Contract Formation - Mutual Assent Flashcards
(25 cards)
Three Requirements of an Offer
- The offer is communicated to and received by the offeree
- The offer serves as a sufficient basis for enforcement if the offeree simply accepts the contract
- Must manifest an intent to be bound to the terms of the contract
- objective and subjective tests
Restatement 35. An Offeree’s Power of Acceptance
An offer gives the offeree the power to complete “manifestation of mutual assent” to the contract by acceptance, unless the power of acceptance is revoked in some way under Restatement 36.
Restatement 36(1). Methods to Terminate the Power of Acceptance
The power of acceptance can be terminated by
(1) The rejection or the counteroffer from the offeree
(2) Lapse in time
(3) Revocation from the offeror
(4) Death or incapacity of either party
Restatement 40. Revocation by Communication
The power of acceptance is revoked when a offeror communicates to an offeree a manifestation of an intent not to enter into the proposed contract.
Restatement 43. Indirect Revocation
The power of acceptance is terminated when the offeror takes definite action inconsistent with the intent to enter into the proposed contract and the offeree acquires reliable information to such effect.
Firm Offer UCC 2-205
An offer by a merchant to buy/sell goods in writing that gives assurances that the offer will remain open is not revocable, for lack of consideration, for the duration of the stated time (not to exceed 3 months). If no time is stated, offer should be held open for a reasonable period of time, not to exceed 3 months.
If the writing with assurances is on a form provided by the offeree, then it must be signed by the offeror as well.
Firm Offer CISG Article 16
An offer is revocable if the revocation is sent before the offeree dispatches their acceptance
However, it is not revocable if
(a) it indicates, by stating a time of acceptance or otherwise, that it was irrevocable OR
(b) it was reasonable for the offeree to rely on it being irrevocable and the offeree did rely on it
Dickinson v. Dodds - Timing Issues
You Snooze, You Lose
An offer may be revoked without an express revocation if the offeree has not accepted and the offeree is aware of the offeror’s intent to revoke
Mailbox Rule
Acceptances are effective upon dispatch
General Universal Rule of Receipt
Offers/Revocations are valid upon receipt
Exceptions to the Mailbox Rule
- Offeror may specify a time other than dispatch for acceptance to be valid (offeror is the master of the offer)
- Acceptances must be given in the manner invited
- Unilateral contracts, where acceptance is valid on full performance
- Option contracts, where acceptance is valid on receipt
Restatement 40. Time When Rejection or Counter Offer Terminates the Power of Acceptance
Rejection or counteroffer does not terminate the power of acceptance. The offer can still be accepted if the acceptance reaches the offeror before the rejection/counteroffer does.
CISG and the Mailbox Rule
The CGIS is largely a universal rule of receipt (Article 18(2)), however the offeror’s ability to revoke is limited once the offeree has dispatched their acceptance (Article 16(1) ).
Restatement 64. Acceptance by Telephone
Acceptance via substantially instantaneous two-way communication is governed the same as if the people were in person
Embry v. Hargadine, McKitten Dry Goods- OTMA
Employer diversion tactics - contract renewal fiasco
Two Part Embry Test: Subjective and Objective
Lucy v. Zehmer- OTMA
Drunk farm contract
It’s the outward objective intent of the offeror that matters, not the internal secret intent
Lefkowitz v. Great Minneapolis Supply Store- OTMA
$1 Fur Coat Add
An ad is a binding offer when it is
- clear
- definite
- explicit
- nothing open for negotiation
Leonard v. Pepsico - OTMA
Pepsi points for a plane
Generally, and ad is not a binding offer (See Lefkowitz for exception).
An advertisement is not a binding offer if it’s a “mere” advertisement OR clearly in jest.
Nebraska Seed v. Harsh - Invitational Talk
A farmer’s letter to a seed company
Acceptance of an invitation to bargain does not create a binding contract
Restatement 26. Preliminary Negotiations
There is not an offer if the person whom the willingness to assent is addressed to knows or has reason to know that the person making it is not making a bargain without further manifestation of assent.
Restatement 29. To whom an offer is addressed
An offer gives power of acceptance to
- a specified person
- a specified group of people/class of people
- anyone/everyone who makes/renders a promised/performance
Restatement 33. Certainty
- A manifestation of intent is not a contract unless it states the terms with a reasonable certainty
- Reasonable certainty means there is a sufficient basis to determine breach and remedies
- If one or more terms are left open or unclear, this may signal that the manifestation of intention is not an offer or acceptance
Restatement § 27. Existence of K Where Written Memorial is Contemplated
If a manifestation of assent is sufficient to conclude a contract, it can constitute one even if the parties also manifest an intention to prepare and adopt a written memorial thereof…
…but circumstances may show that the agreements are just preliminary negotiations.
Empro v. Ball-Co
A company buys another company’s assets and there is a letter of intent
A precontractual agreement is only a binding contract when both parties objectively manifest their intentions to be bound by it.
Too many “subject to’s” can show you don’t have the intent to be bound.
