Offer and Acceptance Flashcards
Offer
An offer gives power to the recipient to conclude a contract by acceptance
a) Would a reasonable person receiving the communication believe that he could enter into a binding agreement with acceptance? Objective Standard in measuring INTENT
Lucy v. Zehmer
Agreement to buy property made in a bar. Zehmer claims he was joking. Judgement for Lucy.
(1) Outward manifestations are all we care about—objective view. Zehmer’s acts were not consistent with him being joking.
(2) Also implicates intoxication, Restatement Section 16.
(3) Even if Zehmer had retracted as soon as he signed the contract, he would still be bound by it
Terms of the offer
i) Common Law: They must be certain and definite (subject matter, price, and quantity)
ii) UCC is more liberal. As long as the parties intend to create a contract, the UCC will apply and fill empty gaps. Usually, these still require a quantity (not price) term. Though requirements and outputs contracts allow that term to remain open as well.
Sun Printing v. Remington
(Enforcement of Contracts with Open Terms)
Sun buys paper from Remington for 16 months. Price was set for 4 months and then left open (allows them to re-negotiate) with a cap set according to an index (Canadian Export Paper’s price). Remington defaulted because it could sell at higher than index price elsewhere.
(1) The court says the open price term was essentially an agreement to agree and thus illusory. Ambiguity over the duration of the price term, and the court refuses to impose their own meaning.
Termination of an offer
i) Lapse of time: if offer specifies a time range (if not—reasonable time)
ii) Death/mental incapacity of the Offeror (even if offeree doesn’t know)
iii) Rejection
iv) Counteroffer
v) Revocation: can be revoked by Offeror anytime prior to acceptance. Offers are revocable unless a fee or premium is paid to the Offeror.
vi) Destruction/illegality of subject matter
vii) Terms of offer include condition and condition fails to occur
Ford Motor Credit v. Russell
(is an ad an offer?) Advertisement for a car with set financing level. Someone comes in who cannot qualify for the level of financing and sues.
i) An advertisement is not an offer; it is an invitation to bargain.
ii) Objectively reasonable person standard—would someone actually expect that this is an offer?
Pepsi Co
harrier jet commercial
Restatement Section 24
offer defined
Restatement Section 17
A manifestation of mutual assent
A communication which advertises to parties that designated property is for sale at a price “not below $X”….
it is not an offer but an invitation to bid with a price floor
When ordering goods…
the order is the offer
Offeror is the master of the offer …
and can dictate the form and manner of the offeree’s acceptance
Firm Offers
UCC, 2-205—an offer to buy/sell goods cannot be revoked if:
a) The Offeror is a merchant
b) There are assurances that the offer is going to remain open
c) The assurance is contained in an authenticated writing from the Offeror
d) If there is no stated time period, a reasonable term is implied. Cannot exceed 90 days. (Past 90—you need consideration)
Merchants
A person who regularly deals in the type of goods involved and any businessperson when the transaction is of a commercial nature. 2-104, UCC
Mid-South Packers v. Shoney’s
Shoney’s buys meat from Mid-South. Mid-South gives them a price list (firm offer) with a provision that any increases will get 45 days’ notice. Price increase and Shoney’s won’t pay for the higher price over the first 45 days.
i) Court says from the original posting of price-list, firm offer lasted for 3 months—this meant Mid-South could change it as much as it wanted after that period.
ii) Shoney’s could have performed under protest, pursuant to UCC 1-308, and reserved the right to challenge the price increase. They did it secretly though, so the court won’t rule in their favor.
