Spring+2010+Business+Law+and+the+Legal+Environment+-+Week+9[1]

Spring+2010+Business+Law+and+the+Legal+Environment+-+Week+9[1]

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Business Law and the Legal  Environment Week 9 Spring 2010
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Firm Offer Example Consolidated Edison Co. of New York (Con Ed) sought bids from General Electric Co. (GE) and others to supply it with two huge transformers. Con Ed required that the bids be held open for 90 days. GE submitted a written bid and included a clause holding the bid open for 90 days. During that period, Con Ed accepted GE’s bid, but GE refused to honor it. Is there a contract?
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Answer Yes. GE made a “firm offer,” governed by UCC §2‑205. When a merchant signs a written firm offer, the offer may not be revoked within that period or three months, whichever is less. Here the offer was for three months, so it is irrevocable.
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Acceptance Manifestation of assent to the offer. Offeror can specify the means of acceptance and its timeliness Authorized means of acceptance Silence is not acceptance. Ex. “If I do not hear from you by tomorrow, I will assume you accepted my offer.”
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Mirror Image Rule – Common Law If the offeree seeks to vary the offer either by addition, deletion or substitution of even the smallest change there is no acceptance, but a counteroffer/rejection. Ex. On Oct. 10, Sara offers to sell an office building to John for $1M if they can close by Nov. 1. John accepts Sara’s offer, but in his written acceptance states that closing should occur on Dec. 1.
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UCC – Battle of Forms The UCC treats the offeree’s additional terms to an offer differently than how it treats an offeree’s terms that contradict the offeror’s offer.
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UCC and its Treatment of an Acceptance with Additional Terms Between Non-Merchants – Additional terms become proposals for inclusion into the contract Between Merchants – Additional (not different) terms become part of the contract UNLESS Offeror‘s offer limits its acceptance to the terms of the offer Additional terms materially alter the contract (even if such terms are materially altering, the court will still uphold a contract, just not with the materially altering terms) Offeror objects within a reasonable time
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Additional Terms between Non- Merchants Example Joe tells Susan, “I’ll sell you my Schwinn bicycle for $150,” and Susan responds, “I’ll take it. The tire pump is included.” Susan has added an additional term in her acceptance. At this point, Joe and Susan have a contract for the sale of the bicycle for $150. Whether the tire pump is included is up to Joe; Joe is free to accept Susan’s proposal or reject it, but his decision does not control whether or not a contract exists . There is a contract because Susan has made a definite statement of acceptance.
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Contract Would the additional term(s) result in unfair suprise or hardship? Are the terms reasonably typical for such
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This note was uploaded on 08/22/2011 for the course FIN 3055 taught by Professor Cgiles during the Spring '08 term at Virginia Tech.

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Spring+2010+Business+Law+and+the+Legal+Environment+-+Week+9[1]

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