2Acceptance

- the action (promise or performance) by the offeree that creates a contract (i.e., makes the
offeror's promise enforceable).

(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.
(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.
(3) Acceptance by a promise requires that the offeree complete every act essential to the making
of the promise.

1. Manifestation of Assent

An effective acceptance requires three things:

1. A manifestation of assent by the offeree to the terms of the offer;
2. The acceptance must be made in the manner invited or required by the offer; and
3. The acceptance must occur while the offer is still open, i.e., if the offer has already been
revoked, the acceptance is not effective to create a contract.

mirror image rule

- The expression of commitment manifesting assent to the bargain offered must be on the
terms proposed by the offeror without any variation.

2. Manner of Acceptance

An offer can only be accepted by the person or persons to whom it is addressed. 

Silence as Acceptance
Generally, acceptance is not made by the offeree remaining silent

the offeree may amount to acceptance in some cases such as:

1) taking the benefit of the offer;
2) prior conduct of the offeree giving the offeror reason to believe that silence would be
acceptance;
3) exercise of dominion over goods; or
4) where the offer states that the offer may be accepted by silence and the offeree remains silent
with the intention of accepting.

Rejection and counter-offer:

- A rejection of the offer terminates that power of acceptance

- A counter-offer proposes an offer on the same subject matter and also rejects the original
offer.

An inquiry regarding the possibility of different terms, a request for a better offer, or

a comment upon the terms of the offer, is ordinarily not a rejection of the original offer.

Revocation
- A communication that manifests the offerors intention not to enter into the contract
previously proposed by the offeror.
- It terminates the offeree’s power of acceptance
-

Since an option is itself a contract, with contract rights, an offeree does not lose their contract
rights simply due to a counter-offer or rejection. Instead, the power of acceptance is not
terminated and the rule is reversed here. However, in the event that the offeree makes a counter-
offer or rejection and the other party relies on it through a material change in position, the offeree
may be estopped from revoking the rejection. 

Grumbling acceptance
- “I am going to sign my employee letter, but I think that you undervalue me”
o Still accepting the offer.

Bi-Lateral Contract:
- An offer that contemplates acceptance by either a promise or performance
o Lucy v zehmer
Unilateral Contract
- An offer that contemplates acceptance once the performance is completed
Both bi and uni lateral contracts are old school…

Promissory Estoppel
- a false statement treated as a promise by a court when the listener had relied on what was
told to him/her to his/her disadvantage. 
 ****Issue Spotting Checklist – Memorize it****
Acceptance by Inaction
The Mailbox Rule
mailbox rule
- an acceptance is effective when put in the mail or dispatched
-  an acceptance sent by telephone, private messenger, facsimile, e-mail or other electronic
transmission is effective upon dispatch.

- an acceptance under an option contract is not operative until received by the offeror.
- The contract is regarded as made at the time and place that the letter of acceptance is put
into the possession of the postal service.

Option contracts
- Option contracts are typically subject to a specific time limit
- typically death of either the offeror or offeree revokes an offer, unless the offer is
irrevocable
- the mailbox rule does not apply to option contracts
-

an offeror can restrict the offer to condition formation of a contract on actual receipt of the
acceptance.

A revocation is effective upon receipt only

I. Offeror controls the offer. The offeror is master of the offer and can specify the means by
which the offeree can accept, for instance by mail or limiting the offer by time. 1-2 Murray on
Contracts § 41.
II. The Basics. The "mailbox" or "dispatch" rule provides that an acceptance is effective when
put in the mail or dispatched. This rule allocates the risk to the offeror that a letter of acceptance
might get lost in the mail and never arrive. This rule is fair because the offeror, as master of the
offer, could have guarded against this risk by restricting the means of acceptance to exclude mail
or to specify that acceptance is only effective upon receipt. 1-2 Murray on Contracts § 47;
1 Corbin on Contracts § 78.
III. Exceptions. The mailbox rule has some exceptions to prevent an offeree from taking
advantage of the rule and speculating on the deal. 1-2 Murray on Contracts § 47. As a result, the
general rule is that rejections of an offer are only effective upon receipt, while acceptances are
effective upon dispatch. Id.  An offeror who relies on a first arriving rejection may make a
contract with another party, but an acceptance that arrives before a first sent rejection is binding
on the offeree. 1-2 Murray on Contracts § 47. An acceptance attempted by mail after the sending
of a rejection is a counter-offer unless received by the offeror prior to the rejection.
IV. Revocations. Must be received prior to an acceptance to be effective. 1-2 Murray on
Contracts § 47.
Formation of an Option Contract

The promise to limit the revocation is called the "option

A binding option may be created by establishing there is a contract to keep the offer open
through having:
1. an offer and a promise not to revoke the offer or to keep the offer open,
2. an acceptance of the promise to keep the offer open, and
3. consideration, i.e., some bargained-for exchange, for the promise to keep the offer open.

A consideration that may be nominal, such as the recitation of one dollar paid, is typically
sufficient to make an offer irrevocable as an option contract.

 The ordinary offer is revocable even though it expressly states the contrary, because of the
doctrine that an informal agreement is binding as a bargain only if supported by consideration.

UCC § 2-205. Firm Offers.

An offer by a merchant to buy or sell goods in a signed writing which by its terms gives
assurance that it 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; but any such term of assurance on a form supplied by the
offeree must be separately signed by the offeror.

U.C.C. § 2-205 permits a MERCHANT to make an irrevocable offer in a signed writing.

option contracts formed by: (i) part performance or tender; (ii) signed writing supported by
consideration; and (iii) statutory firm offers. The fourth way to form a binding option contract is
when an offeree relies detrimentally on the offer (to the extent necessary to prevent injustice).

Detrimental reliance
- Substantial and foreseeable reliance on the offer will create an option contract in these
situations to the extent necessary to avoid injustice.

Article 16 provides that ''an offer cannot be revoked: (a) if it indicates, whether by stating a fixed
time for acceptance or otherwise, that it is irrevocable; or (b) if it was reasonable for the offeree
to rely on the offer being irrevocable and the offeree has acted in reliance on the offer.''
Battle of the Forms (UCC 2-207)

The counter offer is the last form (the ''last shot'') in the exchange of forms. 
 
UCC Section 207 was designed to remedy the injustice of the ''last shot rule.''

§ 30 Form of Acceptance Invited.

(1) An offer may invite or require acceptance to be made by an affirmative answer in words, or
by performing or refraining from performing a specified act, or may empower the offeree to
make a selection of terms in his acceptance.
(2) Unless otherwise indicated by the language or the circumstances, an offer invites acceptance
in any manner and by any medium reasonable in the circumstances.

"Goods" means:
- all things (including specially manufactured goods) which are movable at the time of
identification to the contract for sale other than the money in which the price is to be
paid, investment securities (Article 8) and things in action.
- "Goods" also includes the unborn young of animals and growing crops and other
identified things attached to realty as described in the section on goods to be severed
from realty (Section 2-107).

The terms not satisfying the mirror image rule are merely proposals to the contract. But, between
merchants, additional terms often become part of the contract.

In order for a purported acceptance to be a proviso the acceptance must be expressly made
conditional on assent by the offeror to the additional or different terms. In order to be expressly
made conditional, the language must be clear and track the language of the statute. Language that
is less clear does not typically satisfy this section and will not invoke it.

1. Mirror Image Rule. 2-207 reverses the mirror image rule**

At common law, the problems created by any battle of the forms is resolved straightforwardly.
The expression of acceptance (commitment manifesting assent to the bargain offered) must be on
the terms proposed by the offeror without any variation. This is called the "mirror image rule."
2. Scope of Article Two. Article 2 of the Uniform Commercial Code applies to "transactions in
goods." This generally means contracts involving the sale of goods. So whenever your facts
indicate that the contract involves the sale of goods, you should use the rules of UCC Article 2.
Since the UCC Article 2 is statutory law, it is binding as law and will take precedence over case
law.
3. Formation of Contracts under UCC § 2-207(1). Under UCC § 2-207(1) a "definite and
seasonable expression of acceptance" is an acceptance in fact unless a proviso is present. The
proviso language can typically only be invoked by a party using language that states that its
acceptance is "expressly made conditional" on the offeror's assent to the additional or different
terms.
4. Terms of Contracts formed under UCC § 2-207(1). UCC § 2-207(2) provides that if a
contract is formed under subsection (1) then "[t]he additional terms are to be construed as
proposals for addition to the contract." When the contract is "between merchants" additional
terms become part of a contract formed under (1) automatically, unless: (1) the offer expressly
limits the offeree's acceptance to the terms of the offer; (2) the terms of the acceptance are
material alterations (look for surprise or hardship); or (3) the offeror has already given its
notification of objection to the terms or the objection is given within a reasonable time after
notice of the terms is received.
5. Contracts under UCC § 2-207(3). UCC § 2-207(3) provides an alternate path for parties to
form contracts when a contract based on the writings under (1) has failed. The path is through
conduct of the parties showing intent to contract (typically sending the goods and the other party
accepting the goods). In such cases, the terms are those on which the parties agree, plus gap
fillers from the UCC.

Subsection 1 –
- Is a formation provision
- If you made a contracts you go to subsection 2
Subsection 2 –
- Whether these things (a,b,c) (additional terms) actually become part of the contract
Subsection 3 –
- Once you’re in three you can never go to two (they never go together)
- Stand alone (1 & 2 work together)
- Two parts

K= MA + C (or other Justification)

UCC

- Statutory law
- Sale/transaction of goods?
o Article 2
- Service
o Not UCC – common law
- Is there a special rule?
-

Consideration
 - Typical justification is consideration

- Promises alone do not amount to sufficient consideration

- “X was induced to promise y in exchange for a to promise b”

- Mutual assent and consideration = a contract

- Gift promises LACK consideration

- Past Consideration:
o Not good consideration
- Forbearance
o Giving up a legal right is a good (Legal) means of consideration
- Executory gift
o Not yet carried out
- Carried out gift
o Already completed; given.
o Too late for consideration lawsuit, the deed has already been done
- Love and affection
o NOT consideration
-

bargained-for-exchange is established when

- the promisor gives the promise in exchange for the return promise given by the promisee.
- In turn, the return promise by the promisee is given in exchange for the promisor's
promise.
- Determined on an objective basis

''A valuable consideration, in the sense of the law, may consist either in some right, interest,
profit or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility,
given, suffered, or undertaken by the other.''

 The terms ''nominal'' and ''sham'' consideration refer to cases where the stated consideration is a
pretense and not a reality. Thus, ''nominal consideration'' and ''sham consideration'' are not
consideration as that term is generally defined. By the word ''nominal'' we mean ''in name only''
-- the purported consideration is given, but is not bargained for as part of an exchange. It is given
as a mere pretense or formality. It does not refer to the smallness of the sum as in the expression
a ''nominal sum,'' although usually nominal consideration is a small sum such as $1 or $10

The term ''sham consideration'' refers to falsity of a recital that something has been paid or done.
If the ten dollars was not paid, there is only ''sham consideration.'' In either case, the final
question is whether the agreement is enforceable without consideratio
A variation of the rule of adequacy seems to apply to option contracts. In such cases, a promise
for an option contract may be binding when made in a writing that recites a consideration (even a
small consideration, whether actually given or not) and proposes a fair exchange in a reasonable
time.

One promise that is itself bargained-for and consideration is sufficient to constitute consideration
for any number of return promises.

The controlling rule

- "It matters not from whom the consideration moves or to whom it goes. If it is
bargained for and given in exchange for the promise, the promise is not gratuitous.

Agreements Lacking Consideration : Gift Promises

- An informal promise without consideration that stands utterly alone creates no legal duty
and is not enforceable

- Without a bargain or any such accompanying factor, an informal promise to make a gift
is not binding.

The controlling rule provides that gratuitous promises are unenforceable because they do not
involve any exchange element. Therefore, these promises are not supported by consideration.

The most common of these are gratuitous (gift) promises. The fact that Mark took the car subject
to the loan (an obligation to him) does not transform the gift into an enforceable promise.

UCC – Article 2

- Applies to everybody (merchants and nonmerchants)

- When they’re goods
- The UCC Article 2 applies to transactions in goods so long as there is a rule, but
otherwise the common law applies.