Mutual assent, Offer, and acceptance

What is the Leonard v. Pepsi-co rule?

1. Ads are generally not offers, unless they are clear, definite, explicit and not open for negotiations. If the only thing left to do is say yes, then it would be an offer. 2. If a reasonable person would not have understood the advertisement to be an offer, then it is not an offer. ***3. if a reasonable person would understand that the ad was in jest, then it is not an offer.

What is the Rule for Advertisements?

1. Advertisements are normally not considered offers; however 2. If the advertisement meets the " Clear, definite, explicit, and leaves nothing open for negotiation" rule, then the advertisement cant be considered an offer.

What are the most essential elements of Bargain?

1. Agreement 2. Exchange

R2C §41 (1) Lapse in time: states:

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 amount of time. 2. What is a reasonable time is a question of fact, depending on all circumstances existing when the offer and attempted acceptance are made. ---EVERY OFFER HAS AN EXPIRATION DATE---

How is Mutual Assent typically expressed in complex contracts?

Courts will look at each stage of the contract to see whether there was the SUM TOTAL of mutual assent, for the OVERALL contract.

R2C § 35(2) states:

A contract cannot be created by acceptance of an offer after the power of acceptance has been terminated. except In one of the way listed in R2C §36.

R2C §38(2) states:

A manifestation of intention not to accept an offer is a rejection unless the offeree manifests an intention to take it under further advisement.

R2C § 22(2):

A manifestation of mutual assent may be made even though neither offer nor acceptance can be identified and even though the moment of formation cannot be determined. - So. . . a clearly established offer is not necessary in contract formation so long as there is a clear mutual acceptance by both parties.

How do we know if a person has notice?

A person has notice if: 1. Has actual knowledge of it 2. Has received notice or notification of it; or 3. From all fact and circumstances known to the person at the time in question, has reason to know that it exists; A. Knowledge= actual knowledge B. Discover/learn or word similar = Knowledge rather than reason to know

When can a valid offer be revoked ( Dickinson v. Dodds)

A valid offer is not binding and can be revoked at any point up until complete acceptance by the offeree. Such revocation is valid whether it is given implicitly or explicitly. Also, a valid option much have consideration.

What is the test to see if Alcohol can be used as a defense against assent

Alcohal can be used to show one cannot make a contract BUT you need to provide evidence of: 1. How much alcohol was consumed by the party 2. Over how much time 3. With bystander witness

What is a firm offer?

An offer BY A MERCHANT, to buy or sell goods in signed writing by which its terms gives assurance that it will be held open and is not revocable, for lack of consideration, during the time stated, or if no time is stated a reasonable time, but IN NO EVENT MAY SUCH A PERIOD OF IRRECONCILABILITY EXCEED 3 MONTHS; but any such terms of assurance on a form supplied by the offeree must be separately signed by the offeror.

What is the process of Mutual Assent?

An offer is made: 1. Acceptance= Contract formed 2. Rejection = No Contract 3. Counter offer= Rejection of original offer makes new offer ( starts process over with offeree now the offeror)

How is offer defined?

An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understand that his assent to that bargain as invited and will conclude it. - Really an offer is when the Offeree has nothing left to do but accept, reject, or counter offer - the less opening for conversation the more likely it is to be an offer.

What is the Nebraska Seed rule?

An offer is the second to last communication in the formation of a contract, with the last being acceptance. An offer is a manifestation of intent to enter into an agreement where the only thing left is to do is accept.

R2C §36(1) states:

An offeree's power of acceptance may be terminated by: 1. Rejection or counter-offer by the offeree, or 2. Lapse of time, or 3. Revocation by offeror, or 4. Death or incpacity of the offeror or offeree.

R2C §30(1) states:

An offeror may invite or require acceptance to be made by an affirmative answer in words, or by preforming or refraining from preforming a specific act, or may empower the offeree to make a selection of terms in his acceptance. after specifically detailing a form of acceptance all other forms of acceptance are no longer allowed and cannot manifest assent.

How is Mutual Mistake Defined?

Fraud in the creation of a contract that was unintentional, confusion, or a mistake

How do you determine the medium of acceptance?

Generally you go by the medium of the offer. If the offer was communicated by email and didnt specify how to accept, than an emal can be used to accept.

What is the past practice rule?

If there is past practice then silence in action can serve as an acceptance, so long as that has traditionally been the practice between the parties

How does revocation work in an option contract?

In an option contract you can state terms giving the offeree, for examples 7 days to accept the offer. In this case a counter-offer does not terminate power of acceptance in an option contract.

How do Bargains work?

In modern times less formal contracts have become far more important. the typical contract is a bargain, and is binding without regard to form. the governing principle in the typical case is that bargains are enforceable unless some other principle conflicts.

How are instant messaging and e-mailed treated in contract law?

Instant messaging and email are treated the same as face to face contact.

Does internet have an impact on contract law?

Internet does not fundamentally change the idea or requirements of offer and acceptance, mutual assent, or formation.

What is a unilateral contract?

Invites acceptance by performance ex: find my pet

What is a bilateral contract?

Invites acceptance by promise. - I.E. contract upon promise of action

If you make a firm offer for 6 months will it be covered by the UCC at all?

It will in part. it will only be covered under UCC § 2-205 until the 3 month mark, after that, the offeror is free to revoke UNLESS the parties additionally agreed to an option agreement which is covered under common law and NOT the UCC.

Is Mutual assent needed in each stage of complex contracts?

Mutual assent is not needed in each stage of complex contract. What the court will look or is the sum total of mutual assent through the overall contract.

R2C § 21:

Neither real nor apparent intention that a promise, be legally binding is essential to the formation of a contract, but a manifestation of intention that a promise shall not affect legal relations may prevent the formation of a contract.

Will an oral contract hold in land sales?

No, In land sales generally offer and acceptance must be through writing.

If an offeree says " I accept your offer" but then makes a change in terms is the contract formed?

No, The countract is not formed because it is not a " Mirror Image" of the offeror's original offer.

Are there magic words in any contract or negotiation that when interpreted can lead to a contract?

No, The word are very important but you cannot just cherry pick the words we must also look at the conduct and context to understand whether assent was manifested always think: 1. Words 2. Actions 3. Conduct 4. Context

If people volunteer things or service you cant responsibly refuse is that a contract?

No, but you must refuse if you can.

If a letter is addressed to multiple unrelated individuals, is it likely an offer for contract?

No, likely it is a letter sent to a number of potential buyers. This doesnt mean it cant be an offer but it should raises red flags.

Do inquiries terminate offers?

No, so long as the inquiry is timely, the offer is still live.

Do courts look only at exact words in mutual assent case? ex: go get your men?

No, the context the words are said in are very important, as they can change what the reasonable person would interpret them to mean.

Typically how are advertisements viewed?

Normally all advertisements are viewed as conditional promises, or seeking bids or invitations to enter negotiations.

What does R2C § 37 state?

Not withstanding R2C § 38-49, the power of acceptance under an option contract is not terminated by rejection or counter-offer, or by death or incapacity of offeror, unless the requirements are met for the discharge of a contractual duty.

What is the main tool for Mutual Assent?

Offer and Acceptance

What is a counter offer?

Offer presented by the offeree

How is a Manifestation of Mutual Assent defined?

R2C § 18 states: " A manifestation of mutual assent to an exchange requires that each party either make a promise or bargain or render a performance." - Assent to the formation of an informal contract is operative only to the extent that it is manifested

How is Counter-offer defined under the R2C?

R2C § 39(1) states: 1. A counter-offer is an offer made by an offeree to his/her offeror relating to the same matter as the original offer and proposing a substituted bargain differing from the proposal made by the original offer. 2. An offeree's power of acceptance is terminated by his making a counter-off, unless the offeror has manifested a contrary intention of the offeree.

What constitutes revocation?

R2C § 43 states: An offeree's power of acceptance is terminated when the offeree receives from the offeror a manifestation of an intention not to enter into the proposed contract.

What is an Indirect Revocation?

R2C § 43 states: An offeree's power of acceptance is terminated when the offeror takes definitive action inconsistent with an intent to enter into the proposed contract and the offeree acquires reliable information to that effect. ( this is context)

Is intention to be legal bound required for formation?

R2C §21 states: Neither real nor apparent intention that a promise be legally binding is essential to the formation of a contract, but a Manifestation of intention that a promise shall NOT effect legal relations may prevent the formation of a contract.

Who has the power to choose medium of acceptance?

The offeror but if he or she doesn't it is up to the offeree.

What are the relevant issues to look at in the formation of a contract?

The words and actions publicly manifested by the party should be interpreted to the assent of a contract

What happens if the offeree trys to change the terms of an offer already established by offeror?

This would count as a counter-offer and there is automatically no contract under the previous offer.

What is an irrevocable offer?

Typically up until the moment of acceptance an offeror can revoke the offer Irrevocable offers are the exception In these offers all power of acceptance lies in the hands of the offeree and all that remains of the contract formation is the acceptance. The offer cannot be revoked.

What is required for a Firm Offer?

UCC § 2-205 Firm Offers states: 1. Must have an offer by a merchant 2. Must have a signed writing 3. Must have an assurance that the offer will be held open during time stated or three months if no time is stated.

What is the UCC rule for shipping?

UCC § 2-206 states: -Shipping constitutes formations (after acceptance) - acceptance upon receipt

What is the role of writing? When are you bound?

When it is clear you go by their objective manifestation of intent. If it is not clear, you must use facts in a case to figure out the parties intent from the words, the conduct, and the context.

Is a letter of intent legally binding? ( Empro v. Ball-co rule)

When manifested intentions indicate that a party was not meant to be bound until a formal agreement, that party cannot be bound until such a formal agreement is reached, and any communication until the point of formal agreement is a preliminary negotiation.

Can a part say they wont be bound until certain issues have been agreed upon?

Yes, A party can say " We don't want to be bound until we have a definitive agreement on issues x, y, z. . ."

When you promise to preform does that mean you must complete it?

Yes, When you promise to preform that acts as a promise to complete the performance, once performance starts it must be completed in a reasonable amount of time

Can a person hold their assent until the bargain is formally concluded?

Yes, a manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed know 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.

Can you make an option contract that exceeds 3 months?

Yes, you can make an option contract that exceeds 4 months but it wont be protected or considered as a firm offer and will instead be ruled using common law.

Can you take piece of wording to make a claim regarding assent?

You cant just take exact works or pieces, you must consider the entire letter or wording and its context. You cant just cherry pick or hold world too literally, CONTEXT MATTERS.

I simply agreeing internally enough for mutual assent?

You must through WORDS, CONTEXT, OR ACTION make your assent known to the other party. Internally agreeing or disagreeing doesn't count. The only thing that courts is what is externally expressed or manifested.

After a counter-offer the offeree becomes

the offeror

Are agreements to agree enforceable? (Copeland v. Baskin Robins U.S.A)

Agreements to Agree are generally not enforceable by law

What questions should you ask to determine whether a offer has been made?

1. Is this an initial communication or a response to an inquiry? - If it's a response it is more likely to be an offer 2. Are the words that were used generally reserved for promise or non-committal? - If it is more associated with promise then it is more likely to be an offer. 3. Is there a lot of details and important terms already established? - If a communication is extremely detailed it is more likely to be an offer 4. Was communication sent to many or a select person? - If a communication was sent to just one person it is more likely to be an offer 5. Prior Practices? Course of Deal? - If the parties have regular dealings then it is more likely there is an offer. 6. Usage of the trade? - The way things are typically done in the specific industry

How do we tell the difference between Preliminary Negotiations and Offers?

1. Level of Specificity 2. Amount of People who received the Communication 3. Objective Manifestation of Intent 4. Things unlikely to be offers like: a. Expressions of opinion b. Hopes and estimates c. Invitations to trade/request for bid d. Jokes, Jests, Shams

When trying to determine if a letter of intent serves as a contract what should the court do?

1. Look at the words of the letter and negotiations as a whole. a. look for language or absence of language that may indicate intent of the parties

What are the four categories of Irrevocable offers?

1. Option Contracts 2. Part Performance Contracts 3. Reliance 4. Firm Offers

What is the objective evidence for proof of a contract?

1. Signatures 2. Verbal Agreements 3. Written Language 4. Reasonable actions indicating acceptance

What are the rules for Acceptance by Silence or Exercise of Dominion

1. Where an offeree fails to reply to an offer, his silence and inaction operate as an acceptance in the following cases only: a. Where an offeree take the benefits of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation. b. Where the offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive intends to accept the offer. c. Where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept. 2. An offeree who does any act inconsistent with the offeror's ownership of offered property is bound in accordance with the offered terms unless they are manifestly unreasonable. But if the act is wrongful as against the offer it is an acceptance only if ratified by him.

How is mutual assent expressed in its most basic elements?

1. Words 2. Actions 3. Conduct 4. Context

What is the Objective Meetings of the Minds test?

1. Would a reasonable person take this to infer mutual assent? 2. Did the offeror take these words to infer mutual assent? if yes to both, then we have mutual assent.

What are good ways to express you do not want to commit?

1. You can say your bound but with a provision 2. You can say your bound on the condition that terms are written down after the agreement 3. you can clearly say your not ready to commit

What is the mail box rule?

Acceptance is upon mailing of the letter (date of mailing) - This is not limited to merchants

R2C §58 states:

Acceptance must comply with the requirements of the offer as the promise to be made or the performance to be rendered if no special form is made then R2C § 30(2) comes into play

R2C § 50(1)-acceptance: states

Acceptance of offer is a manifestation of assent to the terms there of madeby the offeree in a manner invited or requested by offeror

How does R2C §53 change the rule of unilateral contracts?

Changes rule to make it so offeree has a reasonable amount of time to actually complete performance before an offer can be revoked. This was to stop offerees from not getting paid afterpainting half a house.

Are court interested in the fairness of a bargain?

Contract care about whether or not a bargain is voluntary. They are not concerned with whether it was a good bargain or fair or if it had an equal power dynamic. it is only interested in if there was a voluntary bargain made in good faith.

Why doesn't an argument claims the offeree did not intend to express consent hold?

Contract law is not concerned with internal feelings only the reasonable interpretation of his words or actions. ONLY WORDS AND ACTIONS AT THE TIME ARE RELEVANT

What is the special detailed regarding assent and land?

Contracts dealing with land typically must be in writing

What is the Texaco v. Pennzoil rule?

Parties intent controls if and when they will be bound, and to determine whether parties intended to be bound only by a formal, signed writing, looking at four factors: 1. Whether parties expressly reserved the right to be bound only when a written agreement is signed 2. Whether there was any partial performance by one party 3. whether all essential terms of the alleged contract has been agreed upon. 4. whether the complexity is such that a formal execution in writing would be expected.

What are the requirements of a Bargain?

R2C § 17 states: 1. Except as stated in subsection (2), the formation of a contract requires a bargain in which there is a manifestation of mutual assent to exchange and a consideration 2. Whether or not there is a bargain a contract may be formed under special rules applicable to formal contracts or under rules stated in §§ 82-84

What does the court look at in extortion cases?

The court will take into account whether there was a prior relationship in situation of potential extortion. courts want to enforce good faith bargains not shake downs. - ex: A stranger who has compromising information is likely extortion, but it is less clear if there is a long standing relationship.

How does Consideration work?

The element of exchange is embodied in the concept of consideration. In some cases a promise is not binding for want of consideration - Refers to an element of exchange which is legally sufficient

How does Agreement work?

The elements of agreement are often referred to as a " meeting of the minds". the parties to most contracts give actual as well as apparent assent, but it is clear that a mental reservation of a to bargain does not impair the obligation he proports to undertake.

R2C § 17(1):

The formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration. - in contracts we are concerned with how a REASONABLE individual would interpret the words or actions of a party. NOT with the parties SUBJECTIVE thought processes.