(A)(5) Offer and Acceptance - Effect of Additional or Different Terms Flashcards
common-law-mirror image rule
the acceptance must mirror the terms of the offer—any change to the terms of the offer, or the addition of another term not found in the offer, acts as a rejection of the original offer and as a new counteroffer
common-law-mirror-image rule - suggestions and inquiries
mere suggestions or inquiries, including requests for clarification or statements of intent, made in respond by the offeree do NOT constitute a counteroffer
common-law-mirror-image rule - conditional acceptance
a conditional acceptance terminates the offer and acts as a new offer from the original offeree
UCC rule—acceptance contains additional or different terms
the UCC does not follow the mirror-image rule—additional or different terms included in an acceptance of an offer do not automatically constitute a rejection of the original offer
how is an acceptance that contains additional or different terms with respect to the terms in the offer for the sale of goods treated?
it is treated as an acceptance rather than a rejection and a counter offer
sale of goods acceptance to offer containing additional or different terms EXCEPTION (1)
an exception exists when the acceptance is expressly conditioned on assent to the additional or different terms, in which case the acceptance is a counteroffer
UCC acceptance of different or additional terms - merchants rule
whether the additional or different terms are treated as part of the contract depends on whether the parties are merchants
UCC rule - acceptance: one or both parties are merchants
when the contract is for the sale of goods between nonmerchants or between a merchant and a nonmerchant, a definite seasonable expression of acceptance or written confirmation that is sent within a reasonable time operates as an acceptance of the original offer
UCC rule—acceptance contains additional or different terms - one or both parties are merchants
a definite and seasonable expression of acceptance or written confirmation that is sent within a reasonable time operates as an acceptance of the original offer even if it states terms that are additional or different from the offer UNLESS the acceptance is made expressly conditional on the offeror’s consent to the additional or different terms
UCC acceptance - one or both parties are not merchants: treatment of additional terms
the additional terms are treated as a proposal for addition to the contract that must be separately accepted by the offeror to become part of the contract
UCC acceptance - both parties are merchants: battle of the forms
when both parties are merchants, the parties often use sales forms that might not be designed for the particular sale in question—as a consequence, the acceptance often contains different and additional terms
whose terms form the basis of the contract in a “battle of the forms”?
the rules may vary depending on whether the terms are additional or different terms
UCC acceptance - both parties are merchants (battle of the forms): acceptance includes additional terms general rule
an additional term in the acceptance is AUTOMATICALLY INCLUDED inn the contract when both parties are merchants, UNLESS and exception applies
UCC acceptance - both parties are merchants (battle of the forms): acceptance includes additional terms EXCEPTIONS (3)
(i) the term materially alters the original contract;
(ii) the offer expressly limits acceptance to the terms of the offer; or
(iii) the offeror has already objected to the additional terms, or objects within a reasonable time after notice of them was received
if any one of these three exceptions is met, the term will not become part of the contract, and the offeror’s original terms control
how is “materially alter” defined?
a term that results in surprise or hardship if incorporated without the express awareness by the other party materially alters the original contract
examples of terms found to have materially altered the original contract
- a warranty disclaimer
- a clause that flies in the face of trade usage with regard to quality
- a regard that complaints be made in an unreasonably short time period
- other terms that create hardship without express awareness by the other party
examples of terms that usually DO NOT materially alter the original contract
- fixing reasonable times for bringing a complaint
- setting reasonable interest for overdue invoices
- reasonably limiting remedies
UCC acceptance - both parties are merchants (battle of the forms): acceptance includes different terms general rule
courts in different jurisdictions disagree as to the result when different terms are included in the merchant offeree’s acceptance—a few jurisdictions treat different terms the same as additional rules; but MOST apply the “knock-out” rule
what is the “knock-out” rule?
different terms in the offer and acceptance nullify each other and are “knocked out” of the contract—when gaps are created after applying the knock-out rule, the court uses Article 2’s gap-filling provisions to patch the holes
UCC rule—acceptance based on conduct
if the offer and purported acceptance differ to such a degree that there is no contract, but the parties have begun to perform anyways (i.e., demonstrated conduct that recognizes the existence of a contract), the Article 2 provides that there will be a contract, and its terms will consist of those terms on which the writings of the parties agree, together with any supplementary terms filled in by the provisions of the UCC
rules that govern auction contracts
the UCC has special rules for auction sales
auction contracts - goods auctioned in lots
if the goods in an auction sale are offered in lots, each lot represents a separate sale
auction contracts - completion of a sale
an auction sale is complete when the auctioneer announces its end, such as by the fall of the auctioneer’s hammer or in any other customary way
auction contracts - completion of a sale: bid made contemporaneously with end of auction
when a bid is made contemporaneously with the falling of the hammer, the auctioneer may, at her discretion, treat the bid as continuing the bidding process or declare the sale completed at the fall of the hammer
auction contracts - reserve and no-reserve auctions
an auction is with reserve unless specifically announced as a no-reserve auction—in either type of auction, a bidder may retract her bid until the auctioneer announces the completion of the sale BUT a retraction does not revive any earlier bids
auction contracts - reserve auction
in a reserve auction, the auctioneer may withdraw the goods any time before she announces the completion of the sale
auction contracts - no-reserve auctions
in a no-reserve auction, after the auctioneer calls for bids on the goods, the goods cannot be withdrawn unless no bid is received within a reasonable time
auction contracts - when the seller bids general rule
when an auctioneer knowingly accepts a bid by the seller or on her behalf, or procures such a bid to drive up the price of goods, the winning bidder may avoid the sale or, at her option, the take goods at the price of the last good-faith bid prior to the end of the auction
auction contracts - when the seller bids EXCEPTIONS (2)
(i) a seller may bid at a forced sale; and
(ii) a seller may bid if she specifically gives notice that she reserves the right to bid
auction contracts - debtors and foreclosing creditors under forced-sale exception to auction sales
debtors and foreclosing creditors are both treated as “sellers” under the forced-sale exception to auction sales
