Offers

This class isolates the first move in formation: the offer. An offer is what confers on the offeree the power to close a deal by acceptance alone, so identifying it precisely matters. The work is to separate true offers from the larger field of statements that merely sound like offers, including price quotations, invitations to bargain, and most advertisements.

What qualifies as an offer

R2d § 24. An offer is a manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that assent is invited and will conclude the bargain. Two features do the work: a present commitment to be bound and terms definite enough that a simple “yes” forms a contract. The test is objective, so the question is how a reasonable person in the offeree’s position would understand the words and conduct, not what the speaker privately intended.

R2d § 26. A manifestation is not an offer where the addressee knows or has reason to know that the maker does not intend to be bound without further assent. Advertisements ordinarily fall here. They are treated as invitations to make offers, not offers, in part because they usually lack a quantity term and because treating them as offers would expose the seller to more acceptances than it has inventory, the oversubscription problem.

R2d § 33. Terms must be reasonably certain. An offer cannot be accepted into a contract the court cannot enforce, so the terms must provide a basis for determining the existence of a breach and for giving a remedy. Where essential terms are left open with no standard for filling them, no contract forms; UCC § 2-305 shows that for sales of goods an open price can be supplied as a reasonable price, a lower certainty floor than the common law’s.

Cases

Lefkowitz v. Great Minneapolis Surplus Store is the rule’s positive pole. The store advertised a named fur stole “worth $139.50” for $1, “first come, first served.” The court held the ad an offer because it was clear, definite, and explicit and left nothing open for negotiation; the “first come, first served” language solved the oversubscription problem by identifying who could accept. Because Lefkowitz accepted by appearing first and tendering $1, the store could not then impose an unstated “house rule” limiting the sale to women: an advertiser may modify an offer before acceptance but not after.

Leonard v. Pepsico is the rule’s negative pole. A commercial showed a teenager landing a Harrier jet at school over a “7,000,000 Pepsi Points” caption, but the jet appeared nowhere in the Pepsi Stuff catalog that actually governed redemption. The court granted summary judgment for Pepsi: no objective, reasonable person could understand the commercial as a serious offer to sell a fighter jet. The commercial was not sufficiently definite, it reserved the terms to the separate catalog, it lacked any “first come, first served” limit, and the joke was obvious. Set against Lucy v. Zehmer, the lesson is that the “just joking” defense fails when the manifestation reads as serious and succeeds when the absurdity is plain.

What you should be able to do

State the elements of an offer under R2d § 24 and distinguish offers from price quotations and invitations to deal under R2d § 26. Apply the advertisement-as-offer rule to a “first come, first served” pattern and decide whether the ad creates a power of acceptance. Use R2d § 33 to judge whether terms are certain enough to enforce and identify which open terms a court will fill. Next class asks the opposite question: once an offer exists, how does it die?