Part II
Contract Formation
Topics E-H
R2 § 50(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.
R2 § 52
An offer can be accepted only by a person whom
it invites to furnish the consideration.
R2 § 58
An acceptance must comply with the requirements
of the offer as to the promise to be made or the
performance to be rendered.
Means of Acceptance
Unless the offer states otherwise, the offeree may
accept by
(1) promise, R2 § 50(3);
(2) performance, R2 § 50(2);
or, in limited circumstances,
(3) silence, R2 § 69.
R2 § 30(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 ….
R2 § 30(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.
R2 § 32
In case of doubt an offer is interpreted as inviting
the offeree to accept either by promising to
perform what the offer requests or by rendering
the performance, as the offeree chooses.
UCC § 2-206(1)
Unless otherwise unambiguously indicated by the
language or circumstances
(a) an offer to make a contract shall be construed
as inviting acceptance in any manner and by any
medium reasonable in the circumstances;
UCC § 2-206(1)
Unless otherwise unambiguously indicated by the
language or circumstances …
(b) an order or other offer to buy goods for prompt
or current shipment shall be construed as inviting
acceptance either by a prompt promise to ship or
by the prompt or current shipment of conforming
or non-conforming goods ....
CISG art. 18(1)
A statement made by or other conduct of the
offeree indicating assent to an offer is an
acceptance. Silence or inactivity does not in itself
amount to acceptance.
R2 § 60
If an offer prescribes the place, time or manner
of acceptance its terms in this respect must be
complied with in order to create a contract. If an
offer merely suggests a permitted place, time or
manner of acceptance, another method of
acceptance is not precluded.
R2 § 63
Unless the offer provides otherwise,
(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
(b) an acceptance under an option contract is not
operative until received by the offeror.
R2 § 62
(1) Where an offer invites an offeree to choose
between acceptance by promise and
acceptance by performance, the tender or
beginning of the invited performance … is an
acceptance by performance.
(2) Such an acceptance operates as a promise to
render complete performance.
CISG art. 18(2)
An acceptance of an offer becomes effective at the
moment the indication of assent reaches the
offeror. An acceptance is not effective if the
indication of assent does not reach the offeror
within the time he has fixed or, if no time is fixed,
within a reasonable time, due account being taken
of the circumstances of the transaction, including
the rapidity of the means of communication
employed by the offeror. An oral offer must be
accepted immediately unless the circumstances
indicate otherwise.
CISG art. 18(3)
[I]f, by virtue of the offer or as a result of practices
which the parties have established between
themselves or of usage, the offeree may indicate
assent by performing an act, such as one relating to
the dispatch of the goods or payment of the price,
without notice to the offeror, the acceptance is
effective at the moment the act is performed,
provided that the act is performed within the
period of time laid down in the preceding
paragraph.
UETA § 15(a)
Unless otherwise agreed between the sender and the recipient, an
electronic record is sent when it:
(1) is addressed properly or otherwise directed properly to an
information processing system that the recipient has designated
or uses for the purpose of receiving electronic records or
information of the type sent and from which the recipient is able
to retrieve the electronic record;
(2) is in a form capable of being processed by that system; and
(3) enters an information processing system outside the control of the
sender or of a person that sent the electronic record on behalf of
the sender or enters a region of the information processing
system designated or used by the recipient which is under the
control of the recipient.
UETA § 15(b)
Unless otherwise agreed between the sender and
the recipient, an electronic record is received when
it:
(1) it enters an information processing system that the
recipient has designated or uses for the purpose of
receiving electronic records or information of the type
sent and from which the recipient is able to retrieve the
electronic record; and
(2) it is in a form capable of being processed by that
system.
R2 § 45
(1) Where an offer invites an offeree to accept by
rendering a performance and does not invite a
promissory acceptance, an option contract is
created when the offeree tenders or begins the
invited performance or tenders a beginning of it.
(2) The offeror’s duty of performance under any
option contract so created is conditional on
completion or tender of the invited performance
in accordance with the terms of the offer.
R2 § 51
Unless the offeror manifests a contrary intention,
an offeree who learns of an offer after he has
rendered part of the performance requested by the
offer may accept by completing the requested
performance.
R2 § 53
(1) An offer can be accepted by the rendering of a
performance only if the offer invites such an
acceptance.
(2) Except as stated in § 69, the rendering of a
performance does not constitute an acceptance if
within a reasonable time the offeree exercises
reasonable diligence to notify the offeror of nonacceptance.
R2 § 53 (cont’d)
(3) Where an offer of a promise invites acceptance
by performance and does not invite a promissory
acceptance, the rendering of the invited
performance does not constitute an acceptance if
before the offeror performs his promise the
offeree manifests an intention not to accept.
R2 § 54(1)
Where an offer invites an offeree to accept by
rendering a performance, no notification is
necessary to make such an acceptance effective
unless the offer requests such a notification.
R2 § 54(2)
If an offeree who accepts by rendering a performance has
reason to know that the offeror has no adequate means of
learning of the performance with reasonable promptness
and certainty, the contractual duty of the offeror is
discharged unless
(a) the offeree exercises reasonable diligence to notify the
offeror of acceptance, or
(b) the offeror learns of the performance within a
reasonable time, or
(c) the offer indicates that notification of acceptance is not
required.
R2 § 69(1) (paraphrased)
An offeree can accept by silence or inaction if:
(a) the offeree takes the benefit of offered services with
reasonable opportunity to reject them and reason to
know that the offeror expected compensation;
(b) the offeror stated or gave the offeree reason to
understand that the offeree could accept by silence or
inaction, and the offeree intends his silence or inaction
to manifest assent; or
(c) because of previous dealings or otherwise, it is
reasonable that the offeree should notify the offeror if
he does not intend to accept.
R2 § 69(2)
An offeree who does any act inconsistent with the
offeror’s ownership of offered property is bound
in accordance with the offered terms unless they
are manifestly unreasonable. But if the act is
wrongful as against the offeror it is an acceptance
only if ratified by him.
B is a professional piano instructor. A brings her
daughter C to B’s studio for an introductory
session. B agrees to accept C as a student, and
tells A that she charges $40/hr. Thereafter, A
brings C to B’s studio twice a week for one-hour
lessons. At the end of the first month, B sends A
an invoice for $320, or $40/hr. for the eight
sessions following the initial one.
“The enclosed DVD includes the first six
episodes of Three’s Company. If you wish to
receive additional DVDs in the future, do
nothing, we will bill you $4.95 for these
episodes, and will send you additional episodes
every 3-4 weeks at a price of $9.95 per DVD. If
you wish to cancel your pre-approved
subscription, return this DVD in the enclosed
postage-paid envelope.”
R2 § 59
A reply to an offer which purports to accept it but
is conditional on the offeror’s assent to terms
additional to or different from those offered is
not an acceptance but is a counteroffer.
R2 § 61
An acceptance which requests a change or
addition to the terms of the offer is not thereby
invalidated unless the acceptance is made to
depend on an assent to the changed or added
terms.
UCC § 2-207(1)
A definite and seasonable expression of
acceptance or a written confirmation which is
sent within a reasonable time operates as an
acceptance even though it states terms additional
to or different from those offered or agreed upon,
unless acceptance is expressly made conditional
on assent to the additional or different terms.
UCC § 2-207(2): Non-Merchants
[A]dditional terms are to be construed as
proposals for addition to the contract….
UCC § 2-207(2): Merchants
… Between merchants [additional] terms become
part of the contract unless:
(a) the offer expressly limits acceptance to the
terms of the offer;
(b) they materially alter it;
(c) notification of objection to them has already
been given or is given within a reasonable time
after notice of them is received.
UCC § 2-207(3)
Conduct by both parties which recognizes the
existence of a contract is sufficient to establish a
contract for sale although the writings of the
parties do not otherwise establish a contract. In
such case the terms of the particular contract
consist of those terms on which the writings of
the parties agree, together with any
supplementary terms incorporated under any
other provisions of this Act
The “Battle of the Forms” Under UCC § 2-207
Was there a "definite and seasonable expression of acceptance" or a written confirmation satisfying § 2-201(2)?
NO
YES
§ 2-207(1) = no contract
Does the acceptance state terms different from
or additional to those included in the offer?
YES
NO
Does the conduct of the parties
"recognize the existence of an agreement"?
NO
§ 2-207(3) = no contract
§ 2-207(1) = contract
Is acceptance of the offer expressly conditional on
the offeror's assent to additional or different terms?
YES
§ 2-207(3) = contract
YES
NO
Contract consists of agreed terms
Contract consists of agreed terms plus
UCC "gap fillers"
§ 2-207(1) = contract
§ 2-207(1) = counter-offer
(1) agreed terms are included
(2) different terms are "knocked out"
Did the offeror expressly assent?
NO
Are both parties merchants?
NO
(3) additional terms are merely proposals to modifiy
Does the conduct of the parties
"recognize the existence of an agreement"?
YES
(3) additional terms are included unless
(a) the offer was expressly limited to its terms
(b) the additional term materially alters the contract
(c) the offeror gives notice of its objection
YES
Contract consists of agreed terms
CISG art. 19
(1) A reply to an offer which purports to be an acceptance
but contains additions, limitations or other
modifications is a rejection of the offer and constitutes
a counter-offer.
(2) However, a reply to an offer which purports to be an
acceptance but contains additional or different terms
which do not materially alter the terms of the offer
constitutes an acceptance, unless the offeror, without
undue delay, objects orally to the discrepancy or
dispatches a notice to that effect. If he does not so
object, the terms of the contract are the terms of the
offer with the modifications contained in the
acceptance.
CISG art. 19
(3) Additional or different terms relating, among
other things, to the price, payment, quality and
quantity of the goods, place and time of
delivery, extent of one party’s liability to the
other or the settlement of disputes are
considered to alter the terms of the offer
materially.
R2 § 71: Consideration Basics
(1) To constitute consideration, a performance or a
return promise must be bargained for.
(2) A performance or return promise is bargained for
if it is sought by the promisor in exchange for
his promise and is given by the promisee in
exchange for that promise.
(4) The performance or return promise may be given
to the promisor or to some other person … by the
promisee or by some other person.
Forms of Consideration
Consideration may take the form of
(1) an act, including giving value (i.e., money),
R2 §§ 71(3)(a) & 72;
(2) forbearing from acting, R2 § 71(3)(b);
(3) creating, modifying, or destroying a legal
relationship, right, or duty, R2 § 71(3)(c); or
(4) a return promise, as long as the promised
performance would be consideration, R2 § 75.
R2 § 73: Pre-Existing Legal Duty
Performance of a legal duty owed to a promisor
which is neither doubtful nor the subject of
honest dispute is not consideration; but a similar
performance is consideration if it differs from
what was required by the duty in a way which
reflects more than a pretense of bargain.
R2 § 74(1): Invalid Claim or Defense
Forbearing from asserting or surrendering a claim
or defense which proves to be invalid is not
consideration unless
(a) the claim or defense is in doubt because of
uncertainty as to the facts or the law, or
(b) the forbearing or surrendering party believes
that the claim or defense may be fairly determined
to be valid.
R2 § 76(1)
A conditional promise is not consideration if the
promisor knows at the time of making the
promise that the condition cannot occur.
R2 § 76(2) (paraphrased)
A conditional promise may be consideration if:
(i) the occurrence of the condition is within the
promisor’s control, and
(ii) the promisor
(a) promises that the condition will occur, or
(b)promises to forbear from causing
condition, whichever is appropriate .
the