Mutual Assent 1

Question 1

RS 1 - Contract defined

Answer 1

A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.

Question 2

RS 2(1) - Promise

Answer 2

A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.

Question 3

Objective Theory

Answer 3

A statement is an offer only if the person to whom it is communicated could reasonably interpret it as an offer. (Embry, Texaco, Lucy)

Question 4

RS 17 - Requirement of a Bargain

Answer 4

The formation of a contract requires a bargain in which there is a manifestation of mutual assent to exchange and a consideration.

Question 5

RS 18 - Manifestation of Mutual Assent

Answer 5

Manifestation of mutual assent to exchange requires each party either make a promise or render a performance.

Question 6

RS 19 - Conduct as Manifestation of Assent

Answer 6

1) The manifestation of assent may be made wholly or partly by written or spoken words, or by other acts, or by failure to act. *** cf 2-204(1)

Question 7

RS 26 - Preliminary Negotiations

Answer 7

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. (Pepsico - ad, invitation to make an offer, Mesaros - Order form is not acceptance, is offer)

Question 8

RS 22 Mode of Assent: Offer and Acceptance

Answer 8

1) The manifestation of mutual assent to exchange ordinarily takes the form of an offer or proposal by one party followed by an acceptance by the other party or parties.
2) 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.
cf. 2-206

Question 9

*RS 24 - Offer Defined

Answer 9

An offer is a manifestation of a willingness to enter into a bargain, so as to justify another person in understanding that his assent to that bargain is invited and will conclude it.

Question 10

RS 29 - To Whom an Offer is Addressed

Answer 10

1) The manifested intention of the offeror determines the person or persons in whom is created a power of acceptance.
2) An offer may create a power of acceptance in a specified person, or in one or more of a specified group or class of person, acting separately or together, or in anyone or everyone who makes a specified promise or renders a specified promise.

Question 11

*RS 33 - Certainty

Answer 11

1) 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 contract are reasonably certain.
2) The terms are reasonably certain if they provide a basis for determining the existence of a breach, and for giving an appropriate remedy.
3) The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance.
(Nebraska - lacked quantity, fails; Lefkowitz - Exception to ad, terms certain and complete)

Question 12

UCC 2-204 - Formation in General

Answer 12

1) contract may be made in any manner sufficient to show agreement (including conduct) cf. RS 19
2) May be contract even though can’t identify moment of its making
3) Open terms do not mean contract fails for indefiniteness cf. RS 33

Question 13

UCC 2-206 - Offer and Acceptance in Formation in contract

Answer 13

1) unless otherwise unambiguously indicated by the language or circumstances
a) an offer shall be construed as inviting any acceptance in any manner and by any media reasonable in the circumstance.
2) Where beginning of a requested performance is a reasonable mode of acceptance, offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.
cf. 22

Question 14

RS 25 - Option Contracts

RS 87 - Option Contract

Answer 14

25: An option contract is a promise that meets the requirements for the formation of a contract and limits the promisor’s power to revoke an offer.
87: 1) An offer is binding as an option contract if it
a) is in writing, signed by offeror, recites consideration for the offer, proposes an exchange on fair terms within reasonable time; or
b) is made irrevocable by a statute
2) An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offer before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice.
(cf. 2-205)

Question 15

RS 35 - The Offeree’s Power of Acceptance

Answer 15

1) An offer gives to the offeree a continuing power to complete the manifestation of mutual assent by acceptance of the offer
2) Cannot be accepted if terminated by means of §36.

Question 16

*RS 36 - Methods of Termination of the power of Acceptance

Answer 16

1)

a) Rejection or counter-offer
b) Lapse of Time
c) Revocation (Dickinson - indirect)
d) Death or incapacity

Question 17

RS 37 - Termination of Power of Acceptance Under Option Contract

Answer 17

Power of acceptance under option contract is not terminated by a rejection, counter offer, rejection, death - unless requirements are met for the discharge of a contractual duty.

Question 18

RS 42 - Revocation By Communication from Offeror Received by Offeree

Answer 18

An offeree’s poet of acceptance is terminated when the offer receives from the offeror a manifestation of an intention not to enter into the proposed contract.

Question 19

RS 43 - Indirect Communication of Revocation

Answer 19

An offeree’s power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract, and the offer acquires reliable information to that effect. (Dickinson)

Question 20

UCC 2-205 - Firm Offers

Answer 20

An offer by a merchant to buy or sell goods in a signed writing by which its terms gives assurance that it will be held open is not revocable for lack of consideration during the time stated or if no time is stated for a reasonable time (no more than 3 months); any such term of assurance on a form supplied by the offer must be separately signed by the offeror.

Question 21

Mirror Image Rule - RS 61 - Acceptance Which Requests Change of Terms

Answer 21

An acceptance which requests change or addition to the terms of the offer is not thereby invalidated unless the acceptance is made to depend on assent to the changed or added terms. (Shaefer - sets forth MIR, Ardente - conditional acceptance not “definite & unequivocal”)

Question 22

Mailbox Rule - RS 63 - Time When Acceptance Takes Effect

Answer 22

1) As soon as put out of the offeree’s possession

2) Acceptance under option contract not operative until received by the offeror

Question 23

Unilateral Contracts

Answer 23

Carlill
Pepsico
White
Ever-tite
Petterson

Question 24

RS 64 - Acceptance by telephone or teletype

Answer 24

Acceptance given by any substantially instantaneous two-way communication is governed by principles applicable to acceptances where the parties are in the presence of each other.

Question 25

RS 65 - Reasonableness of Medium of Acceptance

Answer 25

Acceptance reasonable if one used by offeror, or one customary in similar transactions

Question 26

RS 54 - Acceptance by Performance - Necessity of Notification to Offeror

Answer 26

1) Default - no notification necessary, unless requested
2) If offeree knows offeror has not way of learning of performance, offeror’s duty discharged unless
a) offeree exercises reasonable diligence to notify the offeror
b) offeror learns of performance within reasonable time
c) offer indicates notification is not required

Question 27

RS 30 - Form of Acceptance Invited

Answer 27

1) Offer may invite acceptance by words, performance, or offeree’s selection
2) If not specified by language or circumstances, any medium reasonable

Question 28

RS 62 - Effect of Performance by Offeree Where Offer Invites Either Performance or Promise

Answer 28

1) If choice between promise and performance, beginning of performance is an acceptance
2) Such acceptance operates as a promise to render complete performance.

Question 29

RS 69 - Acceptance by Silence or Exercise of Dominion

Answer 29

1) offeree’s failure to reply operate as acceptance where
a) offeree takes benefit of offered services with reasonable opportunity to reject
b) offeror has given offeree reason to understand that assent may be manifested by silence or inaction
c) previous dealings show that offeree should notify offeror if does not intend to accept (Hobbs)

Question 30

E-Commerce

Answer 30

Sprecht - Requires “immediately visible notice of the existence of term” or an “unambiguous manifestation of assent” (“I agree” button) - must be obvious that entering into contract

Register.com - “apple stand” - have notice of terms, cannot take benefit and say never accepted.