Mutual Assent: Acceptance

Question 1

Acceptance

Answer 1

• An acceptance is a manifestation of assent to the terms of an offer.

Question 2

Who Many Accept

Answer 2

• Generally, only the person to whom an offer is addressed has the power of acceptance.
• A member of a class to which an offer
  has been directed also has the power to accept.
• Generally, an offeree’s power of acceptance cannot be assigned.
• But, if the offeree paid consideration to keep the offer open (an option K), the right to accept is transferable

Question 3

Offeree Must Know of Offer

Answer 3

• The offeree must know of the offer in order to accept it, and this is true whether the offer is for a bi/uni K.
• Thus, if A sends B an offer and B sends A an offer unaware of A’s offer (such as a crossing offer situation), no K is formed, even if the offers contain the same terms

Question 4

Acceptance of Offer for Bi-K

Answer 4

• Unless an offer specifically provides that it may be accepted only through performance, it will be construed as an offer to enter into a Bi-K and may be accepted either by a promise to perform or by the beginning of performance

Question 5

Bi-K Acceptance: Must be Communicated

Answer 5

• Unless the offer provides otherwise, acceptance of an offer to enter into a Bi-K must be communicated to the offeror.
• Generally, an offeree can’t be forced to speak/have their silence treated as acceptance.
• Silence may work as acceptance if, b/c of prior dealings/trade practices, it would be commercially reasonable for the offeror to consider silence an acceptance.
• If recipient of services knows/should have known that services were being rendered with the expectation of compensation and, by a word, could have prevented the mistake, the recipient may be held to have accepted the offer if they fail to speak.

Question 6

Method of Acceptance: Bi-K

Answer 6

• Unless otherwise provided, an offer is construed as inviting acceptance in any reasonable manner & by any medium reasonable under the circumstances
• Offeree’s counterpromise is usually sufficient.

Question 7

Offers to Buy Goods for Current/Prompt Shipment: Bi-K

Answer 7

• Under Art 2, an offer to buy goods for current/prompt shipment is construed as inviting acceptance either by a promise to ship/ by current/prompt shipment of conforming/nonconforming goods

Question 8

Acceptance Must be Unequivocal: Bi-K

Answer 8

• Traditional K law insists on an absolute and unequivocal acceptance of each & every term of the offer (the “mirror image rule”).
• At CL, any different/additional terms in the acceptance make the response a rejection and CO

Question 9

Acceptance of Offer for Unilateral Contract

Answer 9

• Offer provides that it may be accepted only by performance

Question 10

Completion of Performance: Uni-K

Answer 10

• A uni-K is not accepted until performance is completed.
• Beginning of performance may create an option so that the offer is irrevocable.
• Offeree is not obligated to complete performance merely b/c they have begun performance

Question 11

Tip

Answer 11

Keep in mind that like all offerees, the offeree of uni-K must know of the offer to accept it. If the “offeree” acts w/o knowledge & learns of the offer later, their acts were not an acceptance. So, if A finds O’s watch and returns it to O w/o knowledge of O’s reward offer, A has no contractual right to the reward.

Question 12

Notice: Uni-K

Answer 12

• Generally, the offeree is not required to give the offeror notice that he has begun the requested performance but is required to notify the offeror within a reasonable time after performance has been completed.
• No notice is required if:
  (1) the offeror waived notice; or
  (2) the offeree’s performance would normally come to the offeror’s attention within a reasonable time.

Question 13

Offers to Buy Goods for Current/Prompt Shipment

Answer 13

• An offer to buy goods for current/prompt shipment may be accepted by either a promise to ship/by a shipment of conforming/nonconforming goods.

Question 14

Shipment of Nonconforming Goods

Answer 14

• Shipment of nonconforming goods is an acceptance creating a bi-K as well as a breach of the K unless the seller seasonably notifies the buyer that a shipment of nonconforming goods is offered only as an accommodation.
• The buyer is not required to accept accommodation goods and may reject them.
• If buyer rejects, the shipper isn’t in breach and may reclaim the accommodation goods

Question 15

Tip:

Answer 15

• Remember that the accommodation shipment rule applies only when shipment is used as a form of acceptance. Watch out for a fact pattern in which a party accepts an order by promising to ship. The seller then discovers they lack the specified goods and ship nonconforming goods as an “accommodation.” This is a breach, not an accommodation. There was a K at the promise to ship. The shipment wasn’t the acceptance; thus, accommodation is not possible.

Question 16

Battle of Forms

Answer 16

• Art 2 has abandoned the MIR
• Additional/different terms by the offeree in a definite & timely acceptance does not constitute a rejection & counteroffer, but rather is effective as an acceptance, unless the acceptance is expressly made conditional on assent to the additional/different terms.
• Whether the additional/different terms become part of the K depends on whether/not both parties are merchants.

Question 17

Tip:

Answer 17

Art 2 changes the CLR. Thus, for an offer for the purchase/SOG, an acceptance with additional terms is still an acceptance and K is formed (w/w/o the new terms). If the offer is for something other than SOG (ex: land), an acceptance with additional/different terms is a rejection & CO; no K is formed.

Question 18

Terms Included: Art 2

Answer 18

• Art 2 has specific rules for determining what terms are included in the K in such a case.
• These rules are dependent on whether both parties to the transaction are merchants

Question 19

Ks involving Nonmerchants - Terms of Offer Govern: Art 2

Answer 19

• If any party to the K is not a merchant, the
  additional/different terms are considered to be mere proposals to modify the K that do not become part of the K unless the offeror expressly agrees.

Question 20

Ks Between Merchants - Additional Terms Usually Included: Art 2

Answer 20

• If both parties to the K are merchants, additional terms in the acceptance will be included in the K unless:
  (1) They materially alter the original terms of the offer, such as by changing a party’s risk/remedies available
  (2) The offer expressly limits acceptance to the terms of the offer OR
  (3) The offeror has already objected to the particular terms, or objects w/in a reasonable time after notice of them
• Note: Whether an alteration is material is a fact question.

Question 21

Note Different Terms May or May Not be Included: Art 2

Answer 21

• There is a split of authority
• Some cts treat different terms like additional terms
• Other cts follow the “knockout rule,” where conflicting terms in the offer & acceptance are knocked out of the K
• Gaps left by knocked out terms are filled by the UCC.

Question 22

Tip:

Answer 22

Remember that even though a response with different terms can constitute an acceptance under Art 2, there still must be a meeting of the minds or there is no K. Watch for differences in the price, quantity, or quality terms—they likely indicate that there isn’t sufficient meeting of the minds to constitute a K

Question 23

Merchant’s Confirmatory Memo: Art 2

Answer 23

• A merchant’s memo confirming an oral agreement that contains different/additional terms is also subject to BOF provisions

Question 24

Tip:

Answer 24

Watch for an exam question in which merchant parties have come to an oral agreement and a confirmatory memo is sent with additional/different terms. Despite the fact that there is already a K at the time the memo is sent, the memo is put through BOF provisions as if it were an acceptance. Additional terms are put through the material alteration test. Depending on the jurisdiction, different terms are treated either the same as additional terms/knocked out.

Question 25

Moment of Mutual Assent Uncertain: Art 2

Answer 25

• In situations in which it cannot be determined with certainty which specific communication was the offer and which the acceptance but the parties act as though there is a K, the UCC considers this a binding K even though the moment of its making is uncertain.

Question 26

When Effective - Mailbox Rule

Answer 26

• Acceptance by mail/similar means is effective at the moment of dispatch, provided that the mail is properly addressed & stamped, unless one of these exceptions applies:
  (1) The offer stipulates that acceptance is not effective until received.
  (2) An option K is involved (an acceptance under an option K is effective only upon receipt).
  (3) The offeree sends a rejection and then sends an acceptance, in which case whichever arrives first is effective.
  (4) The offeree sends an acceptance and then a rejection, in which case the acceptance is effective (MBR applies) unless the rejection arrives first and the offeror detrimentally relies on it.

Question 27

Tip:

Answer 27

MBR (“effective upon dispatch”) applies only to acceptance. It does not apply to other events in the K setting, such as rejection/revocation.

Question 28

Acceptance by Unauthorized Means

Answer 28

• An acceptance transmitted by unauthorized means/improperly transmitted by authorized means may still be effective if it is actually received by the offeror while the offer is still in existence.

Question 29

Bilateral Contracts Formed by Performance

Answer 29

• If a K is not formed by the parties’ communications, but they begin to perform as if they formed a K, a K is formed.

Question 30

Auctions Ks

Answer 30

• A sale by auction is complete when the auctioneer so announces by the fall of the hammer or in another customary manner.
• An auction sale is with reserve unless the goods are explicitly put up w/o reserve.
• “With reserve” means the auctioneer may withdraw the goods at any time until he announces completion of the sale.