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Questions and Answers
Which mode of offer termination involves a withdrawal by the offeror?
Which mode of offer termination involves a withdrawal by the offeror?
A counteroffer does not terminate the original offer.
A counteroffer does not terminate the original offer.
False
What is the significance of the 'mailbox rule' in contract acceptance?
What is the significance of the 'mailbox rule' in contract acceptance?
Acceptance is valid when dispatched, but rejections are only effective when received.
An offer can be terminated by the death or _______ of either the offeror or offeree.
An offer can be terminated by the death or _______ of either the offeror or offeree.
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Match the following cases with their key outcomes:
Match the following cases with their key outcomes:
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What determines whether an acceptance is considered within a 'reasonable time'?
What determines whether an acceptance is considered within a 'reasonable time'?
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Rejections under the mailbox rule are valid as soon as they are sent.
Rejections under the mailbox rule are valid as soon as they are sent.
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In the context of offers, what happens if an offeree sends a rejection but has already mailed an acceptance?
In the context of offers, what happens if an offeree sends a rejection but has already mailed an acceptance?
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What is the outcome when an acceptance is mailed before a revocation is received?
What is the outcome when an acceptance is mailed before a revocation is received?
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Death of the offeror always terminates an outstanding offer.
Death of the offeror always terminates an outstanding offer.
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What constitutes an irrevocable offer under U.C.C. § 2–205?
What constitutes an irrevocable offer under U.C.C. § 2–205?
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In the case of Dickinson v. Dodds, the offeree's knowledge of the offeror's sale to someone else is considered as __________.
In the case of Dickinson v. Dodds, the offeree's knowledge of the offeror's sale to someone else is considered as __________.
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Match the terms with their definitions:
Match the terms with their definitions:
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What is required for an option contract to be enforceable?
What is required for an option contract to be enforceable?
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In Petterson v. Pattberg, partial performance constitutes acceptance.
In Petterson v. Pattberg, partial performance constitutes acceptance.
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What happens if a buyer accepts an offer after learning the seller has sold the property to someone else?
What happens if a buyer accepts an offer after learning the seller has sold the property to someone else?
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In Minnesota Linseed Oil Co., the court found that acceptance was outside a __________ time.
In Minnesota Linseed Oil Co., the court found that acceptance was outside a __________ time.
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Match the following cases with their key principles:
Match the following cases with their key principles:
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What is the maximum period for which a firm offer can be irrevocable under U.C.C. § 2–205?
What is the maximum period for which a firm offer can be irrevocable under U.C.C. § 2–205?
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A verbal promise to keep an offer open is legally binding.
A verbal promise to keep an offer open is legally binding.
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What must a seller do to effectively revoke an offer before buyer acceptance?
What must a seller do to effectively revoke an offer before buyer acceptance?
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What does U.C.C. § 2–204 emphasize regarding contract formation?
What does U.C.C. § 2–204 emphasize regarding contract formation?
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In Klocek v. Gateway, Inc., the court ruled that the seller's additional terms were automatically part of the contract.
In Klocek v. Gateway, Inc., the court ruled that the seller's additional terms were automatically part of the contract.
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What approach does the Seventh Circuit take regarding in-the-box terms in consumer contracts?
What approach does the Seventh Circuit take regarding in-the-box terms in consumer contracts?
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Under U.C.C. § 2–205, a firm offer does not require __________ if it is made by a merchant in a signed writing.
Under U.C.C. § 2–205, a firm offer does not require __________ if it is made by a merchant in a signed writing.
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In which scenario does U.C.C. § 2–207 apply?
In which scenario does U.C.C. § 2–207 apply?
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A unilateral offer is irrevocable once performance has begun according to the classical rule.
A unilateral offer is irrevocable once performance has begun according to the classical rule.
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What is one key difference between Hill's and Klocek's treatment of shrinkwrap terms?
What is one key difference between Hill's and Klocek's treatment of shrinkwrap terms?
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Both parties must be __________ for additional terms to automatically become part of the contract under U.C.C. § 2–207.
Both parties must be __________ for additional terms to automatically become part of the contract under U.C.C. § 2–207.
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What does the Klocek decision suggest about the buyer's status in typical consumer transactions?
What does the Klocek decision suggest about the buyer's status in typical consumer transactions?
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The mailbox rule applies to rejections in contract law.
The mailbox rule applies to rejections in contract law.
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Identify one reason the court might reject automatic enforcement of shrinkwrap terms.
Identify one reason the court might reject automatic enforcement of shrinkwrap terms.
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Clear termination of an offer can occur through rejection, counteroffer, __________, or death/incompetency.
Clear termination of an offer can occur through rejection, counteroffer, __________, or death/incompetency.
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What aspect of contract law does the case of Dickinson v. Dodds focus on?
What aspect of contract law does the case of Dickinson v. Dodds focus on?
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Match the following terms with their definitions:
Match the following terms with their definitions:
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Study Notes
Offer Termination
- Offers can end through rejection (including counteroffers), expiration (fixed time or reasonable time), revocation by the offeror, or death/incompetence of parties.
- A rejection is only effective when received by the offeror, not when sent. Acceptance, however, often takes effect when sent (mailbox rule).
- A counteroffer rejects the initial offer, unless the original offeror revises or accepts it.
- Determining if a response is a rejection or an inquiry depends on the communication's content and context.
Case Studies (Rejection and Counteroffers)
- Minnesota Linseed Oil Co. v. Collier White Lead Co.: Acceptance by telegraph wasn't timely due to significant market fluctuations. Acceptance is valid when sent, but timeliness depends on circumstances, especially market conditions, goods' nature, and past deals. The court ruled no contract formed.
- Kempner v. Cohn: A buyer's acceptance was timely and deemed effective upon dispatch, even if sent before revocation reached the offeror, and revocation had occurred before the acceptance arrived. This case reaffirms the mailbox rule for acceptance. Offers can be revoked before acceptance is effectively sent.
- Dickinson v. Dodds: Knowledge that the offeror sold to another party effectively revokes the offer, even if the stated time hasn't passed yet. A promise to keep an offer open isn't binding without separate consideration (an option contract).
Case Studies (Unilateral Contracts)
- Petterson v. Pattberg: A unilateral contract offer can be revoked before the offeree completes the requested performance. The offeror's refusal to take the tendered payment was considered valid revocation. This demonstrates a strict classical approach to unilateral contract performance.
- R2d §§ 45, 62: Partial performance in a unilateral contract creates an option contract (making the offer irrevocable) or a binding promise. If an offer can be accepted by promise or performance, starting performance may be considered acceptance.
Case Studies (Counteroffers)
- Minneapolis & St. Louis Ry. Co. v. Columbus Rolling-Mill: A counteroffer (ordering different quantities of goods) terminates the original offer. A subsequent attempt to accept the original terms is ineffective unless the offeror renews them.
- Livingstone v. Evans: A counteroffer that implicitly requests lower price can be seen as an inquiry, and a response stating the offeror "cannot reduce price" is considered a revival of the original offer, meaning the original offer is still valid. This contrasts with the Minneapolis case, as it shows that the offeror can explicitly choose to renew the offer.
Option Contracts and Firm Offers
- Option Contracts: A separate agreement to keep an offer open for a specified time, supported by independent consideration.
- U.C.C. § 2–205 (Firm Offers): A signed writing by a merchant promising to hold an offer open is irrevocable for the stated period (or a reasonable time, maximum 3 months). No consideration is needed if a merchant provides a signed writing.
- CISG Article 16(2): A similar rule exists relating to international sales (CISG), with an offer becoming irrevocable if it indicates irrevocability or the offeree relies on it.
Battle of the Forms (U.C.C. § 2–207)
- Common Law: A variance from the offer is a rejection/counteroffer, leading potentially to the "last shot" scenario.
- U.C.C. § 2–207: Introduces a more flexible approach to the sale of goods, allowing an acceptance with additional terms to still be an acceptance. It addresses the use of different terms from the offer that are NOT material alterations.
- C. Itoh & Co. v. Jordan Int'l Co.: This case illustrates how a seller's conditional acceptance under § 2–207(1) (not an acceptance) creates a contract by conduct under § 2–207(3), excluding any new terms on which there was no agreement.
- Klocek v. Gateway, Inc.: Contrasting with Hill v. Gateway, this holding maintains the buyer as the offeror in consumer transactions and deems extra terms in the box as proposals instead of acceptance until explicitly assented by the buyer. This shows how contract formation and consumer protections are considered very differently between these two cases.
Shrinkwrap, Clickwrap, and In-the-Box Terms
- Shrinkwrap Terms: Extra terms included with the product, known only after purchasing. The buyer assenting is crucial.
- Hill v. Gateway 2000, Inc.: Keeping the product satisfies the acceptance, meaning the in-the-box offer is accepted (regardless of new terms). Hill v Gateway held that sellers are masters of the offer, and those new terms are considered part of the initial offer.
- Klocek v. Gateway, Inc.: The buyer's purchase of the product is considered the offer, and the seller's shipping or delivery constitutes acceptance. Extra/new terms delivered later generally require explicit assent. Klocek v Gateway held that buyers are generally offerors, and sellers acceptance is merely the delivery of the product. Terms provided later under these circumstances generally do not become part of the contract unless explicitly assented to by the buyer.
Key Takeaways
- Various factors can impact the validity of offers and acceptance—revocation, counteroffers, and timing are crucial.
- Rules surrounding unilateral contracts have evolved to offer more protection and fairness to offerees.
- U.C.C. § 2–207 modernizes the "battle of the forms" for goods, differing from the common-law mirror-image rule.
- "Shrinkwrap" contracts have nuanced interpretations related to how consumers respond, with the courts often differing whether acceptance implicitly occurs by keeping the product or explicitly.
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Description
Explore the nuances of offer termination in contract law, focusing on how offers can end through rejection, expiration, or revocation. This quiz examines key case studies on rejections and counteroffers, shedding light on crucial legal principles such as the mailbox rule and timely acceptance.
