George Mason School of Law
Contracts I
G.
Offer and Acceptance II
F.H. Buckley
fbuckley@gmu.edu
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Today
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Revocation: Unilateral Contracts
Counter-offers
Battle of the Forms
UCC 2-207
Revocation: Unilateral Contracts
 The Brooklyn Bridge example
on p. 233.
 Offeror terminates when offeree is halfway
across the bridge.
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Revocation: Unilateral Contracts
 Restatement § 36(1). An offeree’s
power of acceptance may be terminated
by
 (a) rejection or counter-offer by the offeree.
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Revocation: Unilateral Contracts
 Restatement § 45. Option Contract Created
by Part Performance or Tender. (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.
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Revocation: Unilateral Contracts
 Restatement § 45. Option Contract Created
by Part Performance or Tender. (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.
 What if the offeree changes his mind half-way
across the bridge?
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Acceptance vs. Counter-offer
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Acceptance vs. Counter-offer
 Wholesaler offeror offers retailer
offeree “a dozen 22 inch clay pots for
$300.” Offeree emails back “Great.
I’ll take three dozen.”
 Is there a contract?
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Acceptance vs. Counter-offer
 §39. COUNTER-OFFERS.
 (1) A counter-offer is an offer made by an offeree to
his offeror relating to the same matter as the original
offer and proposing a substituted bargain differing
from that proposed by the original offer.
 (2) An offeree's power of acceptance is terminated by
his making of a counter-offer, unless the offeror has
manifested a contrary intention or unless the
counter-offer manifests a contrary intention of the
offeree.
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The “Mirror Image Rule”
 §59. PURPORTED ACCEPTANCE WHICH ADDS
QUALIFICATIONS. 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 counter-offer.
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Acceptance vs. Counter-offer
 Wholesaler offeror offers retailer
offeree “a dozen 22 inch clay pots for
$300.” Offeree emails back “Great.
I’ll take three dozen.”
 Not having heard from wholesaler,
retailer emails back “OK, I’ll take a
dozen.”
 Is there a contract?
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Acceptance vs. Counter-offer
 Restatement § 36. Methods of
Termination of the Power of Acceptance
(1) An offeree’s power of acceptance
may be terminated by
(a) rejection or counter-offer by the
offeree
12
Counteroffers: Dataserv Equipment
at 247
13
Counteroffers: Dataserv Equipment
at 247
Dataserv (seller)
InDepth
Technology (buyer)
14
Counteroffer as Rejection:
Dataserv Equipment
Why was Technology’s response a
counter-offer?
15
Counteroffer as Rejection:
Dataserv Equipment
Why was Technology’s response a
counter-offer?
Was Dataserv’s response an
acceptance of a counteroffer?
 Any third party installer…
 The third objectionable clause
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Counteroffer as Rejection:
Dataserv Equipment
If Dataserv didn’t accept the
counteroffer, could it go back and
accept it later?
17
Counteroffer as Rejection:
Dataserv Equipment
 Restatement § 38(1). A party’s
rejection terminates its power of
acceptance. Once rejected an offer is
terminated and cannot be accepted
without ratification by the other party.
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Acceptance vs. Counter-offer
 Wholesaler offeror offers retailer
offeree “a dozen 22 inch clay pots for
$300.” Offeree emails back “Great.
I’ll take a dozen but I’d really be
much happier if you could send me
three dozen.”
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Acceptance vs. Counter-offer
 § 61. Acceptance Which Requests
Change of Terms. 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.
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The Battle of the Forms
 Why might this be a problem?
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The Battle of the Forms
 “The sender of the last form … could
insert virtually any conditions it
chooses into the contract” (254)
 Ionics
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At Common Law
 What happens at common law where:
 There is performance and indisputably a
contract
 There has been a “Battle of the Forms”
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The “Mirror Image Rule” at
common law
 §59. PURPORTED ACCEPTANCE WHICH ADDS
QUALIFICATIONS. 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 counter-offer.
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The “Mirror Image Rule”
 Restatement § 36. Methods of
Termination of the Power of Acceptance
(1) An offeree’s power of acceptance
may be terminated by
(a) rejection or counter-offer by the
offeree
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The Last Shot Doctrine
 The Last Shot Doctrine as a corollary
of the mirror image rule
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How is the Last Shot doctrine changed
by the “infamous” UCC § 2-207?
27
Ionics at 250
 Was there a battle of the forms?
 If so, was this between merchants?
 And what was the dispute?
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Ionics at 250
Elmwood
thermostats
Ionics
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Ionics at 250
 Applying the last shot doctrine, what
is the contract?
 And who wins as to implied terms?
 UCC 2-314: a warranty that the goods
shall be merchantable … if the seller is a
merchant with respect to goods of that
kind
30
Ionics at 250
 How would you apply UCC § 2207(1) (before the comma) to
Ionics?
 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
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Ionics at 250
 Who would win as to implied
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
32
Ionics at 250
What about the proviso?
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.
33
Ionics at 250
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.
 Qu. the Elmwood “Acknowledgement”: “only
on the terms and conditions set forth herein”
34
Ionics at 250
 In similar circumstances, how did
Roto-Lith end up applying the Last
Shot doctrine?
35
What happens then?
 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.
 Roto-Lith: if the proviso applies, 2-207 is ousted
and we’re back in the common law and the last
shot doctrine
36
Ionics at 250
 If Ionics rejects Roto-Lith, could 2207(2) be helpful?
 The additional terms are to be construed
as proposals for addition to the contract.
Between merchants such terms become
part of the contract unless:
 (a) the offer expressly limits acceptance
to the terms of the offer;
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Ionics at 250
 If Ionics rejects Roto-Lith, could 2207(2) be helpful?
 (a) the offer expressly limits acceptance
to the terms of the offer;
 Was that the case in Ionics? Cf. clause
19 of the Ionics Purchase Order
38
Ionics at 250
 If Ionics rejects Roto-Lith, could 2207(2) be helpful?
 (b) they materially alter it;
 Was that the case in Ionics?
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Ionics at 250
 If Ionics rejects Roto-Lith, could 2207(2) be helpful?
 The additional terms are to be construed as
proposals for addition to the contract. Between
merchants such terms become part of the
contract unless:
 (c) notification of objection to them has
already been given or is given within a
reasonable time after notice of them is
received.
40
Ionics at 250
 If Ionics rejects Roto-Lith, could 2207(2) be helpful?
 (c) notification of objection to them has
already been given or is given within a
reasonable time after notice of them is
received.
 Was that the case in Ionics? Clause
19
41
Ionics at 250
 So what happens when 2-207(1) and
2-207(2) are both ousted?
42
Ionics at 250
 So what happens when 2-207(1) and
2-207(2) are both ousted?
 Two possibilities:
 There is “conduct by both parties
which recognizes the existence of a
contract” in 2-207(3)
 Or there isn’t
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Ionics at 250
 If there is “Conduct by both parties
which recognizes the existence of a
contract is sufficient to establish a
contract for sale”
 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.
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Ionics at 250
 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.
 And what would this be? See Comment 6 at
253
45
Step-Saver at 260
 Is this a contract between
merchants?
46
Step-Saver at 260
Wyse/TSL
Mainframe hardware
plus MS software
Step-Saver (retailer)
47
Step-Saver at 260
Wyse/TSL
Box top license disclaims
warranties
Step-Saver (retailer)
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Shrink-rap Contracts
 Was this a battle of the forms?
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Shrink-rap Contracts
 What did the District Court
hold?
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Shrink-rap Contracts
 The District Court:
 The box-top license as the
crucial Last Shot offer
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Shrink-rap Contracts
 How did the Circuit Court
interpret 2-207(1)?
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Step-Saver
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.
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Shrink-rap Contracts
 What about 2-207(1)’s
proviso?
 unless acceptance is expressly
made conditional on assent to the
additional or different terms
 If the proviso applies, what
happens?
54
Shrink-rap Contracts
 Is that what Step-Saver did?
 Offeree must demonstrate an
unwillingness to proceed unless the
additional terms are included
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Shrink-rap Contracts
 Am I missing something here?
 Clause 5: “Opening this package
indicates your acceptance of these
terms and conditions. If you do not
agree with them you should promptly
return the package unopened”?
56
Shrink-rap Contracts
 Am I missing something here?
 “Opening this package indicates your
acceptance of these terms and
conditions. If you do not agree with
them you should promptly return the
package unopened”?
 But it did go ahead with the deal
(does the proviso mean anything?)
57
Shrink-rap Contracts
 Am I missing something here?
 “best seen as one more form in a
battle of the forms”
58
Hill v. Gateway at 267
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Hill v. Gateway
 Was this between merchants?
 2-207(2) The additional terms are to be
construed as proposals for addition to
the contract. Between merchants such
terms become part of the contract
unless:
60
Hill v. Gateway
 What is RICO?
61
Hill v. Gateway
 How was the arbitration clause
an issue?
 Federal Arbitration Act and federal
pre-emption
62
Hill v. Gateway
 Why does Easterbrook say that
parties are bound to written
agreements?
63
Where the buyer wants to be
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.
64
Hill v. Gateway
 Was there a battle of the
forms?
 If not, what happens to 2-207 per
Easterbrook?
65
If no battle of the forms, is 2207(1) ousted?
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.
66
If no battle of the forms, is 2207(1) ousted?
UCC 2-204(1): A contract for the sale of goods
may be made in any manner sufficient to show
agreement
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