Offer & Acceptance [IN PROGRESS] Flashcards
Embry Test [Objective Theory of Contracts]
(1) Objective: A reasonable person lookinb at counterparty’s conduct would think that counterparty intended to make a K + (2) Subjective: the party asserting the K actually thought there was a K
If an offeree reasonably could conclude
that their assent to an offer would enter them into a legally binding contract
then there is an offer
An offer is defined as
the manifestation of intent to enter into a
bargain as to justify an offeree in that their acceptance will create legal obligations for both parties
offer creates in the offeree
power of acceptance
An offer has three components
- The offeror manifests the intention to enter into bargain,
- Which empowers the offeree to accept
- Clear and definite terms
Acceptance
manifestation of intent to enter into a
legally binding contract through the assent of given terms
A unilateral contract can only be accepted
with
performance
A bilateral contract can be accepted through
promise or performance
Restatement of Contracts § 45
Where an offeree intends to accept a unilateral
contract, failure to complete the terms does not result in a breach of contract action
Start of performance under a unilateral contract prevents
the offeror from revoking the offer. Carlill v. Carbolic Smokeball; Petterson v. Pattburg (holding that where the performance is cash tender, performance is the tendering of money).
Bilateral contracts ______ be revoked once begun
cannot
Restatement of Contracts
§ 62
An offer that purports to accept either promise or performance can constitute a breach if
the offeree fails to perform the terms.
Preliminary Negotiations are
invitations to offer NOT offers
Explain how advertisements are general category of Prelim Negotiations
“Shoes 50% off” lacks important characteristics of an offer to make it binding, such as quantity, who can accept, etc. Nebraska Seed v. Harsh.
BUT Where the offer is specific enough to convey the terms required of a contract, sometimes an advertisement can form a binding offer. Lefkowitz v. Minneapolis
Give examples of a reasonable joke that is not a valid offer
ridiculous price difference between the purchase price and what was offered. Leonard v. Pepsico.
An offeree cannot accept unilateral reward contracts if
they do not know about them. Generally, the offeree must know about the offer to accept.
An offer may only be accepted by
the person in whom the offeror
intended to create the power of acceptance.
The acceptance can only be in response
to an offer
Where method of acceptance is not specified
any reasonable manner of
acceptance may be undertaken
Who can determine the manner in which an offer is accepted?
The offeror, as the “master of the offer”
This can include the suspension of the “mailbox rule”
“Mailbox Rule”
the general and common law rule is that acceptance is effective upon dispatch “(Restatement of Contracts §63)
Restatement of Contracts § 62
If it is unclear whether the offer calls for promise or performance, an offeree is free to decide in the face of ambiguity.
(where ambiguous, the offeree can decide)
If it is unclear (ambiguous) whether the offer calls for promise or performance
the offeree can decide (Restatement of Contracts § 62)
Silence usually _______ constitute acceptance
does not
When can silence constitute acceptance
- Offeree takes the benefit of the service after having reasonable time to reject it;
- Offeror has given reason to understand that silence will accept the offer, and such silence is reasonable under the circumstances;
- Previous course of dealings makes it reasonable to believe that offeree’s silence is acceptance; and
- Offeree acts in a manner inconsistent with the offeror’s ownership, such as exerting dominion or control overgoods.
(Restatement of Contracts § 69; Hobbs v.
Massasoit Whip Co.)
(Remember: silence can mean yes)
“Implied” contracts
A contract may be created where the factual circumstances would lead a court to hold that failure to act would create a contract.
Common Law “Mirror Image” Rule
an offeree’s acceptance of an offer is only
valid if they assent to the exact terms provided in the offer
Any deviation, no matter how minor, constitutes a counteroffer and extinguishes the previous offer.
conditional acceptance
purports to accept but adds additional terms, is not an acceptance, but a counteroffer
Under Restatement of Contracts § 59, An acceptance must be
unconditional
Under Common Law Mirror Image Rule, a mere inquiry is
not a counter-offer