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Quote of the Day
“It takes two to speak the truth -- one to
speak and one to hear.”
Henry David Thoreau,
American Philosopher
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Business Law for a New Century
Meeting of the Minds
 The parties can form a contract only if
they had a meeting of the minds.
• They must understand each other and
intend to reach an agreement.
• A judge will make an objective assessment
of any disagreements about whether a
contract was made -- whether or not a
reasonable person would conclude that
there was an agreement, based on the
parties’ conduct.
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Offer
An offer is an act or statement that proposes
definite terms and permits the other party to
create a contract by accepting those terms.
 Problems with Intent
• Invitation to bargain is not an offer.
• Price quote is generally not an offer.
• An advertisement is generally not an offer.
• Placing an item up for auction is not an
offer, it is merely a request for an offer.
 Problems with Definiteness
• The term of the offer must be definite.
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UCC and Open Terms
The UCC has provisions for supplying
some missing contract terms.
 Open Price
• The UCC establishes a price, based on market
value or valuation by a neutral party.

Output and Requirements Provisions
• An output contract obligates a seller to sell all of
his output to one buyer, who agrees to buy it.
• A requirements contract obligates a buyer to
obtain all of his needed goods from the seller.
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UCC and Open Terms (cont’d)
 Delivery, Time, and Payment
• Usually, delivery is at the seller’s business,
time must be reasonable and payment is
due upon receipt of goods.
 Warranties
• An implied warranty of merchantability,
means that the goods must be of at least
average, passable quality in the trade.
• An implied warranty of fitness means the
goods are suitable for a particular purpose.
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Termination of Offers
 Termination by Revocation
• Effective when the offeree receives it.
 Firm Offers and Revocability
• Common Law Rule
– Revocation of a firm offer is effective if the offeree
receives it before he accepts.
• Option Contract
– The offeror may not revoke an offer during the
option period.
• Sale of Goods
– A writing signed by a merchant, offering to hold
an offer open, may not be revoked.
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Termination of Offers (cont’d)
 Termination by Rejection
• If an offeree rejects an offer, the rejection
immediately terminates the offer.
 Termination by Expiration
• When an offer specifies a time limit for
acceptance, that period if binding.
• If the offer specified no time limit, the offeree
has a reasonable period in which to accept.
 Termination by Operation of Law
• Death or mental incapacity of the offeror
terminates an offer.
• Destruction of subject matter terminates offer.
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Acceptance
 The offeree must say or do something
to accept.
• In a bilateral contract, the offeree generally
must accept by making a promise.
• In a unilateral contract, the offeree must
accept by performing.
• If the offer is ambiguous, the offeree may
accept by either a promise or performance.
 Mirror Image Rule (Common Law)
• Requires that acceptance be on precisely
the same terms as the offer.
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UCC and the Battle of Forms
 An offeree may include in the
acceptance terms that are additional to
or different from those in the offer.
• Additional terms are those that bring up
new issues.
– If both parties are merchants, the additional
terms will generally become part of the contract.
• Different terms are those that contradict
terms in the offer.
– The majority of states hold that different
(contradictory) terms cancel each other out.
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Communication of Acceptance
 Medium and Manner of Acceptance
• If an offer demands acceptance in a
particular medium or manner, the offeree
must follow those requirements.
• If the offer does not specify a type of
acceptance, the offeree may accept in any
reasonable manner and medium.
 Time of Acceptance: The Mailbox Rule
• An accceptance is generally effective upon
dispatch, meaning the moment it is out of
the offeree’s control.
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Promissory Estoppel
 Under the doctrine of promissory
estoppel, even if there is no contract a
promise may be enforceable if:
• The offeror makes a promise knowing the
offeree is likely to reply,
• The offeree does in fact reply; and
• The only way to avoid injustice is to enforce
the promise.
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“Vagueness or ambiguity in an offer
or acceptance guarantees problems
and may lead to litigation. The
executive or consumer who articulates
to herself precisely what she wants
and then bargains clearly for it, is likely
to spend more time doing business
and less time in court.”
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Link to the Internet
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