Governing Law & Offer Essentials
What three essential terms are required under Common Law to form a valid, definite offer?
Price, Quantity, and Subject Matter.
Although advertisements, circulars, and catalogs are generally treated as non-binding invitations to deal, under what specific exception will an ad be treated as a binding offer?
When the terms are clear, definite, explicit, leave nothing open for negotiation, and promise specific performance for specific conduct.
What is the Restatement (Second) of Contracts § 69 general rule regarding silence as acceptance, and what are its three key exceptions?
Silence or inaction generally does NOT constitute acceptance. Exceptions:
Offeree takes the benefit of services with a reasonable opportunity to reject them.
Prior course of dealing makes it reasonable for the offeror to expect notice of rejection.
Offeree continues performance after receiving notice of modified terms.
Under UCC § 2-206, shipping non-conforming goods generally constitutes an acceptance AND a breach. What is the exception to this rule?
The Accommodation Exception: Shipping non-conforming goods with explicit notice that they are offered only as an accommodation to the buyer acts as a counteroffer, not a breach.
How does the Mailbox Rule affect revocations and rejections compared to acceptances?
Acceptances are effective upon proper dispatch (posting), whereas revocations and rejections are effective ONLY upon physical receipt by the offeree/offeror.
What are material terms in contract formation, and what is their legal significance?
Terms that significantly alter legal rights, duties, risks, or remedies (e.g., warranties, arbitration clauses, or liability limits).
Under Common Law, adding or altering them acts as a counteroffer; under UCC § 2-207(2)(b), they do not automatically become part of a contract between merchants.
What was the core holding in Lonergan v. Scolnick regarding form letters and property inquiries?
Form letters, general property descriptions, and exploratory inquiries setting tentative terms constitute preliminary negotiations—not binding offers—because they require further assent from the maker to conclude a deal.
What is the "Receipt Rule" under international contract law (CISG & UNIDROIT)?
A rule rejecting the Common Law Mailbox Rule by establishing that an acceptance becomes effective only when it physically reaches/arrives at the offeror.
What is the Restatement § 54(2) "Prompt Notice Rule" when an offeree accepts a unilateral offer by performance?
If the offeror has no reasonable way of knowing that performance is complete, the offeree must notify the offeror within a reasonable time, or the offeror's duty under the contract is discharged.
Under Dickinson v. Dodds, how is an indirect revocation accomplished?
An offer is indirectly revoked when the offeree learns reliable information from a third party that the offeror has taken action inconsistent with keeping the offer open (e.g., selling the property to someone else).
What is the Common Law Strict Mirror Image Rule?
A rule requiring an acceptance to match every term of the offer exactly. Any variance, addition, or change of terms acts as a rejection and counteroffer.
Under what specific exception does an employee handbook or policy manual become a binding unilateral offer?
When the handbook contains clear and definite promises that are explicitly communicated to employees AND lacks explicit disclaimers maintaining at-will employment status.
Under CISG Article 19(3), what specific terms are explicitly defined as "material alterations" that automatically turn an acceptance into a counteroffer?
Terms relating to price, payment, quality, quantity, place and time of delivery, extent of one party's liability, or settlement of disputes.
Under Restatement § 45, what is the legal effect when an offeree begins performance on a true unilateral offer?
It creates an option contract that blocks the offeror from revoking the offer while the offeree completes performance (though preparatory acts do not trigger this protection).
What are the three strict statutory requirements for a valid UCC § 2-205 Firm Offer?
An offer to buy/sell goods made by a merchant.
Written and signed by the merchant.
Gives explicit assurance that it will be held open (irrevocable for the stated time, or a reasonable time, not to exceed 3 months without consideration).
What are the three statutory gap-fillers provided under UCC Article 2 when parties leave terms open, and what are their default statutory provisions?
Open Price Term (§ 2-305): Reasonable price at delivery.
Open Place of Delivery (§ 2-308): Seller’s place of business.
Open Time for Payment (§ 2-310): Due at the time and place the buyer receives the goods.
In Brown v. Cara, how did the court distinguish Type I and Type II preliminary agreements?
Type I agreements are fully binding on all material terms,
whereas Type II agreements reflect intent on major terms but leave open terms to be negotiated, creating a binding duty to bargain in good faith rather than walk away.
Under Common Law unilateral contract acceptance and Wayment v. Schneider, what is required for valid acceptance, and do preparatory acts qualify?
Valid acceptance requires full performance of the requested act with prior knowledge of the offer.
Preparatory acts or incomplete performance do NOT constitute acceptance.
What was the holding in ProCD Inc. v. Zeidenberg regarding shrinkwrap license enforceability?
Terms inside software packaging are enforceable if the buyer has a meaningful opportunity to inspect the terms post-purchase and the clear right to reject them by returning the product for a full refund.
Under Restatement § 87(2), how can pre-acceptance reliance shield an offer from revocation prior to formal acceptance?
Under Promissory Estoppel, if the offeror should reasonably expect the offer to induce substantial action/reliance by the offeree before acceptance, and such action is induced, the offer becomes irrevocable to the extent necessary to avoid injustice (e.g., general contractor relying on a subcontractor's bid).
Under Anderson v. Douglas & Lomason, was the employee handbook treated as a bilateral or unilateral offer, and why?
A unilateral offer, because the employer promised progressive discipline procedures in exchange for the employee's continued performance of work, without requesting a return promise.
Why was the alleged oral agreement to provide "fair representation" for screenwriting ideas unenforceable in Baer v. Chase?
It failed for indefiniteness because open-ended, vague terms without a concrete metric or objective benchmark prevent a court from finding a breach or fashioning a remedy.
What is a permissive mode of acceptance, and what happens under Restatement § 62 if the requested mode of acceptance is ambiguous?
A permissive mode allows acceptance by any reasonable manner or medium.
If ambiguous, the offeree may choose to accept by either promise or performance, and beginning performance operates as a promise forming a binding bilateral contract.
In Dye v. TAMKO Building Products, how did the court determine that the buyer assented to the boxtop/wrapper arbitration terms?
Unwrapping, opening, or installing the building materials after having conspicuous notice of the terms printed on the exterior wrapper constituted objective manifestation of assent.
If an offeree mails a rejection first, then changes their mind and mails an acceptance, does the Mailbox Rule apply?
No, the Mailbox Rule is lost. Whichever communication arrives at the offeror first controls: if the rejection arrives first, the offer is terminated; if the acceptance arrives first, a contract is formed.