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1 George Mason School of Law Contracts I VIII.Acceptance III F.H. Buckley

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1 1 George Mason School of Law Contracts I VIII.Acceptance III F.H. Buckley

2 Coordination The parties need to know how to coordinate their attempts at agreement 2

3 Acceptance vs. Counter-offer Wholesaler offeror offers retailer offeree a dozen 22 inch clay pots for $300. Offeree s back Great. Ill take three dozen. Is there a contract? 3

4 Acceptance vs. Counter-offer §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. 4

5 The Mirror Image Rule §59. PURPORTED ACCEPTANCE WHICH ADDS QUALIFICATIONS. A reply to an offer which purports to accept it but is conditional on the offeror's assent to terms additional to or different from those offered is not an acceptance but is a counter-offer. 5

6 Acceptance vs. Counter-offer Corinthian Pharmaceutical at 226 Was the delivery of 50 vials an acceptance of the offer? 6

7 UCC 2-206(1) § 2-206(1) Unless otherwise unambiguously indicated by the language or circumstances (a) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances: (b) an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or nonconforming goods, but the shipment of nonconforming goods is not an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer. 7

8 Offer and Acceptance in Article 2 What is an Article 2 transaction? 8

9 Offer and Acceptance in Article 2 What is an Article 2 transaction? UCC § This Article applies to transactions in goods 9

10 Offer and Acceptance in Article 2 What is an Article 2 transaction? UCC § This Article applies to transactions in goods UCC § Goods means all things … which are moveable at the time of identification 10

11 Acceptance vs. Counter-offer Wholesaler offeror offers retailer offeree a dozen 22 inch clay pots for $300. Offeree s back Great. Ill take three dozen. Not having heard from wholesaler, retailer s back OK, Ill take a dozen. Is there a contract? 11

12 Acceptance vs. Counter-offer Restatement § 36. Methods of Termination of the Power of Acceptance (1) An offerees power of acceptance may be terminated by (a) rejection or counter-offer by the offeree 12

13 Counteroffers: Dataserv Equipment at

14 Counteroffers: Dataserv Equipment at 247 Dataserv (seller) Technology (buyer) 14

15 Counteroffers: Dataserv Equipment at 247 Did Technology accept Dataservs initial offer? 15

16 Counteroffers: Dataserv Equipment at 247 Did Technology accept Dataservs initial offer? Could Dataserve accept the counter-offer? And did it? 16

17 Counteroffers: Dataserv Equipment at 247 Did Technology accept Dataservs initial offer? Could Dataserv accept the counter- offer? And did it? Having rejected the counter-offer, could Dataserv subsequently accept it? 17

18 Counteroffer as Rejection: Dataserv Equipment Restatement § 38(1). A partys rejection terminates its power of acceptance. Once rejected an offer is terminated and cannot be accepted without ratification by the other party. 18

19 Counteroffer as Rejection: Dataserv Equipment Restatement § 38(1). A partys rejection terminates its power of acceptance. Once rejected an offer is terminated and cannot be accepted without ratification by the other party. Why might this make sense? Whats the alternative? 19

20 Acceptance vs. Counter-offer Wholesaler offeror offers retailer offeree a dozen 22 inch clay pots for $300. Offeree s back Great. Ill take a dozen but Id really be much happier if you could send me three dozen. 20

21 Acceptance vs. Counter-offer § 61. Acceptance Which Requests Change of Terms. An acceptance which requests a change or addition to the terms of the offer is not thereby invalidated unless the acceptance is made to depend on an assent to the changed or added terms. 21

22 The Battle of the Forms 22 Why might this be a problem?

23 The Battle of the Forms 23 The sender of the last form … could insert virtually any conditions it chooses into the contract Ionics

24 The Battle of the Forms 24 Distinguish the case where performance has begun from the case where it hasnt

25 Counteroffers What happens at common law where: There is performance and indisputably a contract There has been a Battle of the Forms 25

26 The Last Shot Doctrine What happens at common law where: There is performance and indisputably a contract There has been a Battle of the Forms The Last Shot Doctrine as a corollary of the mirror image rule 26

27 How is the Last Shot doctrine changed by the infamous UCC § 2-207? 27

28 How is the Last Shot doctrine changed by the infamous UCC § 2-207? Seller offers a 1956 Ford for $5,000. Buyer writes to say I accept but Id like you to give it a fresh car wash. 28

29 How is the Last Shot doctrine changed by UCC § 2-207? Seller offers a 1956 Ford for $5,000. Buyer writes to say I accept but Id like you to give it a fresh car wash (1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon 29

30 How is the Last Shot doctrine changed by UCC § 2-207? Seller offers a 1956 Ford for $5,000. Buyer writes to say I accept but Id like you to give it a fresh car wash (1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon Was this a new term? 30

31 How is the last Shot doctrine changed by UCC § 2-207? Seller offers a 1956 Ford for $5,000. Buyer writes to say I accept but I dont want the car unless you to give it a fresh car wash. 31

32 How is the last Shot doctrine changed by UCC § 2-207? Seller offers a 1956 Ford for $5,000. Buyer writes to say I accept but I dont want the car unless you to give it a fresh car wash (1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms. 32

33 How is the last Shot doctrine changed by UCC § 2-207? 2-207(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms. Can the parties bargain out of by invoking this proviso?(Roto-Lith) 33

34 How is the last Shot doctrine changed by UCC § 2-207? Seller offers a 1956 Ford for $5,000. Buyer writes to say I accept but I dont want the car unless you to give it a fresh car wash. Does 2-207(2) apply? The additional terms are to be construed as proposals for addition to the contract. 34

35 How is the last Shot doctrine changed by UCC § 2-207? Seller offers a 1956 Ford for $5,000. Buyer writes to say I accept but I dont want the car unless you to give it a fresh car wash. What does 2-207(2) mean? The additional terms are to be construed as proposals for addition to the contract. So are they in the contract or not? 35

36 How is the last Shot doctrine changed by UCC § 2-207? When is 2-207(3) triggered? Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. 36

37 How is the last Shot doctrine changed by UCC § 2-207? When is 2-207(3) triggered? Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In which case, what are the terms of the contract? 37

38 How is the last Shot doctrine changed by UCC § 2-207? In which case, what are the terms of the contract? 2-207(3) In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act. 38

39 How is the last Shot doctrine changed by UCC § 2-207? How is it different if the contract is between merchants (and why should that matter)? UCC (merchant: a person who deals in goods of that kind) 39

40 How is the last Shot doctrine changed by UCC § 2-207? 2-207(2) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless: (a) the offer expressly limits acceptance to the terms of the offer; (b) they materially alter it; or (c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received. 40

41 Ionics at 250 Elmwood thermostats Ionics 41

42 Ionics 42 Applying the last shot doctrine, what is the contract? And is there a problem with that?

43 Ionics at 250 How would you apply UCC § (1) (before the comma) to Ionics? UCC § (1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon 43

44 Ionics at How did Roto-Lith end up applying the Last Shot doctrine?

45 Ionics at 250 What about the proviso? UCC § 2-207(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms. 45

46 Ionics at If Ionics rejects Roto-Lith, could (2) be helpful? The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless: (a) the offer expressly limits acceptance to the terms of the offer; (b) they materially alter it; or (c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

47 Ionics at If Ionics rejects Roto-Lith, could (2) be helpful? The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless: (a) the offer expressly limits acceptance to the terms of the offer; (b) they materially alter it; or (c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

48 Ionics at So what happens when 2-207(1) and 2-207(2) are both ousted?

49 Ionics at So what happens when 2-207(1) and 2-207(2) are both ousted? Two possibilities: There is conduct by both parties which recognizes the existence of a contract in 2-207(3) Or there isnt

50 Ionics at If there is Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act.

51 Step-Saver at 260 Is this a contract between merchants? 51

52 Step-Saver at 260 Wyse/TSL Mainframe hardware plus MS software Step-Saver 52

53 Step-Saver at IBM AT cpu MS DOS

54 Shrink-rap Contracts What did the District Court hold? 54

55 Shrink-rap Contracts The District Court: The box-top license as the crucial Last Shot offer 55

56 Shrink-rap Contracts On appeal, before applying (1), what makes this an Article II transaction? 56

57 Shrink-rap Contracts What about 2-207(1)s proviso? unless acceptance is expressly made conditional on assent to the additional or different terms 57

58 Shrink-rap Contracts What about 2-207(1)s proviso? unless acceptance is expressly made conditional on assent to the additional or different terms 58

59 Shrink-rap Contracts What about 2-207(2)(b)? Was the exemption clause a material alteration? 59

60 Shrink-rap Contracts Can an offeree bargain around 2-207? the third approach on p

61 Shrink-rap Contracts Am I missing something? Opening this package indicates your acceptance of these terms and conditions. If you do not agree with them you should promptly return the package unopened? 61

62 Shrink-rap Contracts Am I missing something? Opening this package indicates your acceptance of these terms and conditions. If you do not agree with them you should promptly return the package unopened? Why did the court think that this didnt work? 62

63 Shrink-rap Contracts So what should the court on remand look to? 63

64 Hill v. Gateway at

65 Hill v. Gateway at 268 Was this between merchants? And was there a battle of the forms? 65

66 Hill v. Gateway at 268 What result if Step-saver is applied here? In which case, when is the contract formed? 66

67 Hill v. Gateway at 268 Why is said to be irrelevant here? 67

68 E-commerce What happens when you click on I accept in an Internet contract? 68


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