02 Oct Make Me An Offer I Can’t Refuse
Polly the plaintiff hires Dan the defendant to paint her house. If you are a 1L student or are studying for the FYLSE you are probably sick and tired of hearing the ongoing struggle of Polly the plaintiff. This poor thing will never get her house painted, there is always something coming up and something going wrong!
I believe that the repetitive nature of the painter hypothetical often causes us as students to become complacent in our offer discussion. We get so bored with the same thing that we stop listening and issue spotting. We quickly see/hear the hypo and move on. We throw down our standard memorized rule statement for offer but never take the time to actually analyze our discussion.
This, is a grave mistake. Making sure that you clearly identify the offer and the small nuances to the offer is crucial. The offer is the first step and if you get this step wrong your entire analysis will go off the rails.
Under Common Law an offer is an objective manifestation of an intent to be bound to certain and definite terms communicated to an identified offeree. The certain and definite terms required in an offer under Common Law are often memorized through the use of the acronym, QTIPS.
- Q – Quantity
- T – Time for Performance
- I – Identity of Parties
- P – Price
- S – Subject Matter
Uniform Commercial Code
The UCC holds that an offer must contain essential terms; identification of the parties, subject matter, and quantity (there is an exception when dealing with requirement and output contracts). As you can see, the UCC varies from the Common Law requirements. Therefore, if you do not identify the governing law correctly then you will miss out on key discussable issues that could potential be present such as time for performance. The UCC holds that if the contract fails to state a time for performance the courts will generally imply a reasonable time; this would not be the case under Common Law.
I couldn’t in good faith move on from here without a small bit on hybrid contracts. The majority rule concerning hybrid contracts is the predominate factor test which asks “What is the predominate factor in this agreement?” If you are given specific percentages or amounts this should clue you as to what the graders are looking for. If your fact pattern says: “Bob and Jan entered into an agreement for the purchase and installation of flooring. The flooring would consist of 80% of the total contract price.” This should be a clear indicator for you that the installation is really just a small portion of the agreement and the flooring is the predominate factor. For bonus points you can bring up the minority rule in Graveman, stating, where the goods portion of the contract is governed by the UCC and the services component is governed by the common law.
A unilateral contract will be identified in the offer. If the offer states that the only way to accept is by performance, then this is a unilateral contract. Remember the offeror is the master of the offer and can request acceptance by performance of an act rather than a return promise. If you do not clearly identify this requirement in the offer then your acceptance discussion will be wrong.
Let’s try an MCQ real quick!
On July 1st, after hearing that the buyer was going to attend medical school, the seller sent the buyer a letter offering to sell his old medical school books. The buyer wrote back on July 8th and told the seller he would buy the books for $100 if the seller delivered them to his apartment on September 1. On August 1st, the buyer decided that he did not want to go to medical school after all and wrote the seller a note telling him that he was no longer interested in buying the law books. He was about to go to the post office to mail it when the seller knocked on his door, the seller said, “I’ll bring you those law books tomorrow. I’ll just have to borrow a friend’s motorcycle to transport them.” The buyer said, “Never mind. I don’t want them,” and handed the seller the note that he had written but not mailed. The sellers statement on August 1st that “I’ll be bringing you those medical books tomorrow,” was probably:
A. An offer
B. A ratification of the acceptance that was mailed on July 8th but was never delivered to the buyer
C. An acceptance
D. Commencement of performance
An offer for a bilateral contract may only be accepted by a promise to perform (keep in mind that in this type of contract beginning to perform is not suitable acceptance). Now take your governing law identification and merge it with what you know about bilateral contracts. Under the UCC an offer to buy goods for prompt shipment allow for acceptance by a prompt promise to ship or by shipment of conforming or non conforming goods (remember if nonconforming goods are shipped this is an acceptance and a breach at the same time).
How does the identification of a unilateral contract make a difference v. a bilateral contract?
Let’s Practice June 2005:
Buyer manufactures mattresses, which feature an outer layer composed of a cotton material called “batting.” Unexpectedly, Buyer’s supply of batting ran out, which brought the entire production line to a halt at a time when Buyer was trying to fill a large, special order from Sleepco, one of his customers. Buyer’s regular supplier of batting refused to deliver any more batting because Buyer was behind on his payments to the supplier.
On May 1, Buyer telephoned Cotton Co. and told Cotton Co. that he urgently needed a large bale of batting and that he was willing to pay “top dollar” if Cotton Co. would deliver the bale of batting by the end of the day.
On May 1, Cotton Co. delivered the bale of batting and told Buyer it would send him Cotton Co.’s invoice for $5,000 later in the week. Buyer was upset because the price was about 30% higher than that charged by his regular supplier but, because of his urgent need, Buyer opened the bale and began using the batting to make mattresses.
On May 2, at a time when Buyer had used about 5% of the batting, Sleepco called and cancelled the order. This cancellation was such a major blow to Buyer’s financial condition that he announced that he would immediately close his manufacturing plant.
On May 5, Cotton Co. learned that, in fact, Buyer had been insolvent for the past 60 days.
On May 6, Cotton Co. demanded that Buyer either pay the invoice or return the unused part of the bale of batting immediately. Buyer refused, asserting that he and Cotton Co. had never entered into an enforceable contract, and informed Cotton Co. that he had sold the remaining batting to another mattress manufacturer.