Unit 4

Agreement

25-1
 Index
 Agreement
 Offer
 Special offers
 Termination of an offer
 Acceptance
 Agreement
 Agreement: Manifestation by two or more persons of
the substance of a contract
 Requires mutual assent to perform current or
future contractual duties
The Facebook, Inc. v. Winklevoss (9th Cir. 2011)
 The Facebook, Inc. v. Winklevoss, 9th Cir. 2011

 Facts:
 The Winklevosses alleged that Facebook and Zuckerberg had misled th
em into believing that Facebook shares were worth $36 per share at the
time of settlement, when in fact an internal Facebook document valued
the stock at $8.88 per share for tax code purposes.
 The Winklevosses sought to rescind the settlement agreement. The U.S
. District Court enforced the settlement agreement. The Winklevosses a
ppealed.
 Issue: Is the settlement agreement enforceable?
 The Circuit Court held that the Winklevoss Twins were sophisticated
litigants with lawyers and financial experts on their side throughout the
extensive litigation. They had every opportunity to learn of the true
value of Facebook stock.  “At some point, litigation must come to an
end. That point has now been reached.”  
 Offer
 Offer: The manifestation of
willingness to enter into a
bargain, so made as to
justify another person in
understanding that his
assent to that bargain is
invited and will conclude it
 Article 14 of PRC Contract
Law (“CL”):
 An offer is a party's ma
nifestation of intention
to enter into a contract
with the other party.
 Offer
 3 Requirements for an  Article 14, CL:
effective offer  an offer shall comply with
 The offeror must :
objectively intend to be  Its terms are specific and
bound by the offer define
 The terms of the offer  It indicates that upon acc
must be definite or eptance by the offeree, th
reasonably certain e offeror will be bound t
 The offer must be hereby.
communicated to the
offeree
 Is there an offer? Lucy v. Zehmer (VA
1954)
 Objective theory of contracts
 Intent to contract is judged by the reasonable person standard and not
by the subjective intent of the parties. Lucy v Zehmer (VA 1954)
 Z and L were drinking. Z made an written offer to sell L a farm for
$50,000. Z alleged that he only wanted to bluff L into admitting he did
not have such money. While L took the offer seriously and offer $5 to
bind the deal. When Z refused to perform the contract, L brought an
action.
 Is the contract enforceable? Ct: Z was not too intoxicated and was
aware of what he was doing. A contract will be determined first by the
actions of the parties, not by there subjective intent.
 Offer
 An offer must contain the following terms
 Identification of the parties
 Identification of the subject matter
 Quantity
 If some terms are omitted, then the
UCC or the court determines:
 Price
 Time of performance
 Place of performance or deliver
(e.g., UCC: seller’s place of
business)
 Quality
 Based on industry norms,
market price, and prior dealings
between the parties
 Article 12, CL:
 The terms of a contract generall
y include the following:
 names of the parties and the do
miciles thereof;
 subject matter;
 quantity;
 quality;
 price or remuneration;
 time, place and and method of p
erformance;
 liabilities for breach of contract;
 method of dispute resolution.
 Hunt v. Mcilory Bank and Trust (Ark. 1981)
 Facts:
 The bank agreed to loan H $175,000 for which short-term promissory note
s ( 期票 ) were signed by H.
 At that time, oral discussion were held with the bank officer regarding lon
g-term financing operation, but no dollar amount, interest rate, or repayme
nt terms were discussed.
 When H defaulted on the notes, the bank filed for foreclosure on the farm.
 H counterclaimed for damages as the bank breached its oral contract to pro
vide long-term financing.
 Is there an oral contract for long-term financing?
 Ct: No interest, loan period, or other terms were ever negotiated. There
were too many uncertain details so that no party could have performed an
agreement for long-term financing. Therefore, no oral contract.
 Offer
 Express Terms
 The terms of an offer must be clear enough to the offeree to
be able to decide whether to accept or reject the terms of th
e offer
 Implied 隐含 Terms
 The court can supply a missing term if a reasonable term
can be implied
 Terms supplied in this way called implied terms

 Communication of an Offer
 Goodwest Rubber Corp. v. Munoz (Cal. 1985)

Facts:
 M leased a property to Goodwest for five years. The lease
granted Goodwest the option to buy the property at a fair market
value.
 Goodwest sought to exercise the option to purchase the property
and tendered $80,000 to Munoz, but he rejected it.
Issue:
 Was the price designation of “fair market value” definite enough
to support an acceptance?
 Ct: “’Fair market value’ is a proper substitute for a specific
price,” and is “an established means of property valuation.”
 Offer
 Special Offers

Advertisements

Rewards

Auctions
 Article 15, CL

 Invitation to offer

 an invitation to offer is a party's manifestation of intention to invite the

other party to make an offer thereto.
 A delivered price list,

 announcement of auction,

 call for tender,

 prospectus, or commercial advertisement, etc.

 A commercial advertisement is deemed an offer if its contents meet the

requirements of an offer.
 Termination of an Offer by Act of the Parties

 Revocation:  Article 18-19, CL:

Withdrawal of an offer  An offer may be revoked. The
notice of revocation shall reach
by the offeror that the offeree before it has
terminates the offer dispatched a notice of acceptance.
 An offer may not be revoked:
 The terms of the offer  (i) if it expressly indicates,
may state that the offer whether by stating a fixed time
will be open for a for acceptance or otherwise;
 (ii) if the offeree has reason to
certain period of time regard the offer as irrevocable,
and has undertaken preparation
for performance.
 Termination of an Offer by Act of the Parties

 Rejection: Express  Article 20, CL

 An offer is extinguished in any of
words or conduct by the the following circumstances:
offeree to reject an offer  (i) The notice of rejection reaches
the offeror;
 (ii) The offeror lawfully revokes t
he offer;
 (iii) The offeree fails to dispatch it
s acceptance at the end of the peri
od for acceptance;
 (iv) The offeree makes a material
change to the terms of the offer.
 Termination of an Offer by Act of the Parties

 Counteroffer: A  Article 30/31, CL

 Acceptance containing material c
response by an offeree hange
that contains terms and  Acceptance containing non-mater
conditions different ial change
from or in addition to
those of the offer
 Is there a counteroffer?

 Example 1:

 Bill: I will pay $100 for an XYZ widget

 Sam: I will sell you an ABC widget for $100

 Example 2:

 Acme Co. manager: I will hire you for $5000 per month.

 Sam: I want $6000 per month

 Example 3:

 Buyer: I offer to buy 100 widgets per month to be delivered on the third day of the month.

 Seller: I accept your offer to buy 100 widget per month to be delivered on the fourth day of the
month.
Termination of Offer by Operation of Law
 Destruction of the subject matter
 Death or incompetency of offeror or offeree
 Supervening illegality
 Lapse of time
 Acceptance
 Acceptance: A  Article 21, CL
 An acceptance is the offeree's ma
manifestation of assent nifestation of intention to assent t
by the offeree to the o an offer.
terms of the offer in a  Article 22, CL
manner invited or  An acceptance shall be manifeste
required by the offer as d by notification, except where it
may be manifested by conduct in
measured by the accordance with the relevant usag
objective theory of e or as indicated in the offer.
contracts
 Acceptance
 Unequivocal acceptance
 Clear and unambiguous acceptance
 Only one possible meaning
 Acceptance
 Mirror Image Rule: for an acceptance to exist, the
offeree must accept the terms as stated in the offer
 Any attempt to accept the offer on different terms
constitutes a counteroffer
 Applies to offers for services or real property, which
are not governed by the UCC
 The UCC applies to goods and does not have the
Mirror Image Rule
 McLaughlin v. Heikkila (Minn. 2005)
 Facts:
 H listed 8 properties for sale.
 M submitted written offers to purchase three properties.
 H changed the prices and closing date and signed the purchase agreeme
nts.
 M did not sign the purchase agreements before H withdrew his offer to
sell.
 M sued to compel specific performance to the purchase agreement.
 Issue: Does the purchase agreement exist?
 Ct: H made a counteroffer and then withdrew the offer before M
accepted. No contract.
 Acceptance
 Silence as Acceptance
 Offeree indicates that silence means agreement
 Offeree signed agreement indicating continuing
acceptance until further notification
 Prior dealings indicate that silence means assent
 Example: Seller offers to sell AA widgets @ $100
per widget. Buyer says it will buy BB widgets.
Seller delivers 10 AA widgets and Buyer accepts
delivery. What result?
 J.C. Durick Insurance v. Andrus (Vt.
2005)
 Facts:
 D offered to insure A’s building for $48,000.
 A replied with a change of the insurance amount.
 D sent a new insurance policy in amount of $48,000 with notation that
the policy will be automatically accepted unless A notifies him to the c
ontrary.
 A did not reply and did not pay the premium.
 Issue: Is there an insurance contract?
 Ct: “The Offeror cannot force the Offeree to be bound by silence.”
 Acceptance
 Time of acceptance  Article 26, CL
 Mailbox rule: an  A notice of acceptance beco
acceptance is effective mes effective once it reache
when it is dispatched, s the offeror. Where the acce
even if it is lost in ptance does not require notif
transmission ication, it becomes effective
 Does not apply if an once an act of acceptance is
offeree first dispatches a performed in accordance wit
rejection and then sends h the relevant usage or as re
an acceptance quired by the offer.
 Acceptance
 Mode of acceptance
 Proper dispatch
 Authorized means of communication
 Implied authorization
 Express authorization