1L Contracts- Mutual Assent

• 1. Offer
• 2. Acceptance
• 3. Consideration

Manifestation of a commitment to be bound to the agreement

OBJECTIVE V. SUBJECTIVE THEORY

• a) Objective/Majority –reasonable person’s interpretation of conduct (words and (Majority
• Test)
• ii) Manifestation of Mutual Assent (Actions, language)

• b) Subjective/Minority- Actual intention of a party, “meeting of the minds”
• i) Actual Mutual Assent present (thoughts, feelings)

Manifestation of intent to be bound

• 1. Communicated to Offeree
• 2. Definite & Specific
• (1) ID Offeree
• (2) ID Subject Matter
• (3) ID Price or Service

iii) Reasonable

• (1) Language
• (2) Surrounding Circumstances
• (3) Prior Practice and Relationship of the Parties
• (4) Method of communication
• (5) Industry custom

i) Death or Incapacity of offeror

ii) Lapse of time

iii) Revocation- termination by offeror

iiii) Rejection- termination by offeree

(1) Outright rejections

(2) Counteroffer—includes conditional acceptance

(a) Option Contract

(b) Detrimental Reliance

(c) Firm Offer (UCC)

(i) Applies only to:

1. Merchants

2. Goods

(d) Unilaterial contract when performance began

General rule: not offers but instead “invitations” to make an offer unless they are (1) clear, (2) pertain to a specific person/class, (3) reasonable

Manifestation of assent to the offer

3 elements to acceptance:

i) Must be communicated to offeror

ii) Timely

iii) Must mirror the offer

Acceptance must mirror the offer; no more, no less. (Any variation will constitute as a counteroffer,which is a rejection of the original.)

• i) Does NOT apply under
• UCC Art. 2 sale/buying of goods by merchants

• Considered acceptance effective when its dispatched in the mail by the offeree, even
• though it has not been communicated.

ii) Exceptions:

(1) Does not apply to rejections

(2) Medium of acceptance must be reasonable and correct to offeror

(3) Applies only when acceptance is properly stamped, addressed, etc.

(4) Acceptance must be a mirror image

(5) Does NOT apply when the offeror has stated (expressly or by implication) that he must receive

(6) Does NOT apply to option contracts b/c the offer must be received before a certain time)

Offeror cannot dictate silence as acceptance.

• IE: “unless you respond w/I 10 days, you
• will be deemed to have accepted my offer”

Promise for a promise

Promise is acceptance

Promise for performance of an action or forbearance

Acceptance= performance is complete

MODERN v. CLASSICAL THEORY

a) Modern Theory- Substantial Performance

• An offeror may not revoke an offer where the offeree has made substantial
• performance.
• When the promisee performs, consideration is supplied...

b) Classical Theory- Revocable at any time before full performance

• Offeror can revoke his offer at a time which the offeree had commenced but not yet
• completed the requested performance... The offeree is denied any remedy because
• a contract was not created.

• an agreement to hold an offer open for a
• specified amount of time and is supported by consideration.

• Offer contract is binding if: in writing and signed by the offeror, recites a purported consideration for the making of the offer, and proposes an exchange
• on fair terms within a reasonable time

1. Writing

2. Signed by offeror

• 3. Held open for a specified amount of
• time….reasonable time

• Cannot be revoked before the specified date; after
• specified date not enforceable

• 4. Recites
• consideration-

• a. Nominal
• consideration is sufficient

• b. If not supported by
• consideration: is a mere offer, which may be withdrawn at any time before
• acceptance.

5. Fair terms

• (iv) Mailbox rules does
• not apply to option contract.

*When an option contract is satisfied… don’t consider promissory estoppel

2-205: Promise but no consideration by merchant

OMG SAT

• An OFFER
• by a MERCHANT
• to buy or sell GOODS
• in a SIGNED WRITING
• which gives ASSURANCE
• for a reasonable TIME

reliance upon an offer before acceptance