I. MUTUAL ASSENT
The formation of a K (normally) requires a bargain. R2K § 17(1). A bargain is an agreement to exchange
promises or to exchange a promise for a performance or to exchange
performances. R2K § 3.
A. The
Objective Test. The courts apply an
objective test (manifestation of
mutual assent) to determine whether there has been an
offer or an acceptance. What the
parties subjectively intended does not matter.
Rather the courts consider "would a reasonable person, given the
facts and circumstances, have understood a bargain was formed?"
1.
Subjective, unstated intent is irrelevant. Embry
"Neither the real nor the apparent intention that a promise be
legally binding is essential to the formation of a contract." R2K § 21.
2.
Contract enforceable notwithstanding:
1) party claims he is drunk, 2)
thought it was a joke. Lucy v.
Zehmer If a K has but one
reasonable meaning, a court will enforce it despite the parties' hidden
intentions. R2K § 71.
3.
A court will not enforce an agreement where the P ought to have understood
that the offerees did not realize they were entering into a legally enforceable
deal. Cohen & "social
dating case" Promissory
Estoppel: promise made, I relied on it,
it was reasonable, it would be unfair not to enforce the promise.
B. The Mechanics
of Offer and Acceptance
1.
Offer - creates the
power in the offeree to make a contract between the parties by an appropriate
acceptance.
To have a valid contract,
ordinarily? one party must make an offer which is conditional on receipt
by the offeror of some act or promise by the offeree, and the offer must be
accepted as to all its terms by the offeree.
An offer is a manifestation of
willingness to enter into a bargain, so made as to justify another person in
understanding that his assent to that bargain is invited and will conclude
it. R2K § 24.
a. An invitation to negotiate does not
constitute an offer. Fisher
b. If the other person has reason to know that
the person making the "offer" does not intend it as an expression of
his fixed purpose until he has given a further expression of his assent, no
offer has been made. Lonergan, R2K § 26.
c. Whether an offer has been made is to be
determined from the writings of the parties plus all of the surrounding
circumstances. Southworth Surrounding circumstances may alter
the normal meaning of words. For
example, words may sound like an offer but clearly be made in jest. 999 bananas car purchase case.
A. Requirements: (1) manifestation of present contractual
intent, (2) certainty and definiteness
of terms, (3) communication to the
offeree. R2K § 23. Thus, there
is no valid offer where A prepares an offer to B, intending to mail it, but
never does.
B.
Some Guides.Southworth
Would a reasonable person in the shoes of the offeree feel that if he
accepted the proposal, a contract would be complete? This is the most important test of all.
(1) To whom made. Proposals made to the public or a large
group of persons (such as in advertisements) are more likely to be construed as
mere invitations to make an offer.
Note: a letter sent to more than
one person may constitute an offer. Jenkins
Towel, Southworth
Multiple Acceptance
Problem - reasonable person who receives offer form letter must realize D does
not intend to sell his land dozens of times over. Lonergan A letter
which refers to a potential sale to a third party may not be construed as a
firm offer to the addressee.
(2) Definiteness and certainty of terms. The more definite the terms, the more likely
an offer has been made. This is a
separate requirement for finding a valid offer. An advertisement offered specific merchandise at a stated
price to the first person to present himself.
There was no room for negotiation as the offer was clear, explicit, and
definite. "Fur for sale" case. Lefkowitz
(3) Language used. The words or conduct used in the proposal
must be words of offer rather than preliminary negotiation. "I bid" suggests an offer. "Are you interested?" suggests
preliminary negotiation. "I am
offering" vs. "I am asking"
Courteen Seed. Note: such words are not essential. Fairmount Glass, Southworth.
If you ask for a firm
offer, and back comes a price, a reasonable person would understand that an
offer has been made. (Fairmount
Glass) Although, as a general
rule, price quotations are not offers, each case must be assessed on its own
particular facts.
Commit to memory: An offer is the manifestation of
willingness to enter into a bargain, so made as to justify another person in
understanding that his assent to that bargain is invited and will conclude
it. R2K § 24.
2) INDEFINITENESS
a) The
requirement of definiteness and certainty of terms. The terms of the offer must be sufficiently
clear and complete so that the court can determine what the parties intended
and can fix damages in case of nonperformance.
[Restatement (Second) 32]
b) The essential terms. A contract must cover (expressly or impliedly) the following four
essential terms: (1) parties to the
contract; (2) the subject matter of the
contract; (3) time for performance; and
(4) price.
c) Implication of
reasonable terms. The essential
terms must either be expressly stated in the contract or be capable of reasonable
implication from the agreement. The
general trend of the courts is to adopt a policy of liberal construction so as
to uphold the reasonable expectations of the parties; thus, the court will
usually imply reasonable terms (i.e., implied-in-fact terms from the dealings
and relationship of the parties) where none are expressly covered by the
parties.
(1) Example -
price.
(a)
Where price is completely omitted. Where the parties have made no provision for price but a charge
was intended, the court will normally imply a "reasonable price"
(e.g., fair market value of goods).
(b)
Where the price stated is indefinite. Often, however, where the parties have made some attempt to
include terms on the price but it is stated in such a vague way as to
unintelligible, the courts will often refuse to imply a reasonable price, and
the contract will be unenforceable due to lack of certainty on an essential
term. For example, A agrees to employ B
"at not exceeding $300 per week."
d) THE Uniform
Commercial Code. In contracts
for the sale of goods, the omission of one or more essential terms does not
render an offer invalid, as long as it appears the parties intended to make a
contract and there is a reasonably certain basis for giving an appropriate remedy. [UCC 2-204]
In effect, the Restatement (2nd) 32 takes
this same approach with respect to all contracts.
2. ACCEPTANCE
Generally.
In order for a contract to exist, there must be an acceptance of the
offer. The acceptance (assent to the
offer) must be in the same manner requested or authorized by the offeror. The general rule (there are exceptions) is
that the offer may be accepted only by the person to whom it is made. Unless stated otherwise, offeror expects
offeree to communicate acceptance.
(Acceptance only by invitation of the offeror, power of acceptance only
resides with person to whom offeror intends it to reside, acceptance = consent
to terms of offer).
A. Bilateral contracts. Here the mere giving of the counter-promise to the offeror is all
that is required. The objective theory
of contract prevails, and whether or not an acceptance has been given depends
on how a reasonable person would interpret the words or conduct of the offeree. But the offeree must have knowledge of the offer,
and notice of acceptance to the offeror is generally required (there are
exceptions, such as where the offeror indicates that no notice is required).
B. Unilateral
contracts. A unilateral
contract may be accpeted only by doing the act requested by the offeror, with
knowledge of the offer and intent to accept it. Normally notice to the offeror of acceptance is not
required. There are exceptions, such as
where the offeror requires that notice be given or where the offeror has no
reasonable means of knowing that the requested performance has been rendered,
in which case there is a requirement that notice be given within a reasonable
time after performance.
C. The offeror
has complete control over an offer. He
sets the terms for acceptance, including the time, manner of communication,
and method of acceptance. A
contract where one of the required signatories never executes the document is
not enforceable. LaSalle Offeror is the master of his offer; if he
specifies exactly the mode that must be used for acceptance, that mode must be
used (at least for Wirtz' class).
D. Time for
acceptance -- The power to create a contract by acceptance terminates at
the time specified in the offer, or, if no time is specified, at the end of a
reasonable time. Ever-Tite Roofing
E. Partial
shipment of a customer's order does not constitute acceptance of the
order. Corinthian Pharmaceutical
Systems "I hear you" 
I accept.
F. Where an
offeree fails to comply with the suggested method of acceptance, but instead
begins performance, a contract may be formed.
In Allied Steel, the suggested method of acceptance was not the
only method since the words of the purchase order said "should"
(softer than shall). If the offeree
failed to communicate its acceptance in the manner required by the offeror,
then even though the offeree commenced performance, there may be no valid
acceptance. But in this case,
performance was commenced with the full knowledge, consent, and acquiescence of
the offeror. Offeror thus waived his
objection. Note also that UCC
2-206(1) provides that unless otherwise unambiguously indicated by the language
of the offer or by the circumstances, an offer to make a contract is to be
construed as inviting acceptance in any manner and by any medium
reasonable under the circumstances. If
the offeror prescribes an exclusive manner of acceptance, an attempt on the
part of the offeree to accept the offer in a different manner does not bind the
offeror.
G. Revocation
prior to communication of acceptance.
No contract arises if the offeror revokes the offer after the offeree
manifests an intent to accept it but before the acceptance is communicated to
the offeror. Hendricks v. Behee Notification to the other party's agent
counts, not your own agent. No
consideration to form an option.
DISTINGUISH: "manifestation
of intent to accept" with "acceptance-communicated"
H. Unilateral v.
Bilateral contracts. The legal distinction
between the two affects revocation (i.e., if all the offeror wants is a return
promise, and such a promise is given, revocation becomes impossible; but if the
offeror requests an act as an acceptance, then the act itself must be performed
or the offeror can still revoke the offer).
(1)
Policy. Where the offer
is unclear as to whether a bilateral or unilateral contract is contemplated, it
is the policy of the law to construe it as an offer for a bilateral
contract. [Restatement 31]
(2)
Rationale. A bilateral
contract accords immediate rights and complete protection to both parties since
a contract arises as soon as the offeree promises to perform; whereas an offer
for a unilateral contract does not ripen into a binding contract until the
performance is actually rendered.
(3)
UCC position. The UCC accepts
this same policy. The UCC states that
unless an offer to buy goods expressly limits acceptance to shipment of the
goods, it is to be construed as inviting acceptance either by shipment or by a
prompt promise to ship the goods. [UCC
2-206].
I. Commercial
Advertisement of a reward constitutes a unilateral contract offer. P's
buying and using the medicine was the act called for. Notification is not necessary in this situation, since D could
hardly have expected all those using the product to give notification of
acceptance. No multiple acceptance
problem - Carbolic Smoke Ball could pay each 100 pounds.
J. Knowledge
of offer. A person whose act
constitutes the performance requested in an offer of which the person was
unaware will not be given the benefits of that contract. Similarly, a person will not be held bound
to accepting an offer he did not hear. Glover Partial reliance is sufficient - e.g.
informant who gives info. to police to avoid arrest but aware of reward has a
right to collect the reward money.
K. Acceptance
by performance with knowledge. A
person may accept an offer by performing, even without telling the offeror of
the intent to accept, where offeror offers a unilateral contract and can see
that performance has been made on the faith of his offer. Award of merger commission to agent. Industrial
America
L. The emerging
theory (see UCC 2-206(1)) is not to characterize contracts as bilateral or
unilateral (for acceptance purposes) but to allow acceptance (unless otherwise
specified) by any reasonable means under the circumstances.
M. An offer that
invites acceptance by performance will be deemed accepted by such performance
unless the offeree manifests his intent not to accept. No reliance on the terms of the contract is
necessary. Industrial America,
(Court disposes of issue as a matter of law, no remanding to determine if any
reliance).
N. The Mailbox
Rule: R2K § 63(a): Unless the offer provides
otherwise, an acceptance made in a manner and by a medium invited by an offer
is operative and completes the manifestation of mutual assent as soon as put
out of the offeree's possession, without regard to whether it ever reaches the
offeror. For e-mail, offer is accepted
when received, not transmitted.
O. The subjective
intent of offeree is immaterial. If a
reasonable offeror would be justified in relying upon the apparent intent of
the offeree as manifested by his conduct, then "acceptance" will be
deemed to have occurred. Further, if
the offeree intends to accept the offer but fails to communicate such intent in
a manner which a reasonable offeror would understand as acceptance, no contract
is formed.
P. Where the
offeree exercises dominion over things which are offered to him, such exercise
of dominion in the absence of other circumstances showing a contrary intention
is an acceptance. R2K § 72. Russell
Q. If
circumstances indicate the exercise of dominion is tortious, the offeror may at
his option treat it as an acceptance, regardless of offeree's stated intention
not to accept.
R. R2K § 69: "An offeree who does
any act inconsistent with the offeror's ownership of offered property is bound
in accordance with the offered terms unless they are manifestly
unreasonable. But if the act is
wrongful as against the offeror it is an acceptance only if ratified by
him."
S. The offeror
cannot force the offeree to reply by wording his offer: "Your silence will be an acceptance of
my offer." R2K § 72. However, silence may
constitute an acceptance if by previous dealings the parties have established a
pattern of accepting by silence. R2K § 69.
T. Because the
goods are specially made and not suitable for sale to others, they fall within
an exception to the Statute of Frauds and no written contract is
necessary. An implied contract may
arise based on the course of dealings between two parties even though there is
no written contract. Smith-Scharff
Paper Co.
2B. THE NATURE
AND EFFECT OF COUNTEROFFER. An offer
may be terminated by act of the parties or by rejection by the offeree. A rejection by the offeree terminates the
offeree's power of acceptance. If the
offeree later attempts to accept the offer notwithstanding the prior rejection,
his "acceptance" is a mere counteroffer.
1)
How effected. A rejection may
occur by either words or conduct, or by a qualified acceptance (which amounts
to a counteroffer and therefore a rejection of the offer). Any rejection terminates the power to accept
and the contractual dealings.
2)
Equivocation. An acceptance
by the offeree must be unequivocal and unqualified. If a purported acceptance is qualified, it
is legally insufficient as an acceptance.
Instead, a qualified acceptance will act as a counteroffer, which will
operate as an implied rejection of the original offer. However, the line between a
"qualified" and an "unqualified" acceptance is not always
clear.
3)
Conditional acceptance.
An acceptance which includes any term or condition which was not part of
the original offer is ordinarily considered a "qualified" acceptance
and thus an implicit rejection of the offer.
However, if the condition was implicit in the offer or the if the
offeree had a legal right to insist upon the condition under the terms of the
offer, the acceptance will be considered an "unqualified"
acceptance. For example, X accepts Y's
offer to sell land but includes a condition that Y give X good title (this is
implied in Y's offer).
4) "Please enter an order for 2000 lbs iron rails plus
splices for those rails at your current price" would be viewed as a
counteroffer. Better to phrase as
"I accept" and "Please advise..."
5) "Grumbling" acceptances. Acceptances which express dissatisfaction
but place no condition on the acceptance generally are considered
"unqualified." For example,
"Ship the goods on the 10th, although I wish you could deliver
sooner." When a change or
modification suggested in the offeree's reply is a demand for more favorable
terms, then it goes beyond the mere "grumbling" acceptance and
operates as an implied rejection of the offer.
6) Inquiries and requests. Acceptances which include inquiries or
requests by the offeree for a better deal generally do not impair the original
offer.
7)
In transactions outside UCC 2-207, an acceptance in which the terms
are at variance with the offer constitutes a rejection, and puts an end to the
negotiations unless the original offeror assents to the modifications.
ACCEPTANCE UNDER THE UCC.
Additional terms.
Section 2-207 of the Code provides that an acceptance operates as such
even if it contains additional terms different from those proposed by the
offeror (unless the acceptance states that it is conditional on the assent to
the additional terms, in which case the offeror would have to make a specific
acceptance of the additional terms for a contract to exist). FIRST, go to 2-207-1. If no, go to 2-207-3. If yes, go to 2-207-2(a),(b).
2-207-2(a) The
additional terms are to be construed as proposals for additions to the
contract. (If as P claims the parties
reached an oral agreement, their contract is governed by UCC 2-207(1), which
means the additional terms contained in D's acknowledgement would be treated as
proposals and would become part of the contract unless they materially altered
it. Whether the terms materially
altered the oral agreement is a question of fact to be determined at trial. Pevar)
2-207-2(b) Where
the contract is between merchants, these additional terms are part of the
contract, unless (1) the offer expressly limits acceptance to the terms
of the offer, (2) the additional terms materially alter the agreement, or (3)
the offeror gives notification of objection to the new terms within a
reasonable time. (These items may be
question for jury to decide.)
8.
A clause that conditions acceptance on assent to additional or different
terms leaves the parties without a contract as of the time the writings are
changed. There must be express assent
to the additional or new terms. Pevar
v. Evans Product
9.
Under UCC 2-207(3), the parties may yet have an agreement based on their
conduct, even when there is no oral or written contract. In this case, the parties continued dealing,
which means they recognized the existence of a contract. The contract would consist of the terms on
which the writings agree, plus those terms supplied by the "gap
filler" provisions of Article Two of the UCC. Pevar v. Evans Product
Co., UCC §§ 2-314, 2-315.
(Warranty disclaimer drops out because no agreement. Therefore, go to gap fillers by 2-315.)
10. When two parties rely on
self-serving forms drafted by attorneys instead of actually working out a
mutually satisfactory agreement, the UCC attempts to enforce an agreement in
spite of conflicting forms probably implements the parties' true intentions,
but a better, if unrealistically idealistic, approach would be for parties to
commercial transactions to negotiate sufficient detail to come up with
consistent terms.
11.
UCC does not apply to problems dealing with securities, real estate.
12.
If I tell you my purpose in using the materials I am buying, I may
create additional responsibilities for you.
UCC 2-315.
13. R2K § 40: Where buyer
has a rejection followed by acceptance, the first one the offeror receives is
binding. Farnsworth argues that the
first manifestation should be binding, to prevent speculation that waits for
events to change and then telegrams response.
3. TERMINATION OF
THE OFFER. An offer may no
longer be effectively accepted if the offeree's power of acceptance has been
terminated by an act of the parties or by operation of law.
A. TERMINATION BY
ACT OF THE PARTIES.
(1) Termination
by non-acceptance in the allotted time period -- R2K § 36 provides that an offeree's power of acceptance may be terminated by
(1) a rejection or counteroffer by the offeree, or (2) by lapse of time, or (3)
revocation by the offeror prior to acceptance, or (4) death or incapacity of
the offeror or offeree. In addition, an
offeree's power of acceptance is terminated by the nonoccurrence of any
condition of acceptance under the terms of the offer.
(2) Revocation of
the offer by the offeror. Where
the offeror communicates a revocation before an acceptance by the offeree, the
offer is terminated.
(a) Requirements
for effective revocation. Assuming
the offer can be revoked, the following are required to make an effective
revocation:
1) Words or conduct. The offeror's words or conduct must be
sufficient for a reasonable person to interpret them as revocation. Neither the Statute of Frauds nor contract
law requires the revocation of an offer be in writing.
2) Communicated to the offeree. The revocation must be communicated to the
offeree (the offeror must at least make reasonable efforts to communicate the
revocation).
3) Effective when received. The revocation is generally held to be
effective when received. [Restatement
(Second) 41] A few states
hold that it is effective when dispatched.
(3) Communication
from a third party. Dickinson v.
Dodds Revocation can come indirectly (rather than directly from the
offeror), such as by a third person, or simply from the circumstances that
would put a reasonable person on notice that the offeror had revoked the
offer. R2K § 42: where an offer is for the
sale of land, if offeree acquires reliable information of sale or intention to
sell to someone else, before he has accepted, the offer is revoked. R2K § 43: An
offeree's power of acceptance is terminated when an offerer takes definite
action inconsistent with sale to offeree and the offeree acquires reliable
information to that effect.
B. TERMINATION BY
OPERATION OF LAW.
(1) By
the lapse of time. The offer lapses
by operation of law after expiration (and before acceptance) of whatever period
of time was specified in the offer.
(a) Computation of time. The period begins to run from the date of
actual receipt by the offeree. [Restatement
(Second) 51]
(b) Where no time period specified. Where no specific time period is specified,
then the offer lapses after a reasonable period of time. Consideration is given the subject matter
involved and all other relevant circumstances in determining what is a
reasonable time.
(c) Offers revocable where specified to remain
open. Note that just because the
offer says it will remain open until some date does not mean that the offeror
cannot validly revoke the offer before acceptance.
(2) By death or destruction of the subject
matter of the offer.
(3) By death or insanity of the offeror or
offeree.
(4) By
the intervening illegality of the proposed contract. A offers to loan B $1,000 at 10%; state law
is passed that 8% interest is the maximum rate that can be charged.
4. IRREVOCABLE
OFFER: NONDESTRUCTIBLE POWER OF
ACCEPTANCE
General Rule: An offer is
revocable even if the offeror expressly promises not to revoke or gives a
definite period during which the offer is to remain open. There are a number of exceptions to this
rule, however.
1. Options to purchase, if based on valid consideration,
are contracts which may be specifically enforced (they are in effect
irrevocable offers). One dollar is
valid consideration for an option, provided the dollar is paid or
tendered. Board of Control Eastern
Mich. Univ
2. A written
acknowledgement of receipt (recital) of the consideration merely creates a
rebuttable presumption that consideration has actually passed. Board of Control of Eastern Mich. Univ.
v. Burgess Some courts would say a
recital is enough, even if no consideration is paid. R2K § 89 takes the position that an option in writing states
that consideration has been received is binding even if consideration has not
actually been paid.
3. However, that
which purports to be an option but fails for lack of valid consideration is
still a simple offer to sell. An option
is a contract collateral to the offer to sell, making the offer irrevocable for
a specified time. A failure of
consideration therefore affects only the collateral option contract, not the
underlying offer. The question then
becomes whether offeror revoked simple offer prior to acceptance.
A. EXCEPTIONS TO
THE GENERAL RULE.
(1) Firm offers under the UCC. A signed, written offer to buy or sell
goods, which states that it will be kept open for a definite time (or if no
time is stated, for a reasonable period of time) may not be revoked for
this period (so long as the period is no longer than three months). [UCC 2-205] - does not apply to REAL ESTATE.
(2)
Offers for consideration.
If the offeree has given any consideration (even nominal consideration)
for the offer, the offer then becomes an option and is not revocable for the
period stated therein. [Restatement
(second) 24A]
Recitals of consideration. Where there is a recital that consideration
has been received for the option, the general rule has been that this recital
is not conclusive (the courts reserve the right to see if the consideration was
actually paid). But R2K § 89 provides that an offer is binding as an option if it is in writing,
signed by the offeror, and recites a purported consideration.
(3) A conditional exercise of an
option does not preclude a later unconditional exercise of the option within
the option period. Counteroffers do not
terminate the power to accept within the option period. Humble Oil v. Westside Investment
(4) Rejection does not terminate the
option power. R2K § 37.
(5)
Revocation of offer for a unilateral contract after past partial
performance. Ordinarily, a
unilateral offer may be revoked at any time prior to the offeree's completing
the act of acceptance called for in the offer.
But a difficult problem is presented where the act requested will take
some time to complete and the offeror attempts to revoke after the offeree has
started performance. Under modern
rules, where the offeree has rendered substantial part performance, courts will
not permit revocation of the unilateral offer by the offeror.
a) An offer of a
unilateral contract can be revoked at any time prior to performance, even if
the offeror knows that the offeree intends to perform. Petterson v. Pattberg. (On exam, answer quoting arguments under
both rules) Even under the modern rules
disallowing revocation with substantial part performance rendered by the
offeree, the result in this case would be the same since the act required for
acceptance was payment, and revocation came before payment.
b) Part performance of
the consideration may transform the unilateral contract into an option
contract, and thus make it irrevocable during the time stated. Where an offer invites an offeree to accept
by rendering a performance (unilateral) and not a promissory acceptance
(bilateral), an option contract or contract with a condition is created when
the offeree begins the invited performance or tenders part of it. The condition is full performance by the
offeree. What constitutes part
performance will vary from case to case.
Thus, until there is action by the offeree - a partial performance
pursuant to the offer - the offeror may revoke, even if his offer is an
exclusive agency or an exclusive right-to-sell. Marchiondo v. Scheck
c) Thus, until there is
action by the offeree - a partial performance pursuant to the offer - the
offeror may revoke, even if his offer is an exclusive agency or an exclusive
right-to-sell. Marchiondo
d) Implied promise not to revoke. The Restatement position (followed by most
courts) is that where an act will take some time to complete, there is a
promise implied in the offer that the offeror will not revoke once the offeree
has made a substantial beginning of performance, provided that performance is
actually completed within the time required by the offer. RATIONALE:
real estate agents devoting much time.
C. INSUFFICIENT
AGREEMENT: INCOMPLETE, INDEFINITE, AND
DEFERRED TERMS
1. The
requirement of definiteness and certainty of terms. The terms of the offer must be sufficiently
clear and complete so that the court can determine what the parties intended
and can fix damages in case of nonperformance.
R2K § 32, 33.
2. The essential terms. A contract must cover (expressly or impliedly) the following four
essential terms: (1) parties to the
contract; (2) the subject matter of the
contract; (3) time for performance; and
(4) price.
3. Implication of
reasonable terms. The essential
terms must either be expressly stated in the contract or be capable of
reasonable implication from the agreement.
The general trend of the courts is to adopt a policy of liberal
construction so as to uphold the reasonable expectations of the parties; thus,
the court will usually imply reasonable terms (i.e., implied-in-fact terms from
the dealings and relationship of the parties) where none are expressly covered
by the parties.
Example - price. (i)
Where price is completely omitted.
Where the parties have made no provision for price but a charge was
intended, the court will normally imply a "reasonable price" (e.g.,
fair market value of goods).
(ii) Where the price stated is indefinite. Often, however, where the parties have made
some attempt to include terms on the price but it is stated in such a vague way
as to unintelligible, the courts will often refuse to imply a reasonable price,
and the contract will be unenforceable due to lack of certainty on an essential
term. For example, A agrees to employ B
"at not exceeding $300 per week."
4. The Uniform
Commercial Code. In contracts
for the sale of goods, the omission of one or more essential terms does not
render an offer invalid, as long as it appears the parties intended to make a
contract and there is a reasonably certain basis for giving an appropriate
remedy. [UCC 2-204] In effect, the Restatement (2nd) 32 takes this same approach with respect to all contracts.
5. The
statement "fair share of the profits" is too vague, indefinite, and
uncertain to form a binding contract.
The intention of the parties is pure conjecture. A fair share may range from a nominal sum to
a substantial amount. The courts cannot
aid parties in such a case when they are unable or unwilling to agree upon the
terms of their own proposed contract. Varney
v. Ditmars Architect-draftsman
case.
6. Implications of reasonable terms. The essential terms must either be expressly stated in the contract or be capable of reasonable implication from the agreement. The general trend of the courts is now to adopt a policy