Introduction to ContractsThe Agreement: Offer

The Agreement: AcceptanceConsideration

Reality of Consent

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Capacity to ContractIllegality

WritingRights of Third Parties

Performance and Remedies

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The Agreement: Acceptance

Make your bargain before beginning to plow.

Arab proverb

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Learning Objectives

Basics of Acceptance Intent Communication

Special Problems

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Acceptance must be by clear expression by offeree of intent to be bound by terms of offer and communicated to offeror Only offeree may accept offer If offer calls for performance, then

performance is acceptance Offeror may specify manner of acceptance

Example: “notify of acceptance in writing”

Requirements for Acceptance

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Adsit Co. v. Gustin

Facts & Procedural History: Gustins ordered products from Plaintiff Adsit

Co.’s website, clicking an “I Accept” button that referred to Adsit’s refund and return policy, and choice of law clause for Indiana

Gustin returned goods and reversed credit charge

Plaintiffs denied receipt of goods and filed suit in Indiana; both parties appealed trial court ruling

Gustins (Texas and Alabama residents) argued that Indiana lacked personal jurisdiction

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Issue: Does the court have jurisdiction? Reasoning and Holding:

Promises become binding when there is a meeting of the minds and consideration is exchanged

A web-based contract, or clickwrap agreement, is valid if the web-user had reasonable notice of the agreement and manifested assent

Gustins had reasonable notice and assented, including to the jurisdiction of Indiana courts

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Adsit Co. v. Gustin

Traditional contract law rule required acceptance to be the mirror image of the offer Example: Finnin v. Bob Lindsay, Inc.

Currently, judges hold that only material variances between an offer and an alleged acceptance result in an implied rejection of the offer

Mirror Image Rule

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UCC 2–207 allows contract formation even when there is some variance between terms of offer and terms of the acceptance A definite and timely expression of

acceptance creates a contract, even if it includes terms different from those stated in offer or if it states additional terms offer did not address [2–207(1)]

Example: Standard Bent Glass Corporation v. Glassrobots Oy

The UCC & Variance of Terms

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With instantaneous forms of communication, knowing when acceptance occurs is easy Complicated by non-instantanesous forms

such as mail Mailbox rule makes acceptance effective

upon dispatch when the offeree used a manner of communication expressly or impliedly authorized (invited) by the offeror Example: Okosa v. Hall

Communicating Acceptance

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Courts today allow communication by any reasonable means of communication

Communicating Acceptance

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General rule is that an offeree’s silence, without more, is not an acceptance

Circumstances may impose duty on offeree to reject offer affirmatively or be bound

Includes cases in which offeree’s silence objectively indicates an intent to accept Example: McGurn v. Bell Microproducts, Inc.

Silence as Acceptance

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McGurn v. Bell Microproducts

Facts: Bell extended offer of employment to plaintiff Plaintiff altered written offer to include

severance package, signed and returned Bell silent regarding alteration and plaintiff

worked for more than a year Bell fired plaintiff and refused to pay severance Plaintiff won summary judgment for breach of

contract

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McGurn v. Bell Microproducts Reasoning & Ruling:

Silence in response to an offer does not constitute acceptance unless offeree takes benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation

Restatement (Second) of Contracts §69 Whether Bell accepted plaintiff’s alteration of the

contract by its silence and conduct is a matter of fact, thus a matter for the jury; case remanded

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OFFER + ACCEPTANCE AGREEMENT

Effect of Acceptance

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Test Your Knowledge

True=A, False = B Silence may never indicate acceptance Offeror may specify manner of

acceptance Only material variances between an offer

and an alleged acceptance result in an implied rejection of the offer

UCC 2–207 does not allow contract formation if there is some variance between terms of offer and terms of the acceptance11 - 17

Test Your Knowledge

Multiple Choice The effect of offer plus acceptance is:

(a) Negligible(b) An agreement(c) The mirror image rule(d) None of the above

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Thought Questions

Do you read clickwrap agreements when purchasing goods through a website? Do you agree you should be bound by “click” agreements if purchasing via the internet?

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