Mutual Assent

Offer : Manifestation of willingness to bargain in such a way that

it invites assent and a reasonable understanding that offeror will
follow through if there is acceptance
Would a reasonable offeree construe this to be an offer?

Offers are explicit, definite, reasonably certain, and invite acceptance from
specified persons.
Ads not usually offers: they are solicitations or invitations for offers
Exception: if advertisement is “clear, definite and explicit and leaves nothing open for
negotiation.”

Preliminary Negotiations
Manifestation of willingness to enter into a bargain is not an offer if the person to
whom it is addressed knows or has reason to know that the person making it does not
intend to conclude a bargain until he has made a further manifestation of assent.

Reason to know: depends not only on the words of other conduct, but also on the
circumstances, including previous communications of the parties and the usages of
their community or line of business (OBJECTIVE TEST)

Letters of Intent (Agreements in Principle)

General Rule: letters of intent usually outline preliminary negotiations and are
generally not enforceable.

Look at conduct of parties + circumstances to determine if there is a contract

If there is no understanding that a signed writing is necessary before parties are

bound and the parties have agreed upon all substantial terms, then an informal
agreement can be binding, even if the parties contemplate a later formal document.

UCC 2-204
Good defined under UCC: thing, moveable, and existing and identifiable at the time of
the contract.

One or more open terms is not fatal for contract formation

Price should still be reasonable, which will be determined by fair market value.

Contract for the sale of goods “may be made in any manner sufficient to show
agreement”

UCC 2-206
Offer construed as inviting acceptance in any manner

Order to buy goods for prompt shipment construed as inviting acceptance by a prompt
shipment of conforming or non conforming goods.

Essential Terms
Subject Matter

Price

Quantity

Payment Terms

Quality

UCC DOES NOT HAVE ESSENTIAL TERMS because of gap fillers. However, quantity can
still be essential (except in the case of requirement or output contracts)

Acceptance
Manifestation of assent to the terms thereof made by the offeree in a manner
invited or required by the offer.
Intent determined objectively – the question is whether a reasonable person in the
offeror’s position would have understood the manifestation as an acceptance.

Definite, clear, unequivocal, without imposing additional conditions of the offer

or adding limitations.
Exceptions:

Acceptance may still be valid even if conditional language included if such language
is clearly independent of the condition (qualified acceptance vs. absolute acceptance)

Acceptances w/ dependent conditions are counteroffers that must in turn be

accepted

May have acceptances w/ independent conditions – conditions not essential to the

intent to accept.
Mirror Image Rule
UCC DOES NOT FOLLOW MIRROR IMAGE RULE – because contract is still formed even
if the offeree ships non-conforming good

Acceptance must be in the same terms of the offer

In common law, acceptance with different terms is a counter offer

Relates mostly now to material changes and tolerates minor discrepancies.

Dependent v. Independent conditions

An acceptance may be clear and unequivocal if there are no conditions or if it is clear

that the acceptance is independent of the additional suggested terms.

§61 An acceptance which changes or ads terms to the original offer is not invalidated
unless the acceptance is dependent on the offeror agreeing to those new or added
terms.

Termination
Rejection

Counter-offer

Revocation by offeror

Death or incapacity of either party

Non-occurrence of any condition of acceptance

Lapse of time

§61 Acceptance which requires change of terms

an acceptance which changes or adds terms to the original offer is not invalidated
unless the acceptance is dependant on the offeror agreeing to those new or added
terms

acceptance must be unequivocal;

however, inclusion of words requesting a modification are not fatal to acceptance

unless entire deal hinges on offeror accepting those new terms.

Mailbox Rule
As soon as the answering letter is mailed, the contract is concluded. Though one party
does not know of the acceptance, the manifestation thereof is put in the proper way
of reaching him.
Acceptance is effective as soon as you send something (at dispatch)

Changing defeault rule

Offeror is always free to change the default mailbox rule and insist on acceptance being
effective only upon actual recipt of the acceptance

No revocation after mailing

Offeror cannot revoke the offer after the offeree has mailed acceptance;

Contract is formed the moment the acceptance goes in the mailbox

Lost or delayed mail

Still a contract, but duties to perform may be affected.

Recapturing acceptance: Contract is formed at time of mailing;

Practical point: How can an offeror enforce an acceptance that he does not know
about?

Can withdraw acceptance until it is received

§30
(1) an offer may invite or require acceptance to be made by an affirmative answer
in words, or by performing or refraining from performing a specified act, or
may empower the offeree to make a selection of terms in his acceptance

(2) unless otherwise indicated by the language or the circumstances, an offer

invites acceptance in any manner and by any medium reasonable in the
circumstances.

§32
In case of doubt an offer is interpreted as inviting the offeree to accept either
by promising what the offer requests or by rendering the performance as the
offeree chooses.

Offer not puffery if intent there and conditions could be met through
acceptance by performance.
Notice of acceptance not required because acceptance by performance
and other elements met.
Acceptance by Performance: Unilateral contracts
Must perform acts specified in contract
Acceptance by Promise: Bilateral contract
UCC v. Restatement
UCC does not distinguish between bilateral and unilateral offers.

Basically two ways to accept offer to buy goods – either promise or shipment, so the
distinction becomes irrelevant

Silence as acceptance:
Where offeree takes benefit of offer with reasonable opportunity to reject them and
reason to know they were offered w/ the expectation of compensation

Where prior course of dealings plus retention of the goods may create a manifestation
of intent

Where conduct which imports acceptance or assent is acceptance no matter

subjective state of mind

Offeror gives offeree reason to believe acceptance may be manifested by silence and
where oferee intends to accept offer and shows that by remaining silent

OBJECTIVE conduct, not secret intentions govern.

Silence alone can be deemed to be acceptance under particular circumstances. Usually

it cannot though.

Prior course of dealings where conduct objectively shows acceptance.

Retention of the goods

Consideration
Pre-existing duty rule
Liability and Consideration and Foreseeability

If the damages are foreseeable at the time of the contract, then you are liable for
those damages

You are liable for a contract when you breach it

When you have a contract you need to have enforceable promises

If you don’t have consideration, we don’t have a contract that is enforceable

Rule of Modification: modification requires consideration

Cannot force the other party in a contract to increase compensation for doing what
you already once promised to do.

Just performing what you already agreed to do is not consideration for the new
contract.

So in order to modify that contract, you need additional consideration under common
law.

Promissory Estoppel
Applies when there is not an enforceable contract but the promisee has
incurred damages in reliance on the promise of the promisor (damages are
limited to the reliance damages)
(1) promise

(2) prove that promise is a type that the promisor can forsee some action or
forbearance by the promisee

(3) prove that the promisee acted as was expected by the promisor (acted in
reasonable reliance on the promise)

(4) Prove the only way to prevent injustice is to enforce the promise

Remedy is typically limited to the damages incurred by the promisee in reliance

on the promise.