Creating a Contract: Acceptances Chapter 11

What is an Acceptance?

An acceptance is an expression of present intent to enter into a bargain based on the terms of an 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.

Acceptance by Shipment

Either promise to ship or shipment constitutes acceptance unless otherwise agreed.

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

Authorized Means of Communication

Under modern law, authorized means includes any reasonable means.

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.

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.

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.

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.

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.

"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.

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.

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.

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

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.