Mutual Assent
Offer/Acceptance
Restatement §17(comment c): “Meeting of the Minds.” The parties to most contracts gives actual as well as apparent assent, but it is clear that a mental reservation of a party to a bargain does not impair the obligation he purports to undertake.
§18. Manifestation of Mutual Assent: requires that each party either make a promise or begin or render a performance.
§19. Conduct as a Manifestation of Assent:
may be made wholly or partly by written or spoken words or by other acts or by failure to act
The conduct of a party is not effective manifestation of his assent unless he intends to engage in the conduct and knows or has reason to know that the other party may infer from his conduct that he assents.
The conduct of a party may manifest assent even though he does in fact assent. In such cases a resulting contract may be voidable because of fraud, duress, mistake or other invalidating cause.
Embry v. Hargadine, McKittrick Dry Goods Co. – D says to P “Go ahead, you’re all right; get your men out and don’t let that worry you” in response to P’s threat to quit, P is subsequently fired.
2 part test: if outward manifestations of intention would be taken by a reasonable man to be employment,(objective portion) and if Embry so understood it (subjective portion). McKittrick’s subjective intentions are irrelevant, his intentions are solely based on the objective part, or the outward communications.
“As a practical matter, It will be difficult to find evidence to the contrary that the subjective understanding of the contract took place, i.e. Embry: ‘dear diary clearly no reasonable person would think this was a contract I can’t believe I got away with this’” – Bruner
Texaco v. Pennzoil – “In answering Issue No. 1, you should look to the intent of Pennzoil and the Getty entities as outwardly or objectively demonstrated to each other by their words and deeds. The question is not determined by the parties’ secret, inward or subjective intentions.”
Lucy v. Zehmer – Drunk/In Jest property contract: “The mental assent of the parties is not requisite for the formation of a contract. If the words or other acts of one of the parties have but one reasonable meaning, his undisclosed intention is immaterial except when an unreasonable meaning which he attaches to hi manifestations is known to the other party.”
(Cultural differences will make it more likely that there will be differences in understanding, hence the wording “a reasonable person of the same kind” that is stipulated in UNIDROIT article 4.2(2).)
Restatement §22. Mode of Assent: Offer and Acceptance
The manifestation of mutual assent to an exchange ordinarily takes the form of an offer or proposal by one party followed by an acceptance by the other party or parties.
A manifestation of mutual assent may be made even though neither offer nor acceptance can be identified and even though the moment of formation cannot be determined.
§24. Offer Denied: 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.
§26. Preliminary Negotiations: A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent.
§29. To Whom an Offer is Addressed:
The manifested intention of the offeror determines the person or persons in whom is created a power of acceptance.
An offer may create a power of acceptance in a specified person or in one or more of a specified group or class of persons, acting separately or together, or in anyone or everyone who makes a specified promise or renders a specified performance.
§33. Certainty:
Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain.
The terms of a contract are reasonable certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.
The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is nto intended to be understood as an offer or as an acceptance.
Preliminary Negotiations
Nebraska Seed Co. v. Harsh – P purchased 1800 bushels of millet seed at $2.25 per hundred weight. Correspondence ensued regarding the terms, samples were sent, after the letter from P urging fast shipping D refused to deliver after being paid the purchase price of $900.
“If a proposal is nothing more than an invitation to the person to whom it is made to make an offer to the proposer, it is not such an offer as can be turned into an agreement by acceptance.”
Relevant UCC:
§2-204. Formation in General
A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.
An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.
Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.
§2-206. Offer and Acceptance in Formation of Contract
Unless otherwise ambiguously indicated by the language or circumstances
an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances;
an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods, but such a shipment of non-conforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer
Where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.
§2-305. Open Price Term
The parties if they so intend can conclude a contract for sale even though the price is not settled. In such a case the price is a reasonable price at the time for delivery if a)nothing is said as to price; b) the price is left to be agreed by the parties and they fail to do so; or c)the price is not to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and it is not so set or recorded.
A price to be fixed by the seller or by the buyer means a price for him to fix in good faith
When a price left to be fixed otherwise than by agreement of the parties fails to be fixed though fault of one party the other may at his option treat the contract as c
y such period of irrevocability exceed 3 months, but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.
What is an Acceptance?
The Mirror Image Rule
“An offer of a bargain by one person to another imposes no obligation upon the former, unless it is accepted by the latter according to the terms on which the offer was made…any qualification of or departure from those terms invalidates the offer, unless the same is agreed to by the party who made it.”
Ardente v. Horan (case where the guy asks about the curtains after putting down a house deposit) – “The acceptance may not impose additional conditions on the offer… However, an acceptance may be valid despite conditional language if the acceptance is clearly independent of the condition.”
“So long as it is clear that the meaning of the acceptance is positively and unequivocally to accept the offer whether such request is granted or not, a contract is formed”
The Mailbox Rule
Restatement §63: Unless the offer provides otherwise,
a) an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree’s possession, without regard to whether it ever reaches the offeror; but
b) an acceptance under an option contract is not operative until received by the offeror
§64: Acceptance by phone: is governed by the principles applicable to acceptances where the parties are in the presence of each other.
§65: Unless circumstances known to the offeree indicate otherwise, a medium of acceptance is reasonable if it is the one used by the offeror or one customary in similar transactions at the time and place the offer is received
Things to consider: if acceptance is lost or delayed, there is still a contract, however the offeror’s duty to perform her obligations may be affected
Unilateral Contracts (Acceptance by Performance)
Carlill v. Carbolic Smoke Ball Co. – Notification of acceptance is not required when contract is open to anyone who performs along the guidelines.
An extravagant promise is still a promise.
Also, the fact that the Company showed sincerity in the matter (with the $1000 set aside in the bank to fund their offer), the claim of curative ability for the product cannot be dismissed as “mere puffery.”
Restatement §54: Acceptance by performance; necessity of notification to offeror
1) Where an offer invites an offeree to accept by rendering a performance, no notification is necessary to make such an acceptance effective unless the offer requests such a notification
If an offeree who accepts by rendering a performance has reason to know that the offeror has no adequate means of learning of the performance with reasonable promptness and certainty, the contractual duty of the offeror is discharged unless a) the offeree exercises reasonable diligence to
