Offer & Acceptance (mutual assent)

Question 1

What standard is the existence of mutual assent judged by?

Answer 1

Objective standard - ask whether words/conduct objectively manifested an intent to create a K.

Question 2

What is an offer?

Answer 2

A valid offer creates a reasonable expectation in the offeree that the offeror is willing to enter into a K based on the offered terms. It requires (a) expression of promise/commitment/undertaking (b) certainty and definiteness as to essential terms and (c) communication to the offeree.

Question 3

How do you differentiate between a valid offer and a mere invitation to negotiate/deal?

Answer 3

Look to language - things like “i would consider…” “i am asking for” and general price quotes are seen as invitations to deal rather than offers. More definite language is more likely an offer.

Also look to conduct and context (but remember it is an objective standard, so if person just subjectively think they made the offer in jest then court won’t find that unless it was objectively so)

Other factors:

• prior conduct of parties/relationship
• method of communication (broader the audience/comms the more likely it is not an offer)

Note: Ads are not offers

Question 4

What terms must be definite/certain for an offer to be valid?

Answer 4

(a) identification of offeree (or class in which they belong)
(b) subject matter
- real estate: which land and price terms
- sale of goods: quantity (certain or capable of being made certain) (e.g. requirements/output K’s ok)
- employment: if duration not specified = at will
- other services: nature of services

Question 5

What are requirement or output K’s? What must be true of the terms for them to be valid?

Answer 5

Requirement K is when a buyer promises to buy from a seller all the goods they require.

An output K is when a seller promises to sell to a buyer all the goods they have.

The exact amount may be left open, but cannot be unreasonably disproportionate to (1) any stated estimate or (2) in the absence of a stated estimate any normal or otherwise comparable prior amount.

Question 6

What happens when terms are missing from a K?

Answer 6

Missing terms will not prevent the formation of a K as along as it appears the parties intended to make a K and there is a reasonably certain basis for giving a remedy. Courts mays supply missing terms as follows:

• price: except for K’s for real property, failure to state price does not prevent formation of K. UCC provides price may be supplied by court as reasonable price at time of delivery.
• time: reasonable time
• vague terms: WILL prevent formation of K, e.g. “appropriate” “fair “reasonable” - not definite enough
• terms to be agreed upon later: generally OK unless its a material term

Question 7

How may an offer be terminated?

Answer 7

By the offeree (rejection):

• lapse of time - failure to accept within time specified/reasonable time
• express rejection
• counteroffer - same subject matter, different terms

By the offeror (revocation):

• express revocation
• implied revocation

Question 8

How do you distinguish between a counteroffer that qualifies as rejection of the offer vs. mere inquiry/bargaining (that maintains original offer)?

Answer 8

Whether a reasonable person would believe offer rejected. Look for punctuation - i.e. question mark indicates bargaining, period indicates new offer.

Note: a counteroffer functions as a new offer that the original offeror can now accept.

Note: an acceptance expressly conditional on acceptance of new terms is a rejection/counteroffer. If parties ship/accept goods in response to conditional acceptance, then have implied contract by conduct.

Question 9

When is a rejection of an offer effective? When is a revocation of an offer effective?

Answer 9

Both a rejection and revocation of an offer are effective when received. If a revocation is by publication, then it is effective when published.

Note: “received” means delivered to place, person does NOT actually need to read.

Question 10

Wrt an offer for an option K, when is a rejection/counteroffer considered a rejection?

Answer 10

Generally never (within the specified period of time), unless the offeror has detrimentally relied on the offeree’s rejection.

Question 11

When is there a valid implied revocation?

Answer 11

When the offeree receives (a) correct information (2) from a reliable source (3) of acts of the offeror that would indicate to a reasonable person that the offeror no longer wishes to make an offer

Question 12

What are the 4 limitations/exceptions to an offerors power to revoke?

Answer 12

1. Option K: If offeror gives promise to keep offer open + offeree gives consideration for the option, then offeror may NOT revoke offer within that time period
2. Merchant Firm Offer (UCC option K): If (a) merchant (b) gives offer in signed writing (c) with promise to keep it open, then offeror may NOT revoke offer in time period (note: do NOT need consideration
   
   • time period to remain open can not exceed 3 months
3. detrimental reliance: when offerer could reasonably expect that the offeree would rely on the offer to their detriment + offeree DOES detrimentally rely
4. beginning performance: In both unilateral and bilateral K, offeree can accept by beginning performance - once begun, offer is irrevocable. In unilateral K, offeree is not bound by K to complete performance once begun - can stop and any time - b/c completion = acceptance.
   
   • Note: substantial prep to begin performance does NOT = beginning, but could be detrimental reliance.

Question 13

In what 3 ways can an offer be terminated by law (i.e. not by party conduct)?

Answer 13

1. death or insanity of either party (need not be communicated to other party)
2. destruction of subject matter (e.g. K to paint tractor, tractor destroyed)
3. supervening illegality (subject matter made illegal)

Question 14

What is an acceptance?

Answer 14

Manifestation of assent to terms of the offer.

Question 15

Who may accept an offer?

Answer 15

Typically only person to whom offer is addressed/class of people.

Right to accept is transferable in an option K offer, but generally not otherwise.

Question 16

Can silence ever constitute acceptance?

Answer 16

Generally, acceptance must be communicated to the offeror. But, silence may constitute acceptance if prior dealings and trade usage make it reasonable for the offeror to view silence as acceptance.

Question 17

Under UCC, what qualifies as a valid acceptance for an offer to buy goods for current or prompt shipment?

Answer 17

Either (1) promise to ship or (2) actual prompt shipment

Question 18

What is the mirror image rule?

Answer 18

Mirror image rule says that for an acceptance to be valid it must mirror the same terms in the offer - otherwise is considered a counteroffer (but make sure to distinguish between counteroffers and mere bargaining).

Question 19

How are offers for unilateral contracts accepted?

Answer 19

Acceptance is completed upon completion of performance (not merely beginning). (But remember, once performance has begun, the offeror may not revoke).

The offeree must also notify the offeror within a reasonable time after performance is complete. BUT no notice is required if (a) offeror waived notice or (b) the notice would normally come to the offerors attention within reasonable time

Question 20

Under the UCC, what is the legal significance of the shipment of nonconforming goods in response to an offer to buy?

Answer 20

Shipment of nonconforming goods functions as an acceptance AND a breach unless the seller gives reasonable notice to buyer that shipment is meant to function as an accommodation.

Note: If the seller accepts by promising to ship and THEN ships nonconforming goods as an accommodation, then this IS a breach - b/c there was a valid K upon promise.

Buyer may reject goods. If buyer rejects goods, seller is not in breach.

Question 21

In a sale for goods, what happens when the offeree counteroffers with different terms?

Answer 21

Under the UCC, the mirror image rule does not apply.

Unless the acceptance is expressly made conditional on assent to the terms, then a counteroffer with different terms is considered a valid acceptance.

Question 22

In a sale for goods, when we have a battle of the forms – i.e. an offer and acceptance with different terms – with ADDITIONAL terms, which terms govern?

Answer 22

(a) if ANY party is nonmerchant - original terms govern (unless offeror expressly assents to new terms
(b) when both parties are merchants - additional terms included UNLESS (a) materially alter original terms - i.e. rights/remedies of parties, (b) offer expressly limits acceptance to terms of the offer, (c) offeror has already objected to the terms or objects within a reasonable time frame

Question 23

In a sale of goods, when we have a battle of forms and the counteroffer proposes DIFFERENT terms (i.e. contradictory terms, NOT additional terms), which terms govern?

Answer 23

Split of authority:

(1) treat the same as additional terms, so if any party is a nonmerchant then original terms apply, if both parties are merchants than new terms apply unless they materially alter/person objected/objects
(2) knockout rule - both conflicting terms are knocked out

Note: if essential terms are different, then there may be NO valid K to begin with - i.e. no mutual assent (e.g. price, quantity, quality)

Question 24

What legal significance is a merchan’t confirmatory memo given? I.e. a memo confirming an oral contract with additional terms?

Answer 24

Even though an oral K has already been made, the confirmatory memo will be put thru the battle of the forms assessment.

Question 25

When is an acceptance effective? What are the 4 exceptions to main rule?

Answer 25

Mailbox rule: An acceptance is effective at dispatch (if properly addressed/stamped) UNLESS:

• offer says not effective until received
• option K - effective only when received
• offeree send a rejection then acceptance: first received rules
• offeree sends an acceptance then rejection: acceptance rules UNLESS rejection arrives first and offeror detrimentally relies on it

Question 26

Does sending an acceptance by unauthorized means invalidate the acceptance?

Answer 26

Possibly not if it is actually received by offeror.

Question 27

Can an offer be implicitly accepted?

Answer 27

Yes, if party’s actions indicate they believe a K has been formed, then this will constitute a valid K.