A contract is judged objectively from the perspective of the offeree, considering whether a reasonable person would understand it as an offer (Embry).

If a party was joking when making an offer, it does not invalidate the contract unless the other party knew of the jest at the time (Lucy).

Differing subjective intents do not prevent contract formation if one party’s understanding is objectively reasonable. If neither understanding is reasonable, no “meeting of the minds” occurs, and no contract is formed (Peerless).

Vague terms that prevent mutual understanding invalidate a contract (Cheever).

An illusory promise, lacking commitment, cannot form a contract.

Bilateral Contract: Default form, involving an exchange of promises.

Unilateral Contract: Formed when an offer is accepted through performance or conduct without a return promise.

A promise manifests an intention to act or refrain from acting, justifying the promisee’s understanding that a commitment has been made.

Commitment: Judged objectively, based on whether a reasonable person would interpret the statement as an offer (Embry).

Content/Certainty: The statement must be specific enough to justify reliance (Restatement (Second) of Contracts §33).

Communication: Can be verbal or written.

Advertisements are generally not offers but invitations to negotiate (Leonard), unless clear, definite, explicit, and leave nothing open for negotiation (Lefkowitz).

Commitment: Affirmatively informs the promisee of the promisor’s intent, judged objectively (Embry).

Content/Certainty: Sufficiently definite to justify reliance.

Communication: Verbal or written to the promisee.

Advertisements are generally not offers but invitations to negotiate (Leonard), unless clear, definite, explicit, and leave nothing open for negotiation (COED: Lefkowitz).

• COED: Clear, Open to no negotiation, Explicit, Definite.

An offer lapses when specified by the offeror or after a reasonable time, determined by communication method and nature of the promise. A late response is a new offer requiring acceptance. Death or incapacity of the offeror terminates the offer, not the contract (Earle).

• Language indicates present intent to be bound (e.g., “this LOI shall govern the relationship…”).
• All essential terms are present (price, scope, timing).
• No clear condition that a formal contract must be executed.
• Conduct shows reliance or performance based on the LOI.

• Express language states parties are not bound until a formal agreement is signed.
• Material terms are still open or under negotiation.
• LOI is referred to as a “proposal” or “memorandum of understanding.”
• LOI conditions enforceability on future events (e.g., board approval).

Acceptance is judged objectively by the reasonable person standard. It must meet the Three Cs: Commitment, Content/Certainty, and Communication.

Mirror-Image Rule (Traditional): Acceptance must be positive, unconditional, unequivocal, and unambiguous, without changing offer terms.

Mirror-Image Rule (Modern): Allows acceptance with inquiries or suggestions, but conditional acceptance is a counteroffer (Ardente).

Bilateral Contract: Acceptance by promise.

Unilateral Contract: Acceptance by performance. Once performance begins, the offer becomes irrevocable.

Acceptance by Conduct: Assent may be shown by conduct if invited or reasonable, judged objectively.

Acceptance by Silence: Only when the offeree accepts benefits, the offeror indicates silence is sufficient, or prior dealings suggest it.

Mailbox Rule: Acceptance is effective when dispatched, if properly addressed and sent reasonably, forming a contract even if it never arrives.

Electronic Acceptance: Same as mailbox rule, but must be in a processable format and sent to a designated inbox.

Revocation must be directly communicated or indirectly shown through actions the offeree learns from a reliable source. Under UCC §2-205, a merchant’s signed offer to hold open is irrevocable for up to three months without consideration.

Goods (UCC §2-105): All things movable at the time of contract identification.

Merchant (UCC §2-104): A person dealing in goods of the kind (e.g., a bike store owner, not a casual seller).

UCC vs. Common Law:

• If common law contradicts UCC, UCC supersedes.
• If common law does not contradict, UCC supplements it.
• If UCC is silent, common law applies.

Predominant Purpose Test: Determines if UCC applies based on whether the contract is primarily for goods or services, considering:

• Language of the contract.
• Primary reason for the contract.
• Relative costs of goods vs. services.
• Nature of the provider’s business.
• Other relevant circumstances.

Conditions for Battle of the Forms:

• Contract is for goods.
• Written offer and acceptance with differing terms.

Step 1: Acceptance (UCC §2-207(1)):

• Acceptance must be definite, seasonable, reasonable, and not diverge significantly on dickered terms (explicitly negotiated terms).
• No “magic words” making acceptance conditional on assent to new terms.
• If acceptance fails, proceed to Step 3 (conduct).

Step 2: Additional/Different Terms (UCC §2-207(2)):

• Between Merchants: Additional terms become part of the contract unless:
  • Offer expressly limits acceptance to its terms.
  • Terms materially alter the contract.
  • Offeror objects within a reasonable time.
• Non-Merchants: Additional terms are proposals, requiring mutual acceptance.
• Different Terms:
  • Knock-Out Rule (Majority): Conflicting terms cancel; UCC fills gaps.
  • First Shot Rule (Minority): Offeror’s terms control.

Step 3: Acceptance by Conduct (UCC §2-207(3)):

• If writings don’t form a contract, conduct recognizing a contract establishes one, with terms where writings agree, supplemented by UCC.