Offer & Acceptance Flashcards
Two Requirements of an Offer
1) Outward manifestation
2) Signal that acceptance will conclude the deal
Are commercial advertisements offers?
Usually, no. They are generally invitations for offers.
But, they can be offers if they express a means by which the goods/services will be allocated if there are a bunch of people who try to accept or have some other reasonable limitation (e.g. “first-come, first-served”, “within the next 24 hours”, “first 10 people only”)
Reward Offers Types
1) Self-limiting: Can only be performed once (e.g. find my dog, get $100)
2) Open-field: Can be potentially performed by multiple parties (e.g. Get the flu after using our product and we’ll send you $100).
Four general ways to terminate an offer (power of acceptance)
1) Lapse of time
2) Death or incapacity of either party
3) Revocation by offeror
4) Rejection by offeree
Face-to-Face Conversation Rule
Generally, an offer made from one person to another during a conversation is only open for the duration of the conversation.
Indirect Revocation
1) Offeror takes definite action inconsistent with the intention to enter the K; and
2) Offeree gets reliable info of the offeror’s action
(e.g. Offeror sells the property and offeree hears about the other sale from their mutual friend)
Functional Equivalents Rule
If an offer is made to some segment of the public, the offer can be revoked by the offeror by communicating the revocation in at least the same way it was offered (if no better ways are reasonable).
The offeree doesn’t need actual notice of revocation in this scenario, the offer is automatically voided.
Elements of an Option K
1) An offer;
2) A subsidiary promise to keep the option open; and
3) A mechanism to secure the subsidiary promise (consideration–usually either performance or promise to perform in exchange for the option)
A time limitation (e.g. offer expires in 30 days) does not necessarily create an option–can just be a termination date.
Construction Contract Special Rule
Subcontractor bids to general contractors are assumed to create an implied option K through promissory estoppel b/c the GC is relying on the bid to create his own bid.
UCC Firm Offer Requirements and Duration
1) Offeror is a merchant
2) Offer is a signed writing
3) Offer expressly states that it will be held open
Irrevocable for either period of time stated or a reasonable time, but in no case longer than 3 months
Definition of Merchant
Someone who has a special knowledge/skill with respect to goods involved with a transaction. Doesn’t need to be a commercial dealer.
Mirror Image Rule
Common law: Acceptance must mirror the terms of the offer or else it is a counter-offer. De minimis variations of the terms may still constitute an acceptance.
UCC rejects this rule and instead has: nonconforming goods and/or battle of the forms
When is a unilateral K binding on the offeror?
Only upon completed performance by offeree in accordance with the terms of the offer.
The offeree is free to stop performing at any point, but cannot recover benefits for faulty performance.
Offeror limitation on unilateral Ks
Offeror cannot revoke the offer once the offeree begins performance (creates an option K).
When the offer includes acceptance by silence…
The offeree must have subjective intent to enter the K in order to be bound.
The mailbox rule applies to…
Acceptances only (but murky on acceptances of option Ks)
Not offers, revocations, counteroffers
If a rejection and an acceptance are both mailed…
Then whichever is received first is binding. If both are received at the same time, then whichever is opened first is binding.
Nonconforming goods & Notice of accommodation
The shipment of non-conforming goods can act as an acceptance so long as there is no notice of accommodation (e.g. I’m sending you this, even though I know it’s wrong). Shipments with notices of accommodations are counteroffers.
Nonconforming goods is still a breach of K under the perfect tender rule.
Battle of the Forms: Merchant-Consumer
Additional or different terms are considered to be proposals.
Battle of the Forms: Merchant-Merchant (Additional Terms)
Additional terms become part of the K unless:
1) Offer expressly limits acceptance
2) Offeror objects to the terms w/i a reasonable time
3) Additional terms would materially alter the K (e.g. negation of warranties, vary from usage of trade/past dealings)
Battle of the Forms: Written Confirmations b/w Merchants
Confirmations with additional terms are added to the already binding agreement so long as they:
1) Don’t materially alter the K
2) The other party doesn’t object
3) Do not differ with the terms of the K (these are merely proposals)
Confirmations sent by both merchants with contradictory terms are knocked out.
Battle of the Forms: Merchant-Merchant (Different Terms)
Majority: Knockout Rule omits both the offeror and offeree’s provisions if they differ.
UCC Conditional Acceptance
An acceptance that clearly states it is conditional on the other party’s assent to new or different terms does not create a binding K until the other party does expressly manifest assent to the terms.
UCC Ks formed by conduct when there is no viable K from the writings alone
If the parties perform as though a K exists, then a K will be recognized with the terms to which the parties agreed and gap-fillers for the problematic terms.
