Mutual Assent & Making Offers

Question 1

Restatement § 3 Agreement Defined

Answer 1

An agreement is a manifestation of mutual assent on the part of two or more persons.

Question 2

Restatement § 3 Bargain Defined

Answer 2

A bargain is an agreement to exchange promises or to exchange a promise for a performance or to exchange performances.

Question 3

Restatement § 18 Manifestation of Mutual Assent

Answer 3

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

Question 4

Restatement § 12 Capacity to Contract

Answer 4

(1) No one can be bound by contract who has not legal capacity to incur at least voidable contractual duties. Capacity to contract may be partial and its existence in respect of a particular transaction may depend upon the nature of the transaction or upon other circumstances.
(2) A natural person who manifests assent to a transaction has full legal capacity to incur contractual duties thereby unless he is
(a) under guardianship, or
(b) an infant, or
(c) mentally ill or defective, or
(d) intoxicated.

Question 5

Restatement § 19 Conduct as Manifestation of Assent

Answer 5

(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.
(2) The conduct of a party is not effective as a manifestation of his assent unless he intends to engage in the conduct and knows or has reason to know that the other party may infer from his conduct that he assents.
(3) The conduct of a party may manifest assent even though he does not in fact assent. In such cases a resulting contract may be voidable because of fraud, duress, mistake, or other invalidating cause.

Question 6

Restatement § 19 Conduct as Manifestation of Assent Responsibility for Unintended Appearance of Assent

A writes an offer to B, which he encloses in an envelope, addresses and stamps. Shortly afterwards, he decides not to send the offer, but by mistake he deposits it in the mail. It is delivered to B, who accepts the offer.

Answer 6

There is a contract unless B knows or has reason to know of A’s error. Whether the contract is voidable for mistake is governed by the rules stated in Chapter 6.

Question 7

Restatement § 61 Acceptance Which Requests Change of Terms

Answer 7

An acceptance which requests a change or addition to the terms of the offer is not thereby invalidated unless the acceptance is made to depend on an assent to the changed or added terms.

Question 8

Restatement § 61 Acceptance Which Requests Change of Terms Interpretation of Acceptance

A offers to sell B 100 tons of steel at a certain price. B replies, “I accept your offer. I hope that if you can arrange to deliver the steel in weekly installments of 25 tons you will do so.”

Answer 8

There is a contract, but A is not bound to deliver in installments.

Question 9

Restatement § 61 Acceptance Which Requests Change of Terms Interpretation of Acceptance

A offers to sell specified hardware to B on stated terms. B replies: “I accept your offer; ship in accordance with your statement. Please send me also one No. 5 hand saw at your list price.”

Answer 9

The request for the saw is a separate offer, not a counter-offer.

Question 10

Restatement § 22 Mode of Assent: Offer and Acceptance

Answer 10

(1) The manifestation of mutual assent to an 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.

Question 11

Restatement § 24 Offer Defined

Answer 11

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

Question 12

Restatement § 26 Preliminary Negotiations

Answer 12

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.

Question 13

Restatement § 26 Preliminary Negotiations Quotation of Price

A writes to B, “I can quote you flour at $5 a barrel in carload lots.”

Answer 13

This is not an offer, in view of the word “quote” and incompleteness of the terms. The same words, in response to an inquiry specifying detailed terms, would probably be an offer; and if A added “for immediate acceptance” the intent to make an offer would be unmistakable.

Question 14

Restatement § 26 Preliminary Negotiations Advertising

A, a clothing merchant, advertises overcoats of a certain kind for sale at $50.

Answer 14

This is not an offer, but an invitation to the public to come and purchase. The addition of the words “Out they go Saturday; First Come First Served” might make the advertisement an offer.

Question 15

Restatement § 26 Preliminary Negotiations Advertising

A advertises that he will pay $5 for every copy of a certain book that may be sent to him.

Answer 15

This is an offer, and A is bound to pay $5 for every copy sent while the offer is unrevoked.

Question 16

Restatement § 26 Preliminary Negotiations Invitation of Bids or Other Offers

A writes B, “I am eager to sell my house. I would consider $20,000 for it.” B promptly answers, “I will buy your house for $20,000 cash.”

Answer 16

There is no contract. A’s letter is a request or suggestion that an offer be made to him. B has made an offer.

Question 17

Restatement § 23 Necessity That Manifestations Have Reference to Each Other

Answer 17

It is essential to a bargain that each party manifest assent with reference to the manifestation of the other.

Question 18

Restatement § 23 Necessity That Manifestations Have Reference to Each Other Unknown Offers of Rewards

A sends B an offer through the mail to sell A’s horse for $500. While this offer is in the mail, B, in ignorance thereof, mails to A an offer to pay $500 for the horse.

Answer 18

There is no contract

Question 19

Restatement § 23 Necessity That Manifestations Have Reference to Each Other

Answer 19

It is essential to a bargain that each party manifest assent with reference to the manifestation of the other.

Question 20

Restatement § 23 Necessity That Manifestations Have Reference to Each Other Mutuality of Assent

A advertises in a large New York newspaper that he will pay a specified reward to anyone who will give him certain information within one year. B sees a copy of this advertisement in a Tokyo newspaper, correctly translated into Japanese, and sends A the information within the year.

Answer 20

There is a contract.

Question 21

Restatement § 23 Necessity That Manifestations Have Reference to Each Other

A sends to B an offer to sell a specified lot for $5,000, also stating terms as to time of payment, mortgage security, taxes and insurance. B is so anxious to buy the lot that, without reading any of these additional terms, he sends to A an unconditional acceptance.

Answer 21

There is a contract on the terms stated in A’s offer.

Question 22

UCC § 2-204. Formation in General

Answer 22

(1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.
(2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.
(3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

Question 23

Restatement § 33 Certainty

Answer 23

(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 the contract are reasonably certain.
(2) The terms of a contract 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.

Question 24

Restatement § 33 Certainty Uncertain Time of Performance

A promises B to sell certain goods to him, and B promises to pay a specified price therefor. No time of performance is fixed.

Answer 24

The time for delivery and payment is a reasonable time. Uniform Commercial Code §§ 2-309(1), 2-310(a). What is a reasonable time depends on the nature, purpose and circumstances of the action to be taken. Uniform Commercial Code § 1-204(2).

Question 25

Restatement § 33 Certainty Other Indefinite Terms

A promises to sell and B to buy all goods of a certain character which B shall need in his business during the ensuing year.

Answer 25

The quantity to be sold is sufficiently definite to provide a basis for remedy, since the promises are interpreted to refer to B’s actual good-faith requirements. Uniform Commercial Code § 2-306.

Question 26

Subjective Approach

Answer 26

Courts must figure out what the promisor actually intended (did they actually INTEND to make a binding commitment)

Question 27

Objective Approach

Answer 27

What a reasonable person would have understood the promisor to mean.

Question 28

Mixed Approach

Answer 28

1. Courts determine if a reasonable person would have understood the promisor as having created a binding commitment
2. Then determine whether the promisee believed a binding commitment has been made

Question 29

Unilateral Contract

Answer 29

A unilateral contract only one party makes a promise. A unilateral contract is one in which a promise is made in exchange for some sort of performance and the commencement of performance binds the promisor, thereby creating the contract. They can be accepted only by performance.

Question 30

Bilateral Contract

Answer 30

A bilateral contract is one in which there are mutual promises between two parties to the contract; each party being both a promisor and a promisee, the contract being form immediately.