WAS THERE FORMATION OF A CONTRACT
Did the parties mutually assent to the agreement?
(1) Was there a manifestation of intent to be contractually bound to a condition promise, such that constitutes an offer? Look at all facts & circumstances.
1. Was it communicated to person to whom addressed?
2. Does it indicate a desire to enter a contract?
a. Does it included performances to be exchanged & terms governing exchange?
b. Or was it invitation to enter into negotiations? Specificity is big hint.
3. Is it directed at some person or group of persons?
4. Does it invite acceptance?
5. Does it engender the reasonable understanding that acceptance will create contract (confers power of acceptance on offeree)?
a. Content, Nature of Communication
b. Context: Industry standards/usage of trade [UCC], course of dealings, relationship of parties, societal & cultural norms.
General Indicia that help distinguish offer from preliminary proposal:
· Words used in communication
· Comprehensiveness & specify of terms
· Relationship of parties, any previous dealings between them & any prior communications in this transaction may cast light on how recipient should have reasonably understood communication
· Common practices & trade usages
(2) Did offeree manifest assent to the offer?
1. Would reasonable person in offeror’s position have understood response as manifestation of assent to offer?
2. Was acceptance made by person whose acceptance was invited by the offer? Did they have the power of acceptance?
3. Did the offeree manifest his agreement in the manner invited or required by the offer?
Was the power of acceptance terminated by lapse of time?
(1) What was the specified or reasonable duration of offer?
a. Did offeror specify time within which acceptance must be made? Any ambiguities in specified time resolved by standard of reasonableness.
b. If not, what was a reasonable time?
– What rational period would parties perceive this offer to be open?
– What time would be needed to receive, consider & reply to offer under all circumstances of transaction?
Acceptance must be effective before offer expires.
Was the power of acceptance terminated before the offer lapsed? [R2K 36] (1) Did the offeree reject the offer or make a counter-offer? [R2K 38 & 39] a. Counter-offer is an implicit rejection unless the offeror has manifested a contrary intention (offer says is willing to receive counter-offers) or the counter-offer manifests contrary intention of offeree (mere inquiry into separate terms)
(2) Did the offeror revoke the offer prior to acceptance?
a. Did offeree receive notice of revocation clearly indicating the offeror is no longer willing to enter contract? Y: terminated upon receipt. [R2K 42] b. If no, did offeree obtain reliable information that offeror took action clearly inconsistent with continued intent to enter contract? Y: terminated when acquires the information. [R2K 43] (3) Did offeror or offeree die or become mentally incapacitated?
(4) Was offer irrevocable?
SALE FOR GOODS: UCC 2-205, Firm Offers
a. Offer by merchant
b. To buy or sell goods
c. In a signed writing
d. For stated period or reasonable period [never over 3 months] e. Do not need consider for promise to hold offer open
NOT SALE FOR GOODS: R2K 87(a)(1), Option Contracts
a. In writing
b. Signed by offeror
c. Recites purported consideration [doesn’t matter if fair or received] d. Proposes exchange on fair terms
i. Offeror learns of performance within a reasonable time
iii. Offer indicates that notification is not required.
(2) If acceptance by promise does dispatch rule apply? [R2K 56] Dispatch rule:
· applies when there is a gap between dispatch and receipt of an acceptance
· is only activated when the offerree uses the authorized means of communication
· doesn’t apply when an acceptance follows a rejection or counteroffer
· doesn’t apply if an offer is irrevocable
· doesn’t apply when communication is near instantaneous
a. If yes, was acceptance properly dispatched?
i. Yes: effective upon dispatch or as soon as put out of offeree’s possession.
ii. No: Treated as operative upon dispatch if received within the time in which a properly dispatched acceptance would normally have arrived. Otherwise dispatch rule does not apply.
**Even though dispatch rule makes acceptance effective even if offeror never receives it, it is usually an implied condition that offeror’s performance is contingent upon notice of acceptance [R2K 63 comments].
Legal effect upon dispatch also applies to offeree’s attempt to overcome communication.
(3) If option contract, acceptance not operative until received by offeror.
R2K 69: Acceptance by Silence