Class 2, Slide 1
I. Acceptance
A. Definition/Requirements
1. Voluntary assent by the offeree
*2. To all of the terms of the offer
3. Communicated to the offeror
4. Effective on dispatch (upon being sent) [The Mailbox Rule]
Class 2, Slide 2
B. Mirror Image Rule
1. General rule: the offeree must accept all of the terms of the offer; the
acceptance must be the “mirror image” of the offer
2. Generally, the offeree cannot add to, subtract from, or qualify the terms of the
offer
Class 2, Slide 3
C. Battle of the Forms Rule [Uniform Commercial Code (UCC) Section 2207]
1. General rule: applies when the contracting parties are merchants.
2. Applies when the offeree tries to change the terms of the offer, by including
additional terms, and/or different terms.
3. If the offeree makes acceptance expressly conditional on the offeror accepting
the changed terms, then it is a counteroffer. [Offeree insists, uses strong words]
4. In contrast, if the offeree merely requests consideration of changed terms, then a
2-part rule determines whether the changed terms become part of the contract.
[Offeree uses soft words; not insistent]
5. 2-part rule:
(a) additional terms rule
Additional terms become part of the contract if:
(i) the original offer did not prohibit additional terms
(ii) the additional terms do not materially alter the contract/increase risk to offeror
(iii) the offeror does not object to the additional terms within a reasonable time
(b) different terms rule
Different terms become part of the contract only if the offeror accepts the terms.
Class 2, Slide 4
D. Silence as acceptance
1. General rule: silence does not equal acceptance
2. Exception: the course of dealing of the parties is that silence constitutes
acceptance
Class 2, Slide 5
II. Consideration
A. Definition
1. A contract is enforceable only if the contracting parties have exchanged
something of value
2. Value is broadly-defined
3. Value may consist of a profit, a benefit or a right
4. Value may consist of incurring a loss or detriment, or waiver/forbearance of a
right
5. It may be a promise to act, or a promise to refrain from acting
Class 2, Slide 6
B. Characteristics of Consideration
1. Consideration does not have to be equal
2. Past performance does not equal consideration
3. A pre-existing duty to perform does not equal consideration
Class 2, Slide 7
III. Promissory Estoppel
Overview: This rule impacts the offeror. This rule applies when the offeror has
made an offer, there is a defect in meeting the legal requirements for a contract, but
it would be unjust not to enforce the contract
1. Applies when the offeror makes an offer (a promise) to the offeree
2. The offeror knows, or should reasonably know and expect, that the offeree will
rely on the promise
3. The offeree does rely on the promise
4. If necessary to prevent injustice to the offeree, courts will enforce the offeror’s
promise
Class 2, Slide 8
IV. Quasi-Contract
Overview: This rule impacts the offeree. This rule applies when an offeror
technically does not make an offer, but mistakenly performs, there is a defect in
meeting the legal requirements for a contract, but it would be unjust not to enforce
the contract
1. Applies when a benefit is conferred upon the offeree by the offeror (typically a
service is provided)
2. The offeree had knowledge of the benefit (service)
3. The offeree retains (keeps) the benefit (service)
4. If necessary to prevent injustice to the offeror, courts will award the offeror the
reasonable value of the service (the benefit)
Class 2, Slide 9
In-Class Exercises
Exercise No. 1
Irwin Schiff (“Schiff”) was a tax resistance advocate. In court cases, he argued
that the U.S. income tax system was illegal and unconstitutional. From 1982-1992,
CBS aired an overnight news program called “CBS News Nightwatch.” The
program was generally episodic, with each show devoted to a main topic. The
program included a viewer participation format. Schiff was a guest during a
segment broadcast from 3:00 a.m. to 4:00 a.m. While he was being interviewed, a
call-in telephone number, with the notation, “Nightwatch Phone-In,” could be seen
on-screen. Schiff told the interviewer that there was nothing in the Internal
Revenue Code which requires anyone to pay income tax. He went on to say that if
anybody watching this show, calls this show, and cites any section of the Internal
Revenue Code requiring a person to file a tax return, he would pay them $100,000.
Later that day, John Newman (“Newman”), while watching CBS Morning News,
saw a clip of Schiff’s earlier interview replayed. Newman had not watched the
original Nightwatch episode, but he performed research. He found sections of the
Internal Revenue Code which contradicted Schiff’s claim. Newman later called
CBS Morning News to claim the $100,000 reward. He confirmed his telephone
call in a follow-up letter to CBS Morning News. Newman claimed that he had
performed the act requested by Schiff in exchange for Schiff’s promise to pay
$100,000. Later, Schiff wrote to Newman, admitting he made an offer during the
program, but he denied Newman’s claim, arguing that Newman had failed to
properly accept the offer. Newman sued Schiff for breach of contract. Should
Newman prevail? Why or why not?
Class 2, Slide 10
Exercise No. 2
Anne Smith (“Smith”) was the manager of an optometry store, with a $40,000
annual salary. Ed Jones of Ace Optical (“Ace”) called Smith about a job with Ace.
Smith expressed interest and was interviewed for the job. Following the interview,
Ace offered Smith a job as manager of Ace’s stores located in Oregon, at an annual
salary of $50,000.
A few days later, Smith received a letter from Ace, entitled “Offer Letter,” which
included a sentence asking Smith to sign and return the letter. Smith signed it, then
placed it in her filing cabinet, as part of her Ace file. Smith gave her employer
notice of her resignation, notified her landlord that she was terminating her
apartment lease, sent a $1,000 non-refundable deposit for a new apartment in
Oregon, and paid for a non-refundable flight to Las Vegas, to attend Ace’s annual
sales meeting. At the sales meeting, Ace told Smith that, upon further review, she
lacked the qualifications needed for the manager job. Upon returning home, Smith
received a letter from Ace, confirming the withdrawal of the job offer. What rights
and remedies, if any, does Smith have against Ace?