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Stage 3: Is Response by Offeree an Acceptance or a Rejection? Does Response = Acceptance? 1.

First look at the Offer, then look at the Response. - Rule: When you make an offer, you can control how the offer can be accepted. o Ex: I make you an offer by mail, which states: acceptance must be by writing (cannot be via email or voicemail) - Rule: When offer does not state how to accept, whatever is reasonable under the circumstances can be used as means of acceptance (use commonsense) o Ex: If I send you an email by mail, it is reasonable to accept by mail if offer does not state otherwise o Ex: If I send you an offer by fax concerning the an item with a volatile price change common sense that an acceptance via snail mail is unreasonable 2. Problems that may be encountered in Acceptance: a. MAILBOX RULE (MB rule) -

Problems you may encounter in terms of acceptance: Mailbox Rule M rule fact pattern on exam will have 3 characteristics: 1) FACT 1: two people are trying to make deal at a distance 1) Ex. one person in Houston; one person in Tampa (not in same room) 2) FACT 2: technologically challenged using method that requires delays in time between sending and receiving 3) FACT 3: Communications are inconsistent 1) Question to figure out: when a particular communication became legally effective o M. Rule is totally arbitrary you cant make any sense out of it 1) Historically, cts made decision that we need rules that are easy to understand and administer people can adjust business practices to rules 2) 2 rules: 1) General Rule 1: most communications are legally effective only when received o Ex: I send letter, offer to sell car on Monday I send letter, revoking offer on Tuesday doesnt get there until Friday Offer is only revoked on Friday o EXCEPTION TO RULE = GENERAL RULE 2 2) General Rule 2: Acceptances are made when they are sent o Ex: you mail letter to accept on Wednesday On Wednesday, we have offer and acceptance Doesnt matter when acceptance arrives, SO LONG AS you can prove when acceptance letter is sent When you get letter Friday, revoking offer = too late K has been made

Offers are like caterpillars; Ks are like butterflies Sometimes offers can be accepted by performance when do you have to give NOTICE of acceptance? o Common sense Im in house watching, you are painting my house no notice 1) You are painting my house in Alaska, Im in tx - notice is required to let me know you are painting my house in alaska

So.. we look at the response to an offer Response can take the form of words or conduct o Whether response = acceptance depends on terms of offer o Typically, on exam, offer will not stipulate how acceptance can be manifested RULE: unless offer only states that offer can be accepted by performance, than acceptance can be stated by anything reasonably under the circumstances After offer: You can ignore it lapse You can accept it You can reject it o In real world, rejection is direct 1) No such thing as born again offers cant reject; then accept o In exam, not so much no direct rejection; need to watch for indirect rejection Indirect Rejection takes on 4 forms 1. COUNTER OFFERS o Applies to ALL K o Ex: I make offer to sell car for 1,000; I respond that I will buy for 300 1) First; say counteroffer has been made; NEXT- say COUNTEROFFERS are rejections to offers (have effect of terminating an offer); 1) If A offers to sell to B for 1000; B counter offers for 400; A says no; B says ok, Ill pay 1000 = NO K, counteroffer rejects original offer, cannot accept after rejection 2. CONDITIONAL ACCEPTANCE o Applies to ALL K o When used on exam, tricky because the term acceptance is used 1) Ex: I accept purchase of car, on condition it passes inspection 1) Terminates/rejects offer o TERMS ON EXAM: 1) I accept on condition that 2) If 3) Provided 4) So long as. 3. MIRROR IMAGE RULE o Applies ONLY to K OTHER THAN sale of goods; COMMON LAW K only 1) C/L K has historic requirement that for response to be acceptance, it must be exactly like offer cannot add or change anything 1) Ex: I make lease and sign lease offer by me (catterpiller); if you sign lease (butterfly) o But.. if you put in lease, adding provision: pets are permitted C/L says: No K you do not accept, you reject o If in responding you add or change anything, under common law it is NOT an acceptance

o Article II of commercial code section 2207 if prof has not mentioned 2207, dont worry
about it most prof will have mentioned 2207 1) This is a mess of a rule going to take two shots at explaining (with break in middle) 2207 What do we need in fact pattern before we use 2207 o Sale of goods (not all sale of goods, dont use 2207 when SoG and) o Given Content of info in two communications1) Offer in First communication 2) Later communication - (because this is a SoG and 2207 applies) Typically first communication = offer; second communication = response to offer Sometimes = first communication = entire agreement 1) Ex: first communication = we agree that I sell you my car for X amt o Second communication = adds something; ex. this is to confirm that I will buy for X amt and that you will deliver on Fri 2) Under c/l .. because you added something NO K 3) BUT this is S of Goods so ARTICLE II o Easy ? = yes, we have a ? o Hard ? = is delivery part of K? SUM UP BEFORE B REAK: o We understand triggering facts 1) SoG 2) 2 communications; not identical o Triggering facts raise 2 ?s one hard; one easy 1) 1. Is there a k? yes 2) 2. Is the new term a part of the K? .. answer is usually NO, but we need to know more AND BREAK TIME!!! Still on question 1 whether there even was an agreement? Obj 3 stages to agreement process o Info for 1st communication- offer? o If yes.. info after offer.. terminated in some way? o Response- acceptace or indirect rejection? 1) Counter offer 2) Condititional acceptances 3) Mirror image rule (only c/l) 4) 2207 article 7 1) Sale of goods AND have info about two diff communications o Offer and form of acceptance o Agreement and followed by summary (confirmation of agreement) that is not identical Under 2201 still a K even with diff terms in summary (so long as not lang of condition) Its ok to add a contrace term (delivery Saturday)

Not ok to add conditional acceptance (my acceptance only if delivery Saturday) RULE: ok to change terms, so long as it doesnt alter periphery of k; cant be conditional to acceptance If summary is not conditional, simply alteration of term becomes is that ok? Discussed later

Final piece for if we have contract we have to determine if we have Consideration In terms of organizing exam: o First- analyze offer and acceptance first; then look at consideration Consideration = a device the law created to distinguish between agreements that merit enforcement by the court to agreements the courts do not want to enforce Tends to be fairly Arbitrary Defined: bargained for detriment o It takes two people to make a K when you analyze consideration, you analyze one person at a time 1) On exam, you are not asked if there is consideration in the K you will always have one party who is a promise breaker, who will say that they do not need to do what they agreed to do because there was no consideration 2) On exam, you need to find the promise breaker (typically D)- and ask, did that promise breaker ask for anything in return for his promise 1) Step 1: who is your promise breaker 2) Step 2: did that person ask for anything in exchange for her promise o If yes consideration K 3) Hemrig v. Sigway uncle agrees to pay nephew if he agrees to refrain from drinking, smoking, and gambling until he turns 21 1) Court says that agreement was enforceable because uncle asked for something in return 4) HYPO: uncle says to nephew Im so proud of you, when you turn 25, I will give you 500 dollars 1) Nephew wants to make uncle proud, refrains from activities 2) This agreement is not legally enforceable note differences 5) HYPO: your LL sends you letter: I promise I will extend your lease for another 2 yrs at same rate 1) You are grateful; go out and paint apt (detriment) 2) LL ends up raising rent 3) Is this promise legally enforceable? o Analyze this outside of consideration o **consideration = people not doing something/ doing something that they were ASKED to do essence of consideration o (cant actually say the following on exam) in essence, on exam you should conclude that there was consideration; watching for the following scenarios: Watch to make sure it was bargained for Watch for past consideration rule Watch for pre-existing duty rule o PAST CONSIDERATION 1) Lucy v. Homer homer is greatful that Apoo saved Lisa; Homer promises to Apoo: I will pay you 1,000 for saving Lisa

This is the third place where Article II differs from Common Law: (special article II rules: 1. Firm offer rule a written promise by a merchant not to revoke is legally enforceable even tho there is no payment for it 2. 2207 3. You need new consideration to modify a common law K; but if it is a Sale of Goods, all you need is a writing (you dont need consideration) a written aggrement to modify a SoG contract is legally enforceable without Consideration

1) Supported by consideration? No tests: o Test 1: Bargained for means requested What was homer bargaining for / requesting when he made promise? A: saving LISA Cant bargain for something when it already happened (cant ask someone to do something that was already done; cant bargain to do something that was already done; cant make promise for something that has already happened in the past) o PREEXISTING DUTY RULE 1) Troublesome b/c it is counter intuitive 2) Rule: (aside from Pro Sports) simply doing something you are already have a legal duty to do is not new consideration for a promise to pay you more 1) HYPO: your job = work as engineer; sign empl K = work for 5 yrs for 75,000 o Turns out theres a shortage of engineers, but you are still under k for 4 yrs o Employer hears you want to take another job; employer says I will raise empl k 200,000 o Enforceable? NO employer is asking you to do something you are already legally obligated to do 3) UNDER C/L, you need new consideration for K modification 4) THAT IS NOT THE RULE UNDER THE UCC ARTICLE II

What do we need for consideration on exam: Must have term BARGAINED FOR this is the essence of consideration o Find promise breaker did not do what he/she said she would do o What did breaker ask for? 1) We are looking for: bargained for 1) Past consideration 2) Preexisting duty rule 3) Once we have done offer; termination of offer; acceptance; and then moved onto consideration we are now in a position to talk about question 2 (of 7). QUESTION 2: Is there some reason (other than lack of consideration) that this agreement should not be legally enforceable?

SUMMING UP: I. What Happens after Offer is made? a) Somebody dies = the deal is off b) Someone takes too long = the deal has lapsed c) Offeror changes his mind: Unambiguously & Communicated to other person = deal is off, UNLESS: - Option offer plus paid for promise - Firm Offer rule sale of goods & written promise by merchant not to revoke - Foreseeable Reliance - Unilateral K offer start of performance under an offer to enter into unilateral K Stages in Life Cycle of an Agreement: 1. Get Facts of 1st Communication Is 1st communication an offer? 2. Facts after 1st Communication Does it terminate the offer? 3. Look at Offerees Response Is response = Acceptance or Rejection ??? 2) Is it an acceptance? 1) Need to look to the offer before we look to response o Rule: when you make offer, you can control how it can be accepted o Ex: I make you an offer by mail; says aceeptance must be by writing (cannot be by email or voicemail) o Many do not say how to accept commonsense = if I send you offer by email; you can accept by email Whatever is reasonable under the circumstances o if I send you fax of offer concerning something with volatile price change --?> common sense: snail mail acceptance is unreasonable