reasonable person’s objective interpretation of the action or the words of the party is the only thing that matters, and NO ONE would think that someone would sell a 2006 BMW in perfect condition for $10.