Mutual Assent · Sep 9
Floor. ~40 min: Lucy callback + Lefkowitz preview. The objective theory scaled to advertising.
Target. ~75 min: Floor + Raffles callback + Leonard preview + R2d § 24 setup for Class 6.
(1) Except as stated in Subsection (2), the formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration.
Manifestation of mutual assent to an exchange requires that each party either make a promise or begin or render a performance.
(1) The manifestation of assent may be made wholly or partly by written or spoken words or by other acts or by failure to act.
(2) The conduct of a party is not effective as a manifestation of his assent unless he intends to engage in the conduct and knows or has reason to know that the other party may infer from his conduct that he assents.
(3) The conduct of a party may manifest assent even though he does not in fact assent. In such cases a resulting contract may be voidable because of fraud, duress, mistake, or other invalidating cause.
(1) There is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations and
(a) neither party knows or has reason to know the meaning attached by the other; or
(b) each party knows or each party has reason to know the meaning attached by the other.
(2) The manifestations of the parties are operative in accordance with the meaning attached to them by one of the parties if
(a) that party does not know of any different meaning attached by the other, and the other knows the meaning attached by the first party; or
(b) that party has no reason to know of any different meaning attached by the other, and the other has reason to know the meaning attached by the first party.
196 Va. 493, 84 S.E.2d 516 (1954)
Supreme Court of Appeals of Virginia
Rule. The mental assent of the parties is not requisite for the formation of a contract; the law imputes to a person an intention corresponding to the reasonable meaning of his words and acts. A secret joking intent is no defense when a reasonable person would believe the words and conduct manifested a serious bargain.
2 Hurl. & C. 906, 159 Eng. Rep. 375 (Ex. 1864)
Court of Exchequer
Rule. Where two parties attach materially different meanings to a critical term and neither has reason to know of the other's meaning, no contract is formed for want of mutual assent.
251 Minn. 188, 86 N.W.2d 689 (1957)
Supreme Court of Minnesota
Rule. An advertisement is an offer when it is clear, definite, and explicit, and leaves nothing open for negotiation. A seller cannot impose new conditions of acceptance after the offer has been accepted by performance.
88 F. Supp. 2d 116 (S.D.N.Y. 1999), aff'd, 210 F.3d 88 (2d Cir. 2000)
United States District Court for the Southern District of New York
Rule. An advertisement does not constitute an offer where no objective, reasonable person could understand it to be a serious expression of willingness to enter a bargain. Obvious humor, exaggeration, and commercial context can defeat any reasonable inference of an offer.
English Court of Appeal
Facts. The company promised £100 to anyone who used its smoke ball as directed and still caught influenza, and advertised that it had deposited money in the bank to show good faith. Mrs. Carlill used the product as directed, caught the flu, and sued for the £100.
Holding. The advertisement was an offer of a unilateral contract, accepted by performance (using the product as directed and still getting sick).
Rule. A reward-style advertisement can be an offer when it requires specific performance for acceptance, and the offeror's conduct (here, setting money aside to pay claims) demonstrates a serious intent to be bound.
A used-car dealership ran a newspaper ad for a used Lexus at $24,000. The dealer's actual price was $34,000; the newspaper made a typo. Donovan saw the ad and tendered $24,000 at the dealership. The dealer refused. Donovan sued for breach.
Was the advertisement an offer? If yes, can the dealer escape it?
In 1966, Lee Calan Imports told the newspaper to advertise a Volvo station wagon at $1,795. The newspaper printed $1,095. O'Brien saw the ad and tendered $1,095. The dealer refused. O'Brien sued.
Was the advertisement an offer?
A bridge to Class 6. Recall the deal in Lucy. Now rewind one step:
Stretch problems from the chapter.
Rules. R2d § 17, R2d § 18, R2d § 19.
Cases. Lucy v. Zehmer · Raffles v. Wichelhaus · Lefkowitz v. Great Minneapolis Surplus Store · Leonard v. Pepsico.
Open question. The objective theory tells us whether an advertisement can be an offer. It does not tell us when a specific manifestation crosses into a true offer, that is, when the offeree's acceptance closes the deal without further word from the offeror. Class 6 takes up R2d § 24 and works Lefkowitz and Leonard as the doctrinal poles.
Next class: Offers
_Mutual Assent_ · Sep 15
Read Lefkowitz v. Great Minneapolis Surplus Store and Leonard v. Pepsico. One ad gets enforced as an offer; one ad does not. Bring a one-line answer: what specific feature of the Lefkowitz ad made it an offer, and what feature of the Pepsi commercial defeated offer status?