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BADM 351 Chap. 11 Agreement

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on 29 August 2016

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Transcript of BADM 351 Chap. 11 Agreement

BADM 351 Chap. 11 Agreement
OBJECTIVES:
H. REVOCATION: HOW DONE?
CASE: BAER V. CHASE, 3D CIR., 2004
1. EXPLAIN AGREEMENT AND THE IMPORTANCE OF GENUINENESS
2. DESCRIBE WHAT CONSTITUTES AN OFFER AND CONSENT
3. DEFINE WHAT WARRANTIES ATTACH TO CONTRACTS FOR SALE OF GOODS UNDER THE UCC?
A.WHAT IS LEGAL STANDARD FOR DETERMINING ASSENT IN K’S?
OBJECTIVE STANDARD: AGREEMENT OR INTENTION OF A PARTY AS IT REASONABLY APPEARS FROM HIS WORDS OR ACTIONS; BY WORD OR CONDUCT.
B. WHAT CONSTITUTES AN OFFER?
1.MUST BE EFFECTIVELY COMMUNICATED TO OFFEREE;
A. BY WORDS OR
B. CONDUCT
2. MANIFEST INTENT TO ENTER INTO K; DETERMINED OBJECTIVELY-WHAT A REASONABLE PERSON WOULD HAVE BELIEVED;
3. INVITATIONS AND PRICE QUOTES ARE NOT K’S
4. BEWARE OF LETTERS OF INTENT-THEY ARE NOT CONTRACTS.
CASE: CARLILL V. CARBOLIC SMOKE BALL CO., CT. OF APPEAL, 1892
FACTS: THE CARBOLIC SMOKE BALL CO. ADVERTISED THAT IT WOULD PAY 100 POUNDS TO ANYONE WHO PURCHASED A CARBOLIC BALL OF CARBOLIC SMOKE AND USED IT ACCORDING TO ITS DIRECTIONS AND THEREAFTER CONTRACTED INFLUENZA. CARLILL PURCHASED THE PRODUCT AND USED IT ACCORDING TO ITS DIRECTIONS AND YET CONTRACTED THE FLU. SHE SUBSEQUENTLY FILED TO RECOVER THE REWARD BUT WAS DENIED BY THE CO. CLAIMING THERE WAS NO CONTRACT.
ISSUE: DID THE ADVERTISEMENT CREATE A BINDING CONTRACT?
RULE: THE PERFORMANCE OF CONDITIONS INVOLVING AN OFFER IS THE ACCEPTANCE OF THE OFFER.
APPLICATION: On appeal, the state's highest court found that the letter of intent did not indicate that the parties would be bound by it but was an agreement to make an agreement, and the seller did not manifest an acceptance of any offer, especially since she did not return the documents sent to her.
CONCLUSION: APPEAL DISMISSED. AFFIRMED FOR CARBOLIC SMOKE BALL CO.
C. ARE ADVERTISEMENTS LEGALLY BINDING OFFERS?
1. ADVERTISEMENTS ARE NOT OFFERS, MERELY, INVITATIONS TO MAKE AN OFFER. E.G., LATE NIGHT TV AD CAR OFFER.
2. STATE CONSUMER PROTECTION STATUTES PROTECT AGAINST BAIT AND SWITCH OR DECEPTIVE ADVERTISING.
3. RECALL GOOD FAITH IN CONTRACTING REQUIREMENT UNDER BOTH COMMON LAW AND UCC.
4. AUCTIONS: AUCTION W/ RESERVE IS AN INVITATION TO MAKE AN OFFER, BUT SELLER RETAINS RIGHT TO REFUSE HIGHEST BID AND WITHDRAW ITEM FROM AUCTION.
----AUCTION W/O RESERVE IS AN OFFER. NO RIGHT TO WITHDRAW ITEM.
D. OFFER MUST BE DEFINITE AND REASONABLY CERTAIN, E.G., SPECIFIC NUMBER OR APPROXIMATE QUANTITY.
1. IDENTIFY THE PARTIES
2. IDENTIFY SUBJECT MATTER AND QUANTITY
3. CONSIDERATION MUST BE PAID TIME OF PERFORMANCE
4. TIME OF PERFORMANCE
NOTE: K TERMS MUST BE CLEAR ENOUGH FOR A CT. TO OBSERVE A REASONABLE BASIS FOR DETERMINING EXISTENCE OF A BREACH, AND FOR GIVING AN APPROPRIATE REMEDY.
FACTS: CHASE WAS A TV PRODUCER-WRITER WHO HAS HAD AS CREDITS SHOWS SUCH AS ROCKFORD FILES. A NJ STATE PROSECUTOR NAMED BAER SUBMITTED A SCRIPT FOR ROCKFORD FILES, AND CHASE ASKED TO MEET WITH HIM. WHEN THEY MET, BAER DISCUSSED A DIFFERENT IDEA FOR A SHOW BASED ON THE NJ MAFIA. CHASE HAD BEEN CONSIDERING A SIMILAR SHOW. BAER HOSTED A VISIT BY CHASE TO NJ WHERE HE INTRODUCED HIM TO DETECTIVES AND OTHERS WHO PROVIDED MATERIAL FOR HIS NEW SHOW IDEA THAT BECAME THE SOPRANOS. CHASE IS ALLEGED TO HAVE TOLD BAER ON AT LEAST THREE OCCASIONS THAT IF THE SHOW SUCCEEDED, HE WOULD REMUNERATE/TAKE CARE OF BAER IN A MANNER COMMENSURATE TO THE TRUE VALUE OF HIS SERVICES. WHEN CHASE WAS NOT FORTHCOMING, BAER SUED TO ENFORCE THE AGREEMENT.
ISSUE: WAS CHASE’S PROMISE SUFFICIENT ENOUGH TO BE ENFORCED?
RULE: INDEFINITENESS CAN CREATE AMBIGUITY WHICH CAN OBVIATE A PROPOSED CONTRACT.
APPLICATION: IN THE ABSENCE OF AN AGREEMENT AS TO THE MANNER OR METHOD OF DETERMINING COMPENSATION, THE PURPORTED AGREEMENT IS INVALID.
CONCLUSION: NO. AFFIRMED FOR DISMISSAL.
E. OPEN OR MISSING TERMS UNDER THE UCC-THE UCC PROMOTES BUSINESS
1. UNLIKE COMMON LAW, IF WE ARE DEALING WITH A SALE OF GOODS UNDER ART. 2, AN AGREEMENT WILL NOT BE INVALID IF IT IS CLEAR THE PARTIES INTENDED TO MAKE A CONTRACT, AND A MISSING OR OPEN TERM MAY BE DETERMINED BASED ON AN APPROPRIATE REMEDY.
2. IF THE K LACKS A METHOD FOR DETERMINING MISSING TERMS, THE UCC CODE ITSELF ESTABLISHES REASONABLE PRICE—MARKET VALUE OR A PRICE ESTABLISHED BY A NEUTRAL EXPERT.
F. OUTPUT AND REQUIREMENTS K’S:
1. WHAT IS AN OUTPUT K?
- AGREEMENT OF A BUYER TO PURCHASE A SELLER’S ENTIRE OUTPUT;
ENFORCED BY OBJECTIVE STANDARD OF GOOD FAITH-HONESTY IN FACT
2. WHAT IS REQUIREMENTS K?
-AGREEMENT OF A SELLER TO SUPPLY A BUYER W/ ALL HIS REQUIREMENTS FOR CERTAIN GOODS, E.G., GROCERY STORE RESTOCKING.
G. UCC PROVIDES STANDARDS BY WHICH COURTS CAN DETERMINE OMITTED TERMS, PROVIDED PARTIES INTENDED TO ENTER K:
1. PRICE-MARKET
2. TIME OR PLACE OF DELIVERY-REASONABLE & SELLER’S BUSINESS
3. OR PAYMENT TERMS-WHEN BUYER RECEIVES GOODS
MISSING TERMS CAN BE SUPPLIED BY:
A. COURSE OF DEALING; e.g. 30 day invoice
B. USAGE OF TRADE; e.g., COD or real estate

C. OR INFERENCE, barber/beaty salon.
1. EXPRESS STATEMENT BY OFFEROR PRIOR TO ACCEPTANCE OR
2. ANY ACT OF OFFEROR INCONSISTENT W/ OFFER, E.G., EARLIER SALE OF ITEM.
3. NOT EFFECTIVE UNTIL RECEIVED BY OFFEREE
4. OPTION K’S: A K TO HOLD OPTION TO PURCHASE OPEN FOR A SPECIFIED PERIOD.
5. FIRM OFFERS: UNDER UCC, MERCHANTS MUST:
A. KEEP OFFERS TO BUY OR SELL GOODS OPEN FOR STATED PERIOD.
B. FOR A REASONABLE TIME IF NO TIME STATED;
C. IF ASSURANCE GIVEN IN WRITING UP TO 3 MONTHS.
D. STATUTORY IRREVOCABILITY: WHEN MAKING BIDS OR OFFERS TO STATE OR GOVT. ENTITY.
E. IRREVOCABLE OFFERS OF UNILATERAL K’S:
1. WHERE PROMISE CONTEMPLATES AN ACT TO FORM A K, I.E., SHOVELING DRIVEWAY;
2. IF ACT SUBSTANTIALLY COMPLETED, MAY NOT REVOKE OFFER, INJUSTICE WOULD RESULT.
6. COUNTEROFFERS TERMINATE OFFERS AUTOMATICALLY.
7. EXPIRATION OF STATED TIME AUTOMATICALLY TERMINATE OFFERS OR IF SPECIFIED MEANS OF ACCEPTANCE NOT FOLLOWED.
8. BY OPERATION OF LAW DEATH OF OFFEROR OR DESTRUCTION OF SUBJECT MATTER.
9. MIRROR IMAGE RULE—ACCEPTANCE BASED ON PRECISELY SAME TERMS AS OFFER.
A. UCC EXCEPTION—BATTLE OF FORMS:
1. IF BOTH PARTIES ARE MERCHANTS AND ONE PARTY ADDS ADDITIONAL TERMS TO K, THEY BECOME PART OF K EXCEPT:
A. ORIGINAL OFFER INSISTED ON ITS OWN SPECIFIC TERMS AND NO OTHERS;
B. ADDITIONAL TERMS WOULD MATERIALLY ALTER ORIGINAL OFFER;
C. IF OFFEROR RECEIVES ADDITIONAL TERMS AND PROMPTLY OBJECTS TO THEM.
CASE: NADEL V. TOM CAT BAKERY, NY SUP. CT., 2009
FACTS: A BAKERY TRUCK STRUCK AND INJURED PLAINTIFF RESULTING IN LITIGATION. WHILE A SETTLEMENT OFFER OF $100,000 HAD BEEN MADE AND DECLINED BY PLAINTIFF, DEFENDANT ASKED HIS ATTORNEY TO PROPOSE THE OFFER AGAIN WHILE THE JURY WAS DELIBERATING. LATER THAT DAY THE JURY SENT A NOTE TO THE JUDGE. THE DEFENDANT BAKERY OWNER INSTRUCTED HIS ATTORNEY THAT IF THE NOTE INDICATED A VERDICT, THE SETTLEMENT OFFER WAS REVOKED AS HE WOULD TAKE THE JURY VERDICT. AFTER DEFENSE COUNSEL TOLD PLAINTIFF’S COUNSEL THIS, PLAINTIFF THEN CLAIMED TO HAVE ACCEPTED THE PLAINTIFF’ SETTLEMENT OFFER. THE JURY VERDICT WAS FOR THE DEFENDANT AND PLAINTIFF NOW CONTENDS A SETTLEMENT WAS REACHED PREVIOUS TO THE VERDICT.
LEGAL ISSUE: WAS THE SETTLEMENT OFFER ACCEPTED IN TIME?
RULE: THERE MUST BE AGREEMENT FOR A CONTRACT TO EXIST.
APPLICATION: THERE WAS NO MEETING OF THE MINDS TO SETTLE AT THE LAST CONVERSATION BEFORE THE JURY VERDICT WAS ENTERED.
CONCLUSION: PLAINTIFF’S MOTION IS DENIED.
NOTE: SHRINKWRAPS AND CLICKWRAPS MUST BE CONSPICUOUS TO BE ENFORCEABLE.
CASE: SPECT V. NETSCAPE COMMUNICATIONS CORP., 2D CIR. CT. APPEALS, 2002
FACTS: A GROUP OF PLAINTIFFS SUED NETSCAPE CLAIMING TWO OF ITS PRODUCTS ILLEGALLY CAPTURED PRIVATE INFORMATION ABOUT FILES THEY DOWNLOADED FROM THE INTERNET. THEY CLAIMED THIS VIOLATED ELECTRONIC EAVESDROPPING STATUTES AS WELL. THE COMPANY MAINTAINED THAT GENERAL TERMS AND CONDITIONS WERE CONTAINED ON THE WEBSITE THEIR PRODUCT WAS PURCHASED FROM BELOW THE DOWNLOADING BUTTONS, AND THE PLAINTIFFS FAILURE TO SCROLL DOWN AND READ THESE CONDITIONS THAT REQUIRED ARBITRATION OF ALL DISPUTES CONSTITUTED ACCEPTANCE.
ISSUE: HAD THE PLAINTIFFS AGREED TO ARBITRATE SUCH CLAIMS BY FAILING TO READ THE CONDITIONS AND OBJECT?
RULE: CONSTRUCTIVE NOTICE OF TERMS CAN CONSTITUTE A MEETING OF MINDS.
APPLICATION: A REFERENCE TO THE EXISTENCE OF LICENSE TERMS ON A SUBMERGED SCREEN IS NOT SUFFICIENT TO PLACE CONSUMERS ON INQUIRY OF CONSTRUCTIVE NOTICE OF THOSE TERMS.
CONCLUSION: NO, JUDGMENT FOR PLAINTIFFS.
I. ACCEPTANCE:
1. IF OFFER DEMANDS SPECIFIC MEANS OR MEDIUM OF ACCEPTANCE, IT MUST BE COMPLIED WITH.
2. IF NOT, ANY REASONABLE MANNER OR MEDIUM WILL SUFFICE.
3. WHAT IS THE MAILBOX RULE? OFFER IS DEEMED ACCEPTED AT MOMENT ACCEPTANCE PLACED IN MAILBOX.
CASE: SOLDAU V. ORGANON, 9TH CIR. CT. APPEALS, 1988
FACTS: ORGANON FIRED SOLDAU, SUBSEQUENTLY SENDING HIM A LETTER THEY WOULD PAY HIM DOUBLE HIS SEVERANCE PAY IF HE SIGNED A WAIVER WAIVING ANY LEGAL CAUSE OF ACTION HE MIGHT HAVE AGAINST THEM. HE DID SO DEPOSITING IT IN A P.O. MAILBOX. UPON RETURNING HOME, HE DISCOVERED A CHECK IN THE AMOUNT OF TWICE HIS SEVERANCE PAY. HE RETURNED TO THE P.O. AND CONVINCED A MAILCLERK TO OPEN THE MAILBOX SO HE COULD RETRIEVE HIS ACCEPTANCE LETTER. HE SUBSEQUENTLY SUED FOR WRONGFUL DISCHARGE.
ISSUE: DID SOLDAU CREATE A CONTRACT ACCEPTANCE WHEN HE DEPOSITED HIS LETTER?
RULE: MAILBOX RULE HOLDS THAT ONCE DEPOSITED, ACCEPTANCE OF CONTRACT OFFER OCCURS.
APPLICATION: UNDER FEDERAL AS WELL AS CALIF. STATE LAW, ACCEPTANCE OCCURRED WHEN HE MAILED HIS LETTER.
CONCLUSION: YES, AFFIRMED.
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