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Chapter 11 – The Agreement: Acceptance


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Chapter 11 – The Agreement: Acceptance

  1. 1. C H A P T E R 11 The Agreement: AcceptanceMake yourbargain beforebeginning toplow.Arab proverb 11-1
  2. 2. Learning Objectives• Explain elements of acceptance under common law and the UCC• Determine how acceptance can be communicated, including by silence• Determine when oral acceptance is effective 11-2
  3. 3. 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” 11-3
  4. 4. Trademark Properties v. A & E Television Networks• Facts & Procedural History: – Dispute arose out of a disagreement over alleged oral agreement to split equally net revenues of the reality television series “Flip This House” – Court dismissed all plaintiff’s claims except breach of contract. Jury returned verdict awarding Plaintiff just over $4 million, or about half of first season’s net revenues – Defendant appealed arguing that evidence was legally insufficient to support a finding of an oral contract under New York law 11-4
  5. 5. Trademark Properties v. A & E Television Networks• Issue: Did jury reasonably find that parties formed an oral contract over distribution of revenue?• Reasoning and Holding: – Oral contracts as binding as written contracts, but “context matters” – If Davis reasonably understood A&E representative’s equivocal statement as acceptance, then contract was formed; also, conduct of A&E and Davis supports both parties believed contract existed – Judgment affirmed 11-5
  6. 6. Mirror Image Rule• Traditional contract law rule required acceptance to be the mirror image of the offer – Example: Pride v. Lewis• Currently, judges hold that only material variances between an offer and an alleged acceptance result in an implied rejection of the offer 11-6
  7. 7. The UCC & Variance of Terms• UCC 2–207 allows contract formation even when there is some variance between terms of offer and terms of 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)] – Belden v. American Electric Components, Inc. 11-7
  8. 8. 11-8
  9. 9. Communicating Acceptance• With instantaneous forms of communication, knowing when acceptance occurs is easy – Non-instantaneous forms (postal mail) more difficult• Mailbox rule makes acceptance effective upon dispatch when the offeree used a manner of communication expressly or impliedly authorized (invited) by the offeror• Okosa v. Hall illustrates operation of the rule 11-9
  10. 10. Communicating Acceptance• Courts today allow communication of acceptance by any reasonable means of communication 11-10
  11. 11. 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. 11-11
  12. 12. 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 contract 11-12
  13. 13. 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 remanded 11-13
  14. 14. Effect of Acceptance OFFER+ ACCEPTANCE AGREEMENT 11-14
  15. 15. 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 acceptance 11-15
  16. 16. 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 above 11-16
  17. 17. Thought Questions• Do you read clickwrap agreements when purchasing goods through a website?• Should you be bound by click agreements if purchasing via the internet? 11-17