Acceptance

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Rules for Acceptance

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(1) Acceptance of an offer is a manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer. 2d § 50 (1981)

(2) Unless otherwise indicated by the language or the circumstances, an offer invites acceptance in any manner and by any medium reasonable under the circumstances. 2d § 30 (1981)

However, offers for bilateral contracts call for accpetance by promise. (3) Acceptance by a promise requires that the offeree complete every act essential to the making of the promise. 2d § 50 (1981). This includes actually communicating the acceptance to the offeror. It is essential to an acceptance by promise either that the offeree exercise reasonable diligence to notify the offeror of acceptance or that the offeror receive the acceptance seasonably. 2d § 56 (1981)

The power of acceptance under an option contract is not terminated by rejection or counter-offer, by revocation, or death or incapacity of the offeror, unless the requirements are met for the discharge of the contractual duty (Restatement 2d § 37).

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Offeror’s Control Over Manner of Acceptance

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An offeror has complete control over an offer and may condition acceptance to the terms of the offer.

La Salle National Bank v. Vega: “The trust not having executed the document, there was no acceptance of the offer, and so there was no contract”…When an offer requires a written acceptance by a specific party no other mode of acceptance may be substituted.

Ever-Tite Roofing Corp. v. Green: “The D’s employed others to do the work contracted to be done by P and forbade P’s workmen to engage upon that undertaking. By this breach D’s are legally bound to respond to P in damages”…if no time is specified for termination of an offer that offer expires at the end of a reasonable time.

Davis v. Jacoby: “For the foregoing reasons we are of the opinion that the letter of April 12, 1931, was an offer to enter into a bilateral contract which was accepted by the letter of April 14, 1931.” If there is any doubt about the interpretation of an offer as unilateral or bilateral, there is a presumption in favor of its interpretation as bilateral. Confusion and ambiguities about methods of modes of acceptance are to be resolved in favor of a bilateral contract.

Maryland Supreme Corp. v. Blake Co.: “Applying the applicable statutory provisions of the UCC to these facts leads to the conclusion that the verbal acceptance by Blake of Supreme’s offer was reasonable under the circumstances, that Blake did so accept it, and that the conduct of the parties, particularly that of Supreme in delivering concrete and that of Blake in accepting and paying for it, recognized the existence of a contract.” UCC § 2-204(1) states that “appropriate conduct by the parties may be sufficient to establish an agreement” and “an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances.” UCC § 2-206(1)(a) states “Any reasonable manner of acceptance is intended to be regarded as available unless the offeror has made quite clear that it will to be acceptable. New Rule: Former rules as to acceptance are rejected and a criterion that the acceptance be ‘in the manner and by any medium reasonable under the circumstances,’ is substituted.

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Effectiveness of Promissory Acceptance

Mail Box Rule

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§ 62. Effect Of Performance By Offeree Where Offer Invites Either Performance Or Promise
(1) Where an offer invites an offeree to choose between acceptance by promise and acceptance by performance, the tender or beginning of the invited performance or a tender of a beginning of it is an acceptance by performance.
(2) Such an acceptance operates as a promise to render complete performance. Restatement (Second) of Contracts § 62 (1981)

Hendricks v. Behee
There is no contract until acceptance of an offer is communicated to the offeror. Communication of acceptance of a contract to an agent of the offeree is not sufficient and does not bind the offeror. Unless the offer is supported by consideration , an offeror may withdraw his offer at any time before acceptance and communication of that fact to him.

Restatement (Second) §63. Time When Acceptance Takes Effect
(1) an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree's possession, without regard to whether it ever reaches the offeror; but (2) an acceptance under an option contract is not operative until received by the offeror.

Adams v. Lindsell (the mailbox rule)
The Court held that Defendants’ offer was accepted on September 5, when Plaintiffs mailed the acceptance letter to Defendants. The Court rejected Defendants’ argument that there could not have been a binding contract until they had received the answer from Plaintiffs accepting the offer. The Court reasoned that under Defendants’ line of reasoning, it would be impossible to complete a contract through the post. If the Defendants were not bound by their offer until the answer was received, then the Plaintiffs would not be bound until they had received word that the Defendants had received their acceptance, and this could go on indefinitely. An offer by post is completed and accepted when the accepting party assents to the terms and puts the letter into the postal system.

§66. ACCEPTANCE MUST BE PROPERLY DISPATCHED
An acceptance sent by mail or otherwise from a distance is not operative when dispatched, unless it is properly addressed and such other precautions taken as are ordinarily observed to insure safe transmission of similar messages.

§67. EFFECT OF RECEIPT OF ACCEPTANCE IMPROPERLY DISPATCHED
Where an acceptance is seasonably dispatched but the offeree uses means of transmission not invited by the offer or fails to exercise reasonable diligence to insure safe transmission, it is treated as operative upon dispatch if received within the time in which a properly dispatched acceptance would normally have arrived.

Exceptions to the mailbox rule:
The mailbox rule applies to 1) situations in which the means of communication used by the parties inherently involves some delay, 2) If the offer specifies a particular mode of acceptance, the offeree must use that mode, 3) doesn’t apply to option contracts, 4) doesn’t apply to revocation by mail, and 5) The acceptance must be sent properly or at least actually get there in a timely manner

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Acceptance by performance

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Accepting by performance
(1) the performance doesn’t need to be communicated to the offeror to make it binding. (2) once the performance is started it becomes binding but not completed until the performance is completed)

Carlill v. Carbolic Smoke Ball Co.
This was an offer for a unilateral contract. Therefore once performance is completed the contract is created and binding. Notification of acceptance does not need to precede performance.

The person shows by his language and from the nature of the transaction whether he requires a notice of acceptance before performance.

Advertisements are not considered offers; they are invitations to offer: unless the advertisement is clear, definite, and explicit and leaves nothing open for negotiation (advertisements are mere requests to offer).

§ 56. Acceptance By Promise; Necessity Of Notification To Offeror
Except as stated in § 69 or where the offer manifests a contrary intention, it is essential to an acceptance by promise either that the offeree exercise reasonable diligence to notify the offeror of acceptance or that the offeror receive the acceptance seasonably.

§ 54. Acceptance By Performance; Necessity Of Notification To Offeror
(1) Where an offer invites an offeree to accept by rendering a performance, no notification is necessary to make such an acceptance effective unless the offer requests such a notification.
(2) If an offeree who accepts by rendering a performance has reason to know that the offeror has no adequate means of learning of the performance with reasonable promptness and certainty, the contractual duty of the offeror is discharged unless a. the offeree exercises reasonable diligence to notify the offeror of acceptance, or b. the offeror learns of the performance within a reasonable time, or c. the offer indicates that notification of acceptance is not required.

Marchiondo v. Scheck
Broker got canned; case was remanded to determine if partial performance was initiated. Partial performance of a unilateral contract creates an option contract.

An option contract is created when the offeree begins the invited performance or tenders part of it preventing the offeror from revoking the offer until completed within the time stated in the offer, or, if no time is stated, within a reasonable time.

Marchiondo (P) did not have had to provide notice to Scheck (D) that he had begun performance.
Restatement (Second) of Contracts § 50 (1981)
(2) Acceptance by performance requires that at least part of what the offer requests be performed or tendered and includes acceptance by a performance which operates as a return promise.

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Acceptance by silence or inaction

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Laredo National Bank v. Gordon-the attorney who played by the rules and the bank who played dumb
While generally offeree may ignore offers, his silence is deemed acceptance, where relations are such that offeror is justified in expecting reply, or offeree is under duty of replying.

Under such circumstances, ‘one who keeps silent, knowing that his silence will be misinterpreted, should not be allowed to deny the natural interpretation of his conduct,’ etc. Williston on Contracts, §§ 91, 91a.

Duty of fair dealing also rests on client in dealings with an attorney.

General rule is that silence doesn’t signify assent unless
1. When the offeree takes the benefit with the reasonable opportunity to reject it
2. Reason has been given to convey silence as acceptance
3. Because of prior dealing offeree knows or should know that notice should be provided to avoid acceptance

Express Contract: a contract that results from the words being exchanged by parties that display the requisite manifestation of intent to be bound

Implied-in-fact Contract: a contract that results from the conduct of the parties that display the requisite manifestation of intent to be bound

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Imperfect Acceptances

Mirror Image Rule

Equitable Estoppel

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Traditional Common Law rule: when an offeree’s acceptance deviates from the offer provided, it is really an implied rejection and the offeree in fact makes a counteroffer.

Contracts not involving the sale of goods use the Traditional Mirror Image rule

The mirror image rule: Gresser v. Hotzler: The offeror is not to be required to deal other than on the terms she specified in her offer. Thus the mirror image rule holds that an acceptance must be a total assent on the terms of the offer. Material differences change the offer.

Equitable Estoppel: a bar which stops or precludes a party from denying or alleging an otherwise important fact because of something that she has done or failed to do. The elements of estoppel are: 1) the misleading of a person through acts or representations; 2) the reasonable reliance by that person on said acts or representations to her detriment.

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Acceptance of the sale of goods-use the UCC

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*****UCC 2-207 condensed rule from the teacher:*****

1) As long as there is a clear, timely acceptance that is not conditional on some new terms, there is a contract, regardless of whether you want some more terms.

2) If you have one non-merchant: New terms are mere proposals that do not change the offer unless the offeror agrees to include the proposed modifications.

3) Two merchants dealing: New terms= part of the deal, unless: the offer expressly limits acceptance, the new terms materially alter it, or the offeror says forget it.

4) If the parties act like they have a deal, the law will treat them like they have a deal. If they’ve exchanged any writings, then those writings form the basis of the deal. Wherever those writings agree, they get to stay; any portions that disagree, they get to go; if what’s left leaves holes to ensure contract performance and enforcement, the UCC will use other provisions from the Code to fill in the blanks.

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Mutual Misunderstandings:

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Raffles v. Wichelhaus:
Oral arguments can be used when there is latent ambiguity in order to determine true meaning of the intent of the parties. Mutual assent does not exist between parties where there is latent ambiguity. Both parties subjective meaning of the contracts was different. Both parties did not attach the same objective meaning to the contract because of the confusion over the month the cotton was to be delivered and which of the two Peerless ships it would be on.

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Ambiguities based on Indefinite and Incomplete Terms

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Varney v. Ditmars: in order for a contract to be enforceable at law the material terms of the contract must be definite and certain. The full intention of the parties must be ascertained to a reasonable degree of certainty. Their agreement must be neither vague nor indefinite and if thus defective oral proof cannot be resorted to. A court cannot aid parties in such a case when they are unable or unwilling to agree upon the terms of their own proposed contract.

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Deficient Agreements

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The draftsman who worked overtime during Christmas but wasn’t paid. If someone accepts the benefits of the contract, there is a contract even if there is some uncertainty or indefiniteness to the oral agreement.

2d § 205 Duty of Good Faith and Fair Dealing
Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.

UCC § 2-204. Formation in General
(3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

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Problems of Postponed Agreement

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Moolenaar v. Co-Build Companies, Inc.:
Is a valid and specifically enforceable renewal option created by a clause which leaves the rent for this period to be determined by subsequent agreement between parties?

If the clause is valid but the parties are unable to agree on the rent, how is this rental figure to be determined? The judge made a decision based on what he thought was a fair amount of rent to be charged ($400.00). This was his own random figure.

Megget feels this is the way courts are moving. Instead of simply determine if a contract existed using the rules to make decisions, the courts are trying to accommodate parties and make the deal work (in other words settle deals).