Offer and Acceptance

Question 1

How is acceptance effective under Common Law?

Answer 1

Acceptance is effective if:

1. Mirrors the terms of the offer (Mirror Image Rule)
   
   • Note: any variation results in counteroffer and rejection of the initial offer
2. Communicated to the offeror

Question 2

How may offeree communicate acceptance?

Answer 2

1. Employ means stipulated in the offer
2. If offer is silent as the means, offeree may use any reasonable means of transmission

Question 3

Means of communicating acceptance is reasonable if it is:

Answer 3

1. the means used by the offeror
2. the means customarily used in similar transactions, or
3. a means of communication that is equivalent in speed and reliability to the means used by the offeror

Question 4

When does acceptance need not be communicated?

(3 exceptions)

Answer 4

1. Acceptance by silence
2. Acceptance by performance
3. Acceptance by mail or other correspondence (mailbox rule)

Question 5

Mailbox Rule

Answer 5

• RULE: acceptence is effective upon dispatch, thereby creating a binding contract

Offeror may not revoke after offeree dispatches his acceptance

• Common law rule accepted by every jurisdiction except Federal
• Applied only to acceptances (therefore offers, revocations, rejectsions, and counteroffers are effective upon receipt by other party
• If acceptance is lost in the mail, still binding

Question 6

Mailbox Rule does not apply to?

Answer 6

Option contracts – acceptance is effective upon receipt

Question 7

Acceptance under the UCC

Answer 7

Three methods of acceptance:

1. Promise to ship goods in conformity with terms of the offer
2. Prompt/current shipment of goods in conformity
3. Shipment of non-conforming goods

Question 8

Changes/Additions/Subtractions of terms under the mirror image rule:

Answer 8

Serves as a counteroffer, which rejects the offer and makes new offer

Question 9

UCC Battle of the Forms

(Between Consumers/Merchants & Consumer)

Answer 9

When acceptance contains terms that are additional or different than those in the offer:

• The new terms are not part of the contract and are instead mere proposals for addition to the contact.
• Non-sending party is free to accept/reject

Question 10

UCC Battle of the Forms

(Between Merchants - Additional Terms)

Answer 10

Additional terms = become part of the contract UNLESS:

• Additional terms would materially alter the contract
• Offeror objects to the additional terms within a reasonable time after receiving notice of them, or
• Offer expressly limits acceptance to the terms of the offer

Question 11

UCC Battle of the Forms

(Between Merchants - Different Terms)

Answer 11

Majority Rule = Omit both the offeror’s original provision and offeree’s differing provision from the contract (“knockout rule”)

Question 12

Firm Offer

Answer 12

Under the UCC, a merchant can make a firm offer (an irrevocable
offer) to either buy or sell goods without consideration so long as:

1. the offer is made by a merchant
2. the offer is made in a writing signed by the merchant
3. the offer expressly states by its terms that it will be held open

Question 13

Requirements of Option Contract

(common law)

Answer 13

1. An offer
2. A subsidiary promise to keep the offer open
3. Some valid mechanism to secure enforcement of the subsidiary promise
   
   • Consideration is most common way to enforece a subsidary promise

Question 14

Exception to shipment of non-conforming goods

Answer 14

If the seller notifies buyer that the non-conforming goods is offered only as an “accommodation” to the buyer, the shipment of nonconforming goods will not constitute acceptance.