Ch. 4 Offers (283-319)

$33 Certainty

(1) Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain. (2) The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy. (3) The fact that one or more terms of a proposal bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance.

Nordyne, Inc., v. International Controls & Measurements Corp. (PRICE QUOTATIONS)

- A price quotation may be deemed an offer if it includes all relevant information needed for the offeree to accept, namely quantity, price, time in which to accept, packaging and shipping information, and payment terms. - Price quotations are generally not offers - Many terms are missing (if, however, all terms are included — it CAN be an offer) - Factors to consider: Extent of prior inquiry; Completeness of terms of bargain; Number of people the "offer" was communicated to - Long negotiation in this case - Nordyne was the only one offered - Specificity of terms: --- Valid offer. Despite missing quantity — there was enough communication to fill in the blanks.

Reasonableness of Offers

- A reasonable person must be able to believe - "No reasonable person would take literally."

Responses to Offers

- Accept - Reject: Lose right to accept - Counter: Rejection - Ignore: Power of acceptance will eventually expire

Exception to Presumption

- Advertisements are presumed not to be offers (but rather invitations for offers) BUT when advertisement is clear, definite, explicit, and leaves nothing up for the imagination — it is an offer and the power of acceptance.

Leonard v. Pepsi Co

- An advertisement does not constitute an offer unless its terms are sufficiently clear and leaves nothing open for negotiation and an advertisement intended to be a joke cannot be sufficiently clear. - P saw Pepsi ad — 7,000,000 Pepsi points for jet Commercial was not an offer because it referred to the catalog. D claims not a unilateral contract and the "see catalog for details" shows the negotiations were not done . - An advertisement which a reasonable person would not take seriously and refers to other materials is not an offer. - Harrier jet was not in the catalog. Catalog formed the offer. Puffery. Reasonableness of ad — 7,000,000 points or $70K for a $23mil jet (no access). Jokes, if objectively understood by a reasonable person to be a joke, are not a contract. Commercial invites you to look at the catalog. Catalog may be an offer (inviting you to perform) — telling you to collect points to redeem those things

Offer

- An offer is an expression by one party of assent to certain definite terms, provided that the other party involved in the bargaining transaction will likewise express assent to the same terms. - It can be defined as a manifestation to another of assent to enter a contract if the other manifests assent in return by some action, often a promise but sometimes a performance ... An offer is not effective until it reaches the offeree - An offer, with minor exceptions ... is a promise to do or refrain from doing some specified thing in the future conditioned on the other party's acceptance

Restatement

- Attempt to clarify common law code

Questions to consider

- Do they promise a specific reward? - Do they ask for a specific act?

Objective Test

- For offer and acceptance - Would a reasonable person in the position of the offeree understand the communication of the offer?

Puffery

- Making statements in an ad based on opinion, not facts, can't be part of the offer.

Advertisements

- More like an invitation to offer (made indiscriminately or at least to multiple people where we can accept everyone — and more invitation is invited) - Generally the presumption is that advertisements are not offers but there are EXCEPTIONS

Unilateral

- Some contracts are asking not for a return promise — but for an acceptance through performance. I offer and the only way you can accept is by performing what I have asked you to do. (Must give me my lost dog to get the $500 reward) - With both types, here is some power to revoke prior to acceptance. It is harder to revoke a unilateral contract because it is unfair to start someone down the path of performance and then yank out

Bilateral

- The first type of contract in terms of offer and acceptance. - Typical offer and acceptance. The exchange of promises binds us even though nothing has happened. Most common. Our promises = consideration.

Mirror Image Rule

- Under common law - An acceptance that varies the terms of an offer becomes a counter-offer. This operates as a rejection of the original offer. If the offeror then proceeds with the contract, his performance is an acceptance of the terms of the counter-offer. However, the common law rule has been replaced by statute in many jurisdictions to achieve more fairness between the parties. For example, the US Uniform Commercial Code (UCC) changes this rule and converts a counter-offer into an acceptance even if it contains additional or different terms. The only requirement is that the responding form must contain a definite and seasonable (=done or happening at the appropriate or proper time; timely) expression of acceptance. The terms of the responding form that correspond to the offer constitute the contract. Any additional terms become proposals for additions to the contract. When the transaction is between merchants, the additional terms become part of the contract unless the offer is specifically limited to its terms, the offeror objects to the new terms, or the additional terms materially alter the offer. - However, if an acceptance expressly conditions acceptance on the offeror's assent to the offeree's terms, the forms do not result in a contract unless the offeror gives an unequivocal (=certain) expression of assent. If so, they have a contract and the differing or additional terms are included. If the offeror does not assent, but the parties proceed as if they have a contract, their performance results in a contract. In this case, the terms of the contract will be those on which the forms agree. - Specifically, in respect of the battle of the forms, the common law last shot rule provided that the party who puts forward the latest terms and conditions gets all of its terms simply because it fired the last shot in the exchange of forms. In most cases this would be the offeree. However, as seen, modern statutes abolish this rule by giving neither party the terms it attempted to impose unilaterally. Instead, under the knock-out rule, the terms on which the forms do not agree cancel each other out and are dropped from the contract. The relevant sale of goods act then supplies any missing terms.

Lefkowitz v. Great Minneapolis Surplus Store

- When an advertisement is clear, definite, and explicit, and leaves nothing open for negotiation, it constitutes an offer, acceptance of which will complete the contract. - Newspaper ad stating that coats are $1. First come, first serve. D states no contract when P comes D claims no offer but rather invitation to make one - HOLDING: Ads can be considered offers under certain circumstances (i.e. when actions necessary to accept the offer are clear) - The specificity of an ad can make it an offer - TEST: "Whether the facts show that some performance was promised in return for something requested."

$26 Preliminary Negotiation

A 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.

$24 Offer

An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to the bargain is invited and will conclude it.

Offer and Acceptance

Offer creates a power of acceptance (creates the legal right to take the offer)

Parole Evidence Rule

The parol evidence rule enacts a principle of the common law of contracts that presumes that a written contract embodies the complete agreement between the parties thereto. The rule therefore generally forbids the introduction of evidence before a judge or jury of extrinsic evidence - evidence of communications between the parties not contained in the language of the contract itself - claimed to change the terms of a later written contract. In order for the rule to be effective, the contract in question must be a complete, or integrated writing; it must, in the judgment of the court, contain all terms that the parties would logically expect to have within such an agreement. One way to ensure that the contract will be found to be a complete agreement for this purpose is through the inclusion of a merger clause, which recites that the contract of which it is part is, in fact, the complete agreement of the parties. The parol evidence rule only applies to determining the meaning of a term of a contract; it does not apply when determining whether a right constitutes a term of the contract. Also, despite this rule, the court will examine the factual matrix surrounding the contract. There are a number of exceptions to the parol evidence rule. Extrinsic evidence can always be admitted for the following purposes: * To work out the subject matter of the contract. * To resolve an ambiguity in the contract. * To show that an unambiguous term in the contract is in fact a mistaken transcription of a prior valid agreement. Such a claim must be established by clear and convincing evidence, and not merely by the preponderance of the evidence. * To show fraud, duress, mistake, or illegal purpose on the part of one or both parties. * To show that consideration has not actually been paid. For example, if the contract states that A has paid B $1,000 in exchange for a painting, B can introduce evidence that A had never actually conveyed the $1,000. * To identify the parties, especially if the parties have changed names. * To imply or incorporate a term of the contract. In order for evidence to fall under this rule, it must involve a communication made prior to the execution of the written contract, and must be evidence as to the terms of the agreement itself. Evidence of a later communications will not be barred by this rule, as it is admissible to show a later modification of the contract. Similarly, evidence of a collateral agreement - one that would naturally and normally be included in a separate writing - will not be barred. For example, if A contracts with B to paint B's house for $1,000, B can introduce extrinsic evidence to show that A also contracted to paint B's car for $100. The agreement to paint the car would logically be in a separate document from the agreement to paint the house.