Answering the “Offer and Acceptance” Objection

Answering the “Offer and Acceptance” Objection Richard Warner

The Current Situation • Courts routinely enforce End User License Agreements between a software manufacturer (Microsoft, Adobe, ProCD) and a consumer (you, me, Zeidenberg). • What is the answer to the “no offer and acceptance” argument? • To see the answer, first ask, • Why don’t we read standard form contracts?

The Answer • Because we already know the terms are acceptable. • Seeing why this is true provides the answer to the “offer and acceptance” objection. • The place to begin is with the fact that contracting is a norm-governed activity.

Norms Defined • A norm is • a sanction-supported behavioral regularity in a group of people, where • the regularity exists in part because each group member thinks each group member ought to act in accord with that regularity. • An example: • You enter a crowed elevator. Where should you stand?

Contract Examples • “Do not deceive a party about a material element of the bargain.” • A norm governing negotiation. • “Impose liability on the best cost-avoider.” • A norm governing contractual terms. • The refrigerator example. • “Sellers may disclaim consequential damages.”

Disclaiming Consequential Damages • This is a sanction-supported regularity • sellers regularly disclaim consequential damages, and • courts regularly enforce the disclaimers. • But do buyers think the ought to abide by it? • How could they? Most do not even know what it means.

Legally-Implemented Norms • People think that they ought to abide by the law. • The disclaimer of consequential damages is a legally enforceable provision, • So buyers think that they ought to abide by it.

Norm Consistent Terms = Acceptable Terms • Assume the terms in a standard form contract are consistent with a relevant norms. • The buyer accepts and abides by the norms. • Hence, the buyer thinks he or she ought to accept and abide by norm consistent terms. • To do otherwise is to do what the buyer thinks he or she ought not to do.

Sellers Will Offer Norm-Consistent Terms • But why will sellers offer norm-consistent terms? • Because, in a sufficiently competitive market, that is the way they maximize profits. • The basic idea: • Buyers who detect a norm-violation will not, other things being equal, buy from sellers offering norm-inconsistent terms, and • Enough buyers will not buy that the lost profits are greater than any gain from norm-inconsistent terms.

The Offer and Acceptance Objection • The pre-packaged, no-negotiation deal contains acceptable terms, but • Should we regard that deal as a contract? • Where is the offer?

Offer Defined • An offer is a manifestation of a willingness to enter a bargain so made as to justify the offeree in thinking his or her assent will conclude the bargain. • Manifestation: • If the buyer knows the terms are acceptable, why not regard that as enough for a manifestation? • Similarly, why not regard the consumer as justified in thinking his or her buying the item concludes the bargain?

Freedom • There is a problem: contractual obligations are freely undertaken obligations. • How is the compelled choice involved in the no-negotiation contract a free choice. • The Cayman Islands example

Answering the “Offer and Acceptance” Objection