Aspen Study Contracts

Question 1

The _____ governs contracts for the sale of goods when the parties to a contract have places of business in countries that have adopted the Convention, which includes the United States.

Answer 1

CISG - United Nations Convention on Contracts for the International Sale of Goods

• It has the force of law because it is a treaty
• applies only when both countries have adopted the CISG

Question 2

The CISG has the force of law because it is a treaty. However, the CISG does not apply to _________.

Answer 2

Consumer Transactions; CISG Article 2(a)

Question 3

Describe Objective Standard

Answer 3

Would a reasonable person in the offeree’s shoes assume that a power of acceptance had been created in him? Note that this means that if the offeree knows or has reason to know that the offeror hasn’t made an offer (e.g., he’s joking), then there’s no offer.

Question 4

Can offers made in jest (joke) ever be the basis of a contract?

Answer 4

It depends. As long as a reasonable person in the offeree’s shoes would believe that the “offer” was intended to create a power of acceptance in him/her, then the offer is effective.

However, if the offeree knows or has reason to know that the offeror is joking, then there’s no offer.

Question 5

Owner owns several ocean-view properties. Friend is a friend of Owner, and has frequently expressed his desire to purchase one of the properties, Suite Sunrise. During dinner one night, the two discuss the Suite Sunrise property, including possible terms for its sale, over several bottles of wine. At the conclusion of the evening, Owner writes the following on an unused dinner napkin: “I agree to sell Suite Sunrise to Friend for $75,000, closing to occur tomorrow.” Signed: Owner. Owner then hands the napkin to Friend and says, “Good luck.” Friend subjectively (and reasonably) believes that Owner intends to be making an offer to sell the property. In fact, Owner, who is somewhat drunk but still lucid, is only joking. Friend responds, “Thanks, I accept.” The next day, Friend presents a check to Owner for $75,000. Owner laughs and says that he was joking and drunk; he refuses to consummate the transaction. Do the parties have a contract?

Answer 5

Yes. Owner manifested the willingness to enter into a contract with Friend. The hypo stipulates that Friend reasonably and honestly believed that Owner was serious. Therefore, the fact that subjectively Owner was only joking doesn’t prevent the napkin from representing an offer that could be accepted, as it was. This hypo is a good example of the objective theory of contracts: what counts is not the speaker’s subjective intention, but what the other party reasonably understands the speaker to intend.

The fact that Owner is “somewhat drunk” does not mean that he can make the contract void because of incapacity. In some limited circumstances, a party might be able to rescind a contract on the basis of incapacity due to intoxication. However, on these facts, Owner was still lucid and therefore not incapacitated.

See Lucy v. Zehmer, 196 Va. 493 (1954).

Question 6

Mike and John knew one another socially for many years. John owns an expensive sports car worth over $50,000. Mike has always admired John’s sports car but could not afford such an expensive car. Over the years, Mike had joked with John that he would purchase John’s car for $5. John would laugh and turn Mike down. One evening at a party, Mike repeatedly asked John to sell him the car for $5. As always, John laughed and turned Mike down. Finally, Mike said that he would purchase the car for $10. John laughed again and said, “OK. You finally named the right price.” Is there a contract?

Answer 6

No. Although the objective meaning of their words suggests that there is mutual assent, the context suggests that both parties are joking. In this case, both the offeree and the offeror know that this was not a serious attempt to enter into a bargain; therefore, there is no offer.

Question 7

Marie, an art student from France, ordered a set of colored pencils from American Pencil Co., a company based in the United States, and paid €20 (approximately $22) by wire transfer. Pencil Co. promised to deliver the colored pencils “no later than May 1,” but they only arrived in Marie’s mailbox in late July, too late for her to use in her studies. If Marie sues Pencil Co. for breach of contract, will the case be governed by the United Nations Convention on the International Sale of Goods (“CISG”)?

(a) Yes, because the United States is a party to the CISG.
(b) Yes, because both France and the United States are parties to the CISG.

© No, because colored pencils are not “goods” within the meaning of the CISG.

(d) No, because this was a consumer transaction.

Answer 7

D

Since Marie is an individual art student, rather than a merchant or a company, this is a consumer transaction and the CISG Article 2(a) does not apply to consumer transactions.

Question 8

Short Answer:

Einstein, intending his statement as a joke, tells Oppenheimer, “I’ll sell you my chemistry set for $50.” Oppenheimer, who has no idea that the set’s plutonium alone is worth many times the $50 price (or that Einstein is joking) says, “I accept.” Is there a contract?

Answer 8

When analyzing whether a contract has been established, one uses the objective theory standard which poses the question, what would a reasonable person believe based on what was presented to them? A reasonable person may not know the cost of a chemistry set. Therefore, there is an offer.

(get this answer checked)

Question 9

On April 1, Fay sends to Mort this signed fax message: “Mort — April is upon us. I need your services — this Wednesday, please, at 11 A.M. I’ll be ready with cash. Okay?” What additional circumstance, if proven, would most clearly mean that Fay’s message constitutes an offer?

(a) Mort is a skilled landscaper, mechanic, and carpenter, and at various times in the past Fay has hired him to perform services related to those skills.
(b) Every April for the previous twelve years Mort has trimmed the trees in Fay’s front yard, for which Fay has each time paid him $125.

© Fay does not know Mort, but has heard that he is a skilled landscaper.

(d) By signed writing, Mort responds to Fay: “Yes, I’ll be there.”
(e) By signed writing, Mort responds to Fay: “I’ll be glad to help you, but my fee is now $35 per hour.”

Answer 9

B

that circumstance - a reasonable person in Mort’s position would justifiably conclude that Fay once again wants her trees trimmed and that she’s ready to pay, as before, $125 in cash.

Question 10

To determine that a given communication is an offer, what should one examine?

Answer 10

(a) the communication itself
(b) the circumstances under which its made

Then ask yourself: “Would a reasonable person receiving this communication understand that a definite bargain is proposed to him and that his assent will ‘seal’ the deal?”

Question 11

Over the fourteen years, 2005 to 2018, Andrea has visited Frank’s diner for breakfast about four times weekly between 6:30 A.M. and 11:45 A.M., each time ordering two soft-boiled eggs with toast, and each time paying the menu price for those items. Also over these fourteen years, Andrea has come to Frank’s diner about three times weekly for lunch between 12:15 P.M. and 3:30 P.M., each time ordering two hard-boiled eggs with toast and paying the menu price. At noon sharp on January 3, 2019 Andrea steps into Frank’s diner and sits at a table. Which of the following additional facts would best justify the legal conclusion that on that day, Andrea has made an offer to Frank in which she proposes to buy soft-boiled eggs for the menu price?

(a) Unbeknownst to Frank, Andrea had breakfast today at 7:30 A.M. in another diner, which she also has frequented regularly for fourteen years.
(b) Unbeknownst to Frank or Andrea, Andrea’s wristwatch is running one hour slow, and Andrea believes the time to be 11:00 A.M.

© Frank does not serve breakfast after 11:50 A.M. and begins serving lunch at noon.

(d) A moment after taking her seat, Andrea says, “Eggs and toast, please.”
(e) A moment after taking her seat, Andrea says, “Another morning — the usual please.”

Answer 11

E

A 14-year history gives Frank every reason to know that Andrea has soft-boiled eggs for breakfast and hard-boiled eggs for lunch. On hearing the word “morning,” Frank should understand that Andrea proposes to buy toast and soft-boiled eggs for the menu price.

Remember, even with the facts added by E, Frank need not give Andrea what she wants. Andrea has made an offer, but since Frank has yet to accept it, the parties do not (yet) have a contract.

Question 12

Vortech Inc. supplied industrial chemicals to a large number of customers, including Hartco Inc. After years of doing business with Hartco, Vortech sent Hartco this document:

> DEFINITIVE OFFER TO SELLWe have available a variety of alcohol- and ammonia-based cleaning products, many of which you’ve purchased in the past. We wish to sell some or all of the products in good quantities at favorable prices. Let us know, please, if you wish to purchase any now. Please describe specifically the product(s) you want to purchase and the exact quantities you wish to acquire. This is a definite offer, and we look forward to your acceptance.

Did Vortech make Hartco an offer?

(a) Yes, because Vortech described its message as a “definite offer”
(b) Yes, because Vortech did not restrict Hartco to purchasing any particular product and left it free to choose among many

© No, because a seller cannot bind a prospective buyer without that buyer’s assent

(d) No, because Vortech did not refer to cleaning chemicals by name
(e) No, because Vortech was nebulous as to the transaction it suggested

Answer 12

E

E means Vortech’s message fails as an offer because it’s too indefinite (“nebulous”) as to any exchange (“transaction”) it proposed (“suggested”). That correctly tells us why Vortech’s proposal is not an offer; it doesn’t adequately specify its terms.

ANALYSIS. Think about the meaning of offer. Ask yourself: “Under these circumstances could Hartco reasonably see in Vortech’s message a proposal for a definite bargain — an explicit exchange?”

Vortech expresses its wish to sell a “variety” of products, in “good quantities” at “favorable” prices. Vortech doesn’t specify what it will sell or what price Hartco must pay for whatever it is. Hartco cannot justifiably believe that Vortech has contemplated a true exchange of specified terms. The writing is not an offer — it’s too vague.

Question 13

Must a statement sufficiently identify the offeree to constitute an offer?

Answer 13

Yes, because it must create in the offeree an immediate power of acceptance. This is sometimes referred to as the “power of acceptance.” Although the offeree is often one person, it can be a class of persons and even the general public, as long as the terms are sufficiently definite and the offeree is clearly identified. Note, however, that the broader the “class” of ostensible offerees, the more likely a court is to find that the communication (e.g., an advertisement) was actually only an invitation for offers.

SIGNIFICANCE: No one except the offeree can accept an offer; so, for instance, if you’re in a bar and you overhear an offer being made to someone else, you can’t turn around and accept that offer because you’re not the offeree.

Question 14

In determining whether an offer to enter into a contract has been made, is the context of the communication relevant?

Answer 14

Yes. Where the language itself is not definite, the relationship between the parties, prior practices, method of communication, and the like frequently can determine whether an offer has been made.

Question 15

Two business acquaintances are talking. The first says, “I’m planning on selling my car for $400.” The second says, “I accept” and then offers $400 cash. Is there a contract?

Answer 15

No, because a reasonable person would conclude that the first person’s statement was merely a statement of intent, not a commitment to enter into a bargain. An offer is “the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.” Rest. 2d §24. So the remark could not be an offer unless a reasonable person would interpret the first remark as indicating that they were giving the second person the right to conclude the bargain without the first person doing anything further. A statement that a person is “planning” to do a transaction on specified terms would not justify the listener in thinking that the speaker is ready to be immediately bound.

Question 16

Collector has a large collection of ceramic figurines. One day, Neighbor was visiting, pointed to a particular figurine and asks, “Would you consider selling that ceramic bunny rabbit for $150?” Collector replies, “I accept.” Is there a contract?

Answer 16

No. Neighbor’s question is an invitation for Collector to negotiate (or for him to make an offer), not an offer in and of itself. For a statement to be an offer, it must be reasonably interpreted as creating in the listener an immediate power of acceptance. When a speaker says, “Would you consider . . . ,” this indicates an interest in negotiating, rather than a commitment to be immediately bound without further action by the speaker.

Question 17

In its advertising circular, a supermarket advertises milk for $1 a gallon. Is this an offer?

Answer 17

No. Such public ads generally are construed as invitations for offers, stating prices at which the seller wishes to receive offers. These are not offers because the quantity term is missing, and there is no clear offeree.

Question 18

A department store puts the following ad in a local newspaper: “Sale — Saturday only — 5 refrigerators. Worth $800, now only $100 each. First come, first served. Will open at 10 A.M.” The ad includes details on the model of refrigerator. Buyer sees the ad, camps out in front of the department store Friday night, and is the first one in on Saturday morning. Buyer says, “I accept your offer for the advertised refrigerator. Here’s my $100.” Is there a binding agreement?

Answer 18

Yes, because the department store’s offer was specific as to subject matter, quantity and price, stated to whom the offer was made (“first come”), and, in general, was worded as a “promise.” As such, it created an immediate power of acceptance in Buyer, and when he accepted, a contract was formed. Note that most ads are not as definite as this one, and, as such, are typically considered only invitations for offers

Question 19

How do you determine whether a communication has the required amount of certainty to be considered an offer?

Answer 19

To be considered an offer, the terms have to be reasonably certain. The terms “are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.” Rest. 2d §33.

Not every term is necessarily required to meet this standard of certainty since a court could imply reasonable terms. However, if the parties leave one or more material terms open or uncertain, that “may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance.” Rest. 2d §33.

The UCC is more flexible. Just because terms are missing, the agreement will not necessarily “fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.” UCC §2-204.

Question 20

Short Answer

Dorothy, owner of the Wizard of Odd-Sizes Shoe Store, is chatting with the Wicked Witch about her ruby slippers. Dorothy says, “I’m planning on selling my ruby slippers for $50.” Wicked Witch says, “Here’s my check. I accept.” Is there a contract?

Question 21

Short Answer

CityWatt, an electric utility serving the city of Metro, posts the following notice on its website on January 1, 2015:

> To All CityWatt Homeowner Customers — Solar Rebate Program

> If you placed a Qualifying Solar Panel Installation (“QSPI”) [a term carefully defined elsewhere in the website] in service at your home during calendar year 2014, under our Solar Rebate Program you are eligible for a 10% credit against the cost of your QSPI. Submit the information required in the application form below, and our home office will determine your eligibility; if you are approved, we will contact you with the amount of your Rebate.

Gary Green, a CityWatt customer who made what was in fact a Qualifying Solar Panel Installation during 2014, submits on Jan. 15, 2015 all information required by the online application form. However, before CityWatt makes any further contact with Green, the company on Jan. 17 posts this notice on its website: “We regret to say that the Solar Rebate Program has been canceled. All pending applications are null and void.” Green asserts that he accepted CityWatt’s offer of a rebate on Jan. 15. Is there a contract between CityWatt and Green whereby CityWatt is obligated to pay Green the QSPI Rebate?

Question 22

Short Answer

The Camelot Army/Navy Surplus Store advertises in a local circular, “Magic Swords, Excalibur model, for sale @ $24 ea.” Lance walks into the store, and says “I accept your ad; here’s my $24, give me 1 sword.” Is there a contract?

Question 23

In the town of Hampshire there live two women named Harriett Folger. One lives at 14 Chelton Lane. The townsfolk know her to be an industrial quality control engineer. She is also a talented seamstress but, as she is well aware, no one knows that. The other Harriett Folger, of 14 Chester Lane, is a seamstress, renowned for the high quality of her work. Farah Fuilan, also of Hampshire, writes and signs this letter:

> Dear Ms. Folger,As is well known, you are a gifted seamstress. I have a dress in need of repair. I’d like you to examine it and determine whether you can fix it. I’ll pay you $100 to do just that much. I’d like to meet next Saturday — at 1:00 P.M. if that works for you. Are you agreeable?Sincerely yours,Farah Fuilan

Confused as to which Harriett lives where, Farah addresses her letter to Harriett the engineer at 14 Chelton Lane. Harriett receives the letter, opens it, and writes back to Farah: “Yes, absolutely. I am agreeable. Let’s meet this coming Saturday at 1:00 P.M., my home.”

Farah then learns of her error. She contacts Harriett the engineer and tells her, “By error, I sent my letter to you. I now know that I should have sent it to Harriett Folger the seamstress, at 14 Chester Lane.” The engineer responds, “You do not know it, but I too am a capable seamstress. You sent the letter to me, I accepted your offer, and we have a contract.” Farah asserts that she and Harriett (the engineer) did not form a contract. Her position is best supported by which fact?

• A. Farah honestly wished to contact the other Harriett and, under the circumstances, her error was reasonably understandable.
• B. Harriett knew that her abilities as a seamstress were unknown to the community.
• C. Harriett’s principal professional activity is in the field of engineering.
• D. Farah cannot be bound to an agreement she did not intend to make.

Answer 23

B

ANALYSIS. Think, first, of the relevant law: Two parties A and B form a contract when A makes an offer to B and B accepts it. B can’t accept an offer if A has not made her one.

Let’s ask: Did Farah make an offer to Harriett? Harriett was “well aware” that the community knew her not at all as a seamstress. Seeing that Farah’s letter referred to a “well known . . . gifted seamstress,” she should have known that Farah meant to make her offer to the other Harriett Folger; that was Farah’s manifest intention. Harriett of Chelton Lane was not Farah’s offeree. Possessed of no offer, that Harriett had nothing to accept. Her response, “I am agreeable” was not an acceptance, and the parties formed no contract.

A refers to Farah’s honest intent and the understandability of her error. Neither of these factors states the reason for which these parties failed to form a contract. They failed to form a contract because legally, Farah made no offer to Harriett. C reminds us that Harriett is not a professional seamstress. But that doesn’t matter. What matters is this: Harriett knows that the community is ignorant of her abilities as a seamstress and so should have believed that Farah did not intend to make a proposal to her. C is wrong. D makes the false statement that one cannot be bound to a contract contrary to her actual intention. We know that’s wrong. Contracts arise not by actual intention, but by manifest intention. D is for the dumper.

B refers to Harriett’s knowledge that the community did not know her as a seamstress. Extend your reasoning from there. Understanding that she was not known as a seamstress, Harriett should have understood that Farah did not intend to engage her as one. That’s the thought for which we’re looking, so B is right.

Question 24

Martha secured a patent for a biomedical device she called “Gutmate.” Believing that Deborah was a qualified manufacturer of biomedical devices, Martha sent Deborah the Gutmate plans and designs, together with a note: “I am prepared to hire you as manufacturer of Gutmate. I have little capital and propose, therefore, to convey to you a share of the patent ownership in exchange for your services. I invite your acceptance.” Deborah responded, by writing: “Yes, we have a deal.”

Does Deborah’s response constitute an acceptance?

• A. Yes, because Deborah expressed her assent, clearly and unequivocally
• B. Yes, because Martha explicitly invited Deborah to accept
• C. No, because Martha’s writing omits to describe Deborah as a qualified manufacturer
• D. No, because Martha’s writing proposes no definite bargain
• E. No, because it did not present the word “accept” or “acceptance”

Answer 24

D

Question 25

Sidney says to Rena: “I’d like to use your recording studio this coming Tuesday from 9 A.M. to noon. Will you rent it to me, and if so, what will you charge?” Rena responds: “Yes, definitely, I accept. The charge is $100 per hour, but on that day the studio is available only from noon to 3 P.M.” Which of the following responses from Sidney would most likely create a contract? * A. “Fine, noon to 3 P.M. it is, but I can pay only $250.” * B. “Fine, noon to 3 P.M. it is, but I can’t afford $300.” * C. “Fine, noon to 3 P.M. it is, but let’s make it $95 per hour.” * D. “Fine.”

Answer 25

D ## Footnote **ANALYSIS.** An offeree’s statement of assent constitutes acceptance only if it “mirrors” the offer. Sidney first issued a preliminary inquiry — an invitation to deal — expressing interest in renting Rena’s studio on Tuesday morning. Rena responded with an offer to rent the studio on Tuesday afternoon for a specific period at a specific price. Sidney’s responses cited at **A**, **B**, and **C** show no assent *to Rena’s offer*. In each, Sidney is unwilling to pay her proposed price. But at **D**, he assents to all of Rena’s terms without alteration. **D** is right.

Question 26

Sidney says to Rena: “I’d like to use your recording studio this coming Tuesday from 9 A.M. to noon. Will you rent it to me, and if so, what will you charge?” Rena responds: “Yes, definitely, I accept. The charge is $100 per hour, but on that day the studio is available only from noon to 3 P.M.” Assume that Sidney responds to Rena: “Well, that’s a high price, and I’d feel better with a price of $95. But that’s *my* problem — you’ve got a deal.” Have the parties formed a contract? * A. Yes, because Sidney assented fully to the terms Rena proposed * B. Yes, because Sidney’s proposed price of $95 differs only slightly from Rena’s proposed price of $100 * C. No, because Sidney did not manifest complete satisfaction with Rena’s proposed price term * D. No, because as to time, Rena’s offer did not conform to Sidney’s original proposal

Answer 26

A ## Footnote **ANALYSIS.** On learning of an offeror’s proposed terms, an offeree might moan, gripe, groan, wail, or whine. But if he answers “yes” to *all* of them, he accepts. Here, Sidney expresses dismay over the $300 price but does, ultimately, accede to it and to all else that Rena proposes. The parties form a contract. **C** and **D** are wrong because they tell us that the parties fail to form a contract. According to **C**, an offeree accepts only if he shows “complete satisfaction” with the offeror’s terms. There is no such rule. Grumpy or glad, sour or sad, the offeree who assents, fully, to the offeror’s terms accepts her offer. **D** suggests that the difference between Sidney’s invitation to deal and Rena’s offer somehow defeats the contract. We know better. Parties may exchange multiple invitations to deal, offers, and counteroffers, each differing from every other. If one party ultimately makes an offer that the other accepts, they hatch a contract. **B** implies that an offeree may accept with a response that alters the offeror’s terms, so long as the change is minor. There’s no such rule. One who purportedly assents to an offer but varies its terms — ever so slightly — fails to accept. Again, one cannot accept an offer not made. **A** correctly states the result and reason. Sidney’s response, in the end, does express assent to all that Rena proposes. Notwithstanding his disgruntlement as to price, he responds, “But that’s *my* problem — you’ve got a deal.” The parties achieve offer and acceptance, and so form a contract. **A** is right.

Question 27

On October 30, Tien brings a box full of silverware to Alex’s store, “Shine, Sheen, and Show-It-Off.” **Tien:** I’d like you to polish all of my silverware by November 1. **Alex:** I can do the job by November 5, for $75. **Tien:** What do you think about November 3? **Alex:** No, I can’t do that either. In fact, I’ve just realized that I can’t do it, even by November 5. How about November 7? Deal? After Alex makes statement 4, * A. the parties have no contract, but Tien is empowered to accept Alex’s offer to complete the job by November 5. * B. the parties have no contract, but Tien is empowered to accept Alex’s offer to complete the job by November 7. * C. the parties have a contract requiring that Alex complete the job by November 5. * D. the parties have a contract requiring that Alex complete the job by November 7.

Answer 27

B ## Footnote **ANALYSIS.** Characterize each communication as an invitation to deal, offer, counteroffer, rejection, revocation, inquiry, acceptance — or whatever. Then, for each statement 1-4, assess the legal consequence. Tien talks first: “I’d like you to polish all of my silverware by November 1.” Arguably, that’s an invitation to deal, and arguably it’s an offer. Tien says nothing about price, but no communication is wholly complete as to all details. Recall the matter of gap fillers (Chapter 4, section C). The law (a court) might impute to Tien’s statement an implied willingness to pay a *reasonable* price, or the “going price.” On the other hand, it might not. We don’t know. Whether Tien’s first statement be an offer or invitation to deal is a question you must answer with your best, most thoughtful, educated guess (known also as your legal opinion). Yet, the answer doesn’t matter. If Tien does make an offer, Alex doesn’t accept it. Rather, with statement 2, Alex makes a counteroffer, complete with price. Hence, Alex rejects Tien’s offer. With statement 3, Tien poses a mere inquiry; Alex’s offer remains effective, leaving Tien with power to accept it for so long as it lives. But with statement 4, it dies; Alex revokes and, simultaneously, makes a new offer proposing to finish the work by November 7. After all is said, there stands Alex’s offer to complete the job by November 7 for $75. Tien has not accepted it, meaning the parties have formed no contract. **C** and **D**, therefore, are wrong. **A** states that the parties have not formed a contract, but describes Tien’s right to accept Alex’s offer to complete the work by November 5. That offer died when Alex revoked it. **A** is wrong. And **B?** It describes Alex’s offer, open for Tien’s acceptance, to finish the work by November 7. **B** is right.

Question 28

Uncle tells Nephew, “I intend to offer Niece my season ticket to the theater for $200.” Niece overhears Uncle’s comment, walks up, and says, “I accept.” Is there a contract between Uncle and Niece?

Answer 28

No, because there was no offer that Niece could accept. An offer is “the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his *assent to that bargain is invited and will conclude it.*” Rest. 2d §24. Here, by using the word “intend,” Uncle did not do or say anything to justify Niece in believing that Niece’s assent was *currently* invited and would conclude the deal—all Uncle did was indicate that he would likely be making an offer to Niece sometime in the *future*.

Question 29

Rock Racer’s Aston Martin luxury sports car is stolen and he offers $20,000 for its return. Suzie Sleuth, an amateur detective, after learning of the reward, locates and retrieves the car, which was abandoned in an alley near the airport, and immediately returns it to Rock. Is Suzie entitled to the reward?

Answer 29

Yes. There is consideration for the promise. Rock’s offer was to the public in general. It is also a typical unilateral contract where the acceptance is the actual performance of the promisee. Such offers of rewards for the return of missing items are generally construed as being capable of acceptance by the first person who complies with the offer after learning about it. Because Suzie knew of the offer, was the first to respond, and was under *no pre-existing legal duty* to return the Aston Martin, she is entitled to the reward. If Suzie had been a police officer performing in the scope of her duties, then the promise would be unenforceable because Suzie would have had a pre-existing legal duty to return the car.

Question 30

Socrates offers to sell his collection of Great Philosophers bubble gum cards to Plato for $20. Plato responds, “I’ll give you $15 for them.” At common law, is Socrates’ offer still valid?

Answer 30

No. The common law on this point is illustrated by the Second Restatement. Rest. 2d §39(1) says that “[a]n offeree’s power of acceptance is *terminated by his making of a counteroffer*, unless the offeror has manifested a contrary intention or unless the counteroffer manifests a contrary intention of the offeree.” Here, nothing in Plato’s $15 counteroffer indicated that Plato intended to keep Socrates’s original offer in force, so the “contrary intention” language does not come into play. (And nothing in Socrates’s original offer shows an intent by him to keep the offer in force should there be a counteroffer.) **RELATED ISSUE:** Suppose Plato had said, “I am keeping your $20 offer under advisement. But would you be interested in taking $15 and an autographed Cleveland Indians baseball instead?” In this situation, Plato as offeree has “manifest[ed] a contrary intention,” i.e., an intention that his counteroffer should not cause Socrates’s offer to terminate. Therefore, the original offer *would* remain alive.

Question 31

Pavlov offers to sell his laboratory equipment to Rover. They argue about terms for a while, during which Rover does not specifically agree to Pavlov’s proposed terms regarding price, warranties, or the time for delivery. Rover then says, “Well, I assume we can iron out the details later, so I accept your proposal in principle.” Is there a contract?

Answer 31

Probably not. A court would likely hold that this is merely an “agreement to agree,” and not a valid contract. That is because there is such a complete indefiniteness in the terms (What’s the price? What are the warranties? When is delivery?) that a court would likely conclude that there is no basis on which a court could grant relief for a breach. So the offer will be treated as having been neither accepted nor rejected.

Question 32

Magellan offers to buy the unusual birdbath Pisarro keeps in his front yard for $400, providing Pisarro gets it to Magellan’s house by Saturday. Pisarro says, “Well, I’m not at all fond of your terms, but OK.” Does a contract exist?

Answer 32

Yes. Pisarro’s acceptance is called a ***grumbling acceptance*** —he has not offered different terms, but merely expressed his dislike for those Magellan offered. However, because his acceptance is valid apart from the “grumbling,” a contract results. The test is an objective one: Would a reasonable person assume the original offer had been rejected?

Question 33

Charize Anon, an avant garde artist who designs flower vases with blown glass, sends a letter to an art dealer, Emil Alou, offering to sell her latest piece, entitled, “Sunrise in Bloom,” for $500. At the same time, Emil sends Charize a letter offering to buy “Sunrise in Bloom” for $500. The letters cross in the mail. At a time before either letter has been received, is there a contract?

Answer 33

No, because there is no mutual assent. In the ordinary case of cross-offers, where neither party is aware of the other’s offer, *neither is treated as being an acceptance* (since neither was sent with the expectation that it would conclude a binding contract). See Rest. 2d §23, Illustr. 4: “*A* sends *B* an offer through the mail to sell *A*’s horse for $500. While this offer is in the mail, *B*, in ignorance thereof, mails to *A* an offer to pay $500 for the horse. There is no contract.” **NOTE:** But notice that either of these crossing offers could *then be accepted*. For instance, suppose Charize got Emil’s letter, and then quickly sent a reply letter, “Your offer is accepted.” At that point, there *would* be a contract (with Emil’s letter being the offer, and Charize’s reply being the acceptance, effective upon dispatch).

Question 34

(Short Answer)

Answer 34

Jackson Pol-lick, an avant-garde artist who paints landscapes with his tongue, sends a letter to Artie Snob, an art dealer, offering to sell his painting “Sunset Over Breakfast” for $5,000. At the same time, Snob sends Pol-lick a letter offering to buy “Sunset Over Breakfast” for $5,000. The letters cross in the mail. Nothing further happens. Is there a contract?

Question 35

(Short Answer) As Elvira knows, Lilly Munster often gives ten-lesson private classes on the art of interior decorating for a total of $400. (The market price for such courses tends to be more like $300.) Lilly and Elvira meet at a party, and Lilly says, “I could come to your house and teach you.” Elvira says nothing. Lilly then shows up at Elvira’s house every Thursday evening for ten weeks, and teaches Elvira her decorating tricks. Elvira never says anything to indicate that she’s expecting to pay for the lessons. At the end of the ten weeks, what, if anything, does Elivra owe Lilly, and on what basis?

Question 36

(Short Answer) Prince Charming finds a glass slipper on the sidewalk in front of his house. Unbeknownst to him, Cinderella has offered $1,000 as a reward for the slipper’s return. Charming goes from house to house, looking for the slipper’s owner. He finally finds Cinderella and returns the slipper to her. Is there a contract between Cinderella and Charming for payment of $1,000?

Question 37

( Short Answer) David Dole, owner of 75,000 acres of forest land in Dover County, Maine, had attempted for several years without success to persuade state and local authorities to purchase the tract as a wildlife refuge. He was approached by Paul Pinsky, a prominent producer of motion pictures and creator of an entertainment park in California known as Pinsky Land. Pinsky said that he saw great possibilities in Dole’s tract of land as a ski area if properly developed with access roads, motels and a summer resort, and if several hundred cottages were built for rental. However, extensive surveys would be needed before he would want to buy. Dole explained that the taxes assessed against the property were delinquent, and that the 2014 tax would be payable Dec. 11, 2014. Dole added: “I simply have to bail out by then.” Dole then prepared and gave Pinsky the following document: > Oct. 9, 2014 > > I hereby give Paul Pinsky the privilege of entering my land in Dover County, Maine to survey and map it as a recreation area. I will sell him the whole tract of 75,000 acres for $7.5 million, provided he accepts this offer by giving me a certified check for $750,000 on or before Dec. 4, 2014. > > */s/ Paul Dole* Pinsky sent a crew of surveyors and architects to the Dover County tract, where they worked for four weeks, at a cost to Pinsky of $100,000. Their activities became widely known and on Nov. 12, a group of five wealthy owners of land in Maine approached Dole, who informed them of his offer to Pinsky. They persuaded Dole that the land should be preserved unspoiled if possible. During the next two weeks the five secured pledges totaling $10 million from 500 persons, and on Nov. 30 the five gave Dole a check for $1 million and jointly signed a promissory note for the remaining $9 million. Dole then executed a conveyance of the 75,000 acre tract to the Wilderness Society, a non-profit corporation whose charter authorizes it “to receive and hold land that is still preserved in or can revert to its natural state and to dispose of such holdings only on such terms as will insure that its natural state is preserved so far as possible.” On Dec. 1, 2014, Pinsky called from California to Dole’s home in Webster, Mass., gave his name, and said, “I have a $750,000 check for Mr. Dole. Where shall I mail it?” Acting on instruction from Dole, his wife replied, “He has moved. I don’t know where he is.” Pinsky arrived in Webster on Dec. 2 with a $750,000 check in his pocket. He inquired around the city and was told that Dole was last seen leaving town by bus with a lot of camping gear. Pinsky, in hot and continuous pursuit, proceeded to the Dover County tract and after searching through the forest finally found Dole in a secluded cabin on Dec. 6. Pinsky said: “Mr. Dole, I believe. Here is your check, well within your Dec. 11 tax deadline.” Pinsky tendered a $750,000 certified check but Dole refused to accept it. Pinsky now consults your law firm. The senior partner instructs you to “prepare a memorandum discussing the legal and equitable remedies Pinsky may have against Dole and the Wilderness Society, and stating your best judgment of the likelihood of success concerning each possible remedy.” Write the memorandum.

Question 38

Jared operates a retail hardware store. By telephone, Sarah, a plumber, contacts him: **Communication 1 (telephone), Sarah:** Do you have in stock a full set of metric combination wrenches? **Communication 2 (telephone), Jared:** Yes, we do. Give me your fax number or address, and I’ll send you a written description and order form. **Communication 3 (telephone), Sarah:** Thanks very much. Send it by email, please, to Splum@sp.com. **Communication 4 (email), Jared:** [description of the wrenches, and then] Full set $450 without ratchet kit. If you want the set, we’ll assemble it for you right away. You may pick it up at our store any time tomorrow. **Communication 5 (email), Sarah:** I’ll take it, but please include ratchet kit at your ordinary price. Jared then assembles the wrenches and readies them for Sarah. **Communication 6 (email), Jared:** We have assembled the wrenches for you, but we do not have any ratchet kits. Please come and take the wrenches. For payment we accept cash, credit card, or debit card. **Communication 7 (email), Sarah:** Without the ratchet kit I have no interest in the wrenches. Thanks very much, but I won’t be making the purchase. **Communication 8 (email), Jared:** You have a contractual obligation to purchase the wrenches, and you have no right to the ratchet kit. Which of the following facts best supports Jared’s position? * A. Sarah initiated the contact with Jared; Jared did not initiate contact with Sarah. * B. In reliance on Sarah’s statements, Jared assembled the wrenches. * C. In this circumstance, both Sarah and Jared are merchants. * D. Wrenches are goods.

Answer 38

**ANALYSIS.** Examine the parties’ conversation and characterize their statements. **Communication 1** is a “mere” invitation to deal. **Communications 2** and **3** are two more invitations to deal. **Communication 4** is Jared’s offer to sell the item. In **Communication 5**, Sarah writes, first, “I’ll take it.” With that single sentence, she issues an “expression of acceptance,” which means that *she accepts Jared’s offer, exactly as Jared made it.* She has formed with Jared a contract for the purchase and sale of a good. **And What About Her Instruction That the Transaction Include Another Item — The Ratchet Kit?** Sarah added her request for the ratchet kit *after* she made her “expression of acceptance”: “I’ll take it.” The request, therefore, is akin to the fine print on the back of a purchase or sales forms. It doesn’t count. It’s not a part of her contract. Again, when Party X offers to buy or sell goods and Party Y responds with what UCC §2-207 calls an “expression of acceptance,” Y accepts X’s offer *as X makes it.* Whatever else Y might write or say does not become part of the contract. The same, of course, applies if Y offers to buy goods and X responds with an “expression of acceptance.” Whatever else X might write or say does not become part of the contract. **Now Maybe You Ask, What About the Mirror-Image Rule Discussed in Chapter 7?** And we answer: The mirror-image rule belongs to the common law. Where an offer concerns anything other than the sale of goods, it’s alive and well. UCC Article 2 addresses contracts for the purchase and sale of goods. It’s a statute. It overrides the common law (Appendix, section A.4, last paragraph). Where an offer concerns the sale of goods, the mirror-image rule has lost its standing. UCC §2-207 supplants it. Jared is right because (1) the transaction concerns the sale of goods, (2) Jared made an offer, and (3) Sarah issued an “expression of acceptance” as that phrase operates in UCC §2-207. Those three facts support Jared’s position; they cause the parties to form a contract. Read the answer choices and determine which reflects one or more of those same three pivotal facts. **A** is wrong**.** Whether two parties form a contract does not depend, ever, on which of them first contacted the other. **B** is just as bad. These parties form a contract with Communication 4, an offer, and Communication 5, an (expression of) acceptance. Nothing that happens afterward alters that reality. After receiving Communication 5, Jared assembled the wrenches. If he had not done so, these two would have a contract just the same. The statement in **C** is very true and consummately irrelevant. Yes, both these parties are merchants as Article 2 defines that word (section A.1 above and Appendix, section D.4). Sarah is a plumber. Hence, by her occupation she holds herself out as having knowledge or skill peculiar to wrenches. Jared operates a hardware store; in this transaction he too is a merchant. That these two folks are merchants, however, has not a whit to do with the fact that they formed a contract. UCC §2-207(1) applies to any buyer and any seller whether they be merchants or not (Appendix, section D.4). **D** correctly reports that wrenches are goods. *That’s* why UCC Article 2 applies, and that’s why the mirror-image rule does not. *That’s* why Sarah’s response “operates as an acceptance” even though it states terms “additional to or different from those offered.” *That’s* why the parties form a contract, and that’s why **D** is right.

Question 39

WaxCo is in the business of selling wax to candle manufacturers. CandleCo manufactures candles. On August 10, with a signed, preprinted “Available for Purchase” form, completing various of its blank spaces in handwriting, WaxCo makes CandleCo this offer: “Will ship to you *@$200* per ton, *15* tons of *WaxCo Z-25* Candle Wax, color *White.* Total price: *$3,000.* Delivery within *10* days of your acceptance. Will unload and stack boxes on your receiving platform.” On August 11, by signed, preprinted “Purchase Order” form, completing various of its blank spaces in handwriting, CandleCo responds by signed writing. For this question, assume that on August 11, CandleCo responds thus: “As per your offer of *August 10*, please ship. Additional Comment(s): *You will stack boxes in piles of three* *.*” Making no response to CandleCo, WaxCo delivers the wax and stacks the boxes in piles of four (not three). CandleCo sues WaxCo alleging that WaxCo was contractually obliged to stack the boxes in piles of *three*. WaxCo maintains that the parties’ contract included no such requirement. Which of the following facts, if proven, best supports WaxCo? * A. In the wax industry, sellers ordinarily deliver boxes and stack them in piles of four. * B. Many times in the past, WaxCo has delivered wax to CandleCo, stacking the boxes in piles of four. * C. The difference between piles of three and piles of four materially alters WaxCo’s obligation. * D. WaxCo and CandleCo have never before done business with each other.

Answer 39

**ANALYSIS.** Under UCC §2-207(1) and (2), CandleCo’s expression of acceptance produces, simultaneously, these two legal consequences: (1) the parties form a contract on WaxCo’s terms, and (2) CandleCo proposes to modify the contract so that WaxCo will stack the boxes in piles of three. WaxCo’s *silence* accepts CandleCo’s proposal if (and only if) to the three questions earlier described the answers are, respectively, (1) “yes,” (2) “no,” and (3) “no.” A given fact will support WaxCo if, for any of the three questions, it fails to provide the answer just mentioned. Choice **A** fails to address any of the three questions. Whether WaxCo’s silence amounts to its acceptance is unrelated to the way in which wax sellers customarily stack boxes. **B** and **D** are wrong because they, too, state irrelevancies. **C** is correct. If stacking piles of three would materially alter WaxCo’s contractual burden, then the answer to question 3 is “yes,” meaning that WaxCo’s silence does not constitute its acceptance. That’s why **C** is right.

Question 41

Fern owns an antique shop, Junk Is Us. She sends a written offer to Euphrates Antique Wholesalers to buy the latter’s entire inventory of old string, partial shipments to occur monthly, with separate billing for each shipment, over a period of months. Euphrates sends back a confirmation that purports to accept her offer. At the bottom of the confirmation is a sentence providing that Fern must pay 3% annual interest (a reasonable rate under the circumstances) on overdue invoices. Fern receives the confirmation and makes no response. (a) Is there a contract? (b) If so, is the interest clause part of the contract?

Answer 42

(a) Yes. The UCC does not follow the common law “mirror image” rule. So the fact that the “acceptance” contains additional terms does *not* prevent it from being a true acceptance that concludes the bargain. See rules regarding *Battle of the Forms* and UCC §2-207(1). Here, nothing in Euphrates’ confirmation made his acceptance expressly conditional on Fern’s acceptance of the interest clause, so the confirmation acted as an acceptance. (b) Yes. UCC §2-207(2) controls whose terms are included if a contract is formed. Here, the terms are integrated into the agreement because the two parties are merchants and none of the exceptions apply. The offer doesn’t provide any limits on acceptance. Since we’re told that Fern “makes no response,” this means she didn’t object to the interest term. So the only issue is whether a clause charging a reasonable rate of interest for overdue invoices is a “material alteration” of the contract. The comments to UCC §2-207 defines “material” as resulting “in *surprise or hardship*” and provide an example similar to these facts.

Question 43

What is the issue that arises in the contracts doctrine referred to as the *Battle of the Forms*?

Answer 43

The **battle of the forms** refers to an issue that arises when an offeror makes an offer with a certain set of terms and the offeree purports to accept with a slightly different or additional set of terms. Normally, this issue arises when the parties exchange forms and some of the terms of the contract are contained in the boilerplate provisions of the forms, but the offeree’s form doesn’t match the offeror’s form. Under the common law, the offeree’s purported acceptance is really a counteroffer because of varying or additional terms. In such a situation, has a contract formed? If the parties behave as if a contract has formed, then whose terms control—the offeror’s terms or the offeree’s terms? Battle of the forms is a term that is normally used in reference to contracts for the sale of goods—governed by the UCC. However, the same issue can arise in contracts governed by the common law. The common law and the UCC treat this problem differently.

Question 44

(Short Answer) Fern owns an antique shop, Junk Is Us. She makes a written offer to buy Euphrates Antique Wholesalers’ entire inventory of old string over a period of months. Fern’s offer promises that she’ll pay any invoice within 30 days, but says nothing about what happens if Fern doesn’t pay on time. Nor does the offer says anything specific about what kind of response by Euphrates will constitute an acceptance. Euphrates immediately sends a written response that says, “We accept your offer.” The response includes an extra clause providing for 8% interest (a rate typical in the industry) on overdue invoices. Fern makes no response to the overdue-invoices clause, receives the first shipment of string and places it into her inventory. Is there a contract? If your answer to (A) is yes, is the overdue-invoices clause part of that contract?

Question 45

Short Answer ## Footnote Wallflower Mart sends a purchase order to Harry’s Wholesale Florist for 500 dried flower arrangements, style 402, for $3 each, to be paid in full 60 days after receipt of goods. Harry’s sends back an acknowledgment form confirming that it will sell 500 dried flower arrangements, style 402, for $3 each, to be paid in full 10 days after receipt of goods. At the bottom of the acknowledgment form there is the following statement in bold type: “This acknowledgment shall operate as an acceptance if and only if you assent to any terms in it that may be different from terms in your order. If you do not so assent, you should notify us immediately.” **(A)** Assume that Wallflower receives the acknowledgment, reads it, and makes no response. Harry’s has not yet made shipment. At this moment, is there a contract? If so, what are the contract’s payment terms? Now, assume that Harry’s, not having heard any response to its acknowledgment form 5 days after sending it, sends the flower arrangements. Wallflower Mart receives the flowers and immediately resells them. Is there a contract? If so, what are its payment terms?

Question 46

(Short Answer) ## Footnote Carr Buff’s hobby is restoring vintage cars. He just completed the restoration of a 1957 Ford after working on it for many years. On December 15, he parked the car in the parking lot of a shopping mall. When he returned to it, he found a note stuck under the windshield wiper that read: “Dear owner of 1957 Ford, my name is Rod Hott. I love this car and would like to buy it from you. I offer to pay you $100,000 for it, which I will pay on delivery of the car and its title papers. If you would like to sell the car to me, please reply to me at rodhott@email.com. by no later than December 20. On your acceptance, we will arrange a date to complete this transaction before Christmas.” After thinking about the offer for a couple of days, Carr decided to accept it. At 7:00 p.m. on December 20 he sent an email to the address in the note in which he said, “Rod, I agree to sell the Ford to you for $100,000. Please note that payment must be in cash or by cashier’s check. Reply to me as soon as you get this message to arrange the time for delivery. The server hosting Rod’s email account was down for maintenance during the evening of December 20, so Carr’s email was not delivered to Rod’s inbox until 6:00 am on December 21. Do Rod and Carr have a contract?

Question 47

Short Answer Ballet de la Forms, Inc., a manufacturer of dance apparel, needed to replenish its stock of fabric. It submitted a written purchase order to Material Alterations, Inc., a fabric manufacturer, in which it specified the description, quantity, and price of the fabric ordered as well as the delivery date and payment terms. Ballet’s order form contained a preprinted term that stated, “Ballet de la Forms shall have the right to return unused goods to the seller within 60 days of delivery of the goods under this order. Acceptance of this offer is limited to the terms stated in this purchase order.” Material Alterations received the order on the next day and immediately mailed its order acknowledgment to Ballet. Unquestionably, the response was mailed and received in good time and before the offer had lapsed. The acknowledgment expressed assent to the order and accorded in all respects with the order, except that it contained a printed term that stated, “Return Policy: Goods may be returned only if defective. No returns will be accepted for any other reason.” Material Alterations has not yet shipped the goods. Do the parties have a contract? If so, what is the contract’s term relating to return of the goods?

Question 48

Short Answer

Answer 48

In addition to a tutu, Tutu needed tights for her dance lessons. She called Leo Tard, a specialist in dancing attire, and ordered three pairs of tights for a total of $350. She arranged with Leo that the tights would be delivered C.O.D. within a week. Leo immediately shipped the tights to Tutu, accompanied by his standard invoice. The invoice stated, “For sanitary reasons, we cannot accept the return of clothing delivered to a customer. All sales are final once the clothing leaves our premises.” By the time that Tutu received the tights, a week later, she had changed her mind about taking dancing lessons and no longer wants the tights. Leo insists that she has bought them and cannot return them. Is he right?