This lecture explores key principles of contract law, focusing on offer and acceptance, revocation of unilateral contracts, and counteroffers in commercial transactions. It examines the Battle of the Forms and the implications of the UCC §2-207 on contract formation. Through illustrative examples, including the Brooklyn Bridge scenario and real-world case studies, we will delineate how counteroffers terminate acceptance and the intricacies of the Mirror Image Rule. Participants will gain a deeper understanding of the concept of option contracts and the significance of clear communication in contract negotiations.
01 / 67The Dynamics of Offer, Acceptance, and Counteroffers in Contract Law
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The Dynamics of Offer, Acceptance, and Counteroffers in Contract Law
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Today • Revocation: Unilateral Contracts • Counter-offers • Battle of the Forms • UCC 2-207
Revocation: Unilateral Contracts • The Brooklyn Bridge example on p. 233. • Offeror terminates when offeree is halfway across the bridge.
Revocation: Unilateral Contracts • Restatement § 36(1). An offeree’s power of acceptance may be terminated by • (a) rejection or counter-offer by the offeree.
Revocation: Unilateral Contracts • Restatement § 45. Option Contract Created by Part Performance or Tender. (1) Where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance, an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it.
Acceptance vs. Counter-offer • Wholesaler offeror offers retailer offeree “a dozen 22 inch clay pots for $300.” Offeree emails back “Great. I’ll take three dozen.” • Is there a contract?
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.
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.
Acceptance vs. Counter-offer • Wholesaler offeror offers retailer offeree “a dozen 22 inch clay pots for $300.” Offeree emails back “Great. I’ll take three dozen.” • Not having heard from wholesaler, retailer emails back “OK, I’ll take a dozen.” • Is there a contract?
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.
Acceptance vs. Counter-offer • Restatement § 36. Methods of Termination of the Power of Acceptance(1) An offeree’s power of acceptance may be terminated by (a) rejection or counter-offer by the offeree
Counteroffer as Rejection: Dataserv Equipment • Restatement § 38(1). A party’s rejection terminates its power of acceptance. Once rejected an offer is terminated and cannot be accepted without ratification by the other party.
Acceptance vs. Counter-offer • Wholesaler offeror offers retailer offeree “a dozen 22 inch clay pots for $300.” Offeree emails back “Great. I’ll take a dozen but I’d really be much happier if you could send me three dozen.”
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.
The Battle of the Forms • “The sender of the last form … could insert virtually any conditions it chooses into the contract” (254) • Ionics
At Common Law • What happens at common law where: • There is performance and indisputably a contract • There has been a “Battle of the Forms”
The “Mirror Image Rule” at common law • §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.
The “Mirror Image Rule” • Restatement § 36. Methods of Termination of the Power of Acceptance(1) An offeree’s power of acceptance may be terminated by (a) rejection or counter-offer by the offeree
Ionics at 250 • Applying the last shot doctrine, what is the contract? • And who wins as to implied terms? • UCC 2-314: a warranty that the goods shall be merchantable … if the seller is a merchant with respect to goods of that kind
Ionics at 250 • How would you apply UCC § 2-207(1) (before the comma) to Ionics? • 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
Ionics at 250 • Who would win as to implied terms? • 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
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.
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. • Qu. the Elmwood “Acknowledgement”
Ionics at 250 • In similar circumstances, how did Roto-Lith end up applying the Last Shot doctrine?
What happens then? • 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.
Ionics at 250 • If Ionics rejects Roto-Lith, could 2-207(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;
Ionics at 250 • If Ionics rejects Roto-Lith, could 2-207(2) be helpful? • (a) the offer expressly limits acceptance to the terms of the offer; • Was that the case in Ionics?
Ionics at 250 • If Ionics rejects Roto-Lith, could 2-207(2) be helpful? • (b) they materially alter it; or
Ionics at 250 • If Ionics rejects Roto-Lith, could 2-207(2) be helpful? • (b) they materially alter it; or • Was that the case in Ionics?
Ionics at 250 • If Ionics rejects Roto-Lith, could 2-207(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: • (c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
Ionics at 250 • If Ionics rejects Roto-Lith, could 2-207(2) be helpful? • (c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received. • Was that the case in Ionics?
Ionics at 250 • So what happens when 2-207(1) and 2-207(2) are both ousted?
Ionics at 250 • 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 isn’t
Ionics at 250 • 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.
Ionics at 250 • 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. • And what would this be? See Comment 6
