BAR FLASHCARDS - C2 Mutual Assent
(121 cards)
1
Q
MUTUAL ASSENT—OFFER AND ACCEPTANCE
A
For an agreement to be enforced as a contract, there must be mutual assent. In other words, one party must accept the other’s offer.
Whether mutual assent is present will be determined by an objective standard; that is, did words or conduct manifest a present intention to enter into a contract?
When a suit is brought in which one party seeks to enforce a contract or to obtain damages for breach of contract, a court must first decide whether there was in fact a contract. In making this determination, a court will ask the following three basic questions:
• Was there mutual assent?
• Was there consideration or some substitute for consideration?
• Are there any defenses to creation of the contract?
2
Q
Whether mutual assent is present will be determined by an ___ standard
A
Whether mutual assent is present will be determined by an objective standard; that is, did words or conduct manifest a present intention to enter into a contract?
3
Q
For any contract question, be sure that there really is an enforce- able contract; that is, you must have all these three elements:
A
• Was there mutual assent?
• Was there consideration or some substitute for consideration?
• Are there any defenses to creation of the contract?
4
Q
- Mutual Assent
A
Offer (promise, undertaking, or commitment with definite and certain terms communicated to offeree)
AND
Acceptance before termination by revocation, rejection, or operation of law.
5
Q
- Consideration
A
Bargained-for exchange of something of legal value
OR
Substitute for consideration, such as promissory estoppel, detrimental reliance, or good faith modification under the UCC
6
Q
- No defenses
A
Mistake (mutual or, under certain conditions, unilateral)
OR
Lack of capacity (makes contract void or voidable)
OR
Illegality (usually renders contract void)
OR
Statute of Frauds
7
Q
THE OFFER
A
An offer creates a power of acceptance in the offeree and a corresponding liability on the part of the offeror.
For a communication to be an offer, it must create a reasonable expectation in the offeree that the offeror is willing to enter into a contract on the basis of the offered terms.
In deciding whether a communication creates this reasonable expectation, ask:
• Was there an expression of a promise, undertaking, or commit- ment to enter into a contract?
• Were there certainty and definiteness in the essential terms?
• Was there communication of the above to the offeree?
8
Q
An offer is a…
A
Manifestation of an intention to be bound
9
Q
Promise, Undertaking, or Commitment
A
For a communication to be an offer, it must contain a promise, under- taking, or commitment to enter into a contract, rather than a mere invitation to begin preliminary negotiations; that is, there must be an intent to enter into a contract.
10
Q
Language in offer
A
The language used may show that an offer was or was not intended. Technical language such as “I offer” or “I promise” is useful, but it isn’t necessary. Phrases such as “I quote,” “I am asking $30 for,” and “I would consider selling for” tend to be construed merely as invitations to deal rather than offers.
11
Q
Surrounding Circumstances
A
The circumstances surrounding the language is considered by courts in determining whether an offer exists. For example, if a statement is made in jest, anger, or by way of bragging, and it is reasonably under- stood in this context, it will have no legal effect.
12
Q
Prior Practice and Relationship of the Parties
A
In determining whether certain remarks constitute an offer rather than preliminary negotiations, a court will look to the prior relation- ship and practice of the parties involved.
13
Q
Method of Communication
A
Use of Broad Communications Media: The broader the communicating media (for example, publications), the more likely it is that the courts will view the communication as merely the solicitation of an offer.
Advertisements, Etc.: Advertisements, catalogs, circular letters, and the like containing price quotations are usually construed as mere invitations for offers.
14
Q
Advertisements, Etc.
A
Advertisements, catalogs, circular letters, and the like containing price quotations are usually construed as mere invitations for offers.
Ads are NOT generally offers! UNLESS you see QUANTITY AND other terms. look at whether ioffered to public.
15
Q
Exception - When ads ARE offers
A
When they contain a PROMISe, the terms are certain and definnite, and the offeree is clearly identified.
16
Q
Definite and Certain Terms
A
An offer must be definite and certain in its terms. The basic inquiry is whether enough of the essential terms have been provided so that a contract including them is capable of being enforced.
17
Q
Offers usually must include:
A
- Offerees name
- Offers subject matter
- Price to be paid
18
Q
Definite and Certain Terms - Identification of the Offeree
A
a. Identification of the Offeree
To be considered an offer, a statement must sufficiently identify the offeree or a class to which they belong to justify the inference that the offeror intended to create a power of acceptance.
19
Q
Definite and Certain Terms - Definiteness of Subject Matter
A
b. Definiteness of Subject Matter
The subject matter of the deal must be certain, because a court can enforce a promise only if it can tell with reasonable accuracy what the promise is.
20
Q
Requirements for Specific Types of Contracts
A
Real Estate Transactions—Land and Price Terms,
Sale of Goods—Quantity Term
Employment and Other Services
21
Q
Real Estate Transactions—Land and Price Terms,
A
An offer involving realty must identify the land and the price terms.
The land must be identified with some particularity
but a deed description isn’t required (for example, “my house in Erewhon” is sufficient if the seller has only one house in Erewhon). Most courts will not supply a missing price term for realty.
22
Q
Land Sale offers mUST include:
A
- Price
- Descrioption of LAND - with some particularly but deed not required.
23
Q
Sale of Goods—Quantity Term
A
In a contract for the sale of goods, the quantity being offered must be certain or capable of being made certain.
PRICE NOT NECESSARY.
24
Q
Sale of Goods—Quantity Term: “Requirements” and “Output” Contracts
A
In a requirements contract, a buyer promises to buy from a certain seller all of the goods the buyer requires, and the seller agrees to sell that amount to the buyer.
In an output contract, a seller promises to sell to a certain buyer all of the goods that the seller produces, and the buyer agrees to buy that amount from the seller.
It is assumed that the parties will act in good faith; so, there can’t be a tender of or a demand for a quantity unreasonably disproportionate to (1) any stated estimate, or (2) (in the absence of a stated estimate) any normal or otherwise comparable prior output or requirements.
In addition to the words “require,” “need,” and “produce,” certain other terms are clues that the contract is a require- ments or outputs contract. On the exam, watch for the following words: “all,” “only,” “exclusively,” and “solely.”
25
requirements contract - incrrasing
In a requirements contract, a buyer promises to buy from a certain seller all of the goods the buyer requires, and the seller agrees to sell that amount to the buyer.
Buyer can increase as long as increase is in line with PRIOR demands.
26
Employment and Other Services
In contracts for employment, if the duration of the employ- ment is not specified, the offer, if accepted, is construed as creating a contract terminable at the will of either party. For other services, the nature of the work to be performed must be included in the offer.
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Missing Terms
The fact that one or more terms are left open does not prevent the formation of a contract if it appears that the parties intended to make a contract and there is a reasonably certain basis for giving a remedy. In such a case, the majority of juris- dictions and Article 2 hold that the court can supply reasonable terms for those that are missing.
28
Missing Terms: Price
Except in contracts for real property, the failure to state the price doesn’t prevent the formation of a contract if the parties intended to form a contract without the price being settled. Note that if a contract for the sale of goods is missing a price term, Article 2 provides that the price will be a reasonable price at the time of delivery.
29
Missing Terms: Time
If an agreement doesn’t specify the time in which an act is to be performed, the law implies that it is to be performed within a reasonable time.
30
Vague Terms
The presumption that the parties’ intent was to include a reason- able term goes to supplying missing terms. The presumption cannot be made if the parties have included a term that makes the contract too vague to be enforced (for example, an agree- ment to split profits on a “liberal basis”). However, uncertainty can be cured by part performance that clarifies the vague term or by acceptance of full performance.
31
Terms to Be Agreed on Later
Often, an offer will state that some term is to be agreed on at a future date. If the term is a material term, the offer is too uncer- tain.
32
Communication to Offeree
To have the power to accept, the offeree must have knowledge of the offer. Therefore, the proposal must be communicated to them
33
TERMINATION OF OFFER
An offer can’t be accepted after it has been terminated. An offer may be terminated by an act of either party or by operation of law.
34
Termination by Offeree: - Lapse of Time
Lapse of Time
An offer may be terminated by the offeree’s failure to accept within the time specified by the offer or, if no deadline was specified, within a reasonable period.
35
Termination by Offeree: - Rejection
— Express Rejection: An express rejection is a statement by the offeree that they do not intend to accept the offer. Such a rejection will terminate the offer.
— Counteroffer as Rejection: A counteroffer is an offer made by the offeree to the offeror that contains the same subject matter as the original offer, but differs in its terms (for example, “I’ll take the house at that price, but only if you paint it first”).
36
Counteroffer v mere bargaining
Counteroffer = rejection
Mere bargainging does NOT equal rejection.
If offeree response has question mark , it is MERE bargaining and does not kill offer.
37
Distinguish—Mere Inquiry
Distinguish between a counteroffer (which constitutes a rejection) and a mere inquiry. An inquiry won’t terminate the offer when it is consistent with the idea that the offeree is still keeping the original proposal under consideration (for example, “Would you consider lowering your price by $5,000?”). The test is whether a reasonable person would believe that the original offer had been rejected.
38
Conditional Acceptance as Rejection
When an acceptance is made expressly conditional on the acceptance of new terms, it is a rejection of the offer. The conditional acceptance is essentially a new offer, and the original offeror may form a contract by expressly assenting to the new terms.
However, the offer that results from a conditional accep- tance cannot be accepted by performance. If the parties ship or accept goods after a conditional acceptance, a contract is formed by their conduct, and the new terms are not included.
39
Conditional acceptance =
REJECTION + NEW OFFER
40
Effective When Received
A rejection is effective when received by the offeror.
41
Rejection of Option
Because an option is a contract to keep an offer open, a rejec- tion of or a counteroffer to an option does not constitute a termination of the offer. The offeree is still free to accept the original offer within the option period unless the offeror has detrimentally relied on the offeree’s rejection.
42
Termination by Offeror—Revocation
A revocation is the retraction of an offer by the offeror.
43
Revocation
OFFERor's retraction of OFFER.
Can be Anytime before acceptance
44
Only offerors can ___, only offerees can ___
Only offerors can revoke, only offerees can reject
45
Direct revokation
Offeror conveys to the offeree that they change their mind "I revoke"
An offeror may revoke by directly communicating the revocation to the offeree (for example, “I revoke my offer of May 25”).
An offer made by publication can be directly revoked only by publication through comparable means (for example, an offer placed in the Wall Street Journal cannot be revoked by publishing in Better Homes and Gardens).
46
An offer made by publication can be directly revoked only by...
An offer made by publication can be directly revoked only by publication through comparable means (for example, an offer placed in the Wall Street Journal cannot be revoked by publishing in Better Homes and Gardens).
47
INdirect revokation
An offer may also be revoked indirectly if the offeree receives:
(1) 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 the offer
But offerree must be aware of the Offeror's CONDUCT.
(for example, after the offeror offers to sell their car to the offeree, the offeree is told by a reliable third party that the offeror just sold the car to someone else).
48
Offeree must be ___ of the revokation
AWARE
49
TIMING of Revocation - Effective When Received
A revocation is generally effective when received by the offeree.
Where revocation is by publication, it is effective when published.
50
Generally a written communication is “received” when...
Generally a written communication is “received” when it is delivered to a place of business through which the contract was made or another location authorized to receive this type of communication. It does not matter whether the recipient actually reads the communication. Courts will likely apply the same rules to phone messages.
51
Limitations on Offeror’s Power to Revoke
Offers can be revoked at will by the offeror, even if he has promised not to revoke for a certain period, except in the following circumstances:
- Options
- Merchant’s Firm Offer Under Article 2
- Detrimental Reliance
- Beginning Performance in Response to True Unilateral Contract Offer
- Death
52
Option Contract
An option is a distinct contract in which the offeree gives consideration for a promise by the offeror not to revoke an outstanding offer for a period of time (for example, an offeror offers to sell her farm to an offeree for $1 million and promises to keep the offer open for 90 days if the offeree pays the offeror $1,000 to keep the offer open).
53
Option Contract NEEDS
Promise to hold it open, and consideration for that.
54
Merchant’s Firm Offer Under Article 2
Under Article 2:
(1) if a merchant,
(2) offers to buy or sell goods in a signed writing, and
(3) the writing gives assurances that it will be held open (for example, “this offer will be held open for 10 days,” “this offer is firm for 10 days,” or “I shall not revoke this offer for 10 days”),
THEN the offer is not revocable for lack of consideration during the time stated, or if no time is stated, for a reasonable time (but in no event may such period exceed 3 months).
55
Merchant’s Firm Offer RULE
- Merchant Promises.
- In signed Writing
- to keep offer open for time stated or reasonable time
ENforceable for up to 3 months. Even if without consideration.
56
For the Merchant’s Firm Offer RULE, a merchant is...
anyone operating any business
57
For the Merchant’s Firm Offer RULE, a signed letter is...
anything that looks authenticated. (sent on own stationary = signed).
58
If a merchant-offeror states that an offer will stay open for a period beyond the UCC’s 3-month limit on irrevocability, they will be bound for....
If a merchant-offeror states that an offer will stay open for a period beyond the UCC’s 3-month limit on irrevocability, they will be bound only for 3 months. Remember that the
3-month limitation applies only to offers not supported by consider- ation. Watch for an offer that looks like a merchant’s firm offer but includes some consideration. This is an option contract, and the offer can be held open for as long as the parties specify.
59
Detrimental Reliance (Foreseeable reliance)
When the offeror could reasonably expect that the offeree would rely to their detriment on the offer, and the offeree does so rely, the offer will be held irrevocable as an option contract for a reasonable length of time.
60
Detrimental Reliance BEFORE acceptance vs after acceptance
I offer to sell you a machine. Before accepting, you have an expensive foundation custom-made to fit the machine. Can I still revoke my offer? YES.
61
Bids are...
Offers
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Beginning Performance in Response to True Unilateral Contract Offer
An offer for a true unilateral contract becomes irrevocable once performance has begun.
The offeror must give the offeree a reasonable time to complete performance.
Note that the offeree is not bound to complete performance—they may withdraw at any time prior to completion of performance, and there is no acceptance until performance is complete.
NOTE: Offeree who started performance has not ACCEPTED, BUT THE OFFEROR CANNOT REVOKE NOW.
63
Beginning Performance in Response to True Unilateral Contract Offer: Distinguish—Preparations to Perform
Substantial preparations to perform (as opposed to the beginning of performance) do not make the offer irrevo- cable but may constitute detrimental reliance sufficient to make the offeror’s promise binding to the extent of the detrimental reliance.
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Mere preparation to perform
IS NOT the start of performance
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Beginning Performance—Offer Indifferent as to Manner of Acceptance
As noted above, most offers are indifferent as to the manner of acceptance, and thus, a bilateral contract may be formed upon the start of performance by the offeree.
Therefore, once the offeree begins performance, the contract is complete and revocation becomes impossible. But note: Notification of the start of performance may be necessary.
66
Death
Death of EITHER party BEFORE ACCEPTANCE will terminate a revokable offer. If either party dies before that offer has been accepted, that offer dies too. BUT, deaht doesnt automatically trerminate a contract, obligation of K goes to the estate of the deceased person.
Death does NOT terminate an irrevokable offer (like an option, or start of performance in a unilateral).
67
Death only terminates...
a revokable offer
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Termination by Operation of Law
The following events will terminate an offer by operation of law:
a. Death or insanity of either party (unless the offer is of a kind the offeror could not terminate, such as, an option supported by consideration). Death or insanity need not be communicated to the other party
b. Destruction of the proposed contract’s subject matter OR
c. Supervening illegality
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THE ACCEPTANCE
An acceptance is a manifestation of assent to the terms of an offer.
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Who May Accept
Generally, only the person to whom an offer is addressed has the power of acceptance. A member of a class to which an offer has been directed also has the power to accept. Generally, an offeree’s power of acceptance cannot be assigned. But, if the offeree paid consideration to keep the offer open (an option contract), the right to accept is trans- ferable.
71
Offeree Must Know of Offer
The offeree must know of the offer in order to accept it, and this is true whether the offer is for a bilateral or unilateral contract. Thus, if A sends B an offer and B sends A an offer unaware of A’s offer (such as a crossing offer situation), no contract is formed, even if the offers contain the same terms.
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Acceptance of Offer for Bilateral Contract
Recall that unless an offer specifically provides that it may be accepted only through performance, it will be construed as an offer to enter into a bilateral contract and may be accepted either by a promise to perform or by the beginning of performance.
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Acceptance of Offer for Bilateral Contract: Acceptance Must Be Communicated
Unless the offer provices otherwise, acceptance of an offer to enter into a bilateral contract must be communicated to the offeror.
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Silence as Acceptance
Generally, an offeree can’t be forced to speak or have their silence treated as acceptance. However, a court may find silence works as an acceptance if, because of prior dealings or trade practices, it would be commercially reasonable for the offeror to consider silence an acceptance.
Also, if the recipient of services knows or should have known that the services were being rendered with the expectation of compensation and, by a word, could have prevented the mistake, the recipient may be held to have accepted the offer if they fail to speak.
75
Method of Acceptance
The language of offer Controls the manner of acceptance.
Unless otherwise provided, an offer is construed as inviting acceptance in any reasonable manner and by any medium reasonable under the circumstances. Any objective manifestation of the offeree’s counterpromise is usually sufficient.
- Offers to Buy Goods for Current or Prompt Shipment: Under Article 2, an offer to buy goods for current or prompt shipment is construed as inviting acceptance either by a promise to ship or by current or prompt shipment of conforming or nonconforming goods.
76
Method of Acceptance - Offers to Buy Goods for Current or Prompt Shipment:
- Offers to Buy Goods for Current or Prompt Shipment: Under Article 2, an offer to buy goods for current or prompt shipment is construed as inviting acceptance either by a promise to ship or by current or prompt shipment of conforming or nonconforming goods.
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Acceptance Must Be Unequivocal
Traditional contract law insists on an absolute and unequivocal acceptance of each and every term of the offer (the “mirror image rule”). At common law, any different or additional terms in the accep- tance make the response a rejection and counteroffer.
78
Performance as Acceptance
Bilateral vs Unilateral.
Bilateral: Offeree has choices. If they start to perform, that is an implied acceptance. A promise that theyll complete their performance.
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A bilateral contract offer can be accepted by....
ANY REASONABLE MANNER. Including starting performance.
80
Acceptance of offer in a UNILATERAL contract
Starting performance is NOT acceptance. Need to COMPLETE performance to accept.
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Acceptance of Offer for Unilateral Contract
If an offer provides that it may be accepted only by performance (that is, an offer for a unilateral contract), note the following particular rules.
82
Acceptance of Offer for Unilateral Contract: Completion of Performance
A unilateral contract is not accepted until performance is completed. Recall that the beginning of performance may create an option so that the offer is irrevocable. However, the offeree is not obligated
to complete performance merely because they have begun perfor- mance, as only complete performance constitutes an acceptance of the offer.
83
Like all offerees, the offeree of a unilateral contract must ____ to accept the offer.
like all offerees, the offeree of a unilateral contract must know of the offer to accept it. If the “offer- ee” acts without knowledge and learns of the offer later,
their acts were not an acceptance.
84
Acceptance of Offer for Unilateral Contract: Notice
Generally, the offeree is not required to give the offeror notice that he has begun the requested performance but is required to notify the offeror within a reasonable time after performance has been completed.
However, NO notice is required if: (1) the offeror waived notice; or (2) the offeree’s performance would normally come to the offeror’s attention within a reasonable time.
85
Acceptance Under Article 2
An offer to buy goods for current or prompt shipment may be accepted by either a promise to ship or by a shipment of conforming or nonconforming goods.
86
An offer to buy goods for current or prompt shipment may be accepted by....
An offer to buy goods for current or prompt shipment may be accepted by either a promise to ship or by a shipment of conforming or nonconforming goods.
87
Improper shipment (shipping the wrong goods)=
Acceptance & Breach
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Shipment of Nonconforming Goods
The shipment of nonconforming goods is an acceptance creating a bilateral contract as well as a breach of the contract unless the seller seasonably notifies the buyer that a shipment of noncon- forming goods is offered only as an accommodation.
The buyer is not required to accept accommodation goods and may reject them.
If the buyer rejects, the shipper isn’t in breach and may reclaim the accommodation goods, because the tender does not constitute an acceptance of the buyer’s original offer.
89
accommodation
Accomodation = a counteroffer. NOT an acceptance or a breach. Seller trying to give buyer something else, buyer has choice to accept it or not.
90
the accommodation shipment rule applies only when...
The accommodation shipment rule applies only when shipment is used as a form of acceptance.
91
a party accepts an order by promising to ship. The seller then discovers they lack the specified goods and ship nonconforming goods as an “accommodation.”
This is a breach, not an accommodation. There was a contract at the promise to ship. The shipment wasn’t the acceptance; thus, accommodation is not possible.
92
Silence as Acceptance
Silence does NOT equal acceptance.
Generally, an offeree can’t be forced to speak or have their silence treated as acceptance. However, a court may find silence works as an acceptance if, because of prior dealings or trade practices, it would be commercially reasonable for the offeror to consider silence an acceptance.
Also, if the recipient of services knows or should have known that the services were being rendered with the expectation of compensation and, by a word, could have prevented the mistake, the recipient may be held to have accepted the offer if they fail to speak.
93
You cannot force contracts on people by...
sending them something in the mail. Simply silence is not acceptance.
94
EXCEPTION: when Silence IS acceptance
Eel-skins, 5 or 6 months in the row when buyer would accept by paying. Look at custom between buyer and seller
95
Additional terms thrown into an acceptance.
Under COMMON LAW: Acceptance must MIRROR offer terms
Under ARTICLE 2: Mirror Image Not Required - Article 2 has abandoned the mirror image rule, providing instead that the inclusion of additional or different terms by the offeree in a definite and timely acceptance does not constitute a rejection and counteroffer, but rather is effective as an acceptance, unless the acceptance is expressly made conditional on assent to the additional or different terms. Whether the additional or different terms become part of the contract depends on whether or not both parties are merchants.
96
For an offer for the purchase or sale of goods, an acceptance with additional terms is....
If the offer is for something other than the sale of goods (for example, land), an acceptance with additional terms is...
For an offer for the purchase or sale of goods, an acceptance with additional terms is still an acceptance and a contract is formed (with or without the new terms).
If the offer is for something other than the sale of goods (for example, land), an acceptance with additional or different terms is a rejection and a counteroffer; no contract is formed.
97
Landlord sends Tenant a signed lease that says nothing about pets. Tenant adds, “Tenant may keep a pet,” signs the lease, and returns it to Landlord. Has Tenant accepted Landlord’s offer?
This is Common Law. So tenant has NOT accepted the landlord's offer bc it violated the mirror image rule.
98
In common law, if the "acceptance" does not mirror the image exactly - throwing additonal terms in...
That is a REJECTION and COUNTER OFFER.
99
Under Article 2, you just need a....
Seasonable expression of acceptance. No mirror image rule - you can throw in additional terms.
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Article 2: Is the additonal term included?
Offeree's additional term NOT part of the contract UNLESS:
- BOTH are merchants,
- It's NOT material, AND
- Offeror does NOT object within a reasonable time.
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Additonal term makes it into the contract if...
Parties are both merchants, its not material, no objection within reaosnable time.
102
Easier to form contracts under...
Article 2.
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Terms Included
Because Article 2 provides that a contract can be formed even though the terms of the acceptance don’t match the terms of the offer, Article 2 also has specific rules for determining what terms are included in the contract in such a case. These rules are dependent on whether both parties to the transaction are merchants.
104
Article 2 additional term: Contracts Involving Nonmerchant
—Terms of Offer Govern: If any party to the contract is not a merchant, the additional or different terms are considered to be mere proposals to modify the contract that do not become part of the contract unless the offeror expressly agrees.
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Article 2 additional term: Contracts Between Merchants
—Additional Terms Usually Included: If both parties to the contract are merchants, additional terms in the acceptance will be included in the contract unless:
- They materially alter the original terms of the offer, such as by changing a party’s risk or the remedies available
- The offer expressly limits acceptance to the terms of the offer OR
- The offeror has already objected to the particular terms, or ob- jects within a reasonable time after notice of them is received
Note: Whether an alteration is material is a fact question.
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Material change
Causes hardship or suprise to the OFFEROR.
They materially alter the original terms of the offer, such as by changing a party’s risk or the remedies available
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Disclaimers are...
A mATERIAL change. So it is not part of the deal if included as an additional term.
108
If an additonal term is INDUSTRY CUSTOM
it DOES NOT EQUAL A MATERIAL CHANGE
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Article 2 DIFFERENT term: Different Terms May or May Not Be Included
There is a split of authority over whether terms in the acceptance that are different from (as opposed to in addition to) the terms in the offer will become part of the contract. Some courts treat different terms like additional terms, and follow the test set out above in determining whether the terms should be part of the contract.
Other courts follow the “knockout rule,” which states that conflicting terms in the offer and acceptance are knocked out of the contract, because each party is assumed to object to the inclusion of such terms in the contract.
Under the knockout rule, gaps left by knocked out terms are filled by the UCC.
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even though a response with different terms can constitute an acceptance under Article 2, there still must be a ....
even though a response with different terms can constitute an acceptance under Article 2, there still must be a meeting of the minds or there is no con-
tract. Watch for differences in the price, quantity, or quality terms— they likely indicate that there isn’t sufficient meeting of the minds to constitute a contract.
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Merchant’s Confirmatory Memo
A merchant’s memo confirming an oral agreement that contains different or additional terms is also subject to the battle of the forms provisions.
112
merchant parties have come to an oral agreement and a confirmatory memo is sent with additional or different terms...
merchant parties have come to an oral agreement and a confirmatory memo is sent with additional or different terms. Despite the fact that there is already a contract at the time the memo is sent, the memo is put through the battle of the forms provisions as if it were an acceptance. Additional terms are put through the material alteration test. Depending on the jurisdiction, different terms are treated either the same as additional terms or knocked out.
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TIMING of ACCEPTANCE: When Effective—The Mailbox Rule
Acceptance is effective when SENT, not received.
Acceptance by mail or similar means is effective at the moment of dispatch, provided that the mail is properly addressed and stamped, unless one of these exceptions applies:
• The offer stipulates that acceptance is not effective until received.
• An option contract is involved (an acceptance under an option contract is effective only upon receipt).
• The offeree sends a rejection and then sends an acceptance, in which case whichever arrives first is effective.
• The offeree sends an acceptance and then a rejection, in which case the acceptance is effective (that is, the mailbox rule applies) unless the rejection arrives first and the offeror detrimentally relies on it.
114
TIMING of ACCEPTANCE: Mailbox rule applies, UNLESS
- Offer states otherwise.
- Offer is IRREVOCABLE. Acceptance is effective when Recieved.
- Rejection sent first, then acceptance. Whichever is received first (race!).
- acceptance sent first, then Rejection . Whichever is received first, if rejection received first and offerror detrimentally relies on it.
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TIMING of ACCEPTANCE vs timing of revokation
Acceptance is effective when sent, revokation is effective when received. Remember, once you have option contract, offerror cannot revoke.
116
If the offeree sends a rejection and then sends an acceptance, ....
The offeree sends a rejection and then sends an acceptance, in which case whichever arrives first is effective.
117
The mailbox rule (“effective upon dispatch”) applies only to...
The mailbox rule (“effective upon dis- patch”) applies only to acceptance. It does not apply to
other events in the contract setting, such as rejection or revocation.
118
What if acceptnace letter gets lost in the mail...
does NOT matter.
119
. Acceptance by Unauthorized Means
An acceptance transmitted by unauthorized means or improperly transmitted by authorized means may still be effective if it is actually received by the offeror while the offer is still in existence.
120
Bilateral Contracts Formed by Performance
If a contract is not formed by the parties’ communications, but they begin to perform as if they formed a contract, a contract is formed.
121
AUCTION CONTRACTS
The UCC contains some special rules regulating auction sales. A sale by auction is complete when the auctioneer so announces by the fall of the hammer or in another customary manner. An auction sale is with reserve unless the goods are explicitly put up without reserve. “With reserve” means the auctioneer may withdraw the goods at any time until he announces completion of the sale.
