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Chapter 11 – The Agreement: Acceptance


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Powerpoint from textbook Business Law - the ethical, global, and e-commerce environment to accompany BA 330 course at the University of Alaska Fairbanks.

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Chapter 11 – The Agreement: Acceptance

  1. 1. Introduction to Contracts The Agreement: Offer The Agreement: Acceptance Consideration Reality of Consent© 2010 The McGraw-Hill Companies, Inc. All rights reserved.
  2. 2. Capacity to Contract Illegality Writing Rights of Third Parties Performance and Remedies© 2010 The McGraw-Hill Companies, Inc. All rights reserved.
  3. 3. The Agreement: AcceptanceMake your bargain beforebeginning to plow. Arab proverb © 2010 The McGraw-Hill Companies, Inc. All rights reserved.
  4. 4. Learning Objectives Basics of Acceptance  Intent Communication  Special Problems11 - 4
  5. 5. Requirements for Acceptance Acceptance must be by clear expression by offeree of intent to be bound by terms of offer and communicated to offeror  Only offeree may accept offer  If offer calls for performance, then performance is acceptance  Offeror may specify manner of acceptance  Example: “notify of acceptance in writing”11 - 5
  6. 6. Adsit Co. v. Gustin Facts & Procedural History:  Gustins ordered products from Plaintiff Adsit Co.’s website, clicking an “I Accept” button that referred to Adsit’s refund and return policy, and choice of law clause for Indiana  Gustin returned goods and reversed credit charge  Plaintiffs denied receipt of goods and filed suit in Indiana; both parties appealed trial court ruling  Gustins (Texas and Alabama residents) argued that Indiana lacked personal jurisdiction11 - 6
  7. 7. Adsit Co. v. Gustin Issue: Does the court have jurisdiction? Reasoning and Holding:  Promises become binding when there is a meeting of the minds and consideration is exchanged  A web-based contract, or clickwrap agreement, is valid if the web-user had reasonable notice of the agreement and manifested assent  Gustins had reasonable notice and assented, including to the jurisdiction of Indiana courts11 - 7
  8. 8. Mirror Image Rule Traditional contract law rule required acceptance to be the mirror image of the offer  Example: Finnin v. Bob Lindsay, Inc. Currently, judges hold that only material variances between an offer and an alleged acceptance result in an implied rejection of the offer11 - 8
  9. 9. The UCC & Variance of Terms UCC 2–207 allows contract formation even when there is some variance between terms of offer and terms of the acceptance  A definite and timely expression of acceptance creates a contract, even if it includes terms different from those stated in offer or if it states additional terms offer did not address [2–207(1)]  Example: Standard Bent Glass Corporation v. Glassrobots Oy11 - 9
  10. 10. 11 - 10
  11. 11. Communicating Acceptance With instantaneous forms of communication, knowing when acceptance occurs is easy  Complicated by non-instantanesous forms such as mail Mailbox rule makes acceptance effective upon dispatch when the offeree used a manner of communication expressly or impliedly authorized (invited) by the offeror  Example: Okosa v. Hall11 - 11
  12. 12. Communicating Acceptance Courts today allow communication by any reasonable means of communication11 - 12
  13. 13. Silence as Acceptance  General rule is that an offeree’s silence, without more, is not an acceptance  Circumstances may impose duty on offeree to reject offer affirmatively or be bound  Includes cases in which offeree’s silence objectively indicates an intent to accept  Example: McGurn v. Bell Microproducts, Inc.11 - 13
  14. 14. McGurn v. Bell Microproducts Facts:  Bell extended offer of employment to plaintiff  Plaintiff altered written offer to include severance package, signed and returned  Bell silent regarding alteration and plaintiff worked for more than a year  Bell fired plaintiff and refused to pay severance  Plaintiff won summary judgment for breach of contract11 - 14
  15. 15. McGurn v. Bell Microproducts Reasoning & Ruling:  Silence in response to an offer does not constitute acceptance unless offeree takes benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation  Restatement (Second) of Contracts §69  Whether Bell accepted plaintiff’s alteration of the contract by its silence and conduct is a matter of fact, thus a matter for the jury; case remanded11 - 15
  16. 16. Effect of Acceptance OFFER + ACCEPTANCE AGREEMENT11 - 16
  17. 17. Test Your Knowledge True=A, False = B  Silence may never indicate acceptance  Offeror may specify manner of acceptance  Only material variances between an offer and an alleged acceptance result in an implied rejection of the offer  UCC 2–207 does not allow contract formation if there is some variance between terms of offer and terms of the acceptance11 - 17
  18. 18. Test Your Knowledge Multiple Choice  The effect of offer plus acceptance is: (a) Negligible (b) An agreement (c) The mirror image rule (d) None of the above11 - 18
  19. 19. Thought Questions Do you read clickwrap agreements when purchasing goods through a website? Do you agree you should be bound by “click” agreements if purchasing via the internet?11 - 19