Contracts Quiz 4

§ 87.Option Contract.

(1)An offer is binding as an option contract if it

(a)is 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; or

(b)is made irrevocable by statute.

 

(2)An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice.

§ 37.Termination of Power of Acceptance Under Option Contract.

Notwithstanding §§ 38–49, the power of acceptance under an option contract is not terminated by rejection or counter-offer, by revocation, or by death or incapacity of the offeror, unless the requirements are met for the discharge of a contractual duty.

§ 2–204.Formation in General.

(1)A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.

(2)An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.

(3)Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

§ 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.

(2)The offeror’s duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer.

 

Comment

b.Manifestation of contrary intention. The rule of this Section is designed to protect the offeree in justifiable reliance on the offeror’s promise, and the rule yields to a manifestation of intention which makes reliance unjustified. A reservation of power to revoke after performance has begun means that as yet there is no promise and no 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.

§ 69.Acceptance by Silence or Exercise of Dominion.

(1)Where an offeree fails to reply to an offer, his silence and inaction operate as an acceptance in the following cases only:

 (a)Where an offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation.

 (b)Where the offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive intends to accept the offer.

 (c)Where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept.

 

(2)An offeree who does any act inconsistent with the offeror’s ownership of offered property is bound in accordance with the offered terms unless they are manifestly unreasonable. But if the act is wrongful as against the offeror it is an acceptance only if ratified by him.

§ 57.Effect of Equivocal Acceptance.

Where notification is essential to acceptance by promise, the offeror is not bound by an acceptance in equivocal terms unless he reasonably understands it as an acceptance.

§ 58.Necessity of Acceptance Complying With Terms of Offer.

An acceptance must comply with the requirements of the offer as to the promise to be made or the performance to be rendered.

§ 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.

§ 60.Acceptance of Offer Which States Place, Time or Manner of Acceptance.

If an offer prescribes the place, time or manner of acceptance its terms in this respect must be complied with in order to create a contract. If an offer merely suggests a permitted place, time or manner of acceptance, another method of acceptance is not precluded.

§ 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.

Mirror Image (Last Shot Rule)

An acceptance must be a total assent on the terms of the offer Any variation, or condition in the acceptance operates as a counteroffer.

§ 2–205.Firm Offers.

An offer by a merchant to buy or sell goods in a signed record which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.

§ 2–207 Additional Terms in Acceptance or Confirmation.

(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.

(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:

(a)the offer expressly limits acceptance to the terms of the offer;

(b)they materially alter it; or

(c)notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

(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.

Restatement §20: Effect of Misunderstanding

(1)There is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations and

(a)neither party knows or has reason to know the meaning attached by the other; or

(b)each party knows or each party has reason to know the meaning attached by the other.

 

(2)The manifestations of the parties are operative in accordance with the meaning attached to them by one of the parties if

(a)that party does not know of any different meaning attached by the other, and the other knows the meaning attached by the first party; or

(b)that party has no reason to know of any different meaning attached by the other, and the other has reason to know the meaning attached by the first party.