© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C HAPTER 10: M UTUAL A SSENT

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. T OPICS C OVERED C HAPTER 10: M UTUAL A SSENT I. Offer. A. Essentials of an Offer. B. Duration of Offers. II. Acceptance of Offer. A. Communication of Acceptance. B. Variant Acceptances. 2

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. E SSENTIALS OF AN O FFER  Communication – offeree must have knowledge of the offer and the offer must be made by the offeror to the offeree.  Intent – determined by an objective standard of what a reasonable offeree would have believed.  3

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. E SSENTIALS OF AN O FFER  Intent – Important to distinguish an offer from proposals that ‘invite’ an offer. C ATAMOUNT S LATE P RODUCTS, I NC. V. S HELDON (2004). C ATAMOUNT S LATE P RODUCTS, I NC. V. S HELDON (2004). Preliminary Negotiations. Advertisements. Auction Sales.  4

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. E SSENTIALS OF AN O FFER  Definiteness—the offer's terms must be clear enough to provide a court with a basis for giving an appropriate remedy. Open Terms (UCC). Good Faith and Commercial Reasonableness. Output and Requirement Contracts.  5

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. D URATION OF O FFERS  Lapse of Time – offer remains open for the time period specified or, if no time is stated, for a reasonable period of time. S HERROD V. K IDD (2007).  S HERROD V. K IDD (2007).  6

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. D URATION OF O FFERS  Revocation – generally, an offer may be terminated at any time before it is accepted, subject to the following exceptions. Option Contract – contract that binds offeror to keep an offer open for a specified time.  7

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. D URATION OF O FFERS  Revocation. Firm Offer – a merchant's irrevocable offer to sell or buy goods in a signed writing ensures that the offer will not be terminated for up to three months. Statutory Irrevocability – offer made irrevocable by statute.  8

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. D URATION OF O FFERS  Revocation. Irrevocable Offer of Unilateral Contract – a unilateral offer may not be revoked for a reasonable time after performance is begun.  9

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. D URATION OF O FFERS  Revocation. Promissory Estoppel – noncontractual promise that binds the promisor because she should reasonably expect that the promise will induce the promisee (offeree) to take action in reliance on it. 10

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. D URATION OF O FFERS  Rejection– refusal to accept an offer terminates the power of acceptance.  Counteroffer—counter-proposal from the offeree to the offeror that indicates a willingness to contract, but on different terms from the original offer.  11

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. D URATION OF O FFERS  Counteroffer. Conditional acceptance is a type of counteroffer which purports to accept the offer, but with additional or different terms. G IANNETTI V. C ORNILLIE (1994). G IANNETTI V. C ORNILLIE (1994). 12

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. D URATION OF O FFERS  Death or Incompetency – either offeror or offeree usually terminates the offer; exception is offer contained in an option.  Destruction of Subject Matter – terminates the offer.  Subsequent Illegality – terminates the offer. 13

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C OMMUNICATION OF A CCEPTANCE  Definition – positive and unequivocal expression of a willingness to enter into a contract on the terms of the offer.  14

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C OMMUNICATION OF A CCEPTANCE  Communication of Offer. General Rule —acceptance effective upon dispatch unless the offer specifically provides otherwise or the offeree uses an unauthorized means of communication.  15

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C OMMUNICATION OF A CCEPTANCE  Communication of Offer. Silence as Acceptance – usually inaction does not indicate acceptance, unless in usual customs or previous dealings, offers have been accepted by silence; example: members of mail order clubs indicate acceptance by NOT returning a mailed notice of shipment. 16

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C OMMUNICATION OF A CCEPTANCE  Communication of Offer. Effective Moment. Stipulated Provisions in the Offer – the communication of acceptance must conform to the specification in the offer. O SPREY LLC V. K ELLY M OORE P AINT C O., I NC. (1999).  Authorized Means –unless the offer provides otherwise, acceptance can be formed in any reasonable manner. O SPREY LLC V. K ELLY M OORE P AINT C O., I NC. (1999).  17

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C OMMUNICATION OF A CCEPTANCE  Communication of Offer. Effective Moment. Unauthorized Means – acceptance effective when received, provided that it is received within the time within which the authorized means would have arrived. Acceptance Following a Prior Rejection – first communication received by the offeror is effective. 18

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C OMMUNICATION OF A CCEPTANCE  Communication of Offer. Effective Moment. Defective Acceptance – late or defective acceptance does not create a contract but serves as a new offer. To create a contract, the original offeror must accept the new offer. 19

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. O FFER AND A CCEPTANCE

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. V ARIANT A CCEPTANCES  Common Law – Under the common law, an acceptance must be positive, unequivocal and must not change the provisions of the offer. Mirror Image Rule – except as modified by the Code, an acceptance cannot deviate from the terms of the offer.  21

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. V ARIANT A CCEPTANCES  Code – Under the Code, an attempt is made to examine the intent of the parties, regardless of the terms, especially in written contracts between merchants using standard sales forms. Battle of the Forms. 22

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. R EVIEW : M UTUAL A SSENT Has a definite and certain offer been communicated? No offer Offer terminated Has lapse of time, death, incompetency, destruction of subject matter, or subsequent illegality occurred? Yes No Has the offer been revoked by the offeror? Has the offeror received a rejection or counteroffer? Is acceptance effective? No No contract No Yes Contract formed