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Creation of Contracts & Agreement: - Offers, - Revocation of Offers, - Acceptance, - Irrevocable Offer, - Unilateral Contracts, - Mailbox Rule, - Rejection

For Exam: Need to show difference between Agreement and K Agreement takes form of: Offer and Acceptance
o o Courts take an objective approach as opposed to a subjective approach Lucy v. Zemmerman dispute whether Z agreed to sell farmland to Lucy Zs say: we talked about it; we offered; but we never intended to sell it was a joke Ct said: we dont agree; we dont care about what you intended; we care what a reasonable person would have interpreted by what you said = Objective Test NOTE: While you will find the phrase meeting of the minds in many cases and outlines this dude strongly recommends not using it on exam (unless prof says otherwise)

HOW DO WE FIND IF THERE IS AN AGREEMENT? In most fact patterns, there are three stages in the Creation of an Agreement: 1. Determine Initial Communication - First time one party says something (sends letter, etc) to the other subj matter of dispute 2. Was that first communication an OFFER? - Offer =a manifestation of commitment - On exam, one person commits first -- we are looking for the first commitment Ex: I will sell you blackacre for x amount 3. For Commitment Need to look at the Communication and Determine 2 Things: i) Exactly What Was Said In terms of what was said, it is not necessary that all terms of deal are spelled out to create a K o Ex: Ill hire you for this much/ this many hrs a week missing duties and other terms In fact pattern look for anything important and anything vague & ambiguous o Ex. well hire you for the summer (9 weeks) for a fair salary (no amt) How should court decide fair salary? Look for Three Words: o In first communication, if you see words fair, appropriate, or reasonable - This sort of vague expression = creates problems this sort of communication may not be an offer, too vague for interpretation ii) In first communication look for REQUIREMENTS CONTRACTS If I offer to buy some grits from you for 5$ a pound == too vague, not an offer how many? (SOME) I offer to buy all the grits I need (if I need any, Ill get them from you), if sold at $5/lb. o More specific; still questionable I made commitment to you of exclusivity o If I buy grits from someone else, you should be able to enforce (if you agree) o Commitment of Exclusivity makes this specific makes Requirements Contract

A contact requirement tends to make exam too easy Look for following terms in first communication, indicating a Requirement K: Only I buy only/solely This is Requirement K All Requirement K F IRST STEP IN DETERMINING IF WE HAVE A K = DO WE HAVE AN OFFER ? Using Objective Approach, if first communication manifests a Commitment = It is in OFFER Wording of communication: determines if it is an offer Problems: o Missing Terms = Not necessarily a problem o Vague or Ambiguous Terms = Problem

Settings: o In lawyers office most likely to lead to commitment via communication o Advertising long time general rule: Ads are not offers Exceptions: Carbolic Smoke Bombs ward off influenza Hypo: In paper, offer to sell antique MG for 2000 You show up, to buy o On exam: 1st Ad does are generally not offer; Ads = invitation to make offer o Under general rule to go to seller and say: I will buy for 2000, you are not accepting an offer, you are making a new offer to buy MG for 2000


NOTE: we are still under question #1: Do we have an agreement? Start with was there an offer? Then determine -- What can happen after offer is made?

1. Death - One person can die (offers die with you) not usually on exam 2. Delay in Response - Person takes too long to respond o Exam strategy 101 every fact is there for a reason (ex. A takes 7 months to respond) o Profs love the I change my mind = REVOCATION 3. Revocation of an offer The person who has made the offer unambiguously indicates she has changed her mind by way of communication o the only person who can revoke an offer is the offeror when you have a fact pattern when the person who makes the offer, changes their mind you Need to Address Two Things in your answer:
1) First thing to look for: the offeror must unambiguously indicate that he has changed

his mind (must be a clear, unambiguous indication) 2) Second: it must be communicated to the offeree o This unambiguous change of mind can be by words or conduct o Epsteins Hypo A offers to sell Cadillac to B; A then sells to neighbor; B sees that neighbor is driving Cadillac; A revoked offer to sell car to A o Selling to neighbor = unambiguous
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After Offeror makes offer 4 Situations in which Offeror Cannot Revoke Prior to Acceptance: 1. OPTION is an offer plus plus what? Plus a paid for promise not to revoke - Applies to ALL Contracts - Requires a PYMT - I offer to sell you Blackacre for XX; and if you give 10 now, I will hold Blackacre and not promise not to revoke (paid for promise to hold option for (this) amt of days) 2. FIRM OFFER Rule seller cannot revoke; does not involve payment to hold - Article II rule ONLY for sale of goods when seller is a merchant (= business person) Ex: A is looking at automobile; B says, Ill sell it to you for 20,000; A says, I need three days to think about it; B says, fine and puts it in writing - Firm Offer Requirements: 1) Sale of goods 2) Promise not to revoke by business person (merchant) 3) It is in signed writing 3. FORESEEABLE RELAINCE- offer has been relied on in way that is reasonably foreseeable **Favorite law school Fact Pattern = foreseeable reliance Ex: Gen. Contractor (GC) trying to convince a prop manager to hire to build office blg. - GC gets quote for A/C = 250,000 GC uses this to est. cost of building = 4 mil. - Cannot revoke after reliance 4. UNILATERAL CONTRACT- (unusual offer) - offer that requires completion of performance as acceptance - Ex. I offer you $10,000 to paint my house; offer states: this can only be accepted by you painting my house (NOTE: This is not done in real world anymore only on exams) - Key Concept you finishing the work results in a contract - 2 pieces - You cannot revoke after making an offer IF: 1. If there has been an offer to enter into a unilateral K 2. AND performance has begun

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 agreement: Get facts of first communication is it an offer? Facts after first comm. does it terminate the offer?

3rd = we have a respond; offeree responds o Need to figure out is response an ACCEPTANCE or REJECTION??? 1) 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

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 o 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 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

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
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?