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Corbin on Contracts

Copyright 2007, Matthew Bender & Company, Inc., a member of the LexisNexis Group.

PART I FORMATION OF CONTRACTS

TOPIC A OFFER AND ACCEPTANCE

Supp. To CHAPTER 3 ACCEPTANCE AND REJECTION OF OFFER

1-3 Corbin on Contracts Supp. to § 3.39

Supp. to § 3.39 Power of Acceptance not Terminated by a Counter-Offer if Either Offeror or Offeree so Prescribes

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The following case is noteworthy:

(1) Hardin v. First Cash Financial Services, 465 F. 3d 470 (10[th] Cir. 2006) . Hardin was a terminable-at-will manager of one of the defendant's branch offices. In December, 2002, the defendant notified employees of a new dispute resolution program (DRP) including mandatory arbitration that employees could voluntarily opt into. As of March 1, 2003, however, all employees would be subject to the DRP. At the time of the announcement, Hardin notified the defendant that she would not consent to the DRP or sign the materials sent to her at any time. In early 2003, the defendant posted a notice cautioning employees on the mandatory character of the DRP as of March 1. There was no further discussion of the plan between Hardin and the defendant. In December, however, Hardin was fired and she sued. The defendant moved to compel arbitration. The district court held that Hardin was not bound by the DRP because of her unwillingness to sign the agreement and her notice to her supervisor that she would not consent to the DRP. The court found that Hardin's notice to the supervisor constituted a counter offer which the employer accepted after March 1 by not terminating her. On appeal, the instant court noted that if the DRP had simply been announced and Hardin had not objected to it, her continuing employment would have operated as an acceptance of the DRP offer. Hardin, however, did object. The court decided that a classic offer and acceptance analysis should apply. The defendant made the DRP an offer which Hardin rejected by her counteroffer to continue her employment without the DRP. The defendant rejected Hardin's counteroffer but reiterated that her continued employment would constitute an acceptance of the defendant's counteroffer. The court noted the normal effect of a counteroffer in rejecting the original offer does not apply where the counteroffer manifests a different intention (Restatement 2d of Contracts, § 38(1)). The defendant continuously expressed its intention not to end negotiations through a rejection or counteroffer. It stated an offer that could be accepted voluntarily through March 1 of 2003 and neither Hardin nor other employees had to accept prior to that time. Hardin clearly rejected the offer at that time, but the offer continued. Moreover, the early 2003 reminder that continued employment would manifest acceptance of the DRP was a further manifestation of a continuing offer. Hardin's continued employment after March 1, therefore, constituted an acceptance of the offer and she was bound by the DRP, including the arbitration provision.

(2) Scoular Co. v. Denney, 151 P.3d 615 (2006) . On May 30, Farmer Denny offered to sell 15,000 bushels of his to-be-grown millet seed at $5 per hundredweight to Scoular, the operator of a grain elevator with whom Denny had dealt in the past. Scoular did not reject the offer, but stated that the price was not yet available and he ''would work on it and see what he could do.'' Four days later, Scoular sold the Millet seed to a buyer at a rate sufficient to meet Denny's price. Scoular's general manager tried to notify Denny but was not successful until June 27 when he spoke with Denny and sent him a written contract. Denny did not sign the contract. When the harvest was ready in the fall of 2002, the market price of millet seed had trebled. Denny sold it to another buyer and told Scoular that it was ''too bad'' Scoular had no written contract. Scoular's action succeeded in the trial court which found an enforceable contract and awarded Scoular damages of $82,500. On appeal, the instant court concluded that Denny had made a revocable offer that Scoular could have accepted. Denny claimed that Scoular rejected the offer when he failed to accept it on the day it was offered. The court found no rejection in Scoular's statement that the price was not yet available and he would see what he could do. Where an offeree states that he will take an offer under further advisement, the offer has not been rejected (Restatement (Second) of Contracts, § 38). The trial court, however, erred in finding that Scoular had accepted the offer by arranging to sell Denny's millet seed to another buyer. When an offer is accepted by conduct, the conduct must unambiguously express the offeree's intention to accept the offer. Scoular dealt with many parties and did nothing to earmark Denny's millet seed as the source of the millet sold to a particular buyer. Denny's offer, however, could have been accepted during the telephone conversation with Scoular's general manager on June 27. The trial court made no explicit findings concerning that conversation. Though Denny never signed the written contract submitted by the general manager, the court noted that Uniform Commercial Code § 2-201(2) allows an otherwise sufficient memorandum to satisfy the statute of frauds sent by one merchant to another where the recipient does not object to it within ten days from its receipt. The judgment for Scoular was reversed and remanded. Denny also petitioned for rehearing concerning whether his offer of May 30 had lapsed by June 27. Since the issue was not raised in Denny's briefs, the court held the issue was not properly before the court and it denied a rehearing.