Chapter 10 Mutual Assent
When is an acceptance effective?
***** As previously discussed, an offer, a revocation, a rejection, and a counteroffer are effective when they are received. ***** An acceptance, on the other hand, is generally effective upon dispatch. This is true unless the offer specifically provides otherwise, the offeree uses an unauthorized means of communication, or the acceptance follows a prior rejection.
What are the five exceptions to revocation?
1. Option Contract 2. Firm Offer 3. Statutory Irrevocability 4. Irrevocable Offer of Unilateral Contract 5. Promissory Estoppel
What are output and requirements contracts?
A buyer's agreement to purchase the entire output of a seller's factory for a stated period or a seller's agreement to supply a buyer with all his requirements for certain goods may appear to lack definiteness and mutuality of obligation. Such an agreement does not specify the exact quantity of goods; moreover, the seller may have some control over her output and the buyer over his requirements. Nonetheless, under the Code and the Restatement, such agreements are enforceable by the application of an objective standard based upon the good faith of both parties. Thus, a seller who operated her factory for eight hours a day before entering an output agreement cannot operate her factory twenty-four hours a day and insist that the buyer take all of the output. Nor can the buyer expand his business abnormally and insist that the seller still supply all of his requirements.
What are counteroffers in terms of offers?
A counteroffer is a counterproposal from the offeree to the offeror that indicates a willingness to contract but upon terms or conditions different from those contained in the offer. It is not an unequivocal acceptance of the original offer and, by indicating an unwillingness to agree to the terms of the offer, it operates as a rejection. It also operates as a new offer. -- For instance, assume that Jordan writes Chris a letter stating that he will sell to Chris a secondhand color television set for $300. Chris replies that she will pay Jordan $250 for the set. This is a counteroffer that, upon receipt by Jordan, terminates the original offer. Jordan may, if he wishes, accept the counteroffer and thereby create a contract for $250. If, on the other hand, Chris states in her reply that she wishes to consider the $300 offer but is willing to pay $250 at once for the set, she is making a counteroffer that does not terminate Jordan's original offer. In the first instance, after making the $250 counteroffer, Chris may not accept the $300 offer. In the second instance she may do so, as the manner in which she stated the counteroffer did not indicate an unwillingness to accept the original offer and Chris therefore did not terminate it. In addition, a mere inquiry about the possibility of obtaining different or new terms is not a counteroffer and does not terminate the offer.
What is a merchant defined as?
A merchant is defined as a person (1) who is a dealer in goods of a given kind, (2) who by his occupation holds himself out as having knowledge or skill peculiar to the goods or practices involved, or (3) who employs an agent or broker whom he holds out as having such knowledge or skill. Section 2-104.
What is promissory estoppel?
A noncontractual promise may be enforced when it is made under circumstances that should lead the promisor reasonably to expect that the promise will induce the promisee to take action in reliance on it. This doctrine has been used in some cases to prevent an offeror from revoking an offer prior to its acceptance. The Restatement provides the following rule: An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice. Restatement, Section 87(2). -- Thus, Ramanan Plumbing Co. submits a written offer for plumbing work to be used by Resolute Building Co. as part of Resolute's bid as a general contractor. Ramanan knows that Resolute is relying on Ramanan's bid, and in fact, Resolute submits Ramanan's name as the plumbing subcontractor in the bid. Ramanan's offer is irrevocable until Resolute has a reasonable opportunity to notify Ramanan that Resolute's bid has been accepted.
How does emotion play into intent?
A promise made under obvious excitement or emotional strain is not an offer. For example, Charlotte, after having her month-old Cadillac break down for the third time in two days, screams in disgust, "I will sell this car to anyone for $100!" Lisa hears Charlotte and hands her a one hundred-dollar bill. Under the circumstances, Charlotte's statement was not an offer if a reasonable person in Lisa's position would have recognized it merely as an overwrought, non-binding utterance. It is important to distinguish language that constitutes an offer from that which merely solicits or invites offers. Such proposals, although made in earnest, lack intent and are therefore not deemed offers. As a result, a purported acceptance does not bring about a contract but operates only as an offer to accept. These proposals include preliminary negotiations, advertisements, and auctions.
What is a variant acceptance?
A variant acceptance—one that contains terms different from or additional to those in the offer—receives distinctly different treatment under the common law and the Code.
Who can accept an offer, and what are some terms?
An acceptance can be made only by an offeree. Acceptance of an offer for a bilateral contract requires some overt act by which the offeree manifests his assent to the terms of the offer, such as speaking, sending a letter, or using other explicit or implicit communication to the offeror. If the offer is for a unilateral contract, the offeree may refrain from acting as requested or may signify acceptance through performance of the requested act with the intention of accepting. A late or defective acceptance does not create a contract. After the offer has expired, it cannot be validly accepted. A late or defective acceptance, however, does manifest the offeree's willingness to enter into a contract and therefore constitutes a new offer. To create a contract based upon this offer, the original offeror must accept the new offer by manifesting his assent. --- For example, if Joy publishes an offer of a reward to anyone who returns the diamond ring which she has lost (a unilateral contract offer) and Steven, with knowledge of the offer, finds and returns the ring to Joy, Steven has accepted the offer. If, however, Steven returns the ring to Joy but in doing so disclaims the reward and says that he does not accept the offer, there is no contract. Without the intention of accepting the offer, merely doing the act requested by the offeror is not sufficient to form a contract.
What is a variant acceptance when it comes to common law?
An acceptance must be positive and unequivocal. In that it may not change, add to, subtract from, or qualify in any way the provisions of the offer, it must be the mirror image of the offer. Any communication by the offeree that attempts to modify the offer is not an acceptance but is a counteroffer, which does not create a contract.
How do you deal with an acceptance following a prior rejection?
An acceptance sent after a prior rejection is not effective when sent by the offeree, but is only effective when and if the offeror receives it before he receives the rejection. Thus, when an acceptance follows a prior rejection, the first communication to be received by the offeror is the effective one. --- For example, Anna in New York sends by mail to Fritz in San Francisco an offer that is expressly stated to be open for ten days. On the fourth day, Fritz sends to Anna by mail a letter of rejection that is delivered on the morning of the seventh day. At noon on the fifth day, however, Fritz dispatches an overnight letter of acceptance that is received by Anna before the close of business on the sixth day. A contract was formed when Anna received Fritz's overnight letter of acceptance, as it was received before the letter of rejection.
What is an offer?
An offer is a definite proposal or undertaking made by one person to another that manifests a willingness to enter into a bargain. The person making the proposal is the offeror. The person to whom it is made is the offeree. Upon receipt, the offer confers on the offeree the power of acceptance, by which the offeree expresses her willingness to comply with the terms of the offer. The communication of an offer to an offeree does not of itself confer any rights or impose any duties on either of the parties. The offeror, by making his offer, simply confers upon the offeree the power to create a contract by accepting the offer. Until the offeree exercises this power, the outstanding offer creates neither rights nor liabilities.
What are the forms an offer may take?
An offer may take several forms: (1) It may propose a promise for a promise. (This is an offer to enter into a bilat- eral contract.) An example is an offer to sell and deliver goods in thirty days in return for the promise to pay a stipu- lated amount upon delivery of the goods. If the offeree accepts this offer, the resulting contract consists of the par- ties' mutual promises, each made in exchange for the other. (2) An offer may be a promise for an act. (This is an offer to enter into a unilateral contract.) A common example is an offer of a reward for certain information or for the return of lost property. The offeree can accept such an offer only by the performance of the act requested. (3) An offer may be in the form of an act for a promise. (This is an offer to enter into an "inverted" unilateral contract.) For example, Maria offers the stated price to a clerk in a theater ticket office and asks for a ticket for a certain performance. The clerk can accept this offer of an act only by delivery of the requested ticket, which amounts, in effect, to the theater owner's prom- ise to admit Maria to the designated performance.
What is lapse of time in relation to offers?
An offer remains open for the time period specified or, if no time is stated, for a reasonable period of time. Determining a "reasonable" period of time is a question of fact, depending on the nature of the contract proposed, the usages of business, and other circumstances of the case (including whether the offer was communicated by electronic means). Restatement, Section 41. For instance, an offer to sell a perishable good would be open for a far shorter time than an offer to sell undeveloped real estate.
What is rejection in terms of offers?
An offeree is at liberty to accept or reject the offer as he sees fit. If the offeree decides not to accept it, he is not required to reject it formally but may simply wait until the offer terminates by the lapse of time. Through a rejection of an offer, the offeree manifests his unwillingness to accept. A communicated rejection terminates the power of acceptance. From the effective moment of rejection, which is the receipt of the rejection by the offeror, the offeree may no longer accept the offer. Rejection by the offeree may consist of express language or may be implied from language or from conduct.
How does silence play into acceptance?
An offeree is generally under no legal duty to reply to an offer. Silence or inaction, therefore, does not indicate acceptance of the offer. By custom, usage, or course of dealing, however, silence or inaction by the offeree may operate as an acceptance. Thus, the silence or inaction of an offeree who fails to reply to an offer operates as an acceptance and causes a contract to be formed. Through previous dealings, the offeree has given the offeror reason to understand that the offeree will accept all offers unless the offeree sends notice to the contrary. --- Another example of silence operating as an acceptance occurs when the prospective member of a mail-order club agrees that his failure to return a notification card rejecting offered goods will constitute his acceptance of the club's offer to sell the goods. Furthermore, if an offeror sends unordered or unsolicited merchandise to a person stating that she may purchase the goods at a specified price and that the offer will be deemed to have been accepted unless the goods are returned within a stated period of time, the offer is one for an inverted unilateral contract (i.e., an act for a promise). This practice led to abuse, however, which has prompted the Federal government as well as most States to enact statutes which provide that in such cases, the offeree-recipient of the goods may keep them as a gift and is under no obligation either to return them or to pay for them.
What is an option contract?
An option is a contract by which the offeror is bound to hold open an offer for a specified period of time. It must comply with all of the requirements of a contract, including consideration being given to the offeror by the offeree.
What is another type of counteroffer?
Another common type of counteroffer is the conditional acceptance, which purports to accept the offer but expressly makes the acceptance conditional upon the offeror's assent to additional or different terms. Nonetheless, it is a counter- offer and terminates the original offer. The Code's treatment of acceptances containing terms that vary from the offer are discussed later in this chapter.
What is the general rule of acceptance?
Because acceptance manifests the offeree's assent to the offer, the offeree must communicate this acceptance to the offeror. This is the rule as to all offers to enter into bilateral contracts. In the case of an offer to enter into a unilateral contract, however, notice of acceptance to the offeror is usually not required. If, however, the offeree in a unilateral contract has reason to know that the offeror has no adequate means of learning of the performance with reasonable promptness and certainty, then the offeree must make reasonable efforts to notify the offeror of acceptance or lose the right to enforce the contract. Restatement, Section 54.
What is statutory irrevocability?
Certain offers, such as bids made to the State, municipality, or other government body for the construction of a building or some other public work, are made irrevocable by statute. Another example is pre-incorporation stock subscription agreements, which are irrevocable for a period of six months under many State incorporation statutes. See Section 6.20 of the Revised Model Business Corporation Act.
What is commercial reasonableness?
Commercial reasonableness is a standard determined in terms of the business judgment of reasonable persons familiar with the practices customary in the type of transaction involved and in terms of the facts and circumstances of the case. --- If the price is to be fixed otherwise than by agreement and is not so fixed through the fault of one of the parties, the other party has an option to treat the contract as canceled or to fix a reasonable price in good faith for the goods. However, where the parties intend not to be bound unless the price is fixed or agreed upon as provided in the agreement and it is not so fixed or agreed upon, the Code provides in accordance with the parties' intent that no contractual liability exists. In such case the seller must refund to the buyer any portion of the price she has received, and the buyer must return the goods to the seller or, if unable to do so, pay the reasonable value of the goods. Section 2-305(4).
What is destruction of subject matter in relation to offers?
Destruction of the specific subject matter of an offer terminates the offer. The impossibility of performance prevents a contract from being consummated and thus terminates all outstanding offers with respect to the destroyed property. --- Suppose that Martina, owning a Buick automobile, offers to sell the car to Worthy and allows Worthy five days in which to accept. Three days later, the car is destroyed by fire. On the following day, Worthy, without knowledge of the car's destruction, notifies Martina that he accepts her offer. There is no contract. Martina's offer was terminated by the destruction of the car.
What is good faith?
Good faith is defined as honesty in fact and the observance of reasonable commercial standards of fair dealing under the 2001 Revised UCC Article 1 adopted by at least forty-nine States. 1-201(20). (Under the original UCC, good faith means honesty in fact in the conduct or transaction concerned. Section 1-201(19).)
What are authorized means in an offer and acceptance?
Historically, an authorized means of communication was the means the offeror expressly authorized in the offer, or, if none was authorized, it was the means the offeror used. -- For example, if in reply to an offer by mail, the offeree places in the mail a letter of acceptance properly stamped and addressed to the offeror, a contract is formed at the time and place that the offeree mails the letter. This assumes, of course, that the offer at that time was open and had not been terminated by any of the methods previously discussed. The reason for this rule is that the offeror, by using the mail, impliedly authorized the offeree to use the same method of communication. It is immaterial if the letter of acceptance goes astray in the mail and is never received. The Restatement, Section 30, and the Code, Section 2- 206(1)(a), both now provide that where the language in the offer or the circumstances do not otherwise indicate, an offer to make a contract shall be construed as authorizing acceptance in any reasonable manner. These provisions are intended to allow flexibility of response and the ability to keep pace with new modes of communication.
What are preliminary negotiations?
If a communication creates in the mind of a reasonable person in the position of the offeree an expectation that his acceptance will conclude a contract, then the communication is an offer. If it does not, then the communication is a preliminary negotiation. Initial communications between potential parties to a contract often take the form of preliminary negotiations through which the parties either request or supply the terms of an offer that may or may not be given. A statement that may indicate a willingness to make an offer is not in itself an offer. If Terri writes to Susan, "Will you buy my automobile for $3,000?" and Susan replies "Yes," no contract exists. Terri has not made an offer to sell her automobile to Susan for $3,000. The offeror must manifest an intent to enter into a contract, not merely a willingness to enter into negotiation.
What are stipulated provisions in an offer and acceptance?
If the offer specifically stipulates the means of communication the offeree is to use, the acceptance, to be effective, must conform to that specification. Thus, if an offer states that acceptance must be made by registered mail, any purported acceptance not made by registered mail would be ineffective. Moreover, the rule that an acceptance is effective when dispatched or sent does not apply in cases in which the offer provides that the offeror must receive the acceptance. If the offeror states that a reply must be received by a certain date or that he must hear from the offeree or uses other language indicating that the acceptance must be received by him, the effective moment of the acceptance is when the offeror receives it, not when the offeree sends or dispatches it.
What are advertisements in relation to offers?
Merchants desire to sell their merchandise and thus are interested in informing potential customers about the goods, the terms of sale, and the price. But if they make widespread promises to sell to each person on their mailing list, the number of acceptances and resulting contracts might conceivably exceed their ability to perform. Consequently, a merchant might refrain from making offers by merely announcing that he has goods for sale, describing the goods, and quoting prices. He is simply inviting his customers and, in the case of published advertisements, the public, to make offers to him to buy the goods. His advertise- ments, circulars, quotation sheets, and merchandise displays are not offers because (1) they do not contain a promise and (2) they leave unexpressed many terms that would be necessary to the making of a contract. Accordingly, his customers' responses are not acceptances because he has made no offer to sell. Nonetheless, a seller is not free to advertise goods at one price and then raise the price once demand has been stimulated. Although, as far as contract law is concerned, the seller has made no offer, such conduct is prohibited by the Federal Trade Commission as well as by legislation in many States.
How does humor relate to intent?
Occasionally, a person exercises her sense of humor by speaking or writing words that—taken literally and without regard to context or surrounding circumstances—a promisee could construe as an offer. The promisor intends the promise as a joke, however, and the promisee as a reasonable person should understand it to be such. Therefore, it is not an offer. Because the person to whom it is made realizes or should realize that it is not made in earnest, it should not create a reasonable expectation in his mind. No contractual intent exists on the part of the promisor, and the promisee is or reasonably ought to be aware of that fact. If, however, the intended jest is so successful that the promisee as a reasonable person under all the circumstances believes that the joke is in fact an offer and so believing accepts, the objective standard applies and the parties have entered into a contract.
What is subsequent illegality in relation to offers?
One of the four essential requirements of a contract, as previously mentioned, is legality of purpose or subject matter. If performance of a valid contract is subsequently made illegal, the obligations of both parties under the contract are discharged. Illegality taking effect after the making of an offer but prior to acceptance has the same effect: the offer is legally terminated.
What is a variant acceptance when it comes to code?
The Code modifies the common law "mirror image" rule, by which the acceptance cannot vary or deviate from the terms of the offer. This modification is necessitated by the realities of modern business practices. A vast number of business transactions use standardized business forms. --- For example, a merchant buyer sends to a merchant seller on the buyer's order form a purchase order for 1,000 dozen cotton shirts at $60.00 per dozen, with delivery by October 1 at the buyer's place of business. On the reverse side of this standard form are twenty-five numbered paragraphs containing provisions generally favorable to the buyer. When the seller receives the buyer's order, he agrees to the quantity, price, and delivery terms and sends to the buyer on his acceptance form an unequivocal acceptance of the offer. However, on the back of his acceptance form, the seller has thirty-two numbered paragraphs generally favorable to himself and in significant conflict with the buyer's form. Under the common law's mirror image rule, no contract would exist, for the seller has not accepted unequivocally all the material terms of the buyer's offer. --- The Code in Section 2-207 attempts to alleviate this battle of the forms by focusing upon the intent of the parties. If the offeree expressly makes her acceptance conditioned upon assent to the additional or different terms, no contract is formed. If the offeree does not expressly make her acceptance conditional upon the offeror's assent to the additional or different terms, a contract is formed. The issue then becomes whether the offeree's different or additional terms may become part of the contract. If both offeror and offeree are merchants, such additional terms may become part of the contract, provided they do not materially alter the agreement and are not objected to either in the offer itself or within a reasonable period of time. If both parties are not merchants or if the additional terms materially alter the offer, then the additional terms are merely construed as proposals to the contract. Different terms proposed by the offeree will not become part of the contract unless the offeror accepts them. The courts are divided over what terms a contract includes when those terms differ or conflict. Some courts hold that the offeror's terms govern; other courts, holding that the terms cancel each other out, look to the Code to provide the missing terms. Some follow a third alternative and apply the additional terms test to different terms. (See Figure 21-4 in Chapter 21.) To apply Section 2-207 to the previous example: because both parties are merchants and the acceptance was not conditional upon assent to the additional or different terms, (1) the contract will be formed without the seller's different terms unless the buyer specifically accepts them; (2) the con- tract will be formed without the seller's additional terms unless (a) the buyer specifically accepts them or (b) they do not materially alter the offer and the buyer does not object; and (3) depending upon the jurisdiction, (a) the buyer's con- flicting terms are included in the contract, (b) the Code pro- vides the missing terms, as the conflicting terms cancel each other out, or (c) the additional terms test is applied.
What is a firm offer?
The Code provides that a merchant is bound to keep an offer to buy or sell goods open for a stated period (or, if no time is stated, for a reasonable time) not exceeding three months if the merchant gives assurance in a signed writing that the offer will be held open. Section 2-205. The Code, therefore, makes a merchant's written promise not to revoke an offer for a stated period enforceable even though no consideration is given to the offeror for that promise.
What are auction sales in relation to offers?
The auctioneer at an auction sale does not make offers to sell the property that is being auctioned but invites offers to buy. The classic statement by the auctioneer is, "How much am I offered?" The persons attending the auction may make progressively higher bids for the property, and each bid or statement of a price or a figure is an offer to buy at that figure. If the bid is accepted—this customarily is indicated by the fall of the hammer in the auctioneer's hand—a contract results. A bidder is free to withdraw his bid at any time prior to its acceptance. The auctioneer is likewise free to withdraw the goods from sale unless the sale is adver- tised or announced to be without reserve. If the auction sale is advertised or announced in explicit terms to be without reserve, the auctioneer may not withdraw an article or lot put up for sale unless no bid is made within a reasonable time. Unless so advertised or announced, the sale is with reserve. A bidder at either type of sale may retract his bid at any time prior to acceptance by the auctioneer. Such retraction, however, does not revive any previous bid.
What is death or incompetency in relation to offers?
The death or incompetency of either the offeror or the offeree ordinarily terminates an offer. Upon his death or incompetency the offeror no longer has the legal capacity to enter into a contract; thus, all his outstanding offers are terminated. Death or incompetency of the offeree likewise terminates the offer, because an ordinary offer is not assignable (transferable) and may be accepted only by the person to whom it was made. When the offeree dies or ceases to have legal capability to enter into a contract, no one else has the power to accept the offer. Therefore, the offer terminates. The death or incompetency of the offeror or offeree, however, does not terminate an offer contained in an option.
What is an offer and agreement?
The manner in which parties usually show mutual assent is by offer and acceptance. One party makes a proposal (offer) by words or conduct to the other party, who agrees by words or conduct to the proposal (acceptance). A con- tractual agreement always involves either a promise exchanged for a promise (bilateral contract) or a promise exchanged for an act or forbearance to act (unilateral con- tract), as manifested by what the parties communicate to each other. An implied contract may be formed by conduct. Thus, though there may be no definite offer and acceptance, or definite acceptance of an offer, a contract exists if both par- ties have acted in a manner that manifests (indicates) a recognition by each of them of the existence of a contract. It may be impossible to determine the exact moment at which a contract was made.
What makes an offer definite?
The terms of a contract, all of which the offer usually contains, must be reasonably certain so as to provide a court with a basis for determining the existence of a breach and for giving an appropriate remedy. Restatement, Section 33. It is a fundamental policy that contracts should be made by the parties and not by the courts; accordingly, remedies for breach must have their basis in the parties' contract. However, where the parties have intended to form a contract, the courts will attempt to find a basis for granting a remedy. Missing terms may be supplied by course of dealing, usage of trade, or inference. Thus, uncertainty as to incidental matters will seldom be fatal so long as the parties intended to form a contract. Nevertheless, the more terms the parties leave open, the less likely it is that they have intended to form a contract. Because of the great variety of contracts, the terms essential to all contracts cannot be stated. In most cases, however, material terms would include the parties, subject matter, price, quantity, quality, and time of performance.
What are the 7 ways to kill an offer?
The ways in which an offer may be terminated, other than by acceptance, are through (1) lapse of time, (2) revocation, (3) rejection, (4) counteroffer, (5) death or incompetency of the offeror or offeree, (6) destruction of the subject matter to which the offer relates, and (7) subsequent illegality of the type of contract the offer proposes. 3 - Rejection: refusal to accept an offer terminates the power of acceptance. 4 - Counteroffer: counterproposal to an offer that generally terminates the original offer. 5 - Death or Incompetency of either the offeror or the offeree terminates the offer. 6 - Destruction of Subject Matter of an offer terminates the offer. 7 - Subsequent Illegality of the purpose or subject matter of the offer terminates the offer.
What is revocation in relation to offers?
To be effective, notice of revocation of the offer must actually reach the offeree before she has accepted. Notice of revocation may be communicated indirectly to the offeree through reasonably reliable information from a third person that the offeror has disposed of the goods which he has offered for sale or has otherwise placed himself in a position which indicates an unwillingness or inability to perform the promise contained in the offer. Restatement, Section 43. Generally, an offer may be terminated at any time before it is accepted, subject to 5 exceptions.
What makes an offer effective?
To be effective, the offer must be (1) communicated to the offeree, (2) manifest an intent to enter into a contract, and (3) be sufficiently definite and certain. If these essentials are present, an offer that has not terminated gives the offeree the power to form a contract by accepting the offer.
How does intent play into offers?
To have legal effect, an offer must manifest an intent to enter into a contract. The intent of an offer is determined objectively from the words or conduct of the parties. The meaning of either party's manifestation is based upon what a reasonable person in the other party's position would have believed. The courts sometimes consider subjective intention in inter- preting the parties' communications.
How must an offer be communicated?
To have the mutual assent required to form a contract, the offeree must have knowledge of the offer; he cannot agree to something of which he has no knowledge. Accordingly, the offeror must communicate the offer, in an intended manner, to the offeree. Not only must the offer be communicated to the offeree, but the communication must also be made or authorized by the offeror. An offer need not be stated or communicated by words. Conduct from which a reasonable person may infer a proposal in return for either an act or a promise amounts to an offer.
What are unauthorized means in an offer and acceptance?
When the offeree uses an unauthorized method of communication, the traditional rule is that acceptance is effective when and if received by the offeror, provided that he receives it within the time during which the authorized means would have arrived. The Restatement, Section 67, provides that if these conditions are met, the effective time for the acceptance relates back to the moment of dispatch.
What are irrevocable offers of unilateral contracts?
Where an offer contemplates a unilateral contract (i.e., a promise for an act), injustice to the offeree may result if revocation is permitted after the offeree has started to perform the act requested in the offer and has substantially but not completely accomplished it. Traditionally, such an offer is not accepted and no contract is formed until the offeree has completed the requested act. By simply commencing performance, the offeree does not bind himself to complete performance; nor, historically, did he bind the offeror to keep the offer open. Thus, the offeror could revoke the offer at any time prior to the offeree's completion of performance. --- For example, Linda offers Tom $300 if Tom will climb to the top of the flagpole in the center of campus. Tom commences his ascent, and when he is five feet from the top, Linda yells to him, "I revoke." The Restatement deals with this problem by providing that where the performance of the requested act necessarily requires the offeree to expend time and effort, the offeror is obligated not to revoke the offer for a reasonable time. This obligation arises when the offeree begins performance. If, however, the offeror does not know of the offeree's performance and has no adequate means of learning of it within a reasonable time, the offeree must exercise reasonable diligence to notify the offeror of the performance.
What are open terms?
With respect to agreements for the sale of goods, the Code provides standards by which omitted terms may be determined, provided the parties intended to enter into a binding contract. The Code provides missing terms in a number of instances, where, for example, the contract fails to specify the price, the time or place of delivery, or payment terms. Sections 2-204(3), 2-305, 2-308, 2-309, and 2-310. The Restatement, Section 34, has adopted an approach similar to the Code's in supplying terms the parties have omitted from their contract. Under the Code, an offer for the purchase or sale of goods may leave open particulars of performance to be specified by one of the parties. Any such specification must be made in good faith and within limits set by commercial reasonableness. Section 2-311(1).
Can an offer be made to the public?
Yes, an offer may be made to the general public. No person, however, can accept such an offer until and unless he has knowledge that the offer exists. For example, if a person, without knowing of an advertised reward for information leading to the return of a lost watch gives information that leads to its return, he is not entitled to the reward. His act was not an acceptance of the offer because he could not accept something of which he had no knowledge.