Acceptance

Question 1

What are the main requirements for acceptance under the common law?

Answer 1

• Acceptance must mirror terms of offer + be communicated to the offeror.

Question 2

Under what two exceptions would an acceptance not need to be communicated?

Answer 2

• Unilateral contract
• Acceptance by mail

Question 3

When would acceptance be effective under a unilateral contract?

Answer 3

• Acceptance is effective only by completing performance, no communication is required unless offer provides otherwise.

Question 4

When is acceptance by mail valid?

Answer 4

• Common law Mailbox Rule: acceptance by mail is effective upon dispatch if properly posted.
  o Default rule - it applies unless the offer provides otherwise.

Question 5

Does the mailbox rule apply to rejections and revocations?

Answer 5

• Applies only to acceptances and not to any other communication (i.e., not to revocations or rejections).

Question 6

The mailbox rule does not apply to which contracts?

Answer 6

• The mailbox rule is not applicable for option contracts; there, acceptance is only effective upon receipt.

Question 7

What happens when an offeree dispatches two responses to an offer, the first purporting to reject the offer and the second purporting to accept it?

Answer 7

• Mailbox rule does not govern if rejection is mailed before acceptance, and whichever arrives first will be effective.

Question 8

When would a seller’s shipment of goods constitute an acceptance?

Answer 8

• Seller can accept Buyer’s offer to purchase goods for prompt or current shipment in 3 ways:
  o Promise to ship goods;
  o Shipping conforming goods; or
  o Shipping non-conforming goods, unless the seller sends the shipment as an accommodation (i.e., counteroffer).
• EXAMPLE: Buyer orders 1,000 widgets from seller for immediate delivery. Seller responds by shipping 800 widgets with an accompanying notice to the buyer explaining that the seller did not have adequate inventory to ship 1,000 widgets and was thus shipping 800 widgets as an accommodation to the buyer in light of the buyer’s urgent need.

Question 9

Does the mirror image rule apply to the sale of goods?

Answer 9

• No, the UCC rejects the mirror image rule. An offeree’s nonconforming acceptance or confirmation (with additional terms) will operate as an effective acceptance of the offer, thus forming a contract (not a counteroffer).
  o EXAMPLE: Buyer sends Seller a purchase order for 1,000 widgets at the advertised price of $10 each. Seller sends Buyer an Acknowledgment of Order form that promises delivery of the widgets at the stated price, but also contains boilerplate language that negates warranties and limits remedies in the event of breach. Seller’s form will operate as acceptance of Buyer’s offer and create a binding contract despite the presence of terms that vary from Buyer’s purchase order.

Question 10

Under a UCC battle of the forms, if the offeree’s acceptance includes additional terms, would the additional terms be enforceable?

Answer 10

• Between merchants, the “additional” terms in offeree’s acceptance or confirmation become part of the K EXCEPT in three circumstances:
  o The offer expressly limits acceptance to its own terms
  o If offeror objects to the additional terms within a reasonable time
  o If the additional terms would materially alter the K

Question 11

When would an additional term materially alter a contract so that the term could not be enforceable?

Answer 11

• “Material alteration” = terms that would result in “surprise or hardship if incorporated w/o the express awareness of the other party.”

Question 12

What are some examples of clauses that would materially alter the contract?

Answer 12

• warranty disclaimers;
• clauses that materially shorten the deadline for raising complaints;
• clauses that change usages of trade or past courses of dealing.
  o EXAMPLE: Buyer sends Seller a purchase order for 1,000 widgets at the advertised price of $10 each. Seller sends Buyer an Acknowledgment of Order that promises delivery of the widgets at the stated price and includes boilerplate language that negates all warranties and requires payment for the order to be complete within 30 days of delivery, which is standard in the widget trade.

Question 13

Under a UCC battle of the forms, if the offeree’s acceptance includes terms that are different from the offeror’s form, which terms would be enforceable?

Answer 13

• Knockout rule: “Different” terms in the two writings dealing with the same topic knock each other out
  o EXAMPLE: Buyer’s purchase order contains a choice of law provision stating that California law will govern disputes arising from the transaction, and Seller’s order acknowledgment states that New York law will govern. Under the majority rule, neither provision is part of the parties’ contract, and if the parties desire a choice of law provision, they will have to negotiate one from scratch.

Question 14

How is a conditional acceptance treated in a battle of the forms scenario?

Answer 14

• If the offeree’s “acceptance” is specifically conditioned on offeror first agreeing to the additional terms in the acceptance before offeree will proceed, this nonconforming, conditional acceptance will NOT be effective to form a K (i.e., it’s a counteroffer).
  o No K is formed by the writings until the offeror expressly assents to the additional terms.

Question 15

Could a contract for the sale of goods be formed by conduct, rather than forms?

Answer 15

• The UCC provides that the parties’ conduct in recognizing the existence of a contract is sufficient to establish a contract even though their writings do not otherwise establish a contract.
  o EXAMPLE: Buyer sends order to Seller, Seller responds with a conditional acceptance containing a negation of warranties, and the parties have no further communications. Seller nevertheless ships the ordered goods, and Buyer accepts and pays for them. Although the parties’ writings do not form a contract-because Seller sent a conditional acceptance-a binding contract is formed by their conduct.

Question 16

Which terms would be enforceable in a contract formed by conduct under the UCC?

Answer 16

• The terms of the contract will be:
  o terms on which the writings of the parties agree; and
  o default terms provided by the UCC.
• Note: Express terms in the parties’ communications which do not match or agree are omitted.