Does party entering into agreement have authority to do so?



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contracts fall 1998

Helen Scott

Does party entering into agreement have authority to do so?

  1. Contract


A. Two Types 4

  1. Unilateral. Promise for performance. 4

  1. Classical doctrine. A and C in performance; requirement of notice; effective upon deposit 4

Bishop v. Eaton. 4


  1. UCC 2-206(2). notification of acceptance (performance) within reasonable time 4

  1. Bilateral. Promise for Promise. 4




  1. Elements

  1. Offer 4

R2d § 24. assent will conclude bargain

  1. Preliminary Negotiations. R2d § 26. not O when further manifestation of assent. Lonergan v. Scolnick. 4

  2. Master of the Offer. R2d § 60. Offeror sets terms re A. 4

  1. Certainty R2d § 33. terms reasonably certain. basis for determining breach and remedy. 4

  1. Revocation.

(1) Classical doctrine 5

Revocation effective upon receipt from reliable source. Henthorn v. Fraser. 5

Offer fully revocable until accepted. Petterson v. Pattberg. 5

R2d § 43. Indirect Communication of Offeror’s revocation. Normile v. Miller. 5

R2d § 36. Power of Acceptance terminated by non-occurrence of condition. 5


  1. Limitations on Revocability. 5

R2d § 45. Part Perf. of Uni K is C for option K. depends on what Offeror wants for Perf. 5

R2d § 87. Option K if separate C. 5

87(2). embodies Drennan. PE which O’r expects before A as C for Option K. 5

UCC §2-205. Firm Offer. merchant. goods. signed writing. no more than 3 mos.

if on form must be separately signed. 6



Mid-South Packers, Inc. v. Shoney’s. series of separate Ks. original O irrev. only 3 mos. 6

UCC §2-103. goods movable at time of K. 6

UCC §2-105. merchant deals in goods or by occupation holds self out as knowledge/skill. 6

N.Y.Gen.Oblig.Law §5-1109. not goods. expressly irrevocable but no C. reasonable time. 6


  1. Acceptance 7

R2d §50. manifestation of assent to O by performance or promise.

  1. Manifestation of Assent 7

  1. Signature and Unilateral Mistake. Absent fraud, duress or mutual mistake . . .

Ray v. Eurice Bros. extensive negotiations. repeat players. St. Landry Loan v. Avie. illiterate.

  1. R2d § 69. Silence or Exercise of Dominion 7

  2. R2d § 27. Assent effective though written memorial intended. factors to determine if K concluded. 7

  3. UCC §2-204. conduct by both parties shows K, though moment of A undetermined. 8

  4. UCC §2-206. any reasonable mode of A. notification of performance in Uni K. 8

  1. Mailbox rule 8

R2d §63. A effective upon deposit except Option K upon receipt. Henthorn v. Fraser. 8

  1. Battle of the Forms - Conflicting Terms in A 8

  1. Common law doctrine

Mirror image rule 8

R2d § 58. promise or performance must comply with O. 8

R2d § 59. A conditional on assent to add’l or diff. terms is not A but C-O. 9

R2d § 39. C-O is substituted bargain; terminates power of A. Normile v. Miller. 9

Last shot rule. Series of C-Os with substantial conditions in boilerplate. Poel v. Brunswick. 9



  1. UCC §2-207(1). First Shot Rule. A even if add’l or diff. terms unless expressly made cond’l

on assent, then C-O. 9

UCC §2-207(2) btwn. merchants terms go into K unless O express limited, materially alter, object. 9

UCC §2-207(3) Knockout Rule. when Performance, K only agreed terms and gap-fillers. 9

Brown Machine v. Hercules. indemnification clause material, no express assent so no K. 10

Dale Horning v. Falconer Glass. limitation of remedy clause was hardship, no surprise. 10

UCC §1-205 course of dealing and usage of trade used to evaluate surprise.

UCC §2-715 Buyer’s Incidental and Consequential Damages from Seller’s breach 10

UCC §2-719 Contractual Modification or Limitation of Remedy. 11


  1. Consideration 11

Gratuitous Promise or gift which requires no consideration is not enforceable.

  1. Benefit-Detriment test. disjunctive. Hamer v. Sidway. (not required under R2d § 79) 11

  2. Bargained-for Exchange. R2d §71. Baehr v. Penn-o-Tex. 11

  3. Adequacy of Consideration. R2d §79. Batsakis v. Demotsis. 11

R2d §77 Illusory Promise. not C if alternatives reserved. Mid-South Packers, Inc. v. Shoney’s. 11

  1. Past services do not constitute consideration. Plowman v. Indian Refining. 12

  2. Condition to a gift does not constitute consideration. Plowman v. Indian Refining.. 12

  3. Motive or Moral obligation is not legally enforceable consideration. Plowman v. Indian Refining. 12

However, parties’ secret ulterior motives do not nullify C. R2d § 81 12


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