BMGT380 - Business Law Midterm #2 - Chapter 11

ACCEPTANCE

a manifestation of assent (agreement) by the offeree to the terms of the offer in the manner invited or required by the offe

IMPLIEDLY AUTHORIZED

a manner of communication used by the offeror in making the offer or a manner of communication common in parties' trade/business

Operation of Mailbox Rule Under [UCC/MODERN

court often apply the mailbox rule liberally, holding that an offer which doesn't indicate otherwise is considered to authorize communication of acceptance by any reasonable means of communication, provided that the acceptance is dispatched in a proper fashion and within a reasonable time frame

COMMON LAW - "MIRROR IMAGE"

requires that the acceptance be the "mirror image" of the offer currently judges hold that immaterial variances between an offer and alleged acceptance = a contract only material variances in the acceptance constitute a rejection of the offer *more information in (2) of factors to see if there's been an acceptance

Special Acceptance Problem Areas

1. Acceptance in Unilateral Contracts 2. Acceptance in Bilateral Contracts 3. Silence as Acceptance 4. Acceptance When a Writing is Anticipated 5. Acceptance of Ambiguous Offers

3 Factors to See if There's Been Acceptance

1. Did the offeree intend to enter into the contract? 2. Did the Offeree accept on terms proposed by the offeror? 3. Did the offeree communicate his acceptance to the offeror?

[UCC] 4 Factors in Figuring Out if the Way Something Was Accepted is Reasonable

1. Speed and reliability of means of acceptance 2. Whether or not the subject matter of the contract is subject to rapid price fluctuations 3. Custom and practice in the industry regarding method of acceptance 4. Whether there has been prior dealings between the parties

EXPRESSLY ACCEPTANCE

Ex: Alanna sends Tammy a detailed offer for the purchase of Tammy's business Tammy sends Alanna a letter saying "I accept your offer" Tammy has expressly accepted

What if Acceptance is Unreasonable or Improper in Some Way?

Ex: mail your acceptance and have wrong address acceptance is effective if the envelope shows up within a reasonable time, but if it doesn't show up in a reasonable time then it is ineffective

Does Offer Stipulate a Particular Means of Acceptance?

NO- did the offeree use an authorized (traditional contract law) or reasonable (modern contract law) means of communicating acceptance? YES- contract formed upon dispatch NO- Common Law- contract formed upon receipt UCC- contract formed upon dispatch YES- did the offeree accept by the stipulated means? YES- contract formed upon dispatch NO- no contract

Rules for Additional Items of Contracts Under UCC

additional terms contained in acceptance form are treated as "proposals for addition to the contract" if the parties are BOTH merchants ... the additional terms became part of the contract UNLESS: 1. Offer expressly limited acceptance to its own terms 2. New terms would materially alter offer 3. Offeror gives notice of objection to new tweets within a reasonable time after receiving the acceptance

CODE'S GAP-FILLING RULES

allows courts to fill contract terms on matters of price, quantity, delivery, and time for payment if term was left out b/c parties were unable to reach an agreement --> absence of intent

MAILBOX RULE [Under 3 factors of acceptance #3]

an acceptance is effective when sent, even if never received or lost; followed by both common law and the UCC Common law- acceptances effective upon dispatch when used manner of communication expressly or impliedly authorized but unauthorized methods not effective until received UCC- if no particular method specified, offer invites acceptance by any reasonable means of communication may be used within a reasonable time and unreasonable method OK if during time frame

EXPRESSLY AUTHORIZED

any manner of communication suggested by the offeror

(3) DID THE OFFEREE COMMUNICATE HIS ACCEPTANCE TO THE OFFEROR

bilateral contract- communicate acceptance of offer by making the promise requested by the offeror unilateral contract- communicate acceptance of an offer by performing the requested act

Factors Used to Determine the Validity of Acceptance

clear expression of the present intent to accept the offer, or to enter into a contract

(2) ACCEPTANCE IN BILATERAL CONTRACTS

exchange of a promise for a promise to accept a bilateral contract, offeree must make promise requested by offeror 2 types of bilateral acceptance: 1. EXPRESSLY ACCEPTANCE 2. IMPLIED ACCEPTANCE

(3) SILENCE AS ACCEPTANCE

general rule that an offeree's silence is not an acceptance offeror cannot impose on the offeree a duty to respond to the offer offeree's silence can indicate an intent to accept: Ex: If Caitlin and Katie has dealt with each other on number occasions and trust was there, Caitlin's silent retention of the goods for a week would probably constitute an acceptance offeree's silence can also operate as acceptance if offeror has indicated it will if accept performance knowing what offeror expects in return, impliedly accepted offeror's terms Ex: paving company offers work on development by a housing company that fails to respond to offer, but allows paving company to do the work - housing company is bound by the offer

(4) ACCEPTANCE WHEN A WRITING IS ANTICIPATED

good to have a contract down in writing b/c provides written evidence of terms of agreement in case disputes sometimes gov. requires written if dispute arises before a written contract ... a party who now wants out may argue parties did not intend to be bound unless both parties signed the writing --> (clear expression of intent by parties during negotiation prevents formation of a contract until both signed) --> (in absence of clear expression, court will as whether a reasonable person familiar with circumstances of negotiation would conclude parties intentions to be bound only when formal agreement was signed)

(2) DID THE OFFEREE ACCEPT ON TERMS PROPOSED BY THE OFFEROR

if offer calls for performance, performance is accepted Common Law Rule = mirror image --> If offeree tried to change/add terms = counter-offer --> More recent rules relaxes mirror image rule ------> Counter-offer only if new terms are MATERIAL ------> Can do inquiry regarding terms (asking without rejecting) ------> Grumbling acceptance (accepts while complaining) UCC Rule = battle of forms --> Most basic situation between merchants --> New terms become contract UNLESS: ------> 1. Offer expressly limits acceptance to its own terms ------> 2. New terms materially change offer ------> 3. Offeror object new terms within reasonable time after receiving acceptance if anyone of these occur, there IS a contract but new terms are left out STANDARD BENT CASE

STIPULATED MEANS OF COMMUNICATION

offer can specify means of acceptance, if the offer does this, then the offeree is restricted to the specific manner of acceptance specified by the offer

IMPLIED ACCEPTANCE

offerees who act in a manner that is inconsistent with the offeror's ownership of offered property are commonly help to have accepted the offeror's terms Ex: if Caitlin leaves 10 bushels of corn with Katie, the owner of the grocery store (Caitlin) saying "look this corn over, if you wait it, sell it for $5 a bushel" if Katie sells it = she impliedly accepted Caitlin's offer

(5) ACCEPTANCE OF AMBIGUOUS OFFERS

often an offer is unclear about which form of acceptance is necessary to create a contract (bi/uni-lateral) --> Offer may be accepted in any matter reasonable in light of surrounding circumstances --> Either a promise to perform or performance, if reasonable creates a contract ACCEPTANCE BY SHIPMENT

ACCEPTANCE BY SHIPMENT [Special Acceptance Problem Areas #5]

order requesting promo or current shipment of goods may be accepted either by promo promise to ship or by a prompt or current shipment of goods [UCC] NON-CONFORMING GOODS = goods different from what buyer ordered [UCC] says promo shipment of either confirming or nonconforming goods = acceptance of an order --> Protects buyers b/c sellers who ship wrong goods have also accepted their offers and breached contract NO CONTRACT if seller notifies buyer within a reasonable time that shipment of nonconforming goods is intended as an accommodation --> Shipment is merely a counteroffer that the buy can accept or reject

UCC - "BATTLE OF THE FORMS"

standards for acceptance on offeror's terms = "Battle of the Forms" Battle of Forms = most modern commercial transaction carried out using preprinted form contracts this rule not strictly applied, instead read only crucial provisions concerning the goods orders, price, and delivery date --> if terms are agreeable = believe they have a contract --> If disputes arose before performance, court compares forms and says no contract --> If disputes arise after performance begun, court holds offeror has impliedly accepted offer's counteroffer and bound by terms Both above terms = unsatisfactory so created BATTLE OF THE FORMS = controversial --> Changed mirror image rule for contracts involving sale of goods --> Allows formation of a contract even when some variance between terms of offer and acceptance --> Can make possible for a term in acceptance to become a part of contract --> In Article 2-207(1) ... A definite and timely expression of acceptance = a contract, even if includes terms different than those stated in the offer or if states additional terms that offer didn't address

(1) ACCEPTANCE IN UNILATERAL CONTRACTS

to accept an offer to enter such a contract, the offeree must perform the requested act

Operation of Mailbox Rule [COMMON LAW]

traditionally the mailbox rule under common law makes properly addressed and dispatched acceptances effective upon dispatch when the offeree uses the manner of communication: 1. Used by the offeror 2. Authorized by the offeror 3. Consistent with past practices between the parties 4. Common in the trade EXPRESSLY OR IMPLIEDLY AUTHORIZED

(1) DID THE OFFEREE INTEND TO ENTER INTO THE CONTRACT

was there a present intent to enter into the contract? look at what the offeree said and did rather than what they secretly intended