1. Rule: from objective manifestations of intent (reasonable person in position of other party would believe, does)
2. Not assent:
a. joke- Lucy
b. sham- problem #4; comment c to section 18; “both parties know it’s not for real”
c. Rest. 21: manifestation of intention that promise shall not affect legal relations, eg.:
i. family, social. Balfour
-generally no assent; would be with appropriate manifestations
ii. letter of intent/agreement to agree. Penzoil
i. If a reasonable person would know this is a mistake= no assent.
ii. Can look at course of dealing or prior agreements.
e. Hawkins v. McGee- Expression of opinion/prediction
i. Difference between prognosis and promise depends on if a reasonable person would think so.
ii. Guesstimate or guarantee?
iii. Predictions and expression of opinions are not offers but in Hawkins it is.
1. Generally: Expectation. Rest. 347
a. Expectation: Loss in Value+ Other Losses- Cost Avoided- Gain Possible (benefit retained)
Loss in Value = seller, K price Buyer, market value
Cost Avoided= seller, not an issue generally
Buyer, contract price
Gain Possible= seller, market value of land, good
Buyer, generally not an issue
Seller Suing: Loss in Value- Gain Possible
Buyer Suing: Loss in value- Cost Avoided
b. Puts promisee in position as if K performed
2. Reliance: (in precontractual actions)
a. Rest. 349: as an ALTERNATIVE to expectation, party has a right to damages based on reliance, including expenditures made in preparation for performance or performances…
b. Puts Promisee back in the position which the Promisee would have been in had the promise NOT been made
c. When you do reliance, expectation is the ceiling, can’t put someone in a better position than they were before; can’t have reliance AND expectation
d. When expectation is speculative or something inherently wrong with the contract, use reliance
a. Restatement 370: entitled to restitution to extent he has conferred a benefit, upon D
b. Promisor must return benefits given to him BY PROMISEE—looks at position Promisor would have been in had the promise not been made.
c. Narrower reward.
II. Offer- Can revoke any time up until acceptance
A. RULE: §24 An offer is the 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. That is: Offeree reasonably, actually believes due to Offeror’s manifestations of intent that an Offer has been made inviting acceptance.
B. NOT an Offer
1. Expression of opinion, prediction. Hawkins, sometimes called puffery.
2. Advertisement. PepsiCo, Lonergan. Rest. 26 cmt. B
Exception: must be clear, definite, and leave nothing open for negotiation (Lefkowitz, said “first come first served” renders offer sufficiently indefinite that no contract could be formed, directed at who can accept the offer)
3. Joke. PepsiCo, Lucy.
“Objective, reasonable person would think it’s a joke”
4. Invitation to negotiate. Rest 26, Lonergan.
5. Price Quote. Fairmount, Briggs
6. Estimate. Briggs
C. Factors to consider:
Complete (major terms)
Inferred from the beginning of performance (Fujimoto)
-Offeree is setting into motion actions reasonably anticipated for things to come
-Some courts say that performance hasn’t begun until partially done
c) May NOT be inferred from preparation for performance
-Preparation for performance is equally consistent with acceptance and rejection therefore NOT acceptance
-Look for connection to the offer
d) Silence? §69
-Generally silence does not qualify of acceptance
>Equally consistent with Acceptance and rejection
1) Takes benefits with reasonable opportunity to reject AND reason to know they were offered with expectation of compensation §69.1a (Minker, Wilhoite, and Hobbs)
2) Or has stated or given offeree a reason to understand may be manifested by silence and offeree in remaining silent intends to accept §69.1b
3) Because of course of dealings or otherwise, reasonable that offeree should notify offeror if doesn’t intent to accept §69.1c (Hobbs)
e) Shipment as acceptance 2-206
1. Unless otherwise unambiguously indicated order to ship accepted by prompt promise to ship OR by shipment of conforming OR nonconforming goods. (Comment 2)
-say something like “the only way you can accept is by shipment”
2. Nonconforming goods not accepted if Seller seasonably notifies Buyer that they are offered only as accommodation