Shipment of Goods as Acceptance
2-206(1)(b) provides, that an offer, usually a purchase order, can
be accepted by any reasonable "medium", including the commencement of performance.
Unless otherwise unambiguously indicated, an offer to buy goods for "prompt
shipment" is to be construed as inviting acceptance either by promise or
by the act of shipment itself. Restatement 2d of Contracts sections 32
and 62 announce a similar principle. Chirelstein,
Concepts & Case Analysis in the Law of Contracts, p. 41.
Silence Not Ordinarily Acceptance
acceptance must be communicated, ordinarily silence cannot constitute an
offer to enter into a bilateral contract.
§1584.5 which reads in part: "The receipt of any goods etc. shall
for all purposes be deemed an unconditional gift to the recipient who may
use or dispose of the goods in any manner he sees fit without obligation
on his part to the sender." Note that this is a statutory exception to
the rule that use of consideration constitutes acceptance.
Termination of the Power of Acceptance
A. An offeree's power of acceptance is terminated
if he fails to accept within the prescribed period. If the offer does not
specify a particular time for acceptance, the offeree's power is terminated
if he fails to accept within a reasonable time. Reasonable time is a question
of fact depending on the circumstances existing when the offer and attempted
acceptance are made; such circumstances include the nature of the proposed
contract, the purposes of the parties, the course of dealing, and the relevant
usages of the trade. E.g., an offer to sell a fluctuating commodity,e.g.,
crude oil, is likely to have a shorter life than an offer to sell a stable
commodity, e.g., real estate.
An offer remains open until it is withdrawn
or revoked. An offer may be revoked any time prior to acceptance.
§ 1586) An offer may be revoked in any of the following ways:
(1) Express revocation, (2) implied revocation, e.g., receipt by the offeree
of reliable information that the offeror has taken action inconsistent
with the offer remaining open, (3) lapse, (4) rejection, (5) counteroffer,
(6) death of the offeror.
As a general rule the offeror is free to revoke
an offer at any time before the offeree has accepted it. Express notice
of withdrawal before acceptance is not required. It is sufficient that
knowledge of acts by the offeror inconsistent with the continuance of the
offer is brought home to the offeree. E.g., in an offer to sell Blackacre
it is sufficient that the person making the offer does some act inconsistent
with the offer such as selling it to someone else, and that the person
to whom the offer is made has knowledge of such act. There need not be an express or actual withdrawal or retraction. Once the person to whom the offer has been made knows that the property has been sold to someone else, it's too late for him to accept the offer. (Dickinson v. Dodds, 2 Ch.Div. 463 (1876).)
An irrevocable option is a contract, made for consideration to keep an
offer open for a certain period of time. Unless consideration is given the option is revocable at any time. (Rest.2d§87). An exception to the rule that an irrevocable option must
be supported by consideration is found in UCC
2-205. (Remember, the UCC only applies to sales of goods and 2-205
applies only to "merchants" [note the broad definition of "merchant" at
2-104(1)]) 2-205 is intended mainly to limit the power of an offeror
to withdraw his firm offer in circumstances in which the offeree reasonably
relies on the offer's firmness. It merely converts a common law offer into
a firm offer. However, it only applies if (1) there has actually been an
offer (2) by a merchant (3) in a signed writing (4) which gives assurance
that it will be held open.
The "Mailbox Rule"
Although revocation and rejection of an offer
are effective when received, the general rule is that a contract is made
when the acceptance is dispatched, even though the letter of acceptance
is lost and never reaches the offeror. This is the rule of Adams v.
Lindsell (K.B. 1818) 106 Eng.Rep.250. In California this rule is codified
§1583. (See Rest.2d §63) Consent is deemed to be fully communicated
when the offeree has placed his acceptance in the course of transmission
to the offeror. In other words, acceptance is effective upon dispatch.
Q. Moe offers to sell Blackacre to Curly for
$100k. The offer is made by mail. The next day, Moe mails a revocation
which arrives one day after the offer. As the postal carrier handed the
revocation to Curly, Curly handed his letter of unqualified acceptance
to the postman. Has a contract been formed?
A. No. Acceptance is effective when put out
of the possession of the offeree. Revocation is effective on receipt. Here
the revocation was received prior to the offeree putting his acceptance
out of his hands.
Softening of the Mirror
Image Rule Under the UCC
At common law, an acceptance which added qualifications
or conditions or which in any way varied from the terms of the original
offer was treated as a rejection and counter offer. This was true no matter
how trivial the qualification or condition. This was known as the "Mirror
Image Rule." The underlying rationale is that the making of a counteroffer
communicates to the offeror that the offeree does not wish to accept the
2-207 was intended to alter the "Mirror Image Rule" of the common law.
Under subdivision (1) of that section, a contract is recognized notwithstanding
the fact that an acceptance or confirmation contains additional or different
terms from those of the offer or prior agreement, provided that the offeree's
intent to accept the offer is definitely expressed and provided that the
offeree's acceptance is not expressly conditioned on the offeror's assent
to the additional or different terms. Hence, 2-207 rejects the common law
mirror image rule and converts many common law counteroffers into acceptances.
A document may be an acceptance under 2-207(1) and yet differ substantially
from the offer. 2-207(2)(b) presupposes that a contract can be formed under
2-207(1) even though the acceptance includes a term that "materially alters"
the offer. Remember, Article 2 of the UCC only applies to contracts for
the sale of goods. (UCC
2-102). If a contract is for anything other than the sale of goods
the Mirror Image Rule will still apply. (Rest.2d §59)
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