A.

Ascertainment of Assent: The "Objective" Test

1. Embry v. Hargadine, McKittrick Dry Goods Co.
Offer: Embry said unles he gets a contract he would quit then and there
 Using objective test there is no issue here
Issue: Whether employer accepted offer by reasonable care/ intention
YOU ARE BOUND BY WHAT YOU DO, NOT WHAT YOU THINK
Dispute about acceptance
Reasonable person
Objective test
2. Lucy v. Zehmer
Offer: Lucy Made it
Issue: Acceptance
Zehmer's Argument: Intoxication, Context (did it in a bar)
Lucy's Argument: Put money down , Zehmer drafted it, not the first time discussed buying
property
Law judges an agreement between two persons exclusively from those expressions of their
intentions which are communicated between them
3. Cohen v. Cowles Media Company
Courts trying to stop the sleazy business of turning stuff over before elections. Discouraging
the activity its against the public policy of the community
Like trying to sue for gambling
Contract against PUBLIC POLICY so that's why its analysis isn't good
Don't look at analysis its TERRIBLE
Mutual assent
1. Both intend to contract
2. Must agree on at the least the main terms of the deal
Objective theory
1. Not what each party subjectively intended
2. Reasonable person in the position of the other party would have thought 1st party intended
Offer
1. Creates power of acceptance
2. Immediately bound
3. Without further negotiation
Acceptance
1. Offeree's immediate intent to enter into the deal
2. A contract is formed as soon as the acceptance occurs
Secret intent
1. Party's secret intentions are irrelevant in determining whether a contract exists and what its
terms are
Contract made in jest
1. Even if one party makes an offer in jest and the other party reasonably believes that he is
serious and seriously accepts the offer, the contract will be binding
B. Implied - In - Fact - Agreement
1. Wrench, LLC. v. Taco Bell Corp
Approaches: Intellectual Property, Contract
Offer: Proposal sent on Nov. 18, 1996
Acceptance: Taco Bell gives no response but takes the idea
ACTIONS SPEAK LOUDER THAN WORDS
 Implied in fact
 Intention to enter into a contract is not manifested by direct or explicit words between the
parties but is instead gathered by implication or proper deduction from the conduct of the
parties, language used. Or things done by them, or other pertinent circumstances attending
the transaction
 Requires mutual assent and consideration and is treated in all other respects like an express
contract
 Look to the acts and conduct of the parties to determine whether the essential elements of
an express contract have been established
 Accepts a benefit from another for which compensation is customarily expected
 A promise to pay fair value may be implied even if no agreement was reached as to price,
duration, or other terms of the contract
C. Offer: Creation of Power of Acceptance
1. Lonergan v. Scolnick
 Ad in paper was a request for an offer
 April 8 letter added nothing in the way of a definite offer
 Indication of intention to sell to first comer
 Further assent on part of defendant required
Under the language used the plaintiff was not being given a right to act within a reasonable
time after receiving the letter, he was plainly told that defendant intended to sell to another
if possible and warned that he would have to act fast if he was interested in buying the land
and so no contract had been entered into between these parties
2. Leonard v. Pepsico, Inc
Commercial advertisement not a unilateral offer
Tongue in cheek attitude of commercial wouldn’t cause reasonable person to conclude that
soft drink company would be giving away fighter planes as part of promotion
No writing between parties sufficient to satisfy the Statute of Frauds
3. Southworth v. Oliver
Letter not out of the blue
Price quotation wasn’t resulting from an inquiry by plaintiff
Definitiveness of the proposal
4. Bretz v. Portland General Electric Co.
 PGE conditioned formation of contract on PGE's receipt of Bretz letter
 Letter wasn’t mailed til Aug 30 and that was same day that he entered contact for sell of
coal
 So there was no contract between Bretz and PGE at time he had maed his contract for sale
of coal
 Bretz cant invoke equitable estoppel to override PGE's statute of frauds Defense
Need for further expression of assent
1. Proposal is not an offer if it reserves to the PROPOSER the power to close the deal
Power of Acceptance
(4) An offer has an immediate and significant legal effect. It enables or empowers the offeree to
accept and thereby place the parties in a contractual relationship. Thus, an offer is said to confer
upon the offeree a ‘‘power of acceptance.’’
Offer made in jest
 1. Offer which the offeree knows or should know is made in jest is not a valid offer and even if
it is purportedly accepted no contract is created
Advertisements are NOT offer
 Advertisements of goods by display, sign, handbill, newspaper, radio or television are not
ordinarily intended or understood as offers to sell. Same is true for catalogues, price lists
and circulars, even though the terms of suggested bargains may be stated in some detail
 To make it an offer it needs
 Language of commitment or some invitation to take action without further
communication
 Advertisements are understood to be mere requests to consider and examine
and negotiate and no one can reasonably regard them as otherwise unless the
circumstances are exceptional and the words used are very plain and clear
 Advertisement has to be clear, definite, and explicit and leaves nothing open for
negotiation, in that circumstance it constitutes an offer , acceptance of which
will complete the contract
Price quotations distinguished from offers
1. Quantity
i. Quote will only be an offer if it or the request to which it is a response makes clear the
quantity in question
2. Addressee
i. Unlikely to constitute an offer if it is not addressed to a particular person but a part of a
price list or large mailing
3. Use of term quote or offer
Objective Test
1. Context
what the offeree should have understood under all of the surrounding circumstances, with
all of his opportunities for comprehending the intention of the offeror, rather than what the
offeror, in fact, intended
2. Language Used
If there are no words of promise, undertaking or commitment, the tendency is to construe
the expression to be an invitation for an offer or mere preliminary negotiations in the
absence of strong, countervailing circumstances
3. Number of Parties
determination of the party or parties to whom the purported offer has been addressed. If
the expression definitely names a party or parties, it is more likely to be construed as an
offer. If the addressee is an indefinite group, it is less likely to be an offer. Operates
effectively in relation to such expressions as advertisements or circular letters. The
addressee is indefinite, and, therefore, the expression is probably not an offer. However, in
reward cases, the addressee is equally indefinite and, yet, the expression is an offer.
4. Definiteness
Finally, the definiteness of the proposal itself may have a bearing on whether it constitutes
an offer. In general, the more definite the proposal, the more reasonable it is to treat the
proposal as involving a commitment.
D. Acceptance: Exercise of Power of Acceptance
1. Acceptance by Promise
a. LaSalle National Bank v. Vega
Bilateral
 Issue: Was it Accepted
Exclusive method was not complied with so no contract
b. Hendricks v. Behee
Bilateral
No method stated
Offer: March 3 Behee send offer to Smiths by real estate agent
Acceptance: March 4 Smiths sign the agreement but Behee had withdrew offer before
he was notified of the acceptance
NO CONTRACT UNTIL ACCEPTANCE IS COMMUNICATED TO THE OFFEROR
Must give notice of your acceptance.
Buyer's agent is not the buyer
SENDING TO AGENT DON'T DO SHIT
Actual notice has to be given to offeror
PUT IT IN THE MAIL - soon as you dispatch
c. Ever-Tite Roofing Corp v. Green
Offer: This agreement shall become binding only upon written acceptance hereof by
the principal or authorized officer of the Contractor or upon commencing
performance of the work
Bilateral: Exclusive
Acceptance: June 18th engage its worksmen and two truck and went to go do
work but found others in performance of work
Bound by outward manifestations
Court bent over backwards to screw over the couple
LANGUAGE THAT CONFUSES FOR CONTRACT IS CONSTRUED AGAINST PERSONT THAT
MAKES A CONTRACT
In this case it was Roofing company's form
2. Acceptance by Performance Not By Promise
a. Carlill v. Carbolic Smoke Ball Co.
Context: - $1000 in bank , but was as an advertisement +/-
Parties: advertisement -
Specificity: +
Language: +
Unilateral: Rewards
Completed when:
a. Buy
b. 3 times daily 2 weeks
c. Get Sick - CONDITION
ACCEPTANCE IS ONLY WHAT YOU CAN DO THAT IS WITHIN YOUR CONTROL
b. Glover v. Jewish War Veterans of United States
Unilateral: Reward
Contract formed
When she
a. Give info
b. Arrested - CONDITION
c. Conviction- CONDITION
ACCEPTANCE IS LIMITED TO WHAT PERSON CAN DO
OFFER CONTAINED EXCLUSIVE MEANS OF ACCEPTANCE
 NO CONTRACT UNLESS KENW OF OFFER AND ACTED WITH INTENTION OF ACCEPTING
THE OFFER
Can't assent without knowledge of existence of off
 EXCEPTION FOR GOVERNMENT
3. Acceptance By Conduct or Silence
a. Russell v. Texas Co.
Bilateral: Exlusive
Offer based upon continued use
They continued to use until NOV 22 but rejected offer in Dec saying that had no
intention to accept
LIKE TACO BELL
- cant do that
b. Ammons v. Wilson
Bilateral: Exclusive
 Acceptance at point of shipment
Offer: shortnering, order at price was subject to acceptance by WILSON Co
So NO Contract aft first
But they didn’t know for 12 days that order was declined when used to dealing with
them in a week
SILENCE IS ACCEPTANCE WHEN
 Where an offeree fails to reply to an offer, his silence and inaction operate as an
acceptance in the following cases and in no otheres
o Where because of previous dealings or otherwise, the offeree has given the
offeror reason to understand that the silence of or inaction is intended by the
offeree as a manifestation of assent, and the offeror does so understand
Case sent back to jury need to decide whether 12 days is silence +
SILENCE ALONE IS NOT ACCEPTANCE
4. Time When Acceptance is Effective
a. Adams v. Lindsell
If we had to wait until it was received, no contract could be completed through mail
Offeror bears burden of lost acceptance because he left it open
Offeror had ability to state otherwise
DISPATCH rule - When out of control
Unless the offer provides otherwise an acceptance made in a manner and by a
medium invited by an offer is operative and completes the manifestation of mutual
assent as soon as put out of the offeree's possession, without regard to whether it
ever reaches the offeror
DISPATCH ONLY APPLIES TO ACCPETANCE
COUNTEROFFERS AND REVOCATIONS REQUIRE RECEIPT
5. Nature and Effect of Counter- Offer
a. Minneapolis & St. Louis Railway Co. v. Columbus Rolling - Mill Co
COUNTEROFFER NEGATES OFFER
MIRROR IMAGE RULE
-only can accept that was offered
Silence not acceptance because no plus here
ALWAYS GO BACK WITH INQUIRY NOT COUNTER OFFER SO YOU DON’T LOSE THE
OFFER
 Acceptance Rules
 Bilateral K (promise for a promise)
 Method of Acceptance
 Exclusive - offeror tells how they should accept
 Suggested - may accept in this way
 No Method Stated
 Unilateral K (promise for a completed act)
 Rewards
 Options - insurance policy
Test for Contract:
Context
Receivers
Specificity
Language
Master Of Offer
The offeror is master of the offer. It is recognized that the offeror may stipulate the terms
upon which he or she is willing to bargain, and also prescribe the method by which the
offeree may accept. The offeror fashions the power of acceptance which is conferred upon
the offeree and can expressly limit the ways in which that power may be exercise. Hence it
follows that an examination of the terms of the offer is a first step in determining the
validity of an alleged acceptance
Acceptance by Conduct
Where the offeree exercised dominion over things which are offered to him, such exercise
of dominion in the absence of other circumstances showing a contrary intention is an
acceptance. If circumstance indicate that the exercise of dominion is tortious the offeror
may at his option treat it as an acceptance, though the offeree manifests an intention not to
accept
Restatement Second 69
Where an offeree fails to reply to an offer, his silence and inaction operate as acceptance in
the following cases only:
 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 expectiation of
compensation
 Taco Bell
 Where because of previous dealings or otherwise, it is reasonable that the offeree
should notify the offeror if he does not intend to accept
 Ammons
Common Law Mirror Image Rule
A proposal to accept the offer it modified or an acceptance subject to other terms and
conditions was equivalent to an absolute rejection of the offer made by the plaintiffs
An offeree cannot pick and choose from among the terms, agreeing here and disagreeing
there, and then asset the existence of an operative acceptance. If the terms are varied or
changed, there is a counter-offer. No contract can arise until agreement is reached as to
those changes; i.e until the counter offer has itself been accepted . Traditionally, courts have
insisted upon total congruence between offer and acceptance, the latter required to be the
mirror image of the former.
E. Assent in Electronic Commerce
 1. Specht v. Netscape Communications Corportation
Legal issue: whether they knew about the offer
Rules don’t change because its ECOMMERCE
Gotta be flexible in law school in looking at law in different ways
F. Termination of offer: Destruction of Power of Acceptance
1. Hendricks v. Behee
In here because of revocation
Did signers accept when sign
 No sign of acceptance
2. Dickinson v. Dodds
Indirect Revocation that's why its important
Law is critical distinction
Did he hear that already sold or planning to sell
He said keeping offer open til 9am
Not legally bound to offer until acceptance
Does dropping off at house as acceptance
Did he dispatch under dispatch rule?
Left at office would be ok so this should be?
If an offer has been made for the sale of property and before that offer is accepted, the person
who has made the offer enters into a binding agreement to sell the property to somebody else,
and the person to whom the offer was first made receives notice in some way that the property
has been sold to another perscon, can he after that make a binding contract by the acceptance of
the offer? No.
Restatement 36
(1) An offeree's power of acceptance may be terminated by (a) rejection or counter-offer by
the offeree, or (b) lapse of time, or (c) revocation by the offeror, or (d) death or incapacity of
the offeror or offeree. (2) in addition, an offeree's power of acceptance is terminated by the
non-occurrence of any condition of acceptance under the terms of the offer.
Restatement 42
Where an offer is for the sale of an interest in land or in other things, if the offeror after
making the offer sells or contracts to sell the interest to another person, and the offeree
acquires reliable information of that fact, before he has exercised his power of creating a
contract by acceptance of the offer, the offer is revoked
Restatement 43
An offeree's power of acceptance is terminated when the offeror takes definite action
inconsistent with an intention to enter into the propose contract and the offeree acquires
reliable information to that effect
G. Irrevocable Offer: Option Contracts
1. Humble Oil & Refining Co. v. Westside Investment Corp
May 2nd letter , was it the same as Minneapolis?
Had paid some money so makes it irrevocable
This is not good business
2. Marchiondo v. Scheck
Completed act
Get buyer to sign contract
Partial performance only applies to unilateral so you need to prove you was still working
Partial performance makes offer irrevocable
3. Drennan v. Star Paving Co.
 Plaintiff relied on the bid, makes it irrevocable
Make offer Irrevocable
 Pay money
 Option Contract
 Bilateral (promise to do the work) - 87(2) preparatory conduct
 Unilateral - 45 begin invited act
Restatement 45
 If an offer for a unilateral contract is made, and part of the consideration requested in the
offer is given or tendered by the offeree in response thereto, the offeror is bound by a
contract, the duty of immediate performance of which is conditional on the full
consideration being given or tendered within the time stated in the offer, or, if no time is
stated therein, within a reasonable time
 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 begins the invted
performance or tenders part of it
 The offeror's duty of performance under any option contract so created is conditional on
completion or tender of the invited performance in accordance wit the terms of the offer
Restatement 87(2)
 An offer which the offeror should reasonably expect to induce action or forbearance of a
substantial character by 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
Other theories
 Quantum Meruit - As much as he deserves
 When perform in reliance upon terms vague and uncertain though they are
 Law presume a promise to pay the reasonable value of service
 Deals with value conferred
 Promissory estoppel
 Deals with reliance
 Restatement 90
 A promise which the promisor should reasonably expect to induce action or
forbearance of a definite and substantial character on the part of the promisee
and which does induce such action or forbearance is binding if injustice can be
avoided only by enforcement of the promise
 Non-contractual recovery