1. PROMISSORY LIABILITY CREATING LIABILITY FOR PROMISE Mutual Assent Reliance Benefit Conferred + Promise Offer Acceptance Consideration Promissory Estoppel Restitution Benefit Conferred no Promise Promises w/I Family Charitable Subscriptions Promises w/i Commercial context Copyright©2004 Kenneth D. Ferguson

2. PROMISSORY LIABILITY CREATING LIABILITY FOR PROMISE Mutual Assent Reliance Benefit Conferred + Promise Offer Acceptance Consideration Promissory Estoppel Restitution Benefit Conferred no Promise Promises w/I Family Charitable Subscriptions Promises w/i Commercial context Copyright©2004 Kenneth D. Ferguson

3. Reaching Agreement: The Process of Contract Formation A. Offer and Acceptance: Bilateral Contracts 1.Bilateral contracts. Are contracts involving promissory commitments on both sides. a.A promise to perform is exchanged for a promise to perform on the other side. b.The classical theorists viewed bilateral contracts as typically being the result of a negotiating process referred to as "offer and acceptance." 2.The "offer and acceptance" process leading to a bilateral contract is typically a three step process. a.Preliminary negotiation. In this first phase there is an exchange of communication of a more or less detailed nature regarding the subject matter of the exchange contemplated by the parties. Lonergan v. Scolnick. 1. §26 Restatement 2nd which states that “[a] manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows 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.”

4. Reaching Agreement: The Process of Contract Formation A. Offer and Acceptance: Bilateral Contracts b."Offer". In this stage one party makes a direct, complete proposal that a contract be entered into on the terms outlined by the offeror. 1.See § 24 Restatement 2d defining an offer as a “manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.” 2.The effect of the offer is to create in the offeree the "power of acceptance", once exercised a contact is formed. See § 35 Restatement 2d stating that “an offer gives to the offeree a continuing power to complete the manifestation of mutual assent by acceptance of the offer.”

5. Reaching Agreement: The Process of Contract Formation A. Offer and Acceptance: Bilateral Contracts c.Acceptance. If the offeree manifests her acceptance of the offer, at that moment the contract is formed. 1.§50 Restatement 2nd defining acceptance as “ a manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer.” a.When mail is invited medium, under the mail box rule, acceptance is effective upon dispatch. § 63 Restatement Second. b.Acceptance is otherwise effective upon receipt by offeror. c.If acceptance is by performance, acceptance is generally effective upon completed performance. (will consider exceptions)

6. Reaching Agreement: The Process of Contract Formation A. Offer and Acceptance: Bilateral Contracts c. 2.Counter-offer. The offeree may respond to the offer by making a counter-offer of her own. That is an offer on her own terms. If this is done, the original offeror now has the power to accept. This process can go on until a contract is formed. a.§ 39 Restatement 2d which states that “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 substitute bargain differing from that proposed by the original offer.” b. Offeree’s power of acceptance is generally terminated upon issuance of counter-offer. 1.Offeree may indicate a contrary intent with respect to the operation of the counter-offer. 2.Offeror may indicate a contrary intent with respect to the operation of the counter-offer.

7. Reaching Agreement: The Process of Contract Formation A. Offer and Acceptance: Bilateral Contracts 3.Rejection. The offeree can out right reject the offer without making a counter-offer, in which case the process is at an end. a.38 Restatement 2d which states that the offeree‘s power of acceptance is terminated by a rejection.” 4.Lapse of offer. The offeree may wait too long to respond to the offer, resulting in a lapse of the offer a.See § 41 Restatement 2d stating that the offers lapses after a time specified in the offer or a reasonable time. 5.Revocation. On the other hand, the offeror may change his mind before acceptance and revoke the offer thereby terminating the power of acceptance created by the offer. a.See § 42, Restatement 2d stating that the offeree’s power of acceptance is terminated if he received from the offeror a manifestation on an intention not to enter into the proposed bargain. b.Under § 43, Restatement 2d, the offeree’s power of acceptance is terminated upon indirect communication of such.