Contracts I
Offer
GR: social Ks are not enforceable because parties don’t have contractual intent
– don’t intend for promise to have legal consequences
– Include Offer, Acceptance & Consideration
Where parties make it clear that they are still negotiating, No K has yet been created (objective basis) Ex. 2 men negotiated for real estate sale, executed each part of K, one said he only had personal check…
– Continental labs v. scott
Statements of Opinion: Not offers but if reasonable person believes offer has been made (where offeror has superior knowledge) then statement may be an offer
– hairy hand case
Ads/Solicitations: Not offers because they are not definite enough or lack demonstration of commitment. Exception if it is clear, definite, and explicit and leaves nothing open to negotiation constitutes an offer, acceptance of which constitutes a K.
Acceptance – manifestation of assent by offeree in manner invited or required by offeror
was there communication by offeree to offeror?
Mailbox rule
was acceptance responsive (given in manner required or invited by offeror)?
was it absolute and unequivocal (did offeree change or add any terms?
– look at mirror-image rule and 2-207 if getting all no’s to these questions, because there may still be a K
Would a reasonable person believe offeree has accepted?
– terms are cemented & can’t be unilaterally changed unless parties agreed to do so
– Offeror is Master of offer a & offeree must accept in manner requested but otherwise may accept in a reasonable manner
– acceptance maybe made in same way offer was sent & faster method is appropriate For example if the offer mailed, then faxed acceptance is appropriate
Silence as Acceptance – silence is not acceptance except when:
1) offeree takes benefit of services with reasonable opportunity to reject them and reason to know they were offered with expectation of compensation
2) offeree had reason to believe assent may be manifested by silence or indication and offeree, in remaining silent, intends to accept
3) because of previous dealings or otherwise it is reasonable that offeree would notify offeror if he has no intention to accept
4) UCC
– evaluate course of performance (how did parties act in within context of circumstances of agreement)
– course of dealing (how two parties have acted over time)
– use of trade (industry practice)
REWARDS
GR: knowledge of offer is required for acceptance of a reward. You must know of offer before your act/performance can be accepted as a form of acceptance on a reward offer. The exception is public rewards. You don’t need to know prior to acting with them.
Motive for Acceptance is irrelevant to courts BUT IT MUST BE VOLUNTARY
Mode of Acceptance
– Depends on what offeror sought
– Bi-K accepted by offeree by promise
– Uni-K accepted by offeree by an act or forbearance
o No K until act or forbearance is done
If it is unclear what offeror intended, offeree may accept in any matter reasonable under circumstances
Beginning of performance acts as acceptance and as a promise to complete performance.
– A K where offeree can’t quit; if offeree quits, he is in breach
o 3 little pigs problem
Uni-K – starting performance creates option K in favor of offeree; offeror must allow reasonable time for offeree to complete performance but because there is no acceptance offeree may stop perform
de conditional on assent to additional or different terms (which is also called proviso language) (is a counter-offer and you must evaluate parties’ conduct under part (3) to determine if it is accepted)
What are terms of parties’ contract? Does additional or different term become part of the K? If both parties are not merchants, terms are to be construed as proposals to additions or changes to the K and must be expressly agreed to by both parties. If both parties are merchants the terms become part of the K unless:
The offer expressly limits acceptance to terms of offer (offeror says no terms may be added)
Materially alters terms of K (resulting in unfair hardship or surprise)
Notification of objection to terms have been given or given within reasonable time
If acceptance has a different term which conflicts with equivalent part of K, majority of courts will use the knock-out rule to removes BOTH conflicting terms from the K and go to gap-fillers to fill in any gaps. Minority rule: should differ to offeror’s language because he had expectation that his terms would be adhered to and offeree had opportunity to read and accept them.
If a dickered term or proviso language was changed, no K unless expressly accepted by parties’ performance. The K exists according to terms which the parties agree on and these gap-fillers:
