Contracts Flashcards
What body of contract law governs the dealings between the gardener and the cook?
UCC Article 2 governs “transactions in goods.” UCC § 2-102. The term “goods” includes, among other things, growing crops (such as tomatoes). UCC § 2-105(1). Thus, the transaction in question is a transaction in goods that is governed by Article 2 of the UCC. Common law principles remain applicable, though, to the extent not displaced by the UCC. UCC § 1-103(b). The document signed by the gardener, which was capable of being accepted, constituted an “offer” for a contract under UCC § 2-206. See also Restatement (Second) of Contracts § 24.
Was the gardener entitled to revoke his offer before the cook accepted it?
A person makes an offer when the person communicates to another a statement of “willingness to enter into a bargain, so made as to justify” the other person “in understanding that his assent to that bargain is invited and will conclude it.” Restatement (Second) of Contracts § 24; Nordyne, Inc. v. Int’l Controls & Measurements Corp., 262 F.3d 843 (8th Cir. 2001). Here, the gardener’s statement in the document that he signed was an offer because it expressed the gardener’s willingness to enter into a bargain in a way that justified the cook in understanding that assent would create a contract.
Power of revocation
Under the common law of contracts, an offer may be revoked by the offeror at any time before acceptance unless an option contract is created limiting the power of revocation. Restatement (Second) of Contracts §§ 25, 87. No option contract is created here because there was no consideration for the gardener’s promise to keep the offer open, and there was no writing reciting a purported consideration. Id. § 25, cmt. c, and § 87(1)(a). As a result, the promise to hold the offer open is not enforceable under the general rule requiring consideration for such a promise
Firm offer rule
As the Restatement notes, a promise to hold an offer open may also be made binding by statute. Id. § 87(1)(b). Because the tomatoes constitute goods, Article 2 of the Uniform Commercial Code is the relevant statute. In some circumstances, the “firm offer” rule in UCC § 2-205 makes a promise to hold open an offer to buy or sell goods binding even in the absence of consideration. UCC § 2-205 does not apply in this situation, however, because it applies only to an offer by a “merchant.” The term “merchant” is defined in UCC § 2-104(1) as “a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction . . .” Here, the gardener is an amateur gardener with no business experience who has never sold tomatoes. Under these facts, the gardener is not a merchant. As a result, UCC § 2-205 does not make the gardener’s promise to hold the offer open binding in the absence of consideration.
In some cases, “an offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract.” Restatement (Second) of Contracts § 87(2). There is nothing in these facts, however, that would justify application of this rule.
In sum, the gardener was not bound by his promise to hold the offer open for 14 days and could revoke it at any time.
