Creating a Contract: Acceptances Chapter 11
battle of the forms
- a timely expression of acceptance creates a contract even if it includes terms that are different from those stated in the offer or states additional terms on points the offer did not address - only exception to this rule occurs when the attempted acceptance is expressly conditional on the offeror's agreement to the terms of the acceptance - name of UCC rule which is an exception to the "mirror image" rule
authorized means
- an acceptance is effective when dispatched if the offeree uses this mean of communication - stipulated means
stipulation
- conditions and details within a contract, agreed by both parties - time, manner, and place
trade usage
- impliedly authorizes a given means of acceptance - if both parties are members to a trade in which acceptances are customarily made by a particular means of communication, the courts assume the offeree is impliedly authorized to accept by that means unless the offer indicates the contrary
silence as acceptance
- law generally requires some affirmative indication of assent from offerees before it binds them to the terms of an offer - means that an offeror is not allowed to word his or her offer so that the offeree must act to avoid being bound to a contract
nonauthorized means
- not effective until the acceptance is actually received by the offeror
accepting offer for unilateral contract
- offeree must perform the requested act or make the requested promise
original offeree
- only person with the legal power to accept an offer and create a contract
accepting offer for bilateral contract
- promise for a promise - offeree must make the promise requested in the offer
shipment
- seller's action which indicates acceptance of offer - sellers who accept by performing, must notify the buyer of their acceptance within a reasonable time - buyers who have not received such notice may treat the offer as having "lapsed" before acceptance and may contract with another seller
present intent
- type of intent needed for valid acceptance
When is Acceptance Communicated?
1. In most instances, the offeror may revoke the offer any time before acceptance. 2. As a general rule, an acceptance is effective when dispatched if dispatched by authorized means
Nita sent a letter to Amber on November 9 in which she offered Amber a job as a secretary. Amber immediately sent a letter to Nita on November 9 accepting Nita's offer. Meanwhile, Nita had a change of heart and on November 10 sent Amber a letter stating that the job offer was revoked. Amber received Nita's letter on November 10, and Nita received Amber's letter on November 11. What result?
A contract between Nita and Amber was formed on November 9.
What is an Acceptance?
An acceptance is an expression of present intent to enter into a bargain based on the terms of an offer.
Requires present intent to contract by the offeree and may be express or implied.
An offer must be construed as a whole, and an acceptance must meet all conditions of the offer.
Farmer Hicks had been selling part of his green bean crop to Frosty King Frozen Foods Co. for five years. Their usual course of dealing was for Hicks to deliver the green beans to Frosty King, which would inspect the beans and notify Hicks within a day or two if it did not want them. Otherwise, Frosty King would send Hicks a check for the beans at the end of the month. One day Hicks delivered green beans to Frosty King as usual. Frosty King kept the beans for a month and said nothing. Four weeks later, Frosty King notified Hicks that it did not want the beans. What result?
Because of the parties' prior dealings, Frosty King's failure to respond constituted acceptance, and a legally binding contract resulted.
Cyber-Contracts
Browse-Wrap Contracts The terms of browse-wrap contracts must be reasonable and conspicuous to be enforced.
John orally offered to sell Shirley his car for $350.00. He did not stipulate manner of acceptance. Shirley may accept the offer:
By any reasonable means.
Acceptance by Shipment
Either promise to ship or shipment constitutes acceptance unless otherwise agreed.
The UCC "Battle of the Forms" provision:
Provides a contract can be formed even though terms of the acceptance differ from terms of the offer.
Battle of the Forms
The Code changes the common law rule by saying that a timely expression of acceptance creates a contract even if it includes terms that are different from those stated in the offer or states additional terms on point the offer did not address
Acceptance of Unilateral Contract Offers
The offeree may expressly or impliedly accept the offer of a bilateral contract. Example: Teter v. Glass Onion, Inc.: There was no enforceable contract and Teter could refuse to sell his artwork to Glass Onion, Inc. (GOI). The individual artwork purchases made by GOI do not show an ongoing agreement for Teter to sell the artwork to GOI on the same terms as he sold to SSG.
Accepting a Bilateral Contract
The offeree may expressly or impliedly accept the offer of a bilateral contract. Example: Teter v. Glass Onion, Inc.: There was no enforceable contract and Teter could refuse to sell his artwork to Glass Onion, Inc. (GOI). The individual artwork purchases made by GOI do not show an ongoing agreement for Teter to sell the artwork to GOI on the same terms as he sold to SSG.
Manner of Communication
The offeror may stipulate terms of acceptance. The offeree must fully comply with the offeror's specifications.
John orally offered to sell Shirley his car for $350.00. He stipulated that if he didn't hear from her in 5 days, he would assume they had a deal. Shirley didn't respond and John sued to enforce the contract. Under these circumstances:
There is no contract because silence can never constitute acceptance, even though custom and prior dealing between the parties might indicate otherwise.
Sam and Dave entered into an oral contract for the sale of goods; however, Sam said "I want to wait to see how this looks in writing before I sign off on it." Later, Sam refused to sign the written contract. Is there an enforceable contract between the parties?
There is no contract because the parties intended there would be no agreement unless reduced to writing.
A counter-offer is a new offer.
True
A writing setting forth the terms of the acceptance is required to effectively accept an offer under common law.
True
As a general rule, acceptance is effective only when received by the offeror if the offeree has used an authorized means of communication.
True
If the offeree has dispatched inconsistent responses to the offer by sending both a rejection and an acceptance, whichever response reaches the offeror first will determine whether a contract is created.
True
If the parties reach a verbal agreement with the understanding that they will later put their agreement into writing, a court may find that the verbal agreement is enforceable even if one of the parties later refuses to sign the writing.
True
Under the UCC, the parties may enter in a binding contract even though the terms of the acceptance differ from the terms of the offer.
True
Authorized Means of Communication
Under modern law, authorized means includes any reasonable means.
reasonable means of communication
any means deemed reasonable by the court in light of the circumstances; the acceptance is effective when dispatched
acceptance
assenting expressly or impliedly to the offeror, on the offorors terms
Browse-Wrap contracts
often accompanying the sale of software, these electronic contracts come in the form of click-on agreements where a user assents to contractual terms by clicking on a button that reads "I agree"
option contracts
paying someone to keep an offer open; if the offer comes through, it becomes a down payment
authorized means
the means by which the offeror says is not appropriate to accept
bilateral
the offer must be complete; the offeree has to say yes or no to accepting the contract; yes = contract sent right away; not yes = rejection
stipulate
to specify in the offer the time, place, or method of communicating acceptance
mirror image rule
under common law, contracts must look the same between both parties
Communication of Acceptance
Acceptance of a unilateral contract is communicated to the offeror when the offeree performs the requested act. Acceptance of a bilateral contract is complete when the offeree communicates acceptance to the offeror.
A offered to sell B a plot of land. The offer was complete and certain as to all material terms. The offer stated that a telegraphed acceptance was required. Within a reasonable time, B telephoned A to accept. Which of the following is a true statement?
B has not accepted and there is no contract.
"The Battle of the Forms Provision:" The UCC adopts a rule that changes the common law rule that an acceptance must "mirror the terms" of the offer.
Example: Trademark Properties, Inc. v. A&E Television Networks: A statement made by an A&E executive constitutes an acceptance because assent can be proven through an act or conduct that shows the intention to contract. Examples: Chateau des Charmes Wines v. Sabate USA: The court found that the forum selection clauses on Sabate France's invoices are not part of the contract. The CISG states that any "additional or different terms relating to the settlement of disputes are considered to alter the terms of the offer materially." Chateau did not assent to the clauses in the invoices.
An attempt to accept by someone other than the offeree is treated as an offer.
False
An offeror cannot stipulate the manner of acceptance under the U.C.C..
False
If the offeree does not use the means of acceptance stipulated by the offeror, his acceptance will never be effective.
False
In most circumstances, silence can constitute acceptance of an offer
False
Dixie offered to work for Hans as an accountant at a salary of $27,000 per year. Hans told Fred about Dixie's offer. Fred then called Dixie and said that he wanted to hire her to work for him.
Fred's phone call to Dixie was an offer.
Nonauthorized Means of Communication
If an authorized means of acceptance is present, any attempt by the offeree to accept by a nonauthorized means is not effective until the offeror actually receives the acceptance.
Silence as Acceptance
In general, silence does not constitute acceptance; however, previous dealing by the parties or trade custom may change this rule. Example: Lambert v. Don M. Barron Contractor, Inc.: The court found that Barron's silence did not act as acceptance to terms of Lambert's offer for consulting services.
John orally offered to sell Shirley his car for $350.00. He stipulated that the manner of acceptance must be in writing. Shirley may accept the offer
Only in writing.
Who Can Accept the Offer?
Only the original offeree has the power to accept an offer and create a contract.
Seabrook negotiated an oral agreement with Vanderhorst. The two worked out all material terms of their agreement and shook hands on the deal, Vanderhorst stating that she would have her lawyer put the agreement in writing at her earliest opportunity. The next day, Vanderhorst's lawyer drafted a written contract that repeated the terms of the parties' oral agreement. Vanderhorst signed the written contract and sent it to Seabrook, but Seabrook refused to sign it, saying that she had decided to deal with someone else instead. Vanderhorst sues Seabrook for breach of contract. (Assume that this contract was not required by law to be in writing.) What result?
Vanderhorst will win because the parties intended to form a contract at the moment they agreed on material terms and shook hands.
Acceptance When a Writing is Anticipated
Whether or not an agreement exists prior to a written agreement is based on the intention of the parties Example: Sprout v. Bd. Of Educ.: The court found that an agreement had been reached between Sprout and the Board of Education but not a binding contract. When it is shown that the parties intend to reduce a contract to writing, this circumstance creates a presumption that no final contract has been entered into.
nonauthorized means
a mode of acceptance that is not effective until the acceptance is actually received by the offeror
dispatched
an effective more of acceptance that means "delivered to the communicating agency"