Duration of the power of acceptance

Counter-Offers (r.39)

(1) A counter-offer is an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer. (2) An offeree's power of acceptance is *terminated* by his making of a counter-offer, UNLESS the offeror has manifested a contrary intention or unless the counter-offer manifests a contrary intention of the offeree. ----------------- a. Counter-offer as rejection. It is often said that a counter-offer is a rejection, and it does have the same effect in terminating the offeree's power of acceptance. But in other respects a counter-offer differs from a rejection. A counter-offer must be capable of being accepted; it carries negotiations on rather than breaking them off. The termination of the power of acceptance by a counter-offer merely carries out the usual understanding of bargainers that one proposal is dropped when another is taken under consideration; if alternative proposals are to be under consideration at the same time, warning is expected. Phillips v. Moore (late acceptance = counteroffer Original offeror can accept → silence can act as acceptance) , R.69 Illustration: 1. A offers B to sell him a parcel of land for $5,000, stating that the offer will remain open for thirty days. B replies, "I will pay $4,800 for the parcel," and on A's declining that, B writes, within the thirty day period, "I accept your offer to sell for $5,000." There is no contract unless A's offer was itself a contract (see § 37), or unless A's reply to the counter-offer manifested an intention to renew his original offer. b. Qualified acceptance, inquiry or separate offer. A common type of counter-offer is the qualified or conditional acceptance, which purports to accept the original offer but makes acceptance expressly conditional on assent to additional or different terms. See § 59. Such a counter-offer must be distinguished from an unqualified acceptance which is accompanied by a proposal for modification of the agreement or for a separate agreement. A mere inquiry regarding the possibility of different terms, a request for a better offer, or a comment upon the terms of the offer, is ordinarily not a counter-offer. Such responses to an offer may be too tentative or indefinite to be offers of any kind; or they may deal with new matters rather than a substitution for the original offer; or their language may manifest an intention to keep the original offer under consideration. Illustration: 2. A makes the same offer to B as that stated in Illustration 1, and B replies, "Won't you take less?" A answers, "No." An acceptance thereafter by B within the thirty-day period is effective. B's inquiry was not a counter-offer, and A's original offer stands. c. Contrary statement of offeror or offeree. An offeror may state in his offer that it shall continue for a stated time in any event and that in the meanwhile he will be glad to receive counter-offers. Likewise an offeree may state that he is holding the offer under advisement, but that if the offeror desires to close a bargain at once the offeree makes a specific counter-offer. Such an answer will not extend the time that the original offer remains open, but will not cut that time short. Compare § 38. Illustration: 3. A makes the same offer to B as that stated in Illustration 1. B replies, "I am keeping your offer under advisement, but if you wish to close the matter at once I will give you $4,800." A does not reply, and within the thirty-day period B accepts the original offer. B's acceptance is effective.

Promise = offer Acceptance = act or forbearance to act

Unilateral K =

Revocation of general offer

Where an offer is made by advertisement in a newspaper or other general notification to the public or to a number of persons whose identity is unknown to the offeror, the offeree's power of acceptance is terminated when a notice of termination is given publicity by advertisement or other general notification equal to that given to the offer and no better means of notification is reasonably available. Problem 24: Substantially equal publicity rule → must use same or substantially similar channels of communication as published award, to revoke *Illustrations:* 1. A, a newspaper, publishes an offer of prizes to the persons who procure the largest number of subscriptions as evidenced by cash or checks received by a specified time. B completes and mails an entry blank giving his name and address, which is received by A. Thereafter, during the contest, A publishes a notice that personal checks will not be counted; B does not see the notice. Unless the original offer provided otherwise, B is not bound by the later notice, since A could have given B personal notice. 2. The United States Government publishes an offer of reward for the arrest of a named fugitive. Seven months later the President publishes a proclamation revoking the offer, which is given the same publicity as the offer. Five months after the proclamation, A, who has been in Italy continuously and who learned indirectly of the offer but not of the revocation, arrests the fugitive in Italy. There is no contract

Lapse of Time (r.41)

(1) An offeree's power of acceptance is terminated at the time specified in the offer ,OR, *if no time is specified, at the end of a reasonable time.* (2) What is a reasonable time is a question of fact, depending on all the circumstances existing when the offer and attempted acceptance are made. OVERALL PRESUMPTION = Termination of face-to-face/ phone convos, as soon as terminated → offer = terminated (obvi if definite period of time set → that controls --> Loring v. City of Boston

Rejection (r.38)

(1) An offeree's power of acceptance is terminated by his rejection of the offer, UNLESS the offeror has manifested a contrary intention. (2) A manifestation of intention NOT to accept an offer is a rejection UNLESS the offeree manifests an intention to take it under further advisement. --------------- a. The probability of reliance. The legal consequences of a rejection rest on its probable effect on the offeror. An offeror commonly takes steps to prepare for performance in the event that the offer is accepted. If the offeree states in effect that he declines to accept the offer, it is highly probable that the offeror will change his plans in reliance on the statement. The reliance is likely to take such negative forms as failure to prepare or failure to send a notice of revocation, and hence is likely to be difficult or impossible to prove. To protect the offeror in such reliance, the power of acceptance is terminated without proof of reliance. This rule also protects the offeree in accordance with his manifested intention that his subsequent conduct is not to be understood as an acceptance. Illustrations: 1. A makes an offer to B and adds: "This offer will remain open for a week." B rejects the offer the following day, but later in the week purports to accept it. There is no contract unless the offer was itself a contract. B's purported acceptance is itself a new offer. 2. A makes an offer to sell water rights to B, and states, "You may accept this offer by applying to the appropriate authority for a permit to use the water." B rejects the offer, obtains water rights elsewhere, and later applies for the permit contemplated by the offer. There is no contract. Even if A's offer was a binding option, B has not exercised it. b. Contrary statement of offeror or offeree. The rule of this Section is designed to give effect to the intentions of the parties, and a manifestation of intention on the part of either that the offeree's power of acceptance is to continue is effective. Thus if the offeree states that he rejects the offer for the present but will reconsider it at a future time, there is no basis for a change of position by the offeror in reliance on a rejection, and under Subsection (2) there is no rejection. Similarly a statement in the offer that it will continue in effect despite a rejection is effective, and a similar statement after a rejection makes a new offer.

Option K created by part performance (r.45)

(1) Where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance, an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it. (2) The offeror's duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer. Wolf/pigs ex (Problem 17, pg. 99): - we have a high preference for bilateral ks BC: w/ unilateral ks... until offeree does act = very vulnerable Law tries to get around it like so (2 options): 1. Beginning of acting = promise to finish acting - Protects the offeree BUT Also binds them (binds both parties @ an earlier moment) 2. *Beginning to act = creates an option that allows that party to finish* - Binds offeror for a reasonable amount of time to allow offeree to accept Outcome of case: K was unilateral to begin with, but then once party began performance --> became bilateral

Revocation by Communication from Offeror Received by Offeree (R.42)

An offeree's power of acceptance is terminated when the offeree receives from the offeror a manifestation of an intention not to enter into the proposed contract. Illustration: 1. A makes a written offer to B to sell him a piece of land. The offer states that it will remain open for thirty days and is not subject to countermand. The next day A orally informs B that the offer is terminated. B's power of acceptance is terminated unless the offer is an option K ------------------ c. Purported revocation after acceptance. Once the offeree has exercised his power to create a contract by accepting the offer, a purported revocation is ineffective as such. Where an acceptance by mail is effective on dispatch, for example, it is not deprived of effect by a revocation subsequently received by the offeree d. What constitutes revocation. The word "revoke" is not essential to a revocation. Any clear manifestation of unwillingness to enter into the proposed bargain is sufficient. Thus a statement that property offered for sale has been otherwise disposed of is a revocation. *But equivocal language MAY OR MAY NOT be sufficient.* = a q of fact Illustrations: 4. A makes an offer to buy goods from B, and later requests B not to deliver the goods until A is in a better condition to handle them. The request does not revoke the offer. 5. A makes an offer to B, and later says to B, "Well, I don't know if we are ready. We have not decided, we might not want to go through with it." The offer is revoked. --> Problem 18 (pg. 100 in book)

rejection OR counter-offer by the offeree, lapse of time, revocation by the offeror, death or incapacity of either party

An offeree's power of acceptance may be terminated by:

Methods of Termination of the Power of Acceptance (r.36)

An offeree's power of acceptance may be terminated by: 1. rejection OR counter-offer by the offeree 2. lapse of time 3. revocation by the offeror 4. death or incapacity of either party

Petterson v. Pattberg (revocation by offeror)

D owned bond (from mortgage on real estate) → D wrote P offering for him to pay it off all at once P showed up to tender payment as specified D told him already sold mortgage + refused to take money RULE: when 2 parties enter into a unilateral contract, the offeror is legally entitled to revocation of rights before performance is completed. (An offering party has the right to name the precise act performance of which would convert his offer into a binding promise. Whatever the act may be until it is performed the offer must be revocable)

Dickinson v. Dodds (revocation by offeror)

D signed + delivered memo to P stating offer to sell prop + to leave the offer open until a specified date/time Heard he was trying to sell Tried to accept after D already K'd w/ some1 else An offer (to sell prop.) may be withdrawn b4 acceptance w/o any formal notice to the person to whom the offer was made. It is sufficient if that person has actual knowledge that the person who made the offer has done some act inconsistent w/ the continuance of the offer, such as selling it to a 3rd person 43 (indirect revocation, definitely applicable here) RULE: there is a revocation of the offer AS SOON as the offeree has knowledge of the offeror's definite action that is inconsistent w/ an intention to enter into the K Indirect revocation = sufficient + Option K = nudum pactum, lacked consideration (if had put $ down for Option K → would've come out opposite way)

Time When Rejection or Counter-Offer Terminates the Power of Acceptance (r.50)

Rejection or counter-offer by mail or telegram does not terminate the power of acceptance until received by the offeror, but limits the power so that a letter or telegram of acceptance started after the sending of an otherwise effective rejection or counter-offer is only a counter-offer UNLESS the acceptance is received by the offeror BEFORE he receives the rejection or counter-offer. Illustration: 1. A makes B an offer by mail. B immediately after receiving the offer mails a letter of rejection. Within the time permitted by the offer B accepts. This acceptance creates a contract only if received before the rejection, or if the power of acceptance continues under §§ 37- 39.

promises in exchange for promises

Typical K =

Termination of Power of Acceptance Under an Option K (R.37)

generally, the power of acceptance under an option K is NOT terminated by rejection OR counter-offer by the offeree, by lapse of time, by revocation by the offeror, or by death or incapacity of the offeror UNLESS the reqs are met for the discharge of a contractual duty Counter-offer = rejection Can't be revived unless offeror makes new offer This = bc offeror may rely on the rejection HOWEVER: w/ option Ks the general rule = offer remains open regardless of rejection UNLESS → the offeror actually relies on the rejection (then offer would be terminated) Ex: if offeror offered to some1 else

Death or incapacity of the offeror or offeree (r.48)

power of ACCEPTANCE is terminated when the offeree or offeror dies / is deprived of legal capacity to enter into the proposed K = automatic termination of the offer (impossible to have meeting of minds @ SAME TIME after death) → true even if NO NOTICE comes to the offeree HYPO: Plan w/ continued offer + acceptance (a new K every couple months) No meeting of the minds for new K offer after death HOWEVER: IF instead: full-fledged K signed THEN one party dies → K = STILL VALID BC there WAS a meeting of the minds

Indirect Communication of Revocation (R. 43)

power of acceptance = terminated when 1. the OFFEROR takes definite action inconsistent w/ an intention to enter into a proposed K AND 2. the offeree acquires reliable info to that effect Case: Dickinson v. Dodds