Acceptance

Question 1

How is acceptance defined?

Answer 1

A manifestation of a willingness to enter into the agreement by the offeree

Question 2

Who can accept an offer?

Answer 2

Only a party to whom an offer is extended may accept or, if the offer is extended to a class, a party who is a member of the class may accept.

Question 3

True or false: The offeree must accept the offer according to the rules of the offer.

Answer 3

True. The offeror is master of the offer

Question 4

Must the offeree know of a valid offer in order to accept?

Answer 4

Yes. In addition, the offeree must communicate the acceptance to the offeror.

Question 5

If there is an ambiguity about whether an offer is unilateral or bilateral, how may an offeree accept?

Answer 5

Acceptance can either be by performance or a return promise.

Question 6

How is a bilateral contract defined? How may a bilateral contract be accepted?

Answer 6

A bilateral contract is one in which a promise by one party is exchanged for a promise by the other. The exchange of promises is enough to render them both enforceable.

An offer requiring a promise to accept can be accepted either with a return promise or by starting performance

Question 7

True or false: Commencement of performance of a bilateral contract operates as a promise to render complete performance

Answer 7

True

Question 8

What is a unilateral contract? How may it be enforced?

Answer 8

A unilateral contract is one in which one party promises to do something in return for an act of the other party (e.g., a monetary reward for finding a lost dog).

Acceptance of an offer for a unilateral contract requires complete performance. Once performance has begun, the offer is irrevocable for a reasonable period of time to allow for complete performance unless there is a manifestation of a contrary intent.

Question 9

True or false: In a unilateral contract, the offeree’s promise to perform is sufficient to constitute acceptance.

Answer 9

False. Acceptance of an offer for a unilateral contract requires complete performance

Question 10

True or false: An offeror in a unilateral contract may terminate the offer before the offeree begins to perform.

Answer 10

True. BUT , expenses incurred by the offeree in preparing to perform may be recoverable as reliance damages.

Question 11

True or false: With an open-to-all offer, you must know about that offer in order to accept it

Answer 11

True.

Question 12

Does acceptance have to be clearly communicated to an offeror for a valid contract?

Answer 12

YES

Question 13

Under the UCC, how may an offeree accept an offfer?

Answer 13

Unless the offeror specifically requires the offeree to accept in a particular manner or by using a particular means, the offeree can accept in any reasonable manner and by any reasonable means.

Reasonable means = A means of acceptance is reasonable if it was used by the offeror, used customarily in the industry, or used between the parties in prior transactions.

Question 14

True or false: Under the UCC, an acceptance by unauthorized means is never effective

Answer 14

False. Even if the acceptance is by unauthorized means, it may be effective if the offeror receives the acceptance while the offer is still open.

Question 15

Is silence ever an appropriate means of acceptance.

Answer 15

Generally, no, even if the offer states that silence qualifies as acceptance (or, more likely, implied acceptance),

Two exceptions for silence acceptance:

1) The offeree has reason to believe that the offer could be accepted by silence, and he was silent with the intent to accept the offer by silence;

2) Because of previous dealings or patterns of behavior, it is reasonable to believe that the offeree must notify the offeror if the offeree intends not to accept

Question 16

What is the mailbox rule?

Answer 16

An acceptance that is mailed within the allotted response time is effective when sent (not upon receipt)

* unless the offer provides otherwise*

Note: The mailing must be properly addressed and include correct postage.

Question 17

True or false: The mailbox rule applies to acceptance in bilateral and unilateral contracts

Answer 17

False. Mailbox rule almost exclusively applies to bilateral contracts (when there is one promise in exchange for another promise), because unilateral contracts require action as acceptance

Question 18

If the offeree sends an acceptance and later sends a communication rejecting the offer, what is the result?

Answer 18

The acceptance will generally control even if the offeror receives the rejection first.

If, however, the offeror receives the rejection first and detrimentally relies on the rejection, then the offeree will be estopped from enforcing the contract.

Question 19

Does the mailbox rule apply if a communication is sent rejecting the offer, and a later communication is sent accepting the contract?

Answer 19

The mailbox rule will not apply and the first one to be received by the offeror will prevail.

Question 20

If an acceptance and rejection are both received by the offeree, must the offeree read the acceptance or rejection for the mailbox rule to take effect?

Answer 20

No. The offeror need not actually read the communication that is received first for it to prevail.

Question 21

True or false: Offers revoked by the offeror are effective upon receipt.

Answer 21

True

Question 22

What happens if the acceptance is via an “instantaneous two-way communication,” such as telephone or traceable fax

Answer 22

It is treated as if the parties were in each other’s presence.

Question 23

In a unilateral contract, is an offeree required to give notice after performance is complete?

Answer 23

No. unless he has reason to know that the offeror would not learn of performance within a reasonable time, or the offer requires notice.

Question 24

In a unilateral contract, if notice is required but not provided, the offeror’s duty is discharged, unless…?

Answer 24

1) The offeree exercises reasonable diligence to notify the offeror;

2) The offeror learns of performance within a reasonable time; or

3) The offer indicates that notification of acceptance is not required.

Question 25

Under CL, must an offeree of a bilateral contract give notice of acceptance?

Answer 25

Yes

Question 26

Under the UCC, when is notice of acceptance required?

Answer 26

Under the UCC, notice is required within a reasonable time if acceptance is made by beginning performance and failure to do so will result in a lapse of the offer

Question 27

Under CL, must the acceptance match the terms of the offer?

Answer 27

YES. 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.

Question 28

Do questions or inquiries serve as a counteroffer in CL?

Answer 28

No. Mere suggestions or inquiries, including requests for clarification or statements of intent, made in a response by the offeree do not constitute a counteroffer.

Question 29

What is a conditional offer? Is it a form of acceptance or a counteroffer?

Answer 29

A conditional acceptance is another form of counteroffer.

A conditional acceptance terminates the offer and acts as a new offer from the original offeree.

Ex: I offer to mow your lawn on Saturday for $50. You say, “OK, if you come over on Sunday. There is no contract.

Question 30

How does the UCC handle acceptance with different or new terms?

Answer 30

UCC = 2-207 (vs. CL Mirror Image Rule
Additional or different terms included in an acceptance of an offer do not automatically constitute a rejection of the original offer.

Question 31

What is the exception for UCC’s 2-207(1) rule of acceptance?

Answer 31

Acceptance is expressly conditional on the offeror’s assent to terms additional or to different from those contained in the offer.

Courts have taken the view that the exception will be triggered and a contract avoided ONLY IF the offeree makes it clear that he is unwilling to close the deal unless the offeror agrees to the additional terms.

Ex:
“This acceptance of your offer is effective only if you agree to all of the terms listed on the reverse side of this acceptance form” → if you see this, there is no contract between the parties

Question 32

What are the three steps for UCC 2-207?

Answer 32

2-207(1): Was there acceptance? Will factor in if you go to step 2 or 3 (can’t do both)
2-207(2): You have a contract with the OG offer with additional terms… what do we do?
2-207(3): Behaving as if there is a contract, but there’s not one yet

Question 33

Under UCC §2-207(1) how do we know if a contract has been formed?

Answer 33

1) Definite (the thing and the price) and seasonable expression of acceptance; OR
2) A written confirmation which is sent within a reasonable time (could be offeror or offeree) even though it states terms additional to or different from those offered or agreed upon

Either of these means to move to 2-207(2). If neither exists, there’s not acceptance and move to 2-207(3)

Question 34

Under 2-207(2), what happens to added or different terms?

Answer 34

You have acceptance under 2-207(1) and now we look to parties and determine who’s a merchant

If either party is NOT a merchant: These additional terms are a mere proposals, terms are out unless the other party explicitly agrees

Both are merchants: terms DO become part of the contract UNLESS
1) Pre-emptive strike clause: OG offer limits acceptance to terms
2) They materially alter the contract, which requires explicit acceptance
3) Notification of objection to these extra terms has already been given or is given within a reasonable amount of time after notice of them has been 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.

Question 35

How does the UCC define merchant?

Answer 35

1) Person that deals in goods of the kind; OR
2) By occupation holds himself out as having knowledge or skills involving those goods; OR
3) Such knowledge or skills may be attributed by his employment of an agent or broken or other intermediary

Question 36

If there’s no acceptance under UCC 2-207(1), what happens next?

Answer 36

Go to 2-207(3): Behaving as if there is a contract, but there’s not one yet but conduct can establish a contract.

Kick out rule: look at the writings between both parties that don’t satisfy 2-207(1)
+ Anything they both discuss and do not agree is OUT
+ Additional terms not yet agreed upon are OUT

What’s in? What both parties agree upon
UCC can fill in any blanks within the four corners other than quantity

Question 37

What are the UCC rules re: auction contracts and lots?

Answer 37

1. Lots: If goods in an auction sale are offered in lots, each lot represents a separate sale.

Question 38

What are the UCC rules re: auction contracts and completion of sale?

Answer 38

2. Completion of 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. 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.

Question 39

What are the UCC rules re: auction contracts and reserve/no reserve auctions?

Answer 39

Reserve and no-reserve auctions: In a reserve auction, the auctioneer may withdraw the goods any time before she announces completion of the sale. An auction is with reserve unless specifically announced as a no-reserve auction.

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.

In either type of auction, a bidder may retract her bid until the auctioneer announces the completion of the sale. A retraction, however, does not revive any earlier bids.

Question 40

What are the UCC rules re: auction contracts when the seller bids?

Answer 40

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 the goods, the winning bidder may avoid the sale or, at her option, take the goods at the price of the last good-faith bid prior to the end of the auction.

There are two exceptions to this rule, which are that (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.

Question 41

Does the mirror image rule apply in UCC?

Answer 41

No, The mirror image rule, which states that the acceptance must mirror the terms of the offer, does not apply to a sale of goods

Question 42

Is incapacity the same for a minor as a person who is mentally ill?

Answer 42

Two standards for mentally ill:

1) The person cannot understand the nature and consequences of his actions OR

2) The person cannot act in a reasonable manner in relation to the transaction (IF the other party knows or has reason to know this).

NOT THE SAME AS A MINOR.

Question 43

What is an implied contract under CL?

Answer 43

A legally-binding obligation that derives from actions, conduct, or circumstances of one or more parties in an agreement.

It has the same legal force as an express contract, which is a contract that is voluntarily entered into and agreed on verbally or in writing by two or more parties.

Question 44

How is a unilateral K accepted?

Answer 44

Acceptance of an offer for a unilateral contract requires complete performance.

Note: Once performance has begun, the unilateral offer is irrevocable for a reasonable period of time to allow for complete performance unless there is a manifestation of a contrary intent.

Question 45

What are the four forms of consideration?

Answer 45

1. A return promise to do something
2. A return promise to refrain from doing something legally permitted
3. The actual performance of some act
4. Refraining from doing some act

Question 46

What is necessary for a firm offer to be created under the UCC?

Answer 46

(1) offeror is a merchant;
(2) assurance that the offer is to remain open; and
(3) assurance is contained in a signed writing from the offeror.

Question 47

Under the UCC, when both parties are merchants, an additional term in the acceptance is automatically included in the contract, UNLESS

(Name the 3 exceptions)

Answer 47

Exception 1: The term materially alters the original contract;
Exception 2: The offer expressly limits acceptance to the terms of the offer; or
Exception 3: The offeror has already objected to the additional terms, or objects within a reasonable time after notice of them was received.

Note: 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.

Question 48

When is fraud in the inducement voidable?

Answer 48

Contract is VOIDABLE by the adversely affected party if she justifiably relied on the misrepresentation in entering into the agreement

Question 49

When is fraud in the execution voidable?

Answer 49

Never!

No contract is formed because the contract is VOID.

Fraud in the execution: fraudulent misrepresentation prevents a party from knowing the character or essential terms of the transaction.

Question 50

At what point can repudiation no longer be retracted?

Answer 50

Repudiation may be retracted until such time as the promisee:
(i) acts in reliance on the repudiation;
(ii) signifies acceptance of the repudiation; or
(iii) commences an action for breach of contract.