Chapter 3 – Negotiation vs. Agreement

Agreement

• The manifestation (or indication) of mutual assent by the parties.

Objective Standard

• An objective standard is used to determine whether parties had a “meeting of the minds”.
• Looks to what a reasonable person would believe, based on the circumstances.

Offer

• An indication of current willingness to enter into a contract, communicated by the person making the offer.

Consideration

• Something promised, given, refrained-from, or done that has the effect of making an agreement a legally enforceable contract.

Open Terms

• Under the UCC a contract may form despite a failure to specify certain terms
• Also called “gap-filling”

Revocation

• Under common law, an offer that is not, in itself, a contract, can be revoked at any time before acceptance (unless promissory estoppel applies).

Firm Offer

• A UCC rule under which no consideration is required to hold offer open between merchants.

Rejection

• Offeree terminates offer
• If an offeree rejects an offer, the rejection terminates the offer and any subsequent attempt to accept is an offer.

Counter Offer

• Offeree responds to offer with an offer.

Acceptance

• Acceptance is compliance or agreement by one party with the terms and of another’s offer so that a contract forms.

Implied Acceptance

• Normally, “pure” silence does not operate as acceptance
• Acceptance can be implied based on behavior, partial performance, or past dealings

Mailbox Rule

• Common law rule
• Acceptance occurs when dispatched by appropriate means

Mirror Image Rule

• Common law rule
• Acceptance must be identical to offer

Battle-of-the-Forms Rule

• UCC rule
• Overrides mirror image rule when merchants use forms

Review Materials for Chapter 3

• Acceptance – Compliance or agreement by one party with the terms of another’s offer so that a contract forms
• Option – An offer, supported by consideration, may not be revoked at will
• Offeror – Party making an offer
• Offeree – Party receiving an offer
• Battle of the Forms Rule – UCC rule, overrides mirror image rule when merchants use forms
• Objective Standard – Used to determine whether parties had “meeting of the minds,” looks to what a reasonable person would believe, based on circumstances
• Firm Offer – UCC rule, no consideration required to hold offer open between merchants
• Offer – An indication of current willingness to enter into a contract, communicated by the person making the offer
• Open Terms – Also called “gap-filling” provisions; under the UCC a contract may form despite failure to specify certain terms
• Counter Offer – Offeree responds to an offer with an offer
• Operation of Law – Events, including death, insanity, destruction of subject matter, and illegality, may terminate an offer
• Rejection – Offeree terminates offer
• Auction Without Reserve – A seller agrees to sell to the highest bidder and cannot revoke the offer to sell, even if bids are disappointingly low
• Mirror Image Rule – Acceptance must be identical to offer
• Mailbox Rule – Common law rule, acceptance occurs when dispatched by appropriate means