Acceptance

Question 1

Acceptance (Rest.)

Answer 1

Acceptance is the offeree’s assent to the offer’s terms, made in the way the offer invites or requires.

BLL: Offeror determines the terms of the contract

Question 2

Acceptance by Promise

Answer 2

Acceptance by promise occurs when the offeree accepts an offer by making a return promise to perform, rather than actually performing.

Question 3

Davis v. Jacoby (“The promise-to-help inheritance case- a bilateral contract formed by promise, not by performance)

Answer 3

An uncle in poor health wrote to his niece and her husband asking them to come care for him and his wife in return leaving them his estate, and the niece’s husband promptly promised to come, but the uncle died before they arrived.

When in doubt, offers are presumed to invite bilateral acceptance by promise rather than unilateral acceptance by performance.

Unless otherwise indicated, an offer may be accepted by promising to perform or by beginning performance.

Question 4

UCC 2-206 (Offer + Acceptance in Formation of Contract)

Answer 4

1(a): Unless clearly indicated otherwise, an offer invites acceptance in any reasonable manner or medium.

1(b): An order to buy goods may be accepted by:

*A prompt promise to ship or
*Prompt shipment

2. If acceptance is by starting performance, the offeror may treat the offer as lapsed if they are not notified of acceptance within a reasonable time.

Question 5

Traditional vs. Modern (Common law) vs. UCC 2-206

Answer 5

Traditional: Rigid (performance only v. promise only)

Modern/Restatement/UCC: Flexible (acceptance by promise, performance, or reasonable manner). (BOTH SAME)

Question 6

Hendricks v. Behee (Real Estate agent case)

Answer 6

Behee offered to buy land from the Smiths through their real estate agent. The Smiths signed and accepted the offer, but never communicated that acceptance to Behee. Before hearing back, Behee revoked his offer. The Smiths claimed a binding contract existed.

An uncommunicated acceptance is not effective; an offer can be revoked any time before acceptance is communicated to the offeror and notice to the offeree’s agent counts as notice to the offeree.

Question 7

Adams v. Lindsell (Once it is in the mailbox, it is deal)

Answer 7

Lindsell (defendant) mailed an offer to sell wool to Adams (plaintiff), but the letter was misdirected and arrived late. Adams immediately mailed back an acceptance, but before it reached Lindsell, Lindsell sold the wool to someone else.

RULE: Under the mailbox rule, acceptance is effective upon dispatch (when mailed), not upon receipt.

Unlike the general rule requiring communication, the mailbox rule binds the offeror before they even know of acceptance.

ONLY applies when the offer is made by mail & the acceptance is expected to come by mail.

If the acceptance is improperly addressed, it is considered effective upon dispatch only if it is received within the time that a properly addressed acceptance would have been received.

Question 8

Rest.: Time When Acceptance Takes Effect

Answer 8

Unless the offer says otherwise, acceptance is effective when it is put out of the offeree’s possession (i.e., mailed), even if it never reaches the offeror.

Exception: In an option contract, acceptance is only effective upon receipt.
(Acceptance only counts when received, so if it is lost in the mail, no contract).

Question 9

Acceptance by performance

Answer 9

Acceptance by performance occurs when the offeree accepts an offer by actually doing the requested act, rather than making a return promise.

Question 10

Carlill v. Carbolic Smoke Ball Co. (Flu for $100 ad became a real offer)

Answer 10

A company advertised that it would pay £100 to anyone who used its “smoke ball” as directed and still caught the flu; Carlill did so and sued when the company refused to pay.

In unilateral contracts (like reward ads), performance of the requested act constitutes acceptance (provided that there is notice and some consideration)—no separate notice of acceptance is required unless expressly demanded by the offeror. Notice of performance = Notice of acceptance.

Carlill’s use of the smoke ball according to the directions — and the resulting benefit to the company (product promotion and sales) — constituted valid consideration.

Question 11

Rest.: Acceptance by Performance

Answer 11

When an offer invites acceptance by performance, no notice of acceptance is required unless the offer explicitly asks for it. If the offeror has no reasonable way of knowing that performance occurred, the offeree must:

*1. Use reasonable diligence to notify the offeror, or
*2. The offeror must learn of the performance within a reasonable time, or
*3. The offer must indicate that notice isn’t required. (The nature of the offer shows that a post-performance notice is enough.)

Question 12

Partial Performance

Answer 12

When an offer can only be accepted by performance, starting the performance makes the offer temporarily irrevocable (an option contract), but the offeror’s duty to perform arises only when the act is fully completed.

Question 13

Electronic Performance

Answer 13

Offeror must make sure the offeree knows or is made aware of what they are signing.

Question 14

Acceptance by Silence or Inaction

Answer 14

BLL: Silence or inaction alone are insufficient to constitute an acceptance.

Question 15

Laredo National Bank v. Gordon (silence sealed the deal, $12,500 lawyer)

Answer 15

Gordon offered to settle his fee for $12,500 at the bank’s request; the bank never replied but went ahead with the settlement and later tried to dispute the amount.

Although silence usually isn’t acceptance, it can operate as acceptance when the relationship or circumstances create a duty to speak or when the offeree knows their silence will be understood as assent.

Prior dealings and circumstances made it reasonable for Gordon to think silence meant assent.

Question 16

Rest: Acceptance by Silence or Exercise of Dominion

Answer 16

Silence is not acceptance– except in three situations:

a. If the offeree accepts the benefits of offered services
* Has a chance to reject.
* Knows the offeror expects to be paid
* Silence by taking benefit constitutes benefits.

b. If the offeror says or implies that silence will count as acceptance
* And the offeree intends to accept by staying silent,
* By intending to stay silent you accept

c. If past dealings make it reasonable for the offeror to expect notice of rejection
* Silent can be treated as assent

Silence is not acceptance unless the offeree knowingly accepts benefits, intends silence to signal assent, or prior dealings make it reasonable to treat silence as acceptance.

Question 17

Imperfect acceptance

Answer 17

An imperfect acceptance is a response to an offer that does NOT match the offer’s terms exactly. Instead of accepting it, it changes, adds, or conditions the terms– making it a counteroffer.

Question 18

Mirror Image Rule

Answer 18

Acceptance must mirror the original terms set by the offeror

Question 19

Gresser v. Hotzler (changing dates)

Answer 19

After months of negotiation to buy the Hotzlers’ property, Gresser signed the purchase agreement but made two date changes—extending the survey delivery and closing dates—without the sellers’ approval. He knew the realtor didn’t have authority to bind the sellers but assumed they would accept. The sellers never initialed the changes and instead accepted a different buyer’s offer the next day.

Under the mirror image rule, an acceptance must exactly match the offer; a response that makes material changes, such as altering performance dates, is a counteroffer, which terminates the original offer and prevents contract formation.

Question 20

Rest: Counteroffer

Answer 20

A reply to an offer that adds, or changes terms is a counteroffer, not an acceptance, if acceptance depends on the new terms.

Question 21

Rest.: Modification

Answer 21

If acceptance includes proposed modification to the offer, but language is NOT conditional, there can still be acceptance.

If the modification is immaterial then some courts will enforce the contract.

Acceptance that materially differs from the original terms of the offer prevents contract formation.

Question 22

UCC 2-207 (1) Battle of the Forms

Answer 22

1. Is there any Acceptance? (Do we have a contract despite diff terms)

a. If the offeree’s form clearly shows intent to accept, it forms a contract even if it adds new or diff terms, unless it expressly made conditional on the offeror agreeing to the new terms.

👉 If someone says “yes,” but their form has extra terms → still an acceptance, unless they say “I only accept if you agree to these new terms.”

Question 23

UCC 2-207(2) Battle of the Forms

Answer 23

If a contract is formed under (1), what do we do with the extra terms?

The extra terms are proposals– not automatically part of the contract.
But if both parties are merchants the ADDITIONAL terms become part of the contract unless:

1. The offer limits acceptance to its own terms.
2. The new terms materially alter the deal, or
3. The offeror objects within a reasonable time.

If any of these three happen → new terms do not become part of the contract.

If one or both parties are not merchants, then the additional terms do NOT automatically become part of the contract.
Instead, they are treated as mere proposals, and they only become part of the contract if the original offeror expressly agrees to them.

Different terms: (Courts split)
*If terms are different then those terms will be knocked out and replaced by UCC Article 2 gap-fillers.

Question 24

UCC 2-207(3): Battle of the Forms

Answer 24

Contract by conduct:

No contract on paper but parties still act like they have an contract (ship goods, accept payment, etc.)

In that case, their conduct creates a contract, even if the writings don’t

The terms are:
*All terms the parties agree on
*Default gap fillers from the UCC for the test.

Question 25

Klocek v. Gateway (one-party merchant case)

Answer 25

Consumer bought a Gateway computer; Gateway included terms inside the box stating that keeping the computer beyond 5 days meant accepting the terms, including an arbitration clause. Under UCC §2-207, when one party is not a merchant, additional terms (like arbitration) are mere proposals and don’t become part of the contract unless expressly agreed to. (The Buyer is usually the offeror in a sales transaction). “Rolling form” or “in-the-box” terms (like Gateway’s arbitration clause) are treated as proposals under §2-207, not binding, unless the buyer expressly assents — no “automatic” post-sale acceptance.

Question 26

Ionics vs. Elmwood Sensors, Inc (Merchant battle? UCC 2-207(3) breaks the tie)

Answer 26

Ionics bought thermostats from Elmwood for its water dispensers. Ionics’ purchase orders said its own terms (including full remedies) controlled unless Elmwood objected in writing. Elmwood responded with its own acknowledgment, adding a liability limitation and stating its terms controlled unless Ionics objected. Neither side objected, but their forms directly conflicted. When Elmwood’s thermostats malfunctioned and caused fires, Ionics sued for damages. Elmwood argued its limitation clause applied. Under UCC § 2-207(3), when both parties exchange conflicting forms but act like a contract exists (by shipping, accepting, or paying), a contract is formed by conduct, not by either form. → The terms that conflict are knocked out (“knockout rule”), and the UCC’s default terms fill the gaps. When buyers and sellers send forms with conflicting terms, neither side’s terms automatically win — the conflicting clauses cancel each other out, and the UCC’s fair default rules apply instead.

Question 27

Common Law v. UCC 2-207

Answer 27

Common Law UCC 2-207

Question 28

Common Law Approach

Answer 28

Acceptance must mirror the offer exactly — any change = counteroffer (no contract). If acceptance merely requests or suggests extra terms (not conditional), it’s still valid. Follows the last shot rule: The contract forms on the terms of the last form sent before performance, since performance accepts that final counteroffer.

Question 29

UCC 2-207 Approach

Answer 29

Allows contract even with different terms (unless acceptance is expressly conditional). New terms = proposals; between merchants, they stick unless: (a) offer limits, (b) material alteration, or (c) timely objection. Conduct (ship/pay/accept) can still create contract → agreed terms + UCC gap-fillers. Merchants: new terms may stick (auto-include unless exception).

Question 30

Berkson v. Gogo (sign-in wrap case)

Answer 30

Consumers bought in-flight Wi-Fi; Gogo’s “Terms of Use” (with arbitration and venue waiver) were only hyperlinked near the sign-in button. Users weren’t required to click, scroll, or acknowledge the terms, and Gogo never emailed them a copy. A sign-in-wrap agreement is only enforceable if a reasonably prudent user would have inquiry notice—the site must make the terms clear, conspicuous, and easily accessible. Hidden or passive hyperlinks don’t show mutual assent, especially when terms materially alter default rights (like arbitration or venue). A sign-in-wrap contract isn’t enforceable unless the website gives clear, conspicuous notice and easy access to the terms-mere hyperlink near a button isn’t enough for assent.

Question 31

Online contract types:

Answer 31

Browsewrap: Online host dictates that assent is given merely by using site. (❌ Usually unenforceable — no notice or affirmative assent.) Clickwrap: User must click “I agree” (or similar) after seeing or being shown the terms. (✅ Generally enforceable — clear notice + affirmative assent.) Scollwrap: User must scroll through terms and then click “I agree.” (✅ Strongly enforceable — explicit notice and manifest assent.) Sign-in-wrap: Signing up or logging in implies assent; terms linked near the button. Link too hidden in Berkson. (⚠️ Only enforceable if site gives clear, conspicuous notice and terms are readily accessible; otherwise ❌ unenforceable.) Browse = no click → bad Click / Scroll = clear assent → good Sign-in = maybe → depends on clarity of notice

Question 32

Misunderstanding

Answer 32

A misunderstanding is when each party attaches a different meaning to the same term or phrase, and neither knows (or has reason to know) the other’s meaning.

Question 33

Deficient Agreements

Answer 33

A deficient agreement is an agreement that appears like a contract but fails to be legally enforceable because it lacks definiteness, mutual assent, or a real commitment.

Question 34

Raffles v. Wichelhaus

Answer 34

Two ships named Peerless were sailing from Bombay at different times (October and December). Each party had a different ship in mind when agreeing to a cotton sale. Rule: No contract exists when both parties attach materially different meanings to the same term, and neither knows nor has reason to know of the other’s meaning. Because both parties reasonably believed in different “Peerless” ships, there was no meeting of the minds—thus, no enforceable agreement.

Question 35

Rest: Effect of Misunderstanding

Answer 35

There’s no contract if both parties attach materially different meanings to a term and neither knows or has reason to know what the other means. Exception: If one party knows (or should know) the other’s meaning, but the other doesn’t know (or have reason to know) of the difference, then the contract is enforced according to the innocent party’s understanding. The party who knows of the misunderstanding loses; the party who doesn’t know wins.

Question 36

Indefiniteness

Answer 36

The agreement is too vague or incomplete to enforce.

Question 37

Varney v. Ditmars (old common law approach)

Answer 37

Varney worked for Ditmars as an architect’s assistant at $35 per week. Ditmars later promised him $5 more per week and “a fair share of my profits” if Varney continued working hard and finished delayed projects. Varney relied on this promise, but when he fell ill and missed work on Election Day, Ditmars fired him. After recovering, Varney offered to return, but Ditmars refused and denied any profit-sharing agreement. Varney sued for lost wages and his share of profits. A promise to pay a “fair share of profits” is unenforceable for indefiniteness because it provides no objective standard to determine the amount. A promise too vague—like paying “a fair share of profits”—is not an enforceable contract since courts can’t determine what was actually agreed upon.

Question 38

Rest.: Certainty

Answer 38

Even if parties intend to contract, no contract is formed unless the terms are definite enough to identify a breach and provide a remedy. If key terms are left open or too vague, it shows no real offer or acceptance was intended.

Question 39

Community Design Corporation v. Antonell (Christmas bonus case)

Answer 39

Antonell, an architectural draftsman, was promised a Christmas bonus by CDC’s president if project drawings were completed by then, with the amount to be determined by a vice president. He worked overtime, completed the drawings on time, but received neither the bonus nor a promised vacation. A contract is not unenforceable for uncertainty when one party has fully performed and the other has received the benefit; equity favors enforcing such agreements. Unlike Varney v. Ditmars, the court here found sufficient certainty because performance and benefit made the promise enforceable.

Question 40

Diff between Varney and Antonell:

Answer 40

Varney: takes the old common law approach, where everything has to be explicit in the contract. Antonell: takes a more modern approach, in that a reasonable jury could figure the missing terms.

Question 41

Agreement to Agree

Answer 41

Even though agreements to agree are usually too indefinite to enforce, 👉 IF the parties clearly intended to be bound from the start, then the court will try to honor that intent — even if some terms were left open. “The intention from the first contract trumps indefiniteness.”

Question 42

Moolenaar v. Co-Build Companies:

Answer 42

Plaintiff, a goat farmer, leased 150 acres for five years from the original owner with an option to renew “at a rent to be renegotiated.” The land was later sold to Co-Build, who demanded $17,000 monthly rent for renewal—far above the prior $375 rate. Plaintiff sought renewal at a reasonable rate and filed for declaratory judgment after Co-Build refused. A renewal clause leaving rent open is enforceable if the missing term can be determined with reasonable certainty—here, by implying a “reasonable” or “fair market” rent based on the parties’ intent and circumstances. An agreement to agree is generally unenforceable if it merely expresses an intent to negotiate key terms later — meaning no binding contract exists until a final written agreement is executed. However, it can be enforceable if the essential terms are sufficiently definite and supported by consideration, with only minor details left open for future negotiation. Although the renewal clause left rent “to be renegotiated,” the court enforced it by implying a “reasonable” or “fair market” rent — making it a valid contract rather than an unenforceable agreement to agree. (price for how the land would be valued if it was used for goat and sheep farming.)

Question 43

Rest.: Invitation of Promise or Performance

Answer 43

If it is unclear whether an offer calls for a promise or performance, the law presumes flexibility-- the offeree may accept either by promising to perform or by actually performing.

Question 44

UCC 2-305(1): Open Price Term

Answer 44

The UCC allows a contract for the sale of goods even if the price is not settled at the time of agreement. 1. The parties if they so intend can conclude a contract for sale even though the price is not settled. In such a case the price is a reasonable price at the time for delivery if: a. Left open (they forgot to set it) b. To be agreed later, but they never agree c. To be set by a third party (e.g., appraiser) d. To be set by one party (but must be set in good faith) In ALL of these situations --> contract still exists, unless the parties clearly intended "no contract unless we set a price."

Question 45

UCC 2-305 (2): Open Price Term

Answer 45

If one party is supposed to set the price, they must do so in good faith.

Question 46

UCC 2-305 (3): Open Price Term

Answer 46

If the party who was supposed to set the price fails to do so (UCC 2-305(3)) The other party MAY: 1. Set a reasonable price, or 2. Cancel the contract

Question 47

UCC 2-305 (4)

Answer 47

If the parties didn't intend to be bound without a fixed price: Then there is no contract. If goods were exchanged, the buyer must return them or pay reasonable value. And the seller must refund any payment received.

Question 48

Diff between Indefiniteness and Agreement to Agree

Answer 48

Indefiniteness Agreement to Agree

Question 49

Indefiniteness- case

Answer 49

The parties intended to be bound and reached an agreement, but some terms are too vague or unclear to enforce (e.g., "a fair share of profits" in profits in Varney v. Ditmars)

Question 50

Agreements to agree- case

Answer 50

The parties intend to negotiate or finalize terms later-- they never reached a complete agreement in the first place. Usually unenforceable unless the parties clearly intended to be bound and there is a way to determine the missing term (as in Moolenar -- court implied "reasonable rent.")