WHAT IS A K?
1. A “contract” is a legally enforceable agreement.
 K may be 
o written, or
o oral (provided it does not fall under the Statute of Frauds.
OFFER
GLOSSARY
Offer: the manifestation of willingness to enter into a bargain, such that the other party understands
that their assent will constitute acceptance, and therefore conclude the deal
 offer may propose a bilateral or unilateral K
Acceptance: a manifestation of assent made by the offeree to terms laid out by the offeror, in a
manner indicated or stipulated by the offer
Bilateral K: a K in which both parties make promises
 ex. A to B: “I promise to pay you $1K on 4/15 if you promise now to walk across
Brooklyn Bridge on 4/1.”
 this is an offer for a bilateral K.
Unilateral K: a K which involves the exchange of the offeror’s promise for the offeree’s act
 ex. A to B: “If you walk across BB, I promise to you $1K as soon as you finish.”
 this is an offer for a promise in exchange for an act
Merchant: one who deals in goods of the kind or otherwise by his occupation holds himself out as
having knowledge or skill peculiar to the practices or goods involved in the transaction UCC §2-104
INTENT
Objective Theory of Contracts
A + B make an agreement:
 Intent = what a reasonable person in B’s position would think that A’s objective
manifestation of intent meant
 ASK WHEN EXAMINING AN OFFER:
 did A’s conduct reasonably indicate to B that A was making an offer?
Is it legally enforceable?
Intent typically decides.
 A + B both intend and desire that their agrmt not be enforceable  it is not.
 A + B want their agrmt to be enforceable, but mistakenly think it is not binding  too
bad, it is enforceable (as long as not Statute of Frauds)
Intent to put in writing later:
 parties’ intention controls
 what if no intent manifested?  “K exists as soon as mutual assent is reached”
 use context to determine whether parties intended to be bound by oral agrmt
 ex. very large deals = ct probably finds no intent to be bound until final
document is signed
VALIDITY OF OFFERS
AN OFFER MUST...
 manifest A’s intent to enter a bargain
 indicate that acceptance will conclude bargain
Offer made in JEST  not valid if offeree knows or should know offer was joke; accept ≠ binding
Offer must indicate that acceptance CONCLUDES bargain
 without further assent from offeror
 if A indicates that there are still details to work out  not an offer
 probably just an invitation to continue negotiations
 invitation to discuss ≠ offer
 continuing negotiations; nothing for B to accept
 soliciting bids = preliminary negotiations  not an offer
 ex. “I want to sell my house if I can get $100K for it.”
 B gives A check for $100K ≠ acceptance, bc it was solicitation for bids, ≠ offer
ADVERTISEMENTS (Pepsico, Carbolic, )
Typically too vague or noncommittal to constitute an offer to sell.
 HOWEVER, in order to constitute an actual offer to sell, ads must contain:
 specific terms
 (exact # of units, “first come first served” etc)
 words of commitment
 (advertiser commits self to certain action in response to consumer’s
specific action)
ACCEPTANCE
AN ACCEPTANCE MUST...
 be given by the person whom offeror intended to be the offeree
 be in response to a valid offer
 offeree must know of the offer at the time of acceptance
 be by appropriate method (see below)
 be within timely duration of power of acceptance (below)
Who can accept?
 only a person whom the offeror intended to wield a power of acceptance
In response to an offer:
 cannot accept an invalid offer (i.e. solicitation for bids)
 note: saying “I will pay x for y” in response to sol. for bids IS an offer.
Offeree must know of offer at time of acceptance:
 ex. person who does act without knowing there was a reward for doing so cannot claim
reward.
METHOD OF ACCEPTANCE
 offeror = master of the offer
 offeror may prescribe the particular method which must be used to accept offer
 offeror can suspend mailbox rule  i.e., say “no acceptance until I receive it”
(this is enforceable).
 Unspecified Method  acceptance can be given by any reasonable method
Accepting a Unilateral K
 FULL PERFORMANCE = acceptance of a unilateral K
 BUT: cts hold that offeree must give notice w/in reasonable time when he finishes
performance
 note: offer is irrevocable after performance starts
Offer doesn’t specify promise or performance as acceptance:
 then offeree may accept by EITHER
 Shipment of Goods: UCC §2-206(1)(b)
 buyer places purchase order that does not state how acceptance occurs;
seller may accept by promising to ship, or just shipping in fact
 Accommodation Shipments: UCC §2-206(1)(b)
 when a seller responds to a purchase order by sending non-conforming
goods, knowing that the goods are wrong (perhaps they’re out of what
buyer ordered)
 accommodation therefore = counteroffer
 if buyer accepts  there is K for quantity/type goods actually sent
 if buyer rejects  he can send back
 SELLER PROTECTS SELF FROM BREACH BY DOING THIS
Acceptance by Silence
 generally not possible
 EXCEPTIONS:
 reason to understand
 offeror gives offeree reason to understand that silence = accept, AND
 offeree subjectively intends to be bound by that silence
 benefit of services
 offeree who silently receives a service has accepted if...
 he had a reasonable opportunity to reject them
 knew or should have known that provider expected
compensation for services
 prior conduct



prior course of dealing makes it reasonable for offeree’s silence to be
construed as acceptance
dominion
 when offeree receives goods and keeps them, generally = acceptance
IMPLIED IN FACT Ks
 all of the above involve “implied in fact” Ks
 definition: in which each party, by his conduct, knowingly leads the other
to believe they both have a contract
 meaning: implied in fact = both parties’ conduct indicates agreement
 not implied in fact = parties fail to take any action indicating agreement
WHEN ACCEPTANCE VARIES FROM OFFER:
Common Law vs. UCC
*UCC always trying to find a K to prevent parties from reneging.


Mirror Image Rule (R61)
 offeree’s response = acceptance ONLY if it is precise mirror image of offer
 cannot conflict or add new terms at all; then it is counteroffer
“Battle of the Forms” UCC §2-207
 rejects MIR
 often leads to K formation even if acceptance varies from offer
 2-207(1): General
 any expression of acceptance or written confirmation = acceptance even
though its terms are different/additional from original offer
 2-207(1): Conditional Terms
 if the expression of acceptance is made conditional on assent to different
terms, then NO K
 cts typically only recognize this when it is clear that the party is
unwilling to move forward with the transaction if the first party
does not agree to the new terms
 Additional Terms in Acceptance
 are both parties merchants?
 at least one party not merchant: add’l term does not prevent K,
but offeror must explicitly assent to add’l term
 BOTH merchants:
 add’l term becomes part of K
 EXCEPTIONS:
o if term materially alters K,  no K
o if offeror actually objects to term,  bye bye term
 Silence on Terms
 Offer = Term 1 and Term 2
 Acceptance = only addresses Term 1
  UCC says acceptance covers all terms not disputed
 Conflicting Terms
 conflicting clauses knock each other out of the K
 then go to  UCC Gap Filler provision



Response Diverges Greatly  not acceptance, so no K
2-207(3): Contract by Parties’ Conduct
 if the exchange of forms do not establish a K, but parties still behave in a
way that indicates the existence of a K  there is a K
Confirmation of Oral K (see p. 53 Emanuel)
DURATION OF POWER OF ACCEPTANCE
 Acceptance is TIMELY if...
 you pinpoint moment when acceptance became effective; then
 was power of acceptance in effect at that moment?
 YES  timely
 No  not timely

Terminating Offeree’s Power of Acceptance
 1 - rejection by the offeree
 exception: rejection ≠ termination if
 offeror indicates that offer still stands despite rejections, OR
 offeree states that might wish to consider offer further later
 2 - counter-offer by the offeree
 be careful: saying “would you take $4 instead of $5?” is too equivocal to
be a counter-offer, so doesn’t terminate
 can also give counter-offer, but say “otherwise, I’d like to consider
original offer”
 3 - lapse of time
 offeror may set time limit
 if no time limit, then reasonable time period
 bargaining f2f or on phone: duration = during convo, unless
evidence of intent to prolong
 4 - revocation by offeror
 offeror free to revoke at any time before acceptance (unless option K)
 revocation takes effect when received by offeree
 never received? never effective
 offeror acts in a way inconsistent with intent to enter K, AND offeree
learns about it? = revocation
 cts typically hold that simply negotiating or even offering to
another party is not sufficient to show revocation
 5 - death or incapacity of either party
 loses legal capacity to enter Ks
 true whether offeree learns of it or not
REVOCABILITY/IRREVOCABLE Ks
 Standard Option K
 offer itself grants offeree an option to enter the K
 Common Law: option K only if offeree gives consideration to offeror


R87: signed option K which states payment of consideration = irrevocable,
whether or not consideration was paid
Firm Offers (UCC §2-205) (only merchants can make firm offers)
 offer may be irrevocable, even without consideration/statement of consid. if:
 it is by a merchant
 is in a signed writing
 gives explicit assurance that offer will be held open
 Three Month Limit!
 offers become revocable after three months
 offer still fine after that point as long as offeror hasn’t revoked
 Not by a Merchant?  NOT A FIRM OFFER (therefore, revocable)
Part Performance or Detrimental Reliance
 offeree’s part performance or detrimental reliance on offer  may make an otherwise
revocable offer into a temporarily irrevocable offer
 Offer for Unilateral K:
 beginning of performance makes offer temporarily irrevocable
 preparations ≠ beginning of performance
 ex. buying walking shoes to prep for crossing Brooklyn Bridge
(full performance will result in K) does not count as performance
 Preparations by Offeree in Bilateral K: R§87(2)
 in bilateral (when return promise constitutes acceptance), preparations
DO = reliance and make offer temporarily irrevocable if justice requires
p. 58 Emanuel
 SubContractors’ Offers: when the contractor calculates a sub’s offer
into their bid and relies on the quote to get the job, subcontractor is
bound by their offer (irrevocable).
WHEN ACCEPTANCE BECOMES EFFECTIVE
 MAILBOX RULE