Sources of Contract Law
I.
UCC Article 2: Sales of Goods
a. Sale (UCC 2-106.1) — transferring ownership of goods for a price
b. Goods (UCC 2-105) — all things (including specially manufactured goods) which are movable at the time of identification to the
K for sale other than the money in which the price to be paid, investment securities, and things in action = “I’ll pay you $100 on
Friday”
i. Tangible moveable items
ii. Goods attached to Real Estate
1. w/o regard to who severs the goods
2. UCC only if seller severs the goods
c. Hybrid Transactions: When the contract involves both goods and services, courts use a predominant purpose test (Bonebrake)
which looks at the dominant factor approach to determine which law should be used.
i. The factors considered are:
1. Language of contract
2. the nature of the providers’ business as a seller of goods or services;
3. The relative value of the goods compared to the services.
a. Examples:
i. Rendition of service with goods incidentally involved (contract with artist for painting)
ii. Slodov —adopted dog, adoption considered service as no goods for money exchange.
iii. Lohman v. Wagner — Sale of Weaner pigs; Hybrid but predominantly the sale of goods and
iv. Advent Systems Limited v. Unisys Corporation — Software that was transferred onto medium
making it a good, but updating software was considered an incidental service; Hybrid trnsx but
predominantly the sale of goods
d. UCC on some Aspects of contract Formation
i. UCC 1-103(b) — Unless displaced by the particular provisions of the UCC, the principles of law and equity, …
supplement its provisions.
ii. Rst2d §17 — the formation of a contract requires a bargain in which there is a manifestation of mutual assent
1. Formation of a contract
2. Requires a bargain
3. In which there is
4. A manifestation of mutual assent to the exchange
5. A consideration
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II.
Common Law
a. Court decisions
b. Reflected in the Restatement 2d
c. Where the UCC doesn’t have a rule or UCC’s rule doesn’t display CL
Commonly Used Terms
III.
Definitions:
a. Promise (Rst2d §2) — a manifestation of intention to act or refrain fro acting in a specified way, so made as to justify a
promisee in understanding that a commitment has been made
b. Agreement (Rst2d §3) — a manifestation of mutual assent between 2 or more parties
c. Contract (Rst2d §1) — a promise or set of promises for the breach of which the law gives a remedy or the performance of
which the law in some way recognizes as a duty (Legally enforceable agreement)
d. Contract (UCC §1-201(12)) — “Contract”, as distinguished from “Agreement”, means the total legal obligation that results from
the parties’ agreement as determined by the UCC supplemented by any other applicable laws
e. Requirement of a Bargain (Rst2d §17) — (except as stated in subsection 2 – referring to §§82-94) the manifestation of mutual
assent to the exchange and a consideration.
Types of Contracts
IV.
Types of Ks
1. Types of Contracts:
a. Contracts for sales of goods = UCC
b. Services, Real Estate, etc. = Restatement (2nd) of Contracts); Common Law/Statutes
c. Unilateral v. Bilateral
I. Bilateral — Formed through an exchange of promises between two parties (Ex: “I will ___ if you ____”)
II. Unilateral — Formed through a promise that can be accepted by performance (Ex: lost animal/wanted
rewards)
i. Anderson v DLC — Employee accepted offer by showing up to work and could walk away at any time
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d. Expressed (Definite oral or written contract) v. Implied
I. The only difference between express and implied in fact is the manner in which the party’s intent is expressed
II. Implied in Fact – no explicit agreement but is rather inferred as a matter of reason or justice from the acts or
conduct of the parties. All of the elements of an express contract must be shown by the facts and
circumstances surrounding the transaction (1) Mutuality of intent, (2) offer and acceptance, (3) authority to
contract) so that it is reasonable or even necessary for the court to assume that the parties intended to be
bound (Ex: Ordering drinks at a bar)
i. Elements of implied in-fact contract:
 The ∆/offeror requested the π/offeree to perform the work
 The π/offeree expected the ∆/offeror to compensate him for those services
 The ∆/offeror knew or should have known that the π/offeree expected compensation
ii. Just as assent may be manifested by words, conduct, or sometimes silence, intention to make a
promise may be manifested in language or other circumstances, including course of dealing, usage of
trade, or course of performance
iii. UCC §1-201(b)(3) — defines agreement
 The bargain of the parties in fact,
 As found in their language or inferred from other circumstances
 Including course of performance, course of dealing, or usage.
iv. Unsolicited Merchandise
 Common law treated unsolicited merchandise as an offer that was accepted if the buyer kept
the goods and thus enjoyed the benefit of their receipt
 The court would likely find a contract implied in-fact and treat the Offeree’s silent acquiescence
in the receipt and use of the valuable goods and services in the circumstances where it knew
payment was expected, as acceptance.
III. Implied in Law (Quasi-Contract) - non-promissory; common law action; law builds relationship of obligation
between parties entering into the contract in order to redress unjust enrichment, for purpose of remedy only
i. Not really a contract at all
ii. Based on the law of restitution that seeks to prevent unjust enrichment and does not depend on the
voluntary consent of the parties.
iii. Remedy is based on the value of the economic benefit conferred on the party who was enriched
i. Doctors who performed emergency surgery on patient, when patient was unable to consent,
surgery was required to save the patients life
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Offers
V.
Elements in Constructing a Contract
a. Rst2d §24 OFFER – a (1) manifestation (2) of willingness to enter into a bargain, so (3) made as to justify another person in
understanding (4) that his assent to that bargain is invited and (5) will conclude it.
i. A manifestation — using words or actions (not secret thoughts)
ii. Of a willingness to enter into a bargain (not just to make a gift)
iii. Made in a way that justifies another person in understanding
1. Based on words and actions in context
2. Based on what would a reasonable person be justified in understanding and did that person have that understanding
3. Reasonable Notice of Terms
a. Or were they hidden secret in an inconspicuous place (employee handbook case, hidden within website case)
iv. That his or her assent to the deal is invited and
v. will conclude the bargain
1. No further action is necessary
b. Indefinite Terms
i. An offer must contain enough definite terms for a court to be able to enforce the K (Ex: parties, subject, quantity, price)
ii. Vague terms or terms of negotiation are insufficient
iii. May indicate resolution of terms necessary to conclude agreement
iv. Court may fill gaps where consistent with parties’ intent and reasonable basis for determining terms is available
1. Execution of More formal agreement
a. Formation conditional on execution: no agreement
b. Execution a mere convenience: K without formal memorial of the agreement
v. If the language stops short of expressing willingness to enter into a binding agreement or indicates that something other than
the offeree’s expression of assent is necessary to conclude the deal, the communication is not an offer.
vi. UCC §2-204(3) — UCC on Indefinite Terms
1. Even though one or more terms are left open, to contract for sale does not fail for indefiniteness if the parties (1)
intended to make a contract and (2) there is a reasonably certain basis for giving an appropriate remedy.
vii. Rst2d §33 — Even if an offer manifests a definite commitment to enter a bargain, mutual assent cannot occur unless the
terms of that offer are stated with "reasonable certainty."
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c.
d.
e.
f.
g.
1. Example: No contract: Academy Chicago Publishers v. Cheever (the deal to sell her husbands short stories had missing
terms and uncertain terms)
Bilateral vs Unilateral
i. Bilateral — Formed through an exchange of promises between two parties (Ex: “I will ___ if you ____”)
ii. Unilateral — Formed through a promise that can be accepted by performance (Ex: lost animal/wanted rewards)
Advertisements
i. Not usually considered offers.
ii. If an advertisement is treated as an offer, it would create a potential for unlimited liability
iii. The advertisement could be accepted by anyone or everyone who happened to read the offer
Advertisement that makes a definite Offer (Rst2d §24 & §26)
i. General rule: Ads are generally not offers because they are made to a large group of people and companies don’t want to
open themselves up to unlimited liability of having to fulfill every offer
1. Most common missing elements are (4) …assent to that bargain is invited and (5) will conclude the bargain because
most people see an ad and know that something else is needed to accept the deal.
2. There must ordinarily be some language of commitment or some invitation to take action without further
communication.
a. Objective test: would a reasonable person in the circumstances believe it was meant to be an offer?
b. Subjective test: applies if other party KNEW if it was meant to be an offer (Lucy v. Zehmer)
3. Exceptions: Advertisement is so definite, that the completion of the offer is explicitly and clearly defined, leaving
nothing open to negotiation
a. Lefkowitz v Great Minneapolis Surplus Store — Fur coat worth $100 for $1 to first 3 people
b. Carlill v Carbolic Smoke Ball — 100 pounds for actually getting sick
c. Fairmont Glass Works v Grundan — prospective buyer asked for price quote for specific quantity. Fairmont
replied and stated that there would be immediate acceptance until May 15th.
4. Example of rule:
a. Leonard v. PepsiCo — fighter jet for sale; unreasonable to think it would be a valid offer
b. Sateriale v Tobacco Co — C-note rewards for Camel cigs, possible exception because they controlled how
many c notes were available and the prizes were equally exclusive, so they were not open to unlimited liability
Rst2d §18 — Manifesting Assent
i. Manifestation of mutual assent to an exchange requires that each party either make a promise to begin or render
performance
Expression of Present Intent
i. A current announcement of current plans cannot necessarily be interpreted as a commitment to follow through with those
plans.
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1. Anderson v DLC — employee handbook was not sufficiently definite. It stated it was not to be a contract at the
beginning and end of the handbook, and the employer could change it at will
h. UCC §2-204(3) — UCC on Indefinite Terms
i. Even though one or more terms are left open, to contract for sale does not fail for indefiniteness if the parties (1) intended to
make a contract and (2) there is a reasonably certain basis for giving an appropriate remedy.
i.
Preliminary Negotiations
i. Parties are allowed some leeway in early negotiations before the point of imminent legal obligation is reached
ii. Sellers are allowed to use advertisements and price quotations as a way to attract potential buyers without being bound.
iii. Indefinite Commitment to the deal
1. Remember Rst2d §2: Promise? Justified in understanding that a commitment has been made
iv. Vague or Ambiguous Terms
1. Ambiguous wording; Internal Inconsistency; Punctuation Mistakes
v. Conspicuous/Easily Identifiable
1. Terms/conditions of K must be clearly conspicuous
a. Nicosia v Amazon — ✅
b. Anderson v DLC — ❌
vi. Missing terms
1. Gaps in the agreement (Parties unable to agree; hastily left something out)
2. Terms intentionally Left for future Resolution
a. One party has discretion (buyer's requirements)
b. Parties will agree later (Renewal rent to be agreed)
vii. Transactions with uncertain Commitment
1. Agreement to agree
2. Letter of Intent
3. Memorandums of understanding
4. Term Sheets
5. Formal Written Contract Later
viii. Different levels of enforceability:
1. The parties intend this letter of intent to be a legally binding document and will use their good faith best efforts to
complete and execute a more definitive agreement within 60 days of this letter of intent
2. The parties do not intend to be legally bound by this letter of intent
3. The parties intend this letter of intent to be legally binding until it is replaced by a more formal and definitive
document addressing the same topics
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ix. Restatement provisions on preliminary agreements
1. Rst2d §26 — Effect of preliminary negotiations (Ex: we’re not done here until I sign my name”)
a. A manifestation to enter into a bargain is not an offer if the person to whom it is addressed knows or has
reason to know that the person making it does not intend to conclude a bargain until he has made a further
manifestation
2. Rst2d §27 — Written Memorial Contemplated (Ex: “write it up, we are done here”)
a. Manifestation of assent that are in themselves sufficient to conclude a contract will not be prevented from so
operating by the fact that the parties also manifest an intention to prepare and adopt a written memorial
thereof; but the circumstances may show that the agreements are [merely] preliminary negotiations.
x. Circumstances affecting enforceability
1. Final writing: Convenience or condition?
a. Rst2d §26: Not an offer until offeree has made a further manifestation assent
b. Rst2d §27: A contract won’t be prevented from being a contract just because they are waiting for the final
write-up
i. Circumstances may show the agreements are preliminary, if so, the circumstances when determining if
K is concluded, include:
a. Whether this is the type of deal usually put in writing
b. Whether it needs a formal writing for its full expression
c. Whether it has too few or too many details
d. Whether the amount involved is large or small
e. Whether it is a common or unusual contract
f. Whether a standard form of contract is widely used on similar transactions and
g. Whether either party takes any action in preparation for performance during the
negotiations
i. Such circumstances may be shown by:
ii. Oral testimony
iii. Correspondence
iv. Other preliminary or partially complete writings
v. Example: Quake Construction v. American Airlines — they ruled in favor of
Quake because the letter of intent was sufficient to be a contract, but a jury trial
was needed to determine if there was a breach.)
xi. Duty to Bargain in Good Faith (No obligation to agree)
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1. As defined by:
a. Rst2d §205 — Every contract imposes upon each party a duty of good faith and fair dealing in its performance
and its enforcement
b. UCC §1-304 — Every contract or duty within the UCC imposes an obligation of good faith in its performance
and enforcement
2. UCC Definition of “Good Faith”
a. UCC §1-201(b)(20) — Honesty in fact and the observance of reasonable commercial standards of fair dealing
3. Duty to try — Can’t pretend to negotiate; undermine efforts to reach agreement
Acceptance
VI.
Acceptance of Offer
a. Rst2d §50 —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.
i. Manifestation — using worlds or actions
ii. To terms of the offer
iii. By the Offeree (no 3rd parties)
iv. In manner required or invited
1. Offer for unilateral K: performance the sole method of acceptance
2. Offer for bilateral K: Promise or beginning performance that implies a promise to finish
b. Unsolicited Merchandise
i. Common law treated unsolicited merchandise as an offer that was accepted if the buyer kept the goods and thus
enjoyed the benefit of their receipt
ii. The court would likely find a contract implied in fact and treat the offeree’s silent acquiescence in the receipt and use of
the valuable goods and services in the circumstances where it knew payment was expected, as acceptance.
c. Assent to Standardized Form Ks
i. Sellers provide customers with a pre-printed, standardized contract form and gives the customer no opportunity to
make adjustments to the available terms
ii. The terms are presented on a take it or leave it basis
iii. Involves a wide disparity in bargaining power
iv. Courts scrutinize under reasonable expectations and unconscionability
1. Reasonable expectations:
a. First developed in context of insurance contracts
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b. Interprets the party’s agreement to conform to the customers reasonable expectations even though the
documented version of the agreement negates those expectations
v. Rst2d §35 — Offeree’s Power of Acceptance
1. An offer gives to the offeree a continuing power to complete the manifestation of mutual assent by acceptance
of the offer
a. A contract cannot be created by acceptance of the offer after the power of acceptance has been
terminated in one of the ways listed in Rst2d §36
VII.
2. Rst2d §36 — An offeree’s power of acceptance may be terminated by:
a. Death of Offeror or Offeree
b. Rejection of Offer (Rst2d §38)
c. Counteroffer (Rst2d §39)
i. An acceptance or proposal to accept an offer that changes the terms is actually a rejection
d. Lapse of Time (Rst2d §41)
i. if an offer is not accepted during the period contract states or within a reasonable time (based on
the industry custom and circumstances), it is cancelled. Ever-Tite Roofing Corporation v. Green
e. Revocation of Offer (Rst2d §42)
i. Until a clear communication of an acceptance of an offer, offeree has the power to revoke the
offer
ii. Can be direct (call, write) or indirect (ex. party finds out through a reliable source) Dickinson v.
Dodds
iii. Method of revocation must be the same method as the offer (or an equivalent method of
effectiveness)
iv. Revocation is effective if it occurs before the offeree has manifested her assent to the offer
v. Revocation is not effective until received by the offeree
vi. Delivery of a communication to someone’s mailbox ordinarily constitutes receipt
f. Non-occurrence of any of acceptance under the terms of the offer
Acceptance by Silence
a. Silence does not ordinarily constitute acceptance. Offeror can’t impose on the offeree silence as a means of acceptance
i. Exceptions:
1. When there is a longstanding relationship custom between buyer and seller
2. When both parties have agreed that silence can be treated as acceptance.
3. When the party remaining silent acts on the agreement, then the silence will be treated as acceptance.
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VIII.
ii. Rst2d §19(1) — The manifestation of assent may be made wholly or partly by written or spoken words or by other acts
or by failure to act.
iii. Rst2d §22 — Mode of assent
1. The manifestation of mutual assent to an exchange ordinarily takes the form of offer or proposal by one party
followed by an acceptance by the other party or parties
2. A manifestation of mutual assent may be made even though neither the offer nor acceptance can be identified
and even though the moment of formation cannot be determined.
UCC §2-204(2)
a. An agreement sufficient to constitute a contract for sale may be found even though the moment of it's making is
undetermined.
b. To discern the moment of acceptance via silence is difficult
i. Silence might operate as acceptance in the following cases only:
1. Offeree takes the benefit of offer with reasonable opportunity to reject them and reason to know that they
were offered with the expectation of compensation
2. Where the offeror has given offeree reason to understand that assent may be manifested by silence or inaction,
and the offeree in remaining silent and inactive intends to accept the offer
3. Where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he
does not intend to accept the offer. (Houston Dairy — Houston made a counteroffer with a cashiers check so
silence was not an acceptable method of acceptance because Houston Dairy had no way of knowing of it had
been accepted)
Irrevocable Ks (Option Ks)
IX.
Limits on revocability
a. Option — Enforceable promise not to revoke
b. Offers that are revocable by offeror (Rst2d §36(1)(c))
i. Rst2d §42 — An offeree’s power of acceptance is terminated when the offeree receives from the offeror a
manifestation of an intention not to enter into the proposed contract
ii. Anytime prior to an effective acceptance
c. Offers become irrevocable with an express or implied promise to keep the offer open, plus:
i. Sealed promise not to revoke (Ex: wax seal stamped next to promisor's signature)
ii. Consideration (most traditional - usually money)
iii. Recitation of consideration (Rst2d §87(1)):
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1. (a) It is binding if it is in writing, signed by the offeror, recites a purported consideration for the making of the
offer, and proposes an exchange on fair terms within a reasonable time; or
2. (b) is made irrevocable by statute (Ex: UCC §2-205)
iv. Signed option agreement
1. Used in real estate transaction, protects buyer from having it sold out from under them
2. Renewal option in commercial Real Estate Leases
3. Stock options
v. Implied promise not to revoke but there was beginning of performance of an offer to make it a unilateral contract
vi. A possible firm offer (UCC §2-205)
X.
d. Rst2d §45 Unilateral K — If rendering performance is the only way to accept, then the contract is created when the offeree
begins substantive performance (Offer becomes irrevocable)
i. The action is the acceptance
ii. Offeror doesn’t seek promise in return, and doesn’t make a promise in return
e. Rst2d §32 — Offers as Rewards
i. In cases of doubt, offer is interpreted as inviting acceptance either
1. With a promise to perform; or
2. rendering the performance
ii. Rst2d §62 — Begin performance = acceptance
1. Example: Cook v Coldwell Bank — Bonus for work
2. Example: Carbolic Smoke Ball — Reward for getting symptoms
Irrevocable Firm Offer — provides mechanism to make irrevocable offer without consideration
a. UCC §2-205 — An offer (1) by a merchant to buy or sell goods in a (2) signed (3) writing which by its terms (4) gives assurance
that it will be held open is not revocable ([because of] “for lack of consideration, during the time stated or if no time is stated
for a reasonable time, but in no event may the period of irrevocability exceeds three months; but any such term of assurances
(5) on a form supplied by the offeree (6) must be separately signed by the offeror”)
i. UCC §1-201(b)(37) Signed defined — ANY symbol executed (letterheads, business cards)
ii. UCC §1-201(b)(43) Writing defined — includes printing, typewriting, or any other intentional reduction to form
iii. UCC §2-104(1) Merchant defined — (1) deals in goods of the kind; (2) Otherwise by his occupation holds himself out as
having knowledge or skill peculiar to the practices or goods
b. Rst2d §63 — Mailbox Rule
i. (a) an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation
of mutual assent as soon as put out of the offeree’s possession, without regard to whether it ever reaches the offeror;
but
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ii. (b) An acceptance under an option contract is not operative until received by the offeror.
c. Rst2d §66 — Mailbox rule is ineffective if
i. Not properly addressed
ii. Other ordinary precautions not observed
d. Electronic communication
i. UETA: Uniform Electronic Transaction Act §15
1. An electronic record is sent when it is: (1) addressed properly (2) In a form capable of being processed by the
recipient's system, and (3) Enters an information processing system outside the control of the sender
2. An electronic record is received when (1) enters the recipients information processing system and (2) In a form
capable of being processed by that system
Common Law Mirror Image Rule
XI.
Common Law Mirror Image Rule
a. Terms in a purported Acceptance that differ from those in a Counteroffer
i. Conditional Acceptance — “I accept your offer to sell your house for $350,000, if you replace the furnace”
ii. Suggesting alternative terms — “I accept your offer to sell your house for $350,000. Will you include the window
treatments?
iii. Terms already implied — “I accept your offer to sell your house for $350,000, provided you can provide marketable
title.”
b. Mirror Image Rule
i. Last Shot Rule —
ii. Rst2d §50: to the terms of the offer
iii. Rst2d §57: Where notification is essential to acceptance by promise, the offeror is not bound by an acceptance in
equivocal terms unless he reasonably understands it as acceptance.
iv. Rst2d §58: An acceptance must comply with the requirements of the offer as to the promise to be made or the
performance to be rendered.
v. Rst2d §59: A reply to an offer which purports to accept it but is conditional on the offeror's assent to terms addition to
or different from those offered is not an acceptance but is a counter-offer.
1. A deviant acceptance is a counteroffer, not an acceptance
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XII.
XIII.
2. HYPO — ABC Co. sends offer to pay $5M to cross Sound Shipyard to restore and renovate Ferry; Terms and
conditions on reverse side of the "purchase order"; Cross Sound Shipyard replies not by signing & returning ABC
Co.’s purchase order, but by sending their own Acknowledgment form containing their own set of terms and
conditions on the reverse side.
a. ❌Contract because original terms sent by ABC Co. were never agreed to
3. Now suppose MV Ferry, in response, delivers the Ferry to Cross Sound for repairs
a. ✅Contract because they manifested assent by performing
c. Acceptance of offers to buy goods via shipment of goods
i. Manner of acceptance: Goods
1. Rst2d §30(2): Unless otherwise indicated by the language or circumstances, an offer invites acceptance in any
manner and by any medium reasonable in the circumstances.
2. UCC §2-206(1)(a) is nearly identical:
a. (1) unless otherwise unambiguously indicated by the language or circumstances:
i. (a) an offer to make a contract shall be construed as inviting acceptance in any manner and by
any medium reasonable in the circumstances.
ii. (b) an offer to buy goods for prompt or current shipment shall be construed as inviting
acceptance either by
1. A promise to ship (aka acceptance)
2. Shipment of conforming goods (aka acceptance)
3. Shipment of non-conforming goods (aka acceptance)
4. Shipment of non-conforming goods does not constitute an acceptance if the seller
seasonably notifies the buyer that the shipment is offered only as an accommodation to
the buyer.
a. In other words: shipment of non-conforming goods is considered a counteroffer, if
the seller says as much. K has nonetheless been breached if wrong items sent
Battle of the Forms UCC §2-207(1) (alters the mirror image rule of the common law)
a. A definite unseasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates
as acceptance even though it states terms additional two or different from those offered or agreed-upon, unless acceptance
is expressly made conditional on assent to the additional or different terms.
i. When there are additional or different bargained terms sent back, then then there is not a contract.
ii. When the terms are wildly different then there is most likely not an acceptance.
iii. When the terms are not wildly different then it is a contract.
Battle of the Forms UCC §2-207(1) (Preserves part of the mirror image rule)
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XIV.
a. A definite unseasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as
acceptance even though it states terms additional two or different from those offered or agreed-upon, unless acceptance is
expressly made conditional on assent to the additional or different terms.
i. Ex. Purchase order is a mirror image on the front terms (bargained for terms) but on the back it has additional terms
and a clause that says: This acceptance is expressly conditional on Buyer's assent to terms in this acknowledgement.
Not a contract.
ii. Courts lean towards formation of a contract despite new or different boilerplate terms except when there is EXPRESSLY
CONDITIONAL language that shows assent is required to the terms
Battle of the Forms UCC §2-207(2) Additional & Different terms in contracts formed via UCC §2-207(1)
a. The additional terms are to be construes as proposals for addition to the contract.
i. Normally proposals to modify a contract have to be “accepted” by the other party to be included in the contract
1. Goods, so consideration not needed for modification: UCC §2-209
ii. Between Merchants [they-additional terms] become part of the contract unless:
1. The offer expressly limits acceptance to the terms of the offer; (Egan v Mobil)
2. They materially alter the contract; or
3. Notification of objection to the additional terms has already been given or is given within a reasonable time
after notice of them is received.
b. UCC §2-207(2) says nothing about different terms
i. Who is a merchant?
1. Person who deals in goods of the kind
2. Person who by his occupation holds himself out as having knowledge or skill peculiar to the
a. Practices
b. Goods involved in the transaction
3. To whom such knowledge or skill may be attributed by his employment of an agent or broker or other
intermediary, who by his occupation holds himself out as having such knowledge or skill
ii. Official comment 2 to UCC §2-104
1. Specialized knowledge
a. As to goods involved in the transition;
b. As to the practices involved in the transaction; or
c. Both good & practices
2. Comments: Some provisions depend on normal business practices which are or ought to be typical of and
familiar to any person in business.
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3. For purpose of UCC §2-207 almost every person in business would be deemed to be a merchant under the
language since the practices involved in the transaction are non-specialized business practices such as answering
mail
iii. Between merchants UCC §2-104(3)
1. In any transaction with respect to which both parties are chargeable with the knowledge or skill of merchants.
2. UCC §2-207(2) — Terms can become part of the contract without mutual assent only if both parties are
merchants
3. The rest of UCC §2-207 applies to everyone: Merchant and non-merchant alike.
iv. What happens to the additional terms in UCC §2-207(2)
1. What happens when neither party is a merchant?
a. They are just proposals for addition to the contract. There will need to be an independent manifestation
of assent.
2. When only one of the parties is a merchant?
a. Nothing more than a proposal, doesn’t become a part of the contract without additional assent
3. What if they are both merchants?
a. The additional terms become part of the contract unless:
i. The offer expressly limits acceptance to additional terms contained in the offer
ii. They materially alter the contract
iii. Notification of objection already given, or given within a reasonable time after notice of them is
received [by the offeree]
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