Contracts - Termination of the offeree's power of acceptance: lapse, rejection and counter

Mailbox rule

a term of common law contracts which determines when a contract has been formed where the parties are communicating via the mail. The basic thrust of the rule is that an acceptance of an offer that is sent before a revocation of the offer is received.

Restatement 64. Acceptance by Telephone or Teletype

acceptance given by telephone or other medium of substantially instantaneous tow-way communication is governed by the principles applicable to acceptances where the parties are in the presence of each other.

Restatement 66: Acceptance Must be properly dispatched

an acceptance sent by mail or otherwise from a distance is not operative when dispatched, unless it is properly addressed and such other precautions taken as are ordinarily observed to insure safe transmission of similar messages.

counter offer

an offer made by the offeree to the original offeror

Restatement 87(2) : Option Contract

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 injusitice.

You have the absolute right to revoke your offer, as long as

the offer does not have an option that is attached to it.

An offer is rejected when

the offeror is justified in inferring from the words or conduct of the offeree that the offeree intends not to accept the offer or to take it under further advisement.

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 of reliance on the statement...To protect the offeror in such reliance, the power of acceptance is terminated without proof of reliance.

Restatement 90. Promise Reasonably Inducing Action or Forbearance

(1) A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy for breach may be limited as justice requires. (2) A charitable subscription or a marriage settlement is binding under Subsection (1) without proof that the promise induced action or forbearance.

Restatement 45. Option contract Created by Part Performance or Tender

(1) Where an offer invites an offeree to accept by rendering 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.

Restatement 41. Lapse of Time

(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. (3) Unless otherwise indicated by the language or the circumstances, and subject to the rule stated in 49, an offer sent by mail is seasonably accepted if an acceptance is mailed at any time before midnight on the day on which the offer is received.

(1) An offer is revocable at any time prior to acceptance, absent the operation of equitable estoppel;

(2) equitable estoppel requires that the defendant must have known the facts; the defendant must have intended that his conduct shall be acted upon; the plaintiff must have been ignorant of the true facts; and plaintiff must have relied on the conduct of the defendant to his detriment; (3) A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.

Restatement. 39-Counter-offers

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.

Equitable estoppel has four elements:

1. the defendant must have known the facts; 2. the defendant must have intended that his conduct shall be acted upon; 3. the plaintiffs must have been ignorant of the true facts; and 4. the plaintiffs must have relied on the conduct of the defendant to his detriment

There is a contract if

Joe sends Bob by mail an offer dated from Joe's house and states as a condition of the offer that an acceptance must be received within three days. • Bob mails an acceptance which reaches Joe's house and is delivered to a servant or is deposited in a mail box at the door within three days; but Joe has been called away from home and does not personally receive the letter for a week.

(Akers v. J.B. Sedberry, Inc.) Whether an employment contract is terminated when the employer does not immediately accept or take under further advisement employee's offer to resign.

No. An offer is rejected when the offeror is justified in inferring from the words or conduct of the offeree that the offeree intends not to accept the offer or to take it under further advisement.

Restatement 37. Termination of Power of Acceptance Under Option Contract

Nothwithstanding, Restatement 38-49, the power of acceptance under an option contract is not terminated by rejection or counter-offer, by revocation, or by death or incapacity of the offeror, unless the requirements are met for the discharge of a contractual duty.

Restatement 40. Time When Rejection or Counter-Offer Terminates the Power of Acceptance

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 a 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.

Restatement 63.Time when Acceptance Take Effect

Unless the offer provides otherwise: (a) an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree's possession, without regard to whether it ever reaches the offeror; but (b) an acceptance under an option contract is not operative until received by the offeror.

Bilateral offer

a party attempts to exchange a promise for a return promise

Restatement 68. What Constitutes Receipt of Revocation, Rejection, or acceptance

a written revocation, rejection, or acceptance is received when the writing comes into the possession of the person addressed, or of some person authorized by him to received it for him, or when it is deposited in some place which he has authorized as the place for this similar communications to be deposited for him.

Restatement 42. Revocation by Communication From Offeror Received by Offeree

an offeree's power of acceptance is terminated when the offeree receives from offeror a manifestation of an intention not to enter the proposed contract.

Restatement 43. Indirect Communication of Revocation

an offeree's power of acceptance is terminated when the offeror takes the definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect

Unilateral offer

is an agreement between two parties, in which the offeror makes a promise and the offeree renders a performance or act or forbearance to act

reliance

the state of needing someone or something for help, support, etc.