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Just a Bit More Acceptance; Termination of Offers

Just a Bit More Acceptance; Termination of Offers. Contracts – Prof. Merges Feb. 14, 2011. Crowdsourcing an M&A Transaction. Deal terms. 3 purchase options Minimums, upside sharing etc. Corinthian Pharma Systems v. Lederle Labs.

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Just a Bit More Acceptance; Termination of Offers

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  1. Just a Bit More Acceptance; Termination of Offers Contracts – Prof. Merges Feb. 14, 2011

  2. Crowdsourcing an M&A Transaction

  3. Deal terms • 3 purchase options • Minimums, upside sharing etc.

  4. Corinthian Pharma Systems v. Lederle Labs

  5. Most commonly, bacteria multiply in the throat, where a grayish membrane forms. This membrane can choke the person. Sometimes, the membrane forms in the nose, on the skin, or other parts of the body. The bacteria can release a toxin that spreads through the bloodstream and may cause muscle paralysis, heart and kidney failure, and death. Approximately 5% of people who develop diphtheria (500 out of every 10,000) die from the disease and many more suffer permanent damage. In the 1920s, before the diphtheria vaccine, there were 100,000 to 200,000 reported cases in the United States each year. Because of the high level of immunization, only one case of diphtheria was reported in the United States in 1999.

  6. Corinthian Pharma v. Lederle • Facts & Procedural History

  7. What is at stake? • 950 vials at $171 (instead of $65) • $100,700 • Worth litigating this claim?

  8. Corinthian Pharma v. Lederle • UCC Review • UCC § 2-206

  9. Analyzing the communications • Lederle’s letter to customers • Top p. 162

  10. Key terms • “all orders subject to acceptance by Lederle” • Prices “submitted without offer and subject to change without notice”

  11. Analyzing the communications • Lederle’s letter to customers  Invitation to offer

  12. Analyzing the communications • Lederle’s 5/20/86 letter to customers  Invitation to offer • Lederle Price Letter E-48

  13. Analyzing the communications • Lederle’s 5/20/86 letter to customers  Invitation to offer • Corinthian’s telephone order 5/19/86 • P. 162

  14. Analyzing the communications • Lederle’s 5/20/86 letter to customers  Invitation to offer • Corinthian’s telephone order 5/19/86  Offer

  15. Analyzing the communications • Lederle’s 5/20/86 letter to customers  Invitation to offer • Corinthian’s telephone order 5/19/86  Offer • Telgo system tracking # 5/19/86  No legal significance

  16. Corinthian’s 2 confirmations  attempted acceptance – no legal effect

  17. Lederle’s shipment of 50 vials of vaccine and letter of 6/3/86 • P. 162, bottom

  18. Lederle’s shipment of 50 vials of vaccine and letter of 6/3/86  Counteroffer

  19. UCC Analysis • § 2-206 • Promise or shipment can be acceptance of offer (order) • But: nonconforming goods may be “accommodation”

  20. Accommodation • Treated as a counteroffer • On what terms? On terms stated (here, quantity of 50 at old price, remaining 950 at new price)

  21. Terminating Power of Acceptance • Lapse • Revocation • Death of Offeror • Rejection

  22. Lapse • Recall Ever-Tite Roofing

  23. Lapse: Loring v. City of Boston – p. 173

  24. Dickinson v. Dodds • Lapse • Revocation • Death of Offeror • Rejection

  25. Dickinson v. Dodds • Facts; procedural history

  26. 6/10/1874 Memorandum “I hereby agree to sell to Mr. George Dickinson . . . [Signed] John Dodds. PS: This offer to be left over until Friday 9 o’clock a.m.”

  27. Facts subsequent to 6/10 memo

  28. Facts subsequent to 6/10 memo • The “cast of characters” • Mr. Berry • Mr. Allan • Mrs. Burgess

  29. Opinion of James, LJ • How does consideration come into it?

  30. The “Underlying” Deal Dickinson: Convey title to property Dodds: $$ for land

  31. The Deal About the Offer Dickinson: Refrain from revoking or terminating offer before 9 am 6/12 Dodds: Think about buying land

  32. Dickinson Dodds

  33. Dickinson Dodds ¢ -- ?

  34. The sequence of events . . .

  35. [Both thought the agreement to keep offer open was binding, and] “this probably explains a good deal of what afterwards took place” – p. 173, top

  36. Dickinson’s purported acceptance at Mrs. Burgess’s home • Why not effective? • Does it matter that Dodds was not home?

  37. Dickinson’s purported acceptance at Mrs. Burgess’s home • Why not effective? • Does it matter that Dodds was not home? • Why did Mrs. Burgess conveniently “forget” to give Dickinson’s note to Dodds?

  38. The scene at the Darlington Railway Station . . .

  39. What was each party trying to do? • Dodds • Dickinson

  40. What was each party trying to do? • Dodds • Dickinson • Why send Berry?

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