I. Introduction to Contract Law

A. Basic Concepts: Terminology, Pedagogy, and Theory Epstein, Markell & Ponoroff, p: -713-716Name Hawkins v McGee 1929 s/c ct NH

Pg 713Facts has large scar tissue on palm from electrocution

Surgeon solicits skin graft and promises 100% hand seeks damages for less than perfect hand

Procedure t/c ruled in favor of awarding 3k in damages for breach of contract.∆ appealed on excessive award

Issue Is there a contract, and if so should the breach of this contract award damages?

Holding Yes there was a contact. No, the award was excessive.Reasoning Because surgeon guaranteed “to make the hand a hundred percent perfect”

and solicited the father to experiment there was an alleged contract.

The difference between the value to him of a perfect hand or a good hand such in its present condition including any incidental consequences fairly within the contemplation of the parties when they made their contract.

Disposition New trialDissent None

WHAT—is the subj matter of transaction or dispute?Goods? Services?—gravamen v predominant purpose

WHERE—what jurisdiction governs?Int’l-CISG? Federal? State?

HOW—did parties enter into or perform transaction?Usually business deal in this class

WHO—is the party, of the contract, subject to a particular body of law or legal rules?UCC, CISG?

WHEN—did the parties enter into or perform the transaction?Pre-UCC, time of slavery?

-1-22 Contracts consists of

o Promise or promiseso Enforcement

Most contracts consist of an exchange of promises This request to get something in return for a promise must be supported by

consideration As of complex economic system has lead courts to take an activist role in monitoring

the fairness of contractual relationships, particularly where there is a significant disparity in bargaining power between the parties

o UCC (1952)o Restatement 2d (1981)o CISG (1986)

-Restatement (Second) of Contracts §1-3 -UCC: -§1-201(b)(3)agreement as distinguished from contract means the bargain of the parties in fact as found in their language or inferred form other circumstances including course of performance course of dealing or usage of trade as provded in section 1-303-(12)—contract as distinguished form from agreement mean the total legal obligation that results from the parties agreement as determined by the UCC as supplemented by any other materials-(26)—party as distinguished form thirty party means a person that has engaged in a transaction or made an agreement subject to the UCC-(27)—person mean an individual, corporation, business trust, estate, trust, partnership, limited liability co., association, joint venture, government, governmental subdivision, agency, or instrumentality, public corporation, or any other legal or commercial entity. -§1-303—a-a course of performance is sequence of conduct between the parties to a particular transaction that exists if

1-repeated occasion for performance by party 2-other party acquiesces without objection to nature of performance b-course of dealing is sequence of conduct concerning pervious transactions between the parties to a particular transactionc-usage of trade is any practice or method od dealing having regularity in place vocation or trade to justify and expectationd-a course of performance may supplement or qualify terms of the agreement and usage of trade applicable in the place in which part of the performance under the agreement is to occur may be so utilized as to that part of the performancee-course of performance or usage of trade may be use whenever reasonably construedf-subject to 2-209 a course of performance is relevant to show a waiver or modification to any term inconsistent with the course of performanceg-usage of trade offered by one party is not admissible unless that part have given the other party notice that the court finds sufficient to prevent unfair surprise to the other party. -§2-106(1)

UCC governs present and future sales ie sale of sculpture.A sale consists in the passing of a title from the seller to the buyer for a price. A present sale means a sale which is accomplished by the making of the contract.

B. Basic Concepts: Governing Law UCC:1-102scope of art. 11-103(b)Principles of equity, merchant, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other validating or invalidating laws supplement the UCC. 1-108UCC modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act2-102

Art. 2 applies to goods 2-105(1)Specially manufactured goods ie car—many good manufactured into oneincluding: unborn animals and growing crops and other things attached to realty2-107(1-2) 1-removed from realty, mineral, or its structure or its material to be removed from realty is a contract for the sale of goods if there to be severed by seller.2-sale of things attached to realty capable of severance w/o material harm therto such as timber is a contract of goods within this article

UETA §§ §2(1)-agreement means the bargain of parties in factdetermined by express language and circumstancesrestatement—mutal assent (4)—contract means the total legal obligation resulting from parties agreement (5)—electronic means relating to technology having electrical, digital, wireless, etc capabilities—defined broadly for growing technology (7)—electronic record means a record created or generated by electronic means(8)—electronic signature means an electronic sounds, symbol or proves attached to a logically associated with a recorded and executed or adopted by a person with the intent to sign the record (13)—record means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable storing information in means other than human memory(16)—transaction means an action or set of actions occurring between 2 or more persons relating to the conduct of business, commercial, or governmental affairsdoes not include unilateral or non-transactional actions§3—scope—applies to electronic records and signatures §5—application—applies to any electronic records or signatures created, generated, communicated or stored on or after effective date.

E-SIGN §§ 7001(a)—electronic signature may not be denied legal affect validity or enforceability solely because it is electronic or because an electronic record was used7002(a)—superseding statutes may modify or limit this act

CISG arts. 1—convention applies to contracts of sale of good between parties whose place of business are in different states. Both parties must reasonably know that other party is of a different state before contract for CISG to be applicable. CISG can be applicable law where only one party has adopted the CISG2—does not apply to personal goods, investments (stocks securities money), electricity, or vessels (aircraft ship hovercraft)3—contracts for goods to be manufactured are considered sales unless the party who orders the goods undertakes a substantial part in supplying materials for production.CISG does not apply to contract which part of obligations of party who furnishes the goods consists in the supply or labor or other services. 6—parties may exclude the application of this convention or subject to art 12 derogate from

or vary the effect of any of its provisions. 10—if party has multiple places of business, the place with the closest relationship to the contract and performance regarding the circumstances know by parties before conclusion of contract or a habitual residence.

Test for Mixed Contractspredominant purpose test-(majority test)—why did parties enter into contract? Goods or serv.Gravamen test—what is π sueing for?—more certain than PPGoverning LawgoodsUCC Art 2 or CISG UCC will govern entire contract is PP determines contract is for goods If πs complaint is for goods then UCC will only govern that aspect of contractnon-goodscommon law/restatement 2d

Anthony Pools v. Sheehan, 455 A.2d 434 (Md. 1983)

Name Anthony Pools v Sheehan 1983S/C Md

Facts Sheehan slipped and fell off ∆ diving board Skid resistant surface stopped an inch short of each side

Procedure T/C directed verdict for ∆ A/C reversed S/C affirmed in favor of Sheehan

Issue Should the “predominant purpose” test be used to determine whether the sale of the diving board included in the transaction carries and implied warranty of merchantability under §2-314?

Holding The diving board does carry an implied warranty of merchantability under §2-314.Reasoning All or nothing classification of the instant transaction under the predominant

purpose test would mean there could be no UCC based implied warranties on the diving board and would be contrary to the legislative policy implicit in §2-316.1

Because transaction in case was a hybrid including services and good predominant purpose test is against policy thus graveman test is used concluding the diving board does carry an implied warranty

In re Trailer & Plumbing Supplies, 578 A.2d 343 (N.H. 1990) Name In re Trailer & Plumbing Supplies, 578 A.2d 343 (N.H. 1990)

Facts Contract mainly for services Point of supplies was for services not supplies No distinction between services and goods No cost breakdown Project not goods Shoester purchased supplies from 3rd party

ProcedureIssue Who owns supplies?

Care Display, Inc. v. Didde-Glaser, Inc., 589 P.2d 599 (Kan. 1979)

Name Care Display Inc v Diddle-Glaser Inc1979 S/C Kan

Facts Care display agreed with Diddle Glaser on booth design for chicago trade show Diddle employee left company and new employee sent out for bids and

ultimately did not hire care display because employees were not unionProcedure T/C ruled for π and A/C affirmedIssue Was the contract for goods or services? Contract enforceable under statute of

frauds?Holding Predominant factor test shows mainly services thus contract valid.Reasoning Sufficient evidence for services particularly inceptional and design services

extremely important in this particular contract with production and set-up being secondary thus predominant factor is services

Design models were prepared by care display and the overriding concern throughout all the extensive negotiations was the development of an artistic or design concept while the actal physical production of the booth and materials to be used therein were incidental to overall subject matter.

Tivoli Enterprises, Inc. v. Brunswick Bowling & Billiards Corp., 646 N.E.2d 943 (Ill. App. Ct. 1995)Name Tivoli Ent. Inc vs Brunswick Bowling

Ill App 1995Facts Tivoli ordered 12 new bowling lanes from Brunswick which worked very

well for 5 years before having issues Brunswick did repairs until 1992 when Tivoli filed a complaint for breach of

contract because lanes should have never been installed for the atmospheric conditions of Tivoli lanes

Procedure -T/C used precedent of predominant factor—contact for goods thus 4 yr statute of limitations thus no breach-App ct affirmed

Issue Should the predominant factor test or graveman test be used to determine what kind of contact ?

Holding Predominant factor test should be used.Reasoning No precedent cases use graveman so predominant factor testgoodsstatue of

limitationsno breach

Midwest Mfg. Holding LLC v. Donnelly Corp., 975 F. Supp. 1061 (N.D. Ill. 1997)

Name Midwest Mfg. Holding LLC v. Donnelly Corp., 975 F. Supp. 1061 (N.D. Ill. 1997)

Facts Acquisition of plasma touch screen company including patents Seller decides not to sell before contract is signed Plaintiff argues statute of frauds does not apply—oral contract is

sufficient ∆ argues tangible goods> intangible aka

goods > personal property Ill statute requires signed contract for sale of goods >$500

Procedure Motion to dismiss deniedsent to courtIssue Is sale for personal property or goods?Holding ∆ Motion to dismiss deniedReasoning The contract was mainly for patents trade secrets technology and operating

know how aka PERSONAL PROPERTY. Therefore using predominant purpose test shows that this contract was mainly for personal property NOT goods thus UCC does not apply consequently neither does statute of frauds. A court will hear the case.

Feingold v. Win-Vent, Inc., 562 A.2d 830 (Pa. Super. Ct. 1989) Name Feingold v. Win-Vent, Inc., 562 A.2d 830 (Pa. Super. Ct. 1989)Facts Fiengolds ordered winders

Winders are delivered damaged, twice 5 yrs later Fiengolds brought suit for breach of contract Win-Vent motioned for summary judgment pursuant 4 yr statute of

limitations Fiengolds appealed that the winders were not goods and that a 12 yr

statute of limitations is applicable.Procedure T/C ruled in favor of ∆

S/C affirmedIssue Were uninstalled winders goods or fixtures of personal property?Holding Winders were MOVABLE at time of delivery thus a good under UCC and

the 4 yr statute of limitation is applicableReasoning Widners were movable as they were never installed nor ever a fixture thus

good and UCC 4 soley applys.

American Mint LLC v. GOSoftware, Inc., 2006 WL 42090 (M.D. Pa. 2006)

Name American Mint LLC v. GOSoftware, Inc., 2006 WL 42090 (M.D. Pa. 2006)Facts Goede owned Mint company in PA and purchased software to use in

GER were he was told the German numeric system would work Software didn’t work as promised Goede sues under his name not the company mint which was on the

contractProcedure dismissedIssue Was the contract between RiTA and Mint(Pa citizen/corporation) or Goede

(citizen of GR)?Holding Contract was between Mint and RiTA thus CISG not applicable because

Goede is a 3rd party not the “buyer” and Fed Ct lacks subject matter jurisdiction.

Reasoning Plaintiff did not prove by preponderance of evidence that Goede and Mint were one in the same thus dismissed to state court.

Asante Technologies, Inc. v. PMC-Sierra, Inc., 164 F. Supp. 2d 1142 (N.D. Cal. 2001)

Name Asante Technologies, Inc. v. PMC-Sierra, Inc., 164 F. Supp. 2d 1142 (N.D. Cal. 2001)

Facts Removed by ∆ to CA s/c court Plaintiff DE corp with princ plc business in CA Plaintiff buys components from ∆ ∆s also DE corp with principle place of business in BC with engineers

in Portland OR and distribution through 3rd party in CA Plaintiff argues third party distributor in CA acts as agent for ∆ thus

CISG doesn’t govern ∆ consented to be bound by acts of unique but ∆ also shows document with unique that distributor can not accept

obligations of sierra whatsoever ∆ argues that choosing law does not show intent to opt out of CISG and

ct agrees

Procedure Brought to CA T/C removed to CA D/CIssue Is contract governed by CISG? Does the CISG preempt state law?Holding YesReasoning CISG adopted by CA and BC so whatever they choose will be CISG

regardless Plaintiff does not persuade ct that Unique acted as agent for Sierra The availability of independent state contract law causes of action

would frustrate the goals of uniformity and certainty embraced by the CISG

CISG is limited in scope but does preempt state law to the extent that the state cause of action fall within the scope of CISG.

Disposition Remand DENIED

II. Contract Formation

A. Mutual Assent

Epstein, Markell & Ponoroff, pp. 36-66

Name Lucy v Zehmer 1954 Va S/C pg37

Facts Lucy has been trying to buy Fergeson farm from Zehmer for a year Lucy walks into dinner with whiskey to make offer on farm Boasting match bet you will bet you wont occurs Mr and Mrs Zehmer signed back of receipt and agree verbally to sell

farm Zehmer says he was joking and drunk when the contract was signed Lucy bring suit for specific performance to sell farm

Procedure Ruled for ∆ at T/C rev in S/CIssue Is the contract valid?Holding Yes, Lucy objectively thought Zehmer wanted to sell farmReasoning Objective standard proper—cannot read mind or understand jest of one

party

Name Leonard v Pepsico 2000 NY Cir. Ct—pg 47

Facts Pepsi runs commercial for pepsi points showing a harrier jet for 7 mill points

kid sees it on tv raises 700k to buy 7mil points no jet in pepsi catalog sends check in mail order for harrier jet, pepsi laughs and says sorry

kiddo kid sues for breach of contract

Procedure Dist ct ruled for ∆ and cir. Ct confirmedIssue Does pepsi have to honor commercial for harrier jet at 7mill points?Holding NoReasoning Advertisements are understood to be requests to consider and negotiate. No

contract because points = words of limitation, not in catalog. Unreasonable to think 700,000 would buy a 23 mil$ jet.

Name Gleason v Freeman TN Dist Ct 2008 pg 55

Facts Freeman=∆ and hired Shutts as agent to sell famous Elvis house But for sale on ebay Ebay terms and condish “auction style advertisements of real property

do not involve legally binging offers to buy and sell—instead ebay real estate auction are simply a way for sellers to advertise their real estate and meet potential buyers”

Shutts added “please note that bidding on ebay is legally binding contract in which the winner commits to following theough on the purchase”—added to deter frivolous bidders

Gleason and partners won bid and filled out an offer form for 15k down and total of 905,100$

11 days later new party mike curb offered a milli and ∆s accepted offer Elements of breach of contract 1. Existence of contract 2. breach 3. damages as result of breach

Procedure Dist Ct denies π motion for partial sum judgment and grants ∆ motion for summary judgement

Issue Was the ebay auction a binding contract?Holding NoReasoning “legally binding contract” language added to deter frivolous bidders and

does not override ebay auction terms that only an invite to make offer. ∆ and π were negotiating contract thus evidence no contract

Name Smith V Boyd S/C of RI 1989 pg.58

Facts Boyd sown house in Cape Cod Listed house for 325k with real estate Joan Carter Smiths sent written offer for selling price + appliances and Boyds orally

agreed to accept offer. Later same day Durigans sent offer for selling price w/o appliances Joan Carter gave both offers to Boyds at the same time Boyds took Durigan offer and Smith brought suit

Procedure T/C ordered Boyds to sell house to πs smith.S/C RI reversed

Issue Are the Boyds bound by oral acceptance of Smiths offer?Holding No, contract never createdReasoning Contract is consensual endeavor. Real estate requires writing so oral

agreement is moot. Policy that parties can negotiate without fear of being bound by discussions.

Restatement (Second) §§

4—a promise may be made through words: orally, written, or inferred through conduct17—formation of a contract requires a bargain in which there is a manifestation of mutual assent to exchange and considerationWhere or not there is a bargain a contract may be formed under special rules applicable to formal contracts or under §§82-94Under UCC assent by customer or beneficiary nor consideration is necessary to establish a letter of creditConsideration is often synonymous with an exchange 18—manifestation of mutual assent to an exchange requires that each party wither make a promise or begin or render a performance.Meaning if another party does not reasonable know the other party is joking they may enforce the jest or sham contract 19—assent can be an act or failure to act, written or spokenparties be aware or reasonably aware his conduct may be inferred by other party as assentFraud duress and mistake can void a contract is a party manifests assent through actions although he does not in fact assent20—if parties have materially different understanding of exchange there is no mutual assentMeaning attached to assent will be considered as to what a party should reasonably know in determining assent21—intention that a promises to be legally binding is essential to the formation of a contract but a manifestation of intention that a promise shall not affect legal relations may prevent the formation of a contract.22—mutual assent usually takes form in offer and acceptance however this is not necessary to manifest mutual assent23—it is essential to a bargain that each part manifest assent with reference to the manifestation of the other.

U.C.C. § 2-204 1-Contract for goods can be made in any manner sufficient to show agreementAgreement is sufficient to constitute a contract even though the moment of its making is undetermined2-Even thou one or more terms are left open a contract does not fail for indefiniteness of the 3-parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

B. Offer: Basic Principles

Epstein, Markell & Ponoroff, 66-83

Name Lonergan V Scolnick 1954 Cal App pg 66

Facts Scolnick put ad in LA paper “Joshua tree vicinity 40 acres need cash will sacrifice”

∆ lived in NY and wrote to ad asking for brief description and directions to land

∆ found land and then stated “bank is ok for escrow agent” π replied “If you’re really interested, decide fast I expect a buyer in a

week” 4 days later property was sold to third party 5 days after prop was sold (9 days from letter to hurry) π gave escrow

agent 100$ depositProcedure T/C ruled for π and app ct affirmedIssue Is there a contract in negotiation letters?Holding NoReasoning In spite of the condition thus imposed the plaintiff delayed more than a

week before notifying the ∆ of his acceptance and since the π was aware of the necessity of promptly communicating his acceptance to the defendant his delay was not the prompt action required by the terms of the offer. There can be no contract unless the minds of the parties have met and mutually agreed upon some specific thing. Advertisement in paper was request for an offer not an offer.

Name Maryland v Blake Coct of app MD pg 70

Facts Blake is general contractor who won bid for middle school supreme is subcontractor who makes ready-mix-concrete in writing Maryland offered $21/yrd for entire job six monthas after written letter supreme raised price to$27/yrd Supreme argues there was no contractual obligation Blake says due to the trade customs there obviously was

Procedure T/c ruled for Blake and App ct affirmedIssue Was there a contract?Holding YesReasoning Letter from Supreme was a proposed offer Blake accepted offer and

Supremes actions of 6 months of $21/yrd constitute their belief their offer was accepted.

133-136

Name Carlill v carbolic smoke ball coCt of app 1893

Facts Smoke ball put add in paper offering to pay 100 pounds to anyone who contract s flu after using smoke ball as directed

carlill used ball as directed and brought suit after contracting flu CSB say jk no one would believe this add Carlill says you made an escrow account.. seems legit

Procedure Trial court ruled for π and app ct affirmedIssue Was this a reward offer?Holding yesReasoning Manifestation of intent not subjective intent—carlill used product as direct

—manifested intent by using.With reward offers do I have to claim the benefit of offer and claim benefit—do I have to know about it before I perform? If had not seen add he still performed as instructed for reward offer.

Restatement (Second) §§ 2426—A manifestation 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 [the offeror] has made a further manifestation of assent.”27—manifestations of assent that are in themselves sufficient to conclude a contract will not be prevented from so operation by the fact that parties also manifest an intention to prepare and adopt a written memorial thereof but the circumstances may show that the agreements are preliminary negotiations 29—1-The offeror’s manifested intent determines who mayaccept the offer.2-anyone or everyone who makes a specified promise or renders aspecified performance.31—an offer may propose the formation of a single contract by a single acceptance or the formation of a number of contracts by successive acceptances from time to time.32—Language or circumstances sometimes make it clear that the offeree is not to bind himself in advance of performance. His promise may be worthless to the offeror, or the circumstances may make it unreasonable for the offeror to expect a firm commitment from the offeree. In such cases, the offer does not invite a promissory acceptance, and a promise is ineffective as an acceptance. Examples are found in offers of reward or of prizes in a contest, made to a large number of people but to be accepted by only one.33—1-2—Requirement of “Certainty”: a purported offer cannot be accepted to form acontract unless the terms of the offer “provide a basis for determining theexistence of a breach and for giving an appropriate remedy.”3—E. Effect of “Open” Term(s): the existence of one or more open or uncertain terms

may evidence that the purported offer is only preliminary.34—1-The terms of a contract may be reasonably certain even though it empowers one or both parties to make a selection of terms in the course of performance.2-Part performance under an agreement may remove uncertainty and establish that a contract enforceable as a bargain has been formed.

3-Action in reliance on an agreement may make a contractual remedy appropriate even though uncertainty is not removed.

CISG arts. 14—1-An offer “is sufficiently definite if it indicatesthe goods and expressly or impliedly fixes or makes provision fordetermining the quantity and price.”2-a proposal other than one addressed to one or more specific persons is to be considered merely as an invitation to make offers unless the contrary is clearly indicated by the person making the proposal.15(1)—an offer becomes effective when it reaches the offeree24—an offer declaration of acceptance or any other indication of intention reaches the addressee when it is made orally to him or delivered by any other means to him personally to his place of business or mailing address or if he does not have a place of business or mailing address to his habitual residence

Lefkowitz v. Great Minneapolis Supply Store, 86 N.W.2d 689 (Minn. 1957)

Name Lefkowitz v. Great Minneapolis Supply Store S/c MN 1957

Facts Store advertised fur coats for $1 first come first serve Lefkowitz showed up with one dollar Store refused sale claiming it was only for women

Procedure T/c ruled in favor of πIssue Under what circumstances does an advertisement for the sale of

goods constitute an offer?Holding When nothing is left up to negotiations-positive terms-Reasoning An advertisement involving a transaction in goods is an offer when it

invites particular action, and when it is clear, definite, and explicit and leaves nothing open for negotiation.the offer was clear, definite, explicit, and left nothing open to negotiation. While the offeror has the right to modify his offer prior to acceptance, he cannot change his offer after acceptance—acceptance was showing up with $1

Donovan v. RRL Corp., 27 P.3d 702 (Cal. 2001)

Name Donvan v RRL Corp

S/C Cal 2001Facts RRL owns lexus of westminster. Places an ad in local newspaper

Paper Advertise a 1995 jaguar for $25,995 with vehicle id number Donovan shops around and decides 95 jaguar is a good deal and decides to buy

it. Donovan brings suit when RRL wont sell at advertised price

Procedure Historians claim it was lost in translationIssue Is RRL bound to sell car at advertised price?Holding Yes under Ca statuteReasoning CA has a statute which says that its a violation to fail to sell a vehicle at the

advertised price...unless ad specifies a time limit.The statute trumps common practice. Statute takes precedence over general rule. While the dealer/buyer might have expected to haggle, the statute requires the dealer to sell the car no more than the advertised price.

C. Terminating the Offer Epstein, Markell & Ponoroff, pp. 83-96 Name Dickinson v Dodds

1867Facts Dodds written offer to Dickenson is left open until Friday June 12 at 9

AM. June 11 Dickenson decides he accepts, tries to communicate this to Dodds, but cant find Dodds. Dickinson leaves acceptance letter to Dodds mother in law.

Dickinson attempts to accept when he finally finds Dodds, but Dodds tells him that he already sold it to someone else. Dickinson sues.

Procedure T/c ruled for Dickinson but Ct of app Chncery Div reversedIssue Did Dickinson Properly accept offer from Dodds?Holding NoReasoning T/c Ruled that allen was an agent of Dodds and could properly accept

Dickinson’s acceptance but Chancellor Bacon disagreed.Courts don’t want to make third parties(allen) to give up land they bought who are unaware of previous negotiations (dickinson and dodds).A revocation is effective when the offeree gets notice of it. Acceptance is effective when the offeree communicates it to the offeror. Dickinson dispatched acceptance to Dodds before Dodds tells Dickinson that he sold it to someone else.

Case Minn Linseed Oil Co v Collier White head Co.Facts Linseed sends Collier a telegram asking for what Collier is willing to pay for

oil. Collier replies next day offering to pay 55 cents a barrell. Linseed responds it will sell collier 300 barrells at 58 cents a barrell

(counteroffer). Collier doesnt get 58 cents a barrell telegram for a couple days, then responds

saying they accept. While telegram is in transit, Linseed sends telegram trying to cancel the offer. Linseed brings suit for balance due for oild sold to defendant

Procedure Dist Ct ruled for πIssue Did Linseed properly terminate offer?Holding YesReasoning Sent termination telegraph before the acceptance telegraph was received. Thus no

meeting of minds. The Court thought it “clear that the intetion of the plaintiff in making the offer by telegraph, to sell an article which fluctuates so much in price, must have been upon the understanding that the acceptance if at all should be immediate and as soon after the receipt of the offer as would give a fair opportunity for consideration. “

Restatement (Second) §§

35—-1-An offer gives to the offeree a continuing power to complete the manifestation of mutual assent by acceptance of the offer.2-A contract cannot be created by acceptance of an offer after the power of acceptance has been terminated in one of the ways listed in §3636—1-An offeree’s power to acceptance may be terminated by:

rejection or counter offer by the offeree lapse of time revocation by the offeror death or incapacity of the offeror or offerree

2-an offeree’s power of acceptance is also terminated by the non-occurrence of any condition of acceptance37—the power of acceptance under an option contact is not terminated by the rejection or counter offer by revocation or by death or incapacity of the offeror unless the requirements are met for the discharge of a contractual duty.38—Rejection is when1-offeree’s power of acceptance is terminated by his rejection of the offer unless the offeror has manifested a contrary intention.2-a manifestation of intention not accept an offer is rejection unless the offeree manifests intention to take it under further advisement39—1-a counteroffer is proposing a substituted bargain differing from that proposed by the original offer2-an offeree’s power of acceptance is terminated by his making a counteroffer, unless the offeror has manifested a contrary..40—r ejection or counteroffer does not terminate the power of acceptance until received by the offeror.41—a Lapse is:1-An offeree’s power of acceptance is terminated at the time specified in the offer, or, if no time is specified, at the end of a reasonable time.2-What is a reasonable time is a question of fact, depending on all the circumstances existing when the offer and attempted acceptance are made. 42—D irect Revocation is an offeree’s power of acceptance is terminated when the offeree receives from the offeror a manifestation of an intention not to enter into the proposed contract. 43—Indirect Revocation is An offeree’s power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable info to that effect.

OWH—“it would be mostrous to allow an inconsistent act of the offeror, NOT KNOWN OR BROUGHT TO THE NOTICE OF THE OFFEREE, to affect the making of a contract”What about revoking ADS or general offers?- hard for a company to retract all its offers that people saw in newspapers- its been held that equal publication/publicity should suffice.- Why? because the offeror would suffer unlimited liability if someone just said we didnt see the revocation but we saw the offer

Why do we have a liberal stance on revocation?- we dont want the offeror to have no power of the contract when the offeree does- so if we didnt allow basically unhindered revocation, the offeror would not be able to reject or accept a contract he sent, while the offeree would. This seems unfair. - there was also agreement that an offeror, without the power of revocability, might change his mind and would therefore not really intend to have a contract but we bound to if the offeree accepted ie “a meeting of the mind would not occur”

- this is discredited now (the notoin of meeting of the minds44—an offeror’s power of revation is not limited by the deposit of money or other property to be forfeited in the event of revocation but the deposit may be forfeited to the extent that it is not penalty46—where an offer is made by advertisement in a newspaper or other general notification to the public or to a number of persons whose identity is unknown to the offeror the offeree’s power of acceptance is terminated when a notice of termination is given publicity by advertisement or other general notification equal to that give to the offer and no better means of notification is reasonable available. 48—D eath or incapacity is an offeree’s power of acceptance is terminated when the offeree or offeror dies or is deprived of legal capacity to enter into the proposed contract.

While outdated, some people say that theres no meeting of the minds if one mind is dead, so no power to contract justification for the Restatement: “it is no hadship to require traders, whose business it is to deal in goods, to exercise diligence so far as to ascertain whether a person upon whose credit they are selling is living” The practical impact of the rule, however, is less than it was then, now that the typical offeror is a deathless corporate entity.”49—if offeree knows or has reason to know communication of offer is delayed through no fault of the offeror a contact can be formed by acceptance within the period which would have been permissible if the offer had been dispatched at the time that its arrival seems to indicate. Unless the delay is doe to the fault of the offeror or to the means of transmission adopted by him or the offeree neither knows nor has reason to know that there has been a delay.

CISG arts. 16(1)—Until a contract is concluded an offer may be revoked if the revaction reaches the offferee before he has dispatched an acceptance17 –an offer even if it is irrevocable is terminated when a rejection reaches the offeror

D. Preserving the Offer

Epstein, Markell & Ponoroff, pp. 96-106 case Beall v Beall

Ct of App MD 1981—pg 97Facts Calvin & Cecilia Beall farm on land owned by Pearl Beall.

Carlton buys land surrounding Calvin and Cecilia’s farm. Calvin grants Carlton option to buy piece of land with consideration for

3 yrs Second option with consideration for another 5 yrs. 3rd option for another 3 yrs but no consideration in 1975. Calvin dies during 3rd option period. After which, Carlton wants to buy property but Cecilia says no. Carlton brings suite for option to buy Cecilia’s land

Procedure t/c ruled for ∆ Cecilia App ct reversed and remandedIssue Was this third option enforceable against Cecilia as heir of Calvin?Holding Yes, so long as carlton can prove he accepted before Cecilia revokedReasoning t/c dismissed case because no consideration was given to Cecilia.

option is an offer it can be withdrawn any time before acceptance.When the offer expires, as long as the term of the offers dont also make the offer lapse then the irrevocable offer just becomes an offer. Offeree is free to accept anytime before the offeror revokes.Case has to go back to trial court to figure out if offer had been revoked before Carlton tried to accept.

case EMU v burgessct of App MI 1973—pg 101

Facts EMU enters a 60 day option to purchase with Burgess. Consideration is 1 dollar and “other valuable consideration.” Receipt of

consideration is written. EMU never gave Burgess a dollar. EMU sues and wins in trial court. Rebuttable presumption - defendant is allowed to show evidence to the

contrary. ie child of married couple is presumed to be biological child of both spouses.  Burgess can provide evidence that makes options contract untrue.

irrebuttable presumption - taken to be true as a matter of law. .

If EMU had reasonably undertaken expenditures to have plans drawn up for land, this could be a situation where the court could turn to R2 §87(2).- but breach of such reliance might only lead a court to give monetary award.- consideration can be non-monetary. Might be action. Has to be agreed to by offeror though.

Procedure t/c ruled for App remanded to determine truth of testimonyIssue Did ∆ properly revoke her offer?Holding Remand to trial court to decide if consideration was receivedReasoning Issue of fact so App ct remanded to t/c to have a trier of fact determine if ∆

was telling the truth—if so she properly revoked.

If EMU had reasonably undertaken expenditures to have plans drawn up for land, this could be a situation where the court could turn to R2 §87(2).- but breach of such reliance might only lead a court to give monetary award.- consideration can be non-monetary. Might be action. Has to be agreed to by offeror though.

Restatement (Second) §§ 25—an option contract is a promise which meets the requirements for the formation of a contract and limits the promisor’s power to revoke and offer87—1-an offer is binding as an option contract if it:a-is in writing and signed by the offeror, recites a purported consideration for the making of the offer, and proposes an exchange on fair terms within a reasonable time; or b-is made irrevocable by statute.

The party bound by the  the contract must sign. Although it is a good idea to have both parties sign the options contract. You never know who is going to breach, so the best practice is to get both parties to sign.

The writing has to recite the consideration for the option and then has to propose on reasonably fair terms that the option is holding open the rights

B. is made irrevocable by statute (will go over in firm offers.)

2-An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice.

its only fair to force the offeror to keep the option open for the offeree for some period of time because the offeror should have expected the offer would have induced offeree to act in some way.

equitable exception to consideration writing rules otherwise an offeree who tried to accept a unilateral contract but did not finish

performance would have no remedy.

CISG arts. 15(2)—an offer even if it is irrevocable may be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer16(2)—however and offer cannot be revoked:

if it indicates whether by stating a diced time for acceptance or otherwise that it is irrevocable or

if it was reasonable for the offer to rely on the offer as being irrevocable and the offeree has acted in reliance on the offer

Norca Corp. v. Tokheim Corp., 643 N.Y.S.2d 139 (N.Y. App. Div. 1996) case Norca Corp V Tokheim

App Ct NY 1996Facts Tokheim(saint switch) offers to sell fuel pumps.

4 months after original saint switch sends new offer with different prices.

Norca tries to accept original offer. Saint switch says it isnt price anymore.

Norca Brings suitProcedure t/c ruled for ∆tokheim/saint switch app ct affirmIssue Did SS revoke their offer by sending another offer?Holding YesReasoning An offer can’t be firm for more than 3 months. Although it was still an

offer...but then prices raised revoking existing offer replacing it with a new one with higher prices.

Scoular Co. v. Denney, 151 P.3d 615 (Colo. Ct. App. 2006)

case Scoular Co v DenneyCol. App Ct. 2006

Facts Denny and Scoular were discussing a forward contract where denny showed desire to sell millet $5/hundred weight

Scoular said no 4 days later Scoular sold the millet they intended to buy from Denney at

a price to meet denney’s request denny had sold millet to another company Scoular brought suit for breach of contract

Procedure t/c ruled for but app ct Reversed in favor of ∆Issue 1-Did Denny offer to sell Scoular fall millet profit?

2-Did Scoular actually accept the offer by making the contract with someone else to sell him the millet that he plans to buy from Denny?

Holding 1-no2-no

Reasoning 1-indicated an desire to sell—negotiate2-could have sent a letter to accept but did not

UCC § 2-205 An offer by a merchant to buy or sell goods in a signed writing which its terms give assurance that is will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months.

terms of assurance - got to be something more than this offer is valid until Friday some courts read what is lapse language to rowley as assurance language.

E. Acceptance: General Principles Epstein, Markell & Ponoroff, pp.

106-132 Restatement (Second) §§ 30325052565758596061636263646566676870 UCC § 2-206 UETA § 15 CISG arts. 1820212223

F. Non-Promissory Acceptance Epstein, Markell & Ponoroff, pp. 132-146 & 178-180 Restatement (Second) §§ 455153546269 Petterson v. Pattberg, 161 N.E. 428 (N.Y. 1928) Bio-Tech Pharmacal, Inc. v. International Business Connections, LLC, 184 S.W.3d 447 (Ark. Ct. App. 2004) ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996)

G. Imperfect Acceptance and “The Battle of the Forms” Epstein, Markell & Ponoroff, pp. 146-178 UCC § 2-207 CISG art. 19 Poel & Arnold v. Brunswick-Balke-Collender Co., 110 N.E. 619 (N.Y. 1915)

iLan Systems, Inc. v. Netscout Service Level Corp., 183 F. Supp. 2d 328 (D. Mass. 2002) Brown Machine v. Hercules, Inc., 770 S.W.2d 416 (Mo. Ct. App. 1989) Dale R. Horning Co. v. Falconer Glass Industries, Inc., 730 F. Supp. 962 (S.D. Ind. 1990) Ionics, Inc. v. Elmwood Sensors, Inc., 110 F.3d 184 (1st Cir. 1997) Filanto, S.p.A. v. Chilewich Int’l Corp., 789 F. Supp. 1229 (S.D.N.Y. 1992)

H. Consideration Epstein, Markell & Ponoroff, pp. 225-264 Restatement (Second) §§ 717273747576777879 8189 UCC § 2-209 Dougherty v. Salt, 125 N.E. 94 (N.Y. 1919) Batsakis v. Demotsis, 226 S.W.2d 673 (Tex. Civ. App. 1949) Plowman v. Indian Refining Co., 20 F. Supp. 1 (E.D. Ill. 1937)