Rule Statements
Indirect: Offer is directly revoked when (1) offeree acquires reliable information that (2) Offeror did an act inconsistent with terms of offer.
Direct: Offeror unequivocally communicates they are unwilling to form a contract.
A woman placed an advertisement in a local newspaper that read, “Ten televisions for sale. $200 each or best offer. First come, first serve.” The advertisement also contained a photograph of the 10 televisions and the woman’s contact information. A man contacted the woman and stated that he would buy all 10 televisions. The woman stated that she had intended to limit sales to one per customer and therefore would not sell the man all 10 televisions.
Did the woman make a valid offer to sell the televisions in the advertisement?
A: Yes, b/c ad contained a photograph of the 10 TVs.
B: Yes, b/c ad was written
C: No, b/c ad left room for negotiation
D: No, b/c ads cannot be valid offers
C: No, b/c ad left room for negotiation
Here, the advertisement leaves room for negotiation on several terms. First, although 10 televisions are listed for sale, they are priced individually at $200 each. It is unclear from the plain text of the advertisement whether the woman seeks to sell 10 televisions to one buyer or 10 televisions to multiple buyers until she has exhausted her inventory. Second, even if the plain language of the advertisement obligates the woman to sell all 10 televisions to the first willing buyer, the advertisement priced the televisions for “$200 each or best offer.” The advertisement therefore leaves room for negotiation over the price, in that it indicates the woman might accept less than $200 per television. Therefore, the advertisement will not be considered an initial offer, but rather a solicitation for offers from the public.
Additional vs. Different Terms
Additional: K is silent on subject of disputed term
Different: Offer contains a diff term on subject of disputed term
(1) Counteroffer
(2) Period of time ended/lapsed
(3) Party's subsequent death/legal incapacity
(4) Offeree rejects
(5) Offeror revokes, directly or indirectly
An Offeree (P) hears from the Offeror's spouse (D) that D has increased the price of D's listed car to $20,000 after offering it to P for $18,000 the day before. Is D's prior offer revoked?
Yes; P received information from a reliable source that D did an act inconsistent with the offer's terms.
Merchant Firm Offer Rule
An offer (1) by a merchant to buy or sell (2) goods in a (3) signed writing which (4) gives assurance that the offer will be held open is not revocable for the time stated (5) or if no time is stated, for a reasonable time. However, (6) period of irrevocability must not exceed 6 months.
An accountant was on track to do particularly well one tax season. After a successful day, the accountant had dinner with a close friend. At dinner, the accountant invited the friend to take a vacation with him in May, after the end of tax season. The accountant had just purchased a vacation package that was currently priced at $2,500, but the price was expected to go up soon. The friend replied that he would like to go along, but he did not have enough money to pay for a $2,500 vacation package. The accountant noted that he was anticipating a profitable tax season and promised to give $2,000 to the friend at the end of tax season, around April 15. Counting on receiving the $2,000, the friend booked the vacation package and paid the $2,500 in full. Shortly after April 15, the accountant told the friend that tax season had not gone as well as he had anticipated, and the accountant could not pay the $2,000 after all. At that time, the friend could have canceled the vacation package, although $1,000 of the price was nonrefundable. Thus, the friend could receive only a $1,500 refund by canceling the vacation.
If the friend sues the accountant under a theory of promissory estoppel, what amount, if any, is the friend likely to recover?
A: $2,000
B: $1,500
C: $1,000
D: $0
C: $1,000
First, given the circumstances surrounding the accountant's promise, the accountant should have reasonably expected that his promised $2,000 payment would induce the friend to go spend money on the vacation package before the price went up. Second, the friend actually and justifiably relied on this specific promise to purchase the vacation package. Third, as a result of friend's reliance on the promise, the friend has suffered a detriment in the form of purchasing a $2,500 vacation package that the friend would not have bought otherwise. Therefore, the friend is likely to recover something from a promissory-estoppel claim.
However, the friend's damages will be limited to just the amount necessary to avoid injustice. Accordingly, although the friend relied on the accountant's promise to pay for the whole vacation package, the friend can still get $1,500 back. The only amount that the friend cannot get refunded is $1,000. Therefore, $1,000 is all that is necessary to avoid injustice and make the friend whole.
2-207(3); K is not formed and conduct must be analyzed.
Option Contract
An option contract– as a fully formed contract with offer, acceptance, and consideration– restricts Offeror’s power to revoke another offer.
P asks D to keep an offer open to buy a car to him for a week while he thinks about it, and D agrees. 2 days following this agreement, P shows up to D's house to purchase the car D informs him he sold the car to someone else yesterday. Does P have grounds to enforce their prior agreement?
No; there was no option contract formed.
If any of the following occur, an offer is irrevocable:
(1) Offeree has an option K;
(2) Offeree has begun performance for unilateral K;
(3) Offeree's detrimental reliance;
(4) Merchant Firm Offer Rule
(5) Offeree accepts offer
A man helped his brother paint the brother’s house. The brother’s house was large, so the job took all weekend to complete. The next weekend, the man called his brother and asked whether he could help the man’s girlfriend move apartments. His brother responded, “Sure, I owe you for helping me paint my house last weekend.” The brother helped the man’s girlfriend move, which took only two hours.
What is the best explanation for why there is not a contract between the man and his brother?
A: The brother help the man's girlfriend move was not adequate consideration because it only took two hours, while the paint job took all weekend.
B: The brother's promise to help the man's girlfriend move was made after the man already had helped paint his brother's house.
C: Neither party paid the other for the services.
D: The brother rendered service to a third party, not the man.
B: The brother's promise to help the man's girlfriend move was made after the man already had helped paint his brother's house.
Answer option B is correct. Consideration exists when something of value is exchanged in a bargain. However, past consideration will not result in an enforceable contract. Past consideration is any consideration that already was given before the contract was formed.
Here, the man asked his brother to help the man’s girlfriend move. The purported consideration was the man helping paint his brother’s house the previous weekend. However, that service already had been rendered when the brother promised to help the man’s girlfriend move. Therefore, there was no actual consideration for the brother’s promise, and no contract.
Under 2-207(2), if the contract has different terms, what happens?
They are knocked out and replaced by UCC gap fillers.
How does an offer invite acceptance? (Method Rule)
Unless the offer requires otherwise, an offer invites acceptance in any manner and by any medium reasonable in the circumstances.
P sees a poster offering $1,500 for the return of D's dog. P gets in his car and spends the entire rest of his day looking for the dog.
P runs into D while looking and D says they are no longer willing to compensate $1,500 for the return of the dog and hopes someone will return it for free. Is D's revocation valid?
No; P already began performance on the unilateral contract.
Forbearance Rule
Even if the claim later proves invalid, forbearance on suing is valid consideration so long as (1) Claimant believes in good faith the claim has merit, and (2) Claimant has a non-frivolous basis in fact and law for asserting that claim.
A man called the pastor of his church and explained that he wished to donate $10,000 to the church. The pastor said that would be wonderful and that he would be awaiting the check. The man then checked his finances and realized that $10,000 was more than he could comfortably donate.
Is the man contractually obligated to donate $10,000 to his church?
A: Yes, b/c the man's offer to donate $10,000 was valid
B: No, b/c the man's realization he could not donate $10K indicates lack of intent to be legally bound.
C: No, b/c man did not place his offer in writing.
D: No, b/c man's promise to donate $10,000 was not supported by consideration.
D: No, b/c man's promise to donate $10,000 was not supported by consideration.
Here, the man made an offer to donate $10,000 to his church. The pastor accepted the offer. However, the terms of the man’s offer do not obligate the church to do anything in exchange for the man’s $10,000. Rather, the man’s donation is a gift. Because the church is not obligated to do anything or refrain from doing anything in exchange for the man’s $10,000, no consideration supports the man’s promise to pay. Therefore, the man is not contractually obligated to donate $10,000 to his church, because there is no enforceable contract.
If one of the Parties is NOT a merchant, and there are additional terms, under 2-207(2), what are these terms considered?
Mere proposals
If an acceptance does not satisfy the Mirror Image Rule, what rule is turned to?
Without an option contract, when is an Offeror not allowed to revoke an offer?
(1) Offeree detrimentally relied or (2) started performance on unilateral K
Material Benefit Rule
(1) A promise made (2) in recognition of (3) a non-gifted received benefit (4) previously received by Promisor from Promisee is enforceable as justice requires.
A man was searching for plastic cups that could be printed with his employer’s logo. The cups were to be used at an industry convention in one year. The man called a novelty-goods supplier, who regularly dealt in goods with printed logos, such as pencils, cups, hats, and other apparel. The supplier orally stated that he would sell the man 1,000 cups for $1,000. The man stated that he would think about it and call back. The supplier informed the man on the phone that, if the man paid a $50 deposit, the supplier would keep the offer open for two months. The man agreed and paid $50. One month later, the man called back, accepted the supplier’s offer, and provided payment information to place an order for 1,000 cups for $1,000. The supplier refused to accept the order and informed the man that the price of the cups was now $2,000.
Is the supplier’s promise to keep the offer open for two months a firm offer under the UCC?
A: Yes, b/c supplier in this transaction is a merchant
B: Yes, b/c man provided consideration for supplier's promise
C: No, b/c supplier's promise was not made in writing
D: No, b/c supplier offered to keep the offer open longer than one month
C: No, b/c supplier's promise was not made in writing
Here, the supplier is a merchant for purposes of the transaction because the supplier regularly deals in goods with printed logos, such as the novelty cups the man sought. However, the supplier did not make a promise to keep the offer open in a signed writing; rather, the supplier’s promise was made over the phone. The supplier’s promise to keep the offer open for two months therefore is not a firm offer under the UCC.
1. Seller sends Buyer a written offer to sell 100 widgets at $10 each, stating: “Acceptance must be made on these exact terms.”
Buyer responds with a written acceptance that agrees to the price and quantity but adds the following clause: “All disputes must be resolved by arbitration.” Buyer’s acceptance is expressly conditional on Seller’s assent to the arbitration clause. Seller ships the goods without responding.
What is the legal result under UCC §2-207?
A. No contract is formed because Buyer made a counteroffer that Seller never accepted.
B. A contract is formed by the writings, and the arbitration clause becomes part of the contract.
C. A contract is formed by conduct (shipment), but the arbitration clause is not part of the contract.
D. No contract is formed because the terms materially conflict.
C. A contract is formed by conduct (shipment), but the arbitration clause is not part of the contract.
Correct Answer: C
Explanation:
Buyer’s “expressly conditional” acceptance prevents a contract from being formed by the writings (so A seems plausible, but see next step).
Seller’s shipment of the goods creates a contract by conduct under UCC §2-207(3).
In a contract formed by conduct, only the terms the writings agree on become part of the contract; additional terms like an arbitration clause do not become part of the contract unless both parties expressly agreed.
Thus, a contract exists, but the arbitration clause drops out.
What would make an advertisement an offer?
Where they satisfy the offer rule-- willingness to enter into a K with specific terms.
D made an offer to P to sell his brand new car to him for in exchange for $20,000 in exactly 30 days. P accepted. In anticipation of getting the new car, P sold his car (his sole form of transportation) the day before going to buy the new car so he would have enough money. When P gets to D's house, D already sold the car. Was the offer validly revoked since it was before the exchange of promises?
No; P detrimentally relied.