Supp. To § 1.11 Offer Defined

[Go To Main]

Corbin asked whether an offer has any legal status before acceptance. His answer, using Hohfeld's freshly minted fundamental legal conceptions, was that an offer creates a power of acceptance in the offeree. Modern drug laws offer a second, surprising, answer.

In Arizona v. Alvarado, 875 P.2d 198 (Ariz. Ct. App. 1994) , the trial judge found Alvarado guilty of offering to sell marijuana, a felony. Defendant appealed, urging that there was no substantial evidence to support the conviction. The appellate court disagreed, but reversed and remanded for a new trial anyway on a different theory.

The State maintained (and the trial judge agreed) that offering to sell marijuana is a strict liability crime, and that the speaker's intentions are irrelevant. According to the State's position, if the speaker knows what he says, and if a reasonable person would understand what he says as an offer, then the speaker is guilty of offering to sell marijuana no matter what he intended. Noting that this theory would criminalize mere words, even those spoken without criminal intent, the court concludes that this theory lacks a necessary mens rea. Hence, to commit the crime of offering to sell marijuana, ''a person must be aware or believe that he has made an offer to sell, not that he has told a lie or made a joke.''

This subjective component of offer in a criminal case was conspicuously missing from State v. Cardwell, 1997 Conn. Super. LEXIS 2109 (Conn. Super. Ct. July 31, 1997) , where the defendant was charged with violating a state ticket scalping law. That law criminalizes any offer or sale of tickets to entertainment events within the state at prices greater than their face price plus $3. Defendant arranged his business so that potential buyers of in-state events would call his office located outside the state. He argued that when in-state buyers for in-state events call his out-of-state office the offer is not made in-state so he does not violate the statute.

The court says an offer is made when communicated, so when the defendant communicates to in-state residents, even when he is out-of-state, the offer is made in-state and he violates the statute. If the in-state customer made the offer, the defendant would not be guilty of offering to sell at all (though presumably the customer would). But he would have to accept. Since acceptance also must be communicated, the contract is formed when the customer hears the acceptance. At that moment a ''sale'' is made in-state, so the defendant violates the other part of the statute that prohibits sales at premium prices.

All this is pure objective theory of contracts. Communication and the site of communication are all that matter. But what about the Alvarado theory? That theory requires that the defendant have ''been aware that he has made an offer to sell.'' This defendant had designed his business precisely so that he was not making an offer to sell in-state. So he could not have been aware that he was making such an offer. The defendant had argued and the court extensively discussed myriad challenges to the defendant's conviction, including numerous constitutional and jurisdictional ones, but not apparently this little corner of contract law.

So much for the subjective theory of contracts.

(A) The following cases cite this section:

(1) Cobb-Alvarez v. Union Pacific Corp., 962 F. Supp. 1049 (N.D. Ill. 1997) (applying Illinois law). An employer's letter inviting certain employees to apply to resign early in exchange for an enhanced severance package was held not to constitute an offer but rather an invitation. The letter said that the employer would consider applications and any applications received would be subject to approval. Said the court: ''The necessity of the purported offeror's further approval undermines the inference that an offer exists.''

(2) Pierpont v. Lee County, 710 So. 2d 958 (Fla. 1998) . Florida law provides that when a condemning authority embarks on a taking, the attorney hired by the condemnee gets a fee based on the difference between the final judgment and the last written offer made by the condemning authority before the condemnee hired the attorney. Here the county commenced a ''quick taking proceeding'' against the condemnee, which was by statute required to include a good faith estimate of the value of the property. They followed it by a written offer. The condemnee wanted his attorney's fee calculated on the difference between final judgment and the good faith estimate, arguing that the good faith estimate is equivalent to an offer because it is an expression of what the condemning authority is willing to pay. The county wanted to pay only the difference between final judgment and the written offer.

The Supreme Court of Florida held that a good faith estimate of value does not constitute a written offer, on the ground that a good faith estimate of value does not bind the condemning authority, which is free to contest the issue of full compensation by presenting testimony of a lower or higher value.

(3) Leonard v. PepsiCo, Inc., 88 F. Supp. 2d 116 (S.D.N.Y. 1999) . This case is fully discussed in § 2.4 of this supplement.

(4) Heartland Express, Inc. v. Terry, 631 N.W.2d 260 (Iowa 2001) . The employee, a Georgia resident, applied for a job with the employer, an Iowa company, by filling out an application at one of the employer's Georgia terminals, and was hired. Later, the employee suffered a brain injury and applied for workers' Compensation benefits. The decisive issue in this workers' compensation proceeding is whether the Industrial Commissioner of Iowa had subject matter jurisdiction over the claimant's claim for workers' compensation benefits and his claim for alternate medical care. The court considered whether the contract for hire took place in Iowa or in Georgia. The general rule, as stated by the court, is that the place of contract is the place where the acceptance is made. If a resident of one state places a letter in the mail making an offer to one who resides in another state, the contract would be completed where the acceptance is mailed. In determining where the offer was accepted, the court held that the application for employment completed by the employee was not an offer which created the power of acceptance, but rather a solicitation of an offer of employment. Therefore, when the employer approved the application in Iowa, there still was no contract. There was no contract, said the court, until Heartland telephoned the employee and offered him the job. Since the employee accepted the job over the telephone, from his home in Georgia, Georgia is deemed to be the place of the contract. Therefore, the court found that the Industrial Commissioner of Iowa had no subject matter jurisdiction over the claim. This case is also noted at § 2.3 of this supplement.

(5) Elan Corp. v. Andrx Pharms., Inc., 272 F. Supp. 2d 1325 (S.D. Fla. 2002) , rev'd, 366 F.3d 1336 (Fed. Cir. 2004) . Elan brought an action against Andrx for patent infringement on naproxen sodium under the name ''Naprelan.'' Elan's patent was filed with the U.S. patent office on January 14, 1991. While a patent is considered presumptively valid, an inventor loses his right to a patent if the invention has been placed in public use or on sale in this country more than one year prior to the date of the patent application, 35 U.S.C. § 102(b). The ''on-sale'' bar is predicated on preventing the removal of inventions from the public which the public has justifiably come to believe are freely available to all, promoting widespread disclosure of new inventions to the public, and preventing the inventor from commercial exploitation and exclusivity of the invention beyond the statutorily authorized term while providing the inventor with a reasonable time to determine whether a patent is a worthwhile investment. A single sale or offer to sell may be sufficient to invoke the ''on-sale'' bar. Andrx claimed that Elan had offered the product for sale more than one year prior to the date of the patent application, i.e., prior to January 14, 1990. The central issue was whether Elan had made an offer to sell which required the court to analyze the concept of ''offer.'' The court quoted this section of Corbin to the effect that the purported offer must be an act that leads the offeree reasonably to believe that a power of acceptance has been conferred and must contain all of the terms of the contract. The court noted that the various authorities' concept of an ''offer,'' such as that of Corbin and that of the Restatement (Second) of Contracts, § 24, did not differ in any material respect. While rejecting Andrx's claims that Elan's trademark filing or an advertisement in an international pharmaceutical publication constituted offers, it found that Andrx had met its statutory burden of clear and convincing evidence of an offer to sell on August 7, 1987, long prior to the one-year ''on-sale'' period, in certain of Elan's proposals (''licensing documents'') which manifested a commitment to supply certain quantities of tablets at certain prices together with certain licensing fees.

These documents were illustrated by a letter sent by Elan to Lederle Laboratories setting forth ''licensing and development plans'' including its plan to file a patent application upon the expiration of another patent. The letter set forth licensing fees and indicated that Elan was interested in discovering a partner who would aid in clinical trials. Similar letters were sent to other pharmaceutical companies. Elan's appeal claimed that the letter did not amount to an offer to sell. The instant court agreed, viewing the letter not as an offer to sell naproxen tablets, but as an offer to grant a license under the patent and an opportunity to become Elan's partner. The court found that the letter did not mention any quantities, time of delivery or place of delivery. It did not mention product specifications beyond the general statement that the potential product would be a 500-mg once-daily tablet containing naproxen. The dollar amounts in the letter were not price terms for the sale of the tablets. They were amounts that Elan was requesting to form and continue a partnership with the company to which they were addressed. The district court had determined that a statement in the letter that Elan would supply tablets at a price enabling Lederle to achieve an initial gross profit margin of not less than 70 percent of ''current naproxen prices'' was sufficient to constitute the price term. The instant court rejected this statement as a price term since, until the product had proven to be safe and efficacious and until another patent had expired, there was no possibility of determining current naproxen prices. The court reversed the district court's invalidation of Elan's patent.

Gemmy Indus. Corp. v. Chrisha Creations, Ltd., 2006 U.S. App. LEXIS 15552 (Fed. Cir. 2006) involved a dispute over the patentability of a holiday product. Gemmy brought this action for patent infringement against Chrisha that claimed the patent was invalid because it violated the on-sale bar in being offered for sale more than one year prior to the application for a patent. The district court agreed and granted summary judgment for Chrisha. More than one year prior to the application, the product had been displayed in less than final form to potential customers in Hong Kong along with ''quote sheets'' that included an estimated price of the product, measurements and sometimes weights. Approximately 30 retailers saw this exhibit but no sales orders were taken. On appeal, Gemmy relied upon the Elan opinion in arguing that this exhibit did not meet the requirements of a commercial offer for sale that would bar the patent under 35 U. S. C. § 102(b) of the patent statute. The court noted that § 33 of the Restatement (Second) of Contracts was in accord since the mere publication of preliminary data left open terms, thereby indicating that the exhibit did not amount to an offer. The court vacated the district court's summary judgment.

(6) In Finnsugar Bioproducts, Inc. v. Amalgamated Sugar Co., LLC, 2002 U.S. Dist. LEXIS 4979 (N.D. Ill. Mar. 25, 2002) , the court had to determine whether there was a commercial offer for sale that activated the ''on-sale'' bar of 35 U.S.C. § 102(b). The court quoted several statements from this section of Corbin in defining and describing an offer: an offer is an expression by one party of assent to certain definite terms, provided that the other party involved in the bargaining transaction will likewise express agreement to the same terms; an offer creates a power of acceptance; a legally operative offer must contain all the terms of the contract to be made; to constitute an offer, the expression must lead the offeree reasonably to believe that a power to create a contract has been conferred. Applying these and other descriptions of an offer, the court found that the evidence was sufficient to determine that an offer for sale had been made, activating the ''on-sale'' bar.

(7) Moldflow Corp. v. Simcon, Inc., 296 F. Supp. 2d 34 (D. Mass. 2003) . The defendant filed a motion to dismiss the plaintiff's patent infringement suit brought in Massachusetts, based on the absence of personal jurisdiction. The court agreed that defendant had no continuous or systematic business presence in Massachusetts that would justify the exercise of general jurisdiction. The court cited this section of Corbin for the general rule that to constitute an offer, an expression must be sufficiently definite. It found that promotional flyers sent by the defendant to Massachusetts companies in an attempt to sell the defendant's software were not sufficiently definite to create powers of acceptance in the recipients, since the materials did not include quantity, time of delivery, or terms of payment. These promotional materials were not ''offers to sell'' the infringing software as that phrase is construed under federal patent law, and were, therefore, insufficient to establish specific personal jurisdiction over the defendant.

(8) Wafios Mach. Corp. v. Nucoil Indus. Co., 2004 U.S. Dist. LEXIS 13674 (S.D.N.Y. July 21, 2004) . When the plaintiff brought this action for patent infringement, the defendant claimed that the action should be dismissed for lack of personal jurisdiction. The plaintiff alleged that by publishing a catalogue of its machines, including the allegedly infringing machine on its website, the defendant had offered to sell the infringing product wherever Internet sellers could access the defendant's website. Recognizing earlier conflicts in decisions, the court concluded that the Federal Circuit required the determination of whether an invention was the subject of a commercial offer for sale to be analyzed according to general principles of contract law. Citing this section of Corbin and the Restatement (Second) of Contracts, § 24, the court stated the basic rule that an offer creates a power of acceptance in the offeree. The product information on the defendant's website providing neither pricing information nor ordering forms was insufficient to create an offer to sell. While the website, alone, was insufficient, the court held that jurisdictional discovery was necessary to resolve the issue.

(9) Saye v. Howe, 2004 Conn. Super. LEXIS 3103 (October 25, 2004) . Saye, a former portfolio manager for Old Hill Partners (OHP), an investment management company, initiated this action claiming that OHP breached oral modifications of the terms of his original employment contract. The evidence showed that the parties had entered into negotiations for revised terms to Saye's employment contract but they never came to an agreement because Saye refused to agree to make a greater commitment to OHP. He refused to agree to an enhanced non-compete agreement. But Saye alleged that OHP agreed to a significant increase in his compensation. As evidence of this increase, Saye pointed to the fact that OHP provided this increase to him in the year 2000. The court rejected Saye's contention and characterized the increase in the year 2000 as a one-time discretionary bonus, not a modification. The court reasoned that Saye failed to provide any new consideration supporting an enforceable modification. The evidence showed that OHP sought, without success, to have Saye agree to an enhanced non-compete agreement (which would have constituted new consideration), given Saye's history of job changes and the fact that Saye had discussed moving to California. Saye refused to agree. Saye claimed that OHP breached a modification regarding another aspect of his compensation package that was evidenced by an alleged offer contained in an email of OHP's President. The court rejected this contention, noting that there was no written evidence of Saye's acceptance. Moreover, the one point that Saye claims was offered to him (and which he claimed he verbally accepted) was included in an email from OHP's President among a listing of numerous points the parties had discussed in an effort to reach agreement. The court found that to cull one item from this e-mail and label it as an 'offer' was untenable. The court cited Corbin for the proposition that an offer is an unambiguous expression of the terms under which someone is willing to enter into a contract. The fact that the parties may have agreed on various points in the course of their negotiations does not mean that they regarded the arrangement as a complete contract. One point of negotiation, posited in one e-mail by OHP's President among many other points, was not intended to be an ''offer'' that could be accepted isolated from the other points of negotiation. Accordingly, the court found no enforceable modification.

(10) Harris Wayside Furniture Co., Inc. v. Idearc Media Corp., 2007 U. S. Dist. LEXIS 46019 (D.N.H. 2007) . Where the plaintiffs sought to advertise in the defendant's yellow pages and signed the defendant's standard application which clearly stated that the publisher's agreement to publish could only be evidenced by the actual publication of the ad, the court cited this section of the treatise in defining an offer in accordance with the definition in § 24 of the Restatement (Second) of Contracts. This case is fully discussed in § 33.4.

(B) The following cases cited the predecessor to this section:

(1) Baker v. United States, 50 Fed. Cl. 483 (2001) . Pursuant to a federal statute guaranteeing loans to farmers, the plaintiffs applied for a $400,000 loan through the United States Farm Services Agency. The defendant denied the application and refused to implement the determination of a hearing officer in an action by the bank that would have administered the loan. The plaintiffs alleged that the federal statute, the Consolidated Farm and Rural Development Act, constituted an offer which the plaintiffs had accepted through their application, thereby forming a contract under which the loan would be guaranteed up to 90 percent to the bank making the loan. Citing Corbin at § 11, the court held that the statute is not an offer since there is no power of acceptance when another act, the approval of the application, must be performed by the purported offeror. The statute, therefore, is an invitation to submit offers by applying for guaranteed loans.

(2) Levy v. Lucent Techs., Inc., 2003 U.S. Dist. LEXIS 414 (S.D.N.Y. Jan. 13, 2003) . The court denied both the former employee's and the former employer's motions for summary judgment. The employee alleged a series of e-mails created a bilateral contract pursuant to which he agreed to remain with the employer in exchange for the employer's promise that, inter alia, his unvested stock options would vest upon a material diminution of his responsibilities without his consent. Since he was an at-will employee, the exchange could not have formed a bilateral contract. The jury could find, however, the employer made an offer that the employee accepted through performance. An objective standard is employed to determine whether an offer was made. As Corbin stated, an act which creates a power of acceptance must be one that ''leads the offeree to reasonably believe that a power to create a contract is conferred upon him.'' Material issues of fact remained which precluded summary judgment. This case is fully discussed at § 4.2 and also cited at §§ 6.2 and 577.

(3) Beaver v. Mueller, 662 N.W.2d 678 (Wis. Ct. App. 2003) . The plaintiff resort owners entered into an oral contract to exchange housing for labor with one of the defendant workers, Askins. Another defendant, Mueller, who had introduced Askins to the plaintiffs, later agreed to supervise Askins's work. The plaintiffs never promised compensation nor did they provide compensation to Mueller. When Askins breached the contract, the plaintiffs sued both Askins and Mueller seeking compensatory and punitive damages, inter alia, for breach of contract. The plaintiffs obtained a default judgment against Askins. The trial court dismissed the claims against Mueller, who was simply ''helping out'' in accordance with his long-time friendship with the plaintiffs. The trial court concluded the claims were frivolous and that Mueller was therefore entitled to the award of costs and attorney fees under a Wisconsin statute. On appeal, the instant court cited Corbin in holding that there was no consideration to support a contract between the defendant supervisor and the plaintiffs. The court affirmed the judgment below and held that Mueller was entitled to a further award for the costs and attorney fees of the appeal.

This case is also cited at § 5.3.

(4) Kraft Foods North America, Inc. v. Banner Engineering and Sales, Inc., 446 F. Supp. 2d 551, 2006 U.S. Dist. LEXIS 61702 (E.D. Va. 2006) . Banner sent Kraft a quote for an impedance pipe heating system to be installed in Kraft's Richmond, Virginia facility, and Kraft then sent Banner a purchase order for $26,397 per its proposal. After installation, problems occurred and the project using the system had to be shut down for approximately four months due to these problems. Banner argued that the terms and conditions submitted with its quotation were controlling which included a limitation on consequential damages. Kraft countered that the terms and conditions contained in its purchase order were controlling. The court explained that ''[p]rice quotations are a daily part of commerce by which products are shopped and commercial transactions initiated. Without more, they amount to an invitation to enter into negotiations, but they are not offers that can be accepted to form binding contracts. As a general rule, the submission of a purchase order by a prospective buyer is viewed as an offer which may then be accepted or rejected by a seller. Citing Corbin, the court explained that ''the determination whether an offer inviting acceptance has been made is controlled by the expressed intention of the offeror.'' Banner included ''Terms and Conditions of Sale'' with its quotation, but the terms and conditions failed to express clearly whether Banner intended its quotation to be an offer. The court concluded that ''[g]iven that price quotations are typically nothing more than invitations to enter into negotiations, and that Banner's terms and conditions stated that all orders are subject to Banner's acceptance ... Banner's quotation was not an offer.'' Consequently, Kraft's purchase order was an offer which Banner accepted when it shipped the goods to the Richmond plant pursuant to the purchase order. Thus, the terms and conditions in Kraft's purchase order superseded the terms and conditions in Banner's quotation and constituted the contract between Kraft and Banner. The limitation on consequential damages contained in the terms and conditions of Banner's quotation was not part of the contract, but express warranties contained within the terms and conditions of Kraft's purchase order were part of the contract.

(C) The following cases are noteworthy:

(1) Castle Rock Constr. Co. v. Department of Transp. of Colo., 74 P.3d 491 (Colo. Ct. App. 2003) . After completing highway construction work for the defendant, the plaintiff claimed additional compensation under a contract that provided for arbitration of such claims and a final ''offer'' to be made by the chief engineer. The arbitrators recommended a payment to the plaintiff of $572,003 plus interest. The chief engineer reviewed the recommendation with accountants and concluded that the amount owing to the plaintiff was $188,322 plus interest, which the defendant paid to the plaintiff. Five months later, the plaintiff and its indemnitor filed an action against the defendant. The defendant moved to dismiss the claim on the footing that the chief engineer's letter constituted final agency action and the plaintiff's failure to seek review of such final action within 30 days as required by Colorado statutes deprived the court of subject matter jurisdiction. The trial court agreed and granted the motion to dismiss. The court of appeals reversed since the contract expressly stated that ''the decision of the chief engineer ... shall constitute the final offer by [CDOT].'' Quoting the Restatement (Second) of Contracts, § 24, the court held that ''offer'' is not an ambiguous term and contemplates a response from the offeree. Thus, the chief engineer's letter was an offer and did not constitute final agency action. Cases cited by the defendant that upheld the thirty-day requirement did not involve the modified contract language contained in the instant contract. The court held that state agencies, like private parties, are bound by the terms of the contracts they enter.

(2) Izumi Prods. Co. v. Koninklijke Philips Elecs. N.V., 315 F. Supp. 2d 589 (D. Del. 2004) . In this patent infringement action, the defendant raised the ''on-sale'' bar (35 U.S.C. § 102(b)) that invalidates a patent if the product was offered for sale in the United States more than one year prior to the application for a U.S. patent. The court found that while the products had been advertised in catalogues, advertisements and other promotional materials, such materials are typically viewed as mere invitations to solicit offers. Recognizing that customers could have placed orders for the goods and actual sales may have been made, the court found that the record was devoid of any sales figures to show that offers or sales were, in fact, made within the time frame that would have raised the ''on-sale'' bar. The court granted Izumi's motion for partial summary judgment as to this issue.

(3) Zimmerman v. McColley, 826 N.E.2d 71 (Ind. Ct. App. 2005) . When they were injured in an auto accident as a result of a collision with a car driven by Dulin who died in the accident, the McColleys asked their granddaughter (Chamberlin) to assist them in dealing with Dulin's insurer, the Auto-Owners insurance company. Chamberlain was not an attorney nor was she experienced in negotiating personal injury settlements. The insurer's representative, Hall, informed Chamberlain that the McColley's were entitled to be represented by counsel, but once they hired a lawyer, Hall would no longer be able to discuss the claim with Chamberlain. Hall and Chamberlain discussed possible settlement amounts during which Chamberlain rejected two offers from Hall at $65,000 and $75,000. A few days before the statute of limitations would expire, Hall and Chamberlain had a telephone conversation in which Hall asked Chamberlain if the McColleys would settle for $115,000. Though Hall was not authorized to settle the claim for more than $75,000, she had not informed Chamberlain of this limitation and she had the apparent authority to offer more than $75,000. The McColleys were with Chamberlain when she took the call. Chamberlain told Hall that the McColleys accepted that offer and asked about scheduling a meeting to receive the check. Hall then, for the first time, indicated that the settlement would be structured. Chamberlain required an explanation of a structured settlement and after hearing it told Hall that her grandparents would not agree to such an arrangement. Subsequently, the McColleys filed this action against. Zimmerman, the special administrator of Dulin's estate, alleging Dulin's negligence in causing their injuries. Shortly thereafter, they filed a petition to enforce the settlement with the insurer. Zimmerman argued that there was no ''meeting of the minds'' between the parties concerning the $115,000 settlement since Hall did not intend to make an offer. The court repeated the classic rule of contract law that the objective rather than subjective intention of the parties is controlling. Recognizing that it is often difficult to distinguish between offers and preliminary negotiations, the court relied upon the definition of an offer in § 24 of the Restatement (Second) of Contracts which requires an outward manifestation of a willingness to enter into a bargain that justifies the other party in understanding that her assent to that bargain is invited and will conclude it. Hall had previously extended offers of $65,000 and $75,000 which Chamberlain had rejected. Her final telephone statement asked if the McColleys would accept or settle for $115,000. The court held that Chamberlain was reasonable in understanding this statement to mean that her acceptance, acting for her grandparents, would conclude a contract. Indiana law did not require settlement agreements to be in writing. The court affirmed the judgment of the trial court.

(4) Fedder Dev. Corp. v. FB Hagerstown, (4th Cir. 2006) . In late 2003, Fedder and FB Hagerstown began negotiations for the sale of FB's shopping center. FB's attorney sent an e-mail to Fedder's attorney containing a draft real estate purchasing agreement stating ''the contract is not binding unless and until executed by and delivered to both parties.'' Subsequent revisions through e-mail exchanges occurred between the attorneys with FB's attorney repeating the foregoing qualification. On June 10, 2004, FB's attorney sent a e-mail containing a ''redline'' comparison of the most recent draft agreement and an execution copy of the agreement, ''on the assumption'' that the changes were acceptable to Fedder. The message requested that an authorized officer of Fedder sign five copies of the agreement and stated, ''If you will deliver the copies to the Escrow agent for its signature along with a deposit of $100,000, I will request [FB] print out and execute the same number... for delivery to the Escrow agent as well. The Escrow agent can then sign and date all copies of the contract, retain one original, and then return two fully executed originals to you, and return two originals to me for [FB] along with evidence of receipt of the initial deposit.'' Fedder's attorney replied that the changes were acceptable and he was forwarding the document to his client for signature and instructing the client to send the signed copies to the Escrow agent. Two weeks later, Fedder's attorney sent another e-mail to FB's attorney stating that he had the executed copies and the deposit check and wanted to know whether to send the contracts to FB's attorney for signing or to the Escrow agent. Before Fedder's attorney could deliver the executed copies and check to anyone, FB ''called off the deal.'' Fedder sought specific performance of the contract and the trial judge granted summary judgment for FB. On appeal, Fedder claimed that by signing the agreement submitted by FB and preparing a deposit check, Fedder had exercised its power of acceptance created by the June 10 e-mail. Quoting the definition of ''offer'' in § 24 of the Restatement (Second) of Contracts, the court held that FB had not made an offer in the June 10 e-mail because FB still had to sign the agreement to be bound. Thus, the power of acceptance resided in FB. The June 10 e-mail simply invited Fedder to make an offer in a particular fashion to FB that was free to accept or reject it. The court also found that, even if the June 10 e-mail had contained an offer from FB, Fedder failed to accept in the prescribed manner since FB revoked the offer prior to any delivery of the signed copies and check to the Escrow agent. The court also found that the FB's attorney's ''signature'' on the June 10 e-mail was not effective to bind FB since the attorney had made it clear that no contract would exist unless his client signed. Consequently, the requirement of a writing to satisfy the statute of frauds in a sale of land contract was not met. The judgment below was affirmed.

(5) Jensen v. IBM, 2006 U.S. App. LEXIS 18516 (4th Cir. 2006) . IBM announced a new compensation methodology for its sales representatives contained in a glossy brochure which described commissions based on attaining sales quotas with illustrations. The brochure, however, contained a disclaimer that the example it provided was only illustrative, actual numbers would be different, and local documentation prevailed. The brochure directed employees to go to the corporate intranet which contained a sales incentive plan management guide and a field management guide to incentive plans. In addition to these materials, the plaintiff's manager provided him with a ''quota letter'' that tailored the incentive plan to him. The letter stated, ''[T]his program does not constitute a promise by IBM to make any distributions under it.'' It gave IBM the right to adjust, modify or cancel the program. Subsequently, the plaintiff closed an exceptionally large transaction ($24 million). He calculated his commission under the new incentive plan at $2.6 million. IBM, however, paid him a commission of less than $500,000 and Jensen brought this action. The district court entered summary judgment for IBM. On appeal, the central issue was whether IBM made an offer that created a power of acceptance in the plaintiff. The plaintiff was a terminable-at-will employee. The court stated that ''an employer can make a unilateral offer to its employees and the offer becomes a contract when its conditions are fulfilled.'' Since all offers are ''unilateral'' in the sense that they are made by one party called the offeror, the court meant to say that an employer can make an offer to be accepted only by performance, thereby forming a unilateral contract. The court also states that employers can make such offers to terminable-at-will employees ''whose employment is otherwise without a contract.'' This gratuitous suggestion is inaccurate. Terminable-at-will employment contracts have no duration, but they are still contracts. The court also states that an offer to a terminable-at-will employee that can only be accepted by performance can be modified until the offer's conditions are satisfied. Again, the statement is not accurate since it would be possible to make an offer to an at-will employee that would require time to perform and once performance began, the offer would become unmodifiable and irrevocable under common law principles such as those covered in Section 45 of either the First or Second Restatements of Contracts. Notwithstanding these gratuitous errors, the court correctly found that IBM never made an ''offer'' as defined in the § 24 of the Restatement (Second) of Contracts since the quota letter expressly stated that IBM was not making a promise to adhere to any statement in the illustrated program and could modify or cancel the program at any time. Thus, IBM never ''manifested a willingness to enter into a bargain'' with the plaintiff or other employees. Even if the letter had not contained such a disclaimer, there were several other statements in the other incentive plan materials to which the plaintiff and other sales representative were directed that would have indicated to a reasonable party in the plaintiff's position that he was not entitled to the commission that he calculated.

(6) Yardscapes v. Town of East Haddam, 2006 Conn. Super. LEXIS 2184 . The Town sent an announcement to certain contractors that had served the town in the past and replicated the announcement with a legal advertisement in the local newspaper for winter snowplowing bids. Under its contract with its own union workers, the Town was permitted to supplement normal snowplowing when the snow accumulated four inches or more or where two vehicles were unavailable. The announcement indicated that bidders would have to be ''on call'' when needed and would receive an hourly rate for work actually performed. The town reserved the right to cure any infirmities in any bid and was under no obligation to accept the lowest bid if the board determined that a higher bid was in the best interests of the town. The plaintiff responded to the announcement by placing itself on the call list. The town advised the plaintiff and other contractors who qualified and otherwise bid on time would be called out first while late bidders would be called out second. The plaintiff's bid was on time. When another firm that was one hour late in submitting its hourly rate bid was chosen for a particular snowplowing project, the plaintiff claimed the town had breached a contract and violated the implied covenant of good faith and fair dealing. The court placed the case under the required rule that a contract must be reasonably definite and certain in its terms as suggested in § 33 of the Restatement (Second) of Contracts. The facts, however, suggest that there was no contract because there was no offer. The court recognized that while the town documents used the words ''bid'' and ''contract,'' it was not inviting specific bids. Nor was it making any promise or commitment that would provide any contractor with a reason to understand that a response would create a legal obligation. Essentially, the town simply wanted to know which contractors would be available for snowplowing and what the hourly rates would be. The announcement was akin to asking a seller of services if he would be available to provide such services at some indefinite time and what the price of the services would be. The court notes that contractors who listed themselves as available were under no obligation to the town. The plaintiff had refused to perform some work in the past. For that reason alone, the town was under no obligation to the contractors but the announcement itself expressly stated that the town had no obligation to hire any contractor. The town's explanation for hiring the one-hour late contractor was larger equipment and good experience with that contractor in the past. The explanation, however, was unnecessary since the town could have hired or not hired him or any contractor in its sole discretion as the announcement expressly stated. Since there was no contract, the court held that there could be no violation of the implied covenant of good faith which applies only to fulfill the reasonable expectations of contracting parties as they had intended.

(7) Medical Solutions, Inc. v. C Change Surgical, LLC, 2006 U. S. Dist. LEXIS 93855 (D. D. C. 2006) . In determining whether the defendant's display of a product at a trade show constituted an ''offer to sell'' the product that allegedly infringed the plaintiff's patent, the court relied upon the definition of ''offer'' in § 24 of the Restatement (Second) of Contracts as well as precedent involving the interpretation of ''offer to sell'' under 35 U. S. C. § 271(a). The plaintiff claimed that the defendant showed the product with the intention of creating customer interest in it. A hundred clinical professionals left their contact information at the defendant's trade show booth that had made the product more visible to potential customers. The court noted that the display did not include any price terms which the court viewed as defeating the critical requirement in the definition of an offer that a party would be justified in understanding that his assent to a bargain was invited and would conclude the bargain, forming a contract. The court found no ''offer to sell'' under these circumstances. It should be noted that contracts can be made absent a price term as suggested by the Uniform Commercial Code, § 2-305. It is, however, critical to discover the parties' intent to conclude a contract with an open price term. The display of an item at a trade show with no price attached thereto appears to be a mere preliminary negotiation.

(8) Willis v. Swain, 112 Haw. 184, 145 P. 3d 727 (2006) . An insurance company claimed that it offered supplemental uninsured motorist coverage to an insured as evidenced by a statement in a certificate of eligibility that read, ''If you desire UM coverage, contact an insurance agent to assist you with these coverages upon the payment of the appropriate premium.'' The court held that this statement was at most an invitation to negotiate and not an offer. It did not manifest a willingness to enter into a bargain, so made as to justify in understanding that her assent to such a bargain was invited and would conclude it (Restatement (Second) of Contracts, § 24).

(9) Davis v. Mobile Home Tenants Association v. Everson Construction, Inc., 2007 R. I. Super. LEXIS 79 . A statute required notice to any incorporated mobile home tenants' association that the owner intended to sell the property so as to provide the tenants' association representing 51% of the tenants the right to purchase it at the offered price. The owner made an offer to sell the property which offer was accepted prior to the incorporation of the tenants association. The deed conveying the property, however, was mistaken. Before a new and corrected deed was recorded, the association was incorporated and claimed a violation of the statute in not being notified of its right to purchase the property. The court held that, the association was incorporated and, therefore, entitled to notice under the statute only after an offer had been made and accepted. The court repeated the Restatement (Second) of Contracts definition of an ''offer'' in § 24 as a manifestation of willingness to enter into a bargain so made as to justify the party to whom it was addressed that his assent to the offer was invited and would conclude a contract. There was no offer nor acceptance as of the date of the association's incorporation. Those operative acts had preceded the date of incorporation and a contract was formed. Both the mistaken and corrected deeds were performances of the contract. The statute required that notice be given to a qualified association ''before a mobile home park may be sold.'' The court held the park was ''sold'' when the buyer and seller consummated a binding contract to sell which occurred before the association had the necessary incorporated existence to activate the statute.

(10) Fellowes, Inc. v. Michilin Prosperity Co., 2007 U. S. Dist. LEXIS 45545 (E.D. Va. 2007) . The plaintiff, an Illinois corporation, alleged the defendants infringed its patents on shredders in violation of U. S. C. § 271(a) by offering to sell or by selling shredders manufactured by Michilin (a Taiwanese company) containing features on which the plaintiff held patents. Section 271(a) applies only to offers to sell and sales within the United States. The defendants claimed that they did not offer to sell or sell their shredders within the United States. They insisted that the sale and offer to sell occurred outside the United States because the defendants' shredders are sold ''F. O. B. China.'' Relying on the traditional definition of an ''offer'' in § 24 of the Restatement (Second) of Contracts, the court held that the location of the passage of title to goods or the passage of the risk of loss does not, by itself, determine where a ''sale'' or ''offer to sell'' occurs for purposes of § 271(a). The sales process involved one of the defendants (Intek) delivering ''quote sheets'' to United States retailers containing the prices and specifications of Michilin shredders. The retailers would issue purchase orders based on the quote sheets. The court deemed the ''quote sheets'' to be offers and the retailers' purchase orders acceptances of those offers since a purchase order may be used in various ways including use as an offer or acceptance. The use of the purchase order determines its legal effect. The court stated that the sending of the purchase order ''constituted an essential element of the sale that occurred within the United States'' that was the intended destination for the majority of the ''accused shredders.'' The agreements allowing these sales to occur were negotiated and executed in the United States. The court held that, under § 271(a), Michilin offered to sell and sold the accused shredders in the United States during the terms of the plaintiff's patents.

(11) Fletcher-Harlee Corp. v. Pote Concrete Contrs., Inc., 482 F.3d 247 (3d Cir. 2007) . The plaintiff (Fletcher) was a general contractor that brought this action against Pote, a concrete subcontractor, for refusing to perform in accordance with its submission of a quote that Fletcher relied upon in submitting a bid for the entire project. The instant court recognized the classical practice in which a general contractor necessarily relies on bids from various subcontractors in order to create the general, overall bid. Courts recognize the subcontractors' bids as firm offers because they may very well be relied upon and the general contractor cannot accept the subcontractor bids until the general succeeds in being awarded the contract for the project. The ''realism'' of such commercial practices is recognized by courts in their interpretation of contracts. Such practices, however, must yield to the express terms used by the parties since express terms are given greater weight than evidence of usages of trade (Restatement (Second) of Contracts, § 203 (b)). Fletcher sent a solicitation letter to various subcontractors stating that their bids had to be held open for a minimum of 60 days and the subcontractors had to be responsible for the prices and proposals they submitted. Since the solicitation letter was not in the record, the court doubted whether it was an offer. It assumed that it was merely a request to submit an offer. If the recipient of such a letter knows that it is sent to more than one subcontractor of suppler of the same service or product, it would not be an offer since, as the court defined ''offer'' in accordance with § 24 of the Restatement (Second) of Contracts, it would not be a manifestation of willingness to enter into a bargain, so made as to justify the recipient in understand that his assent was invited and would form a contract. Pote replied with a price quotation that not only failed to conform to the terms of Harlee's solicitation but stated that it was submitted for informational purposes only, did not constitute a ''firm'' offer, should not be relied on, and Pote would not be held liable for any of the terms in this quote. The court correctly noted that this reply could not be an offer because it disclaimed any intention on the part of Pote to be bound. Even if Harlee's solicitation letter had been an offer, the Pote response could not be an acceptance because it contained terms that were materially different from the terms of the offer (Restatement (Second) of Contracts § 59) unlike the situation in contract for the sale of goods under the Uniform Commercial Code § 2-207(1) where a definite and seasonable expression of acceptance may form contract notwithstanding different of additional terms. For the same reason that Pote quotation was not an offer, it could not be a counter offer. Absent any offer or acceptance, there was no contract and the district court properly dismissed Harlee's claim for breach of contract. Notwithstanding the language in Pote's quotation, Harlee used that quoted price in his bid for the project which was successful. Pote then refused to perform in accordance with the quote and Harlee had the concrete supplied by another party, adding $200,000 to Harlee's cost which it attempted to recover from Pote on a promissory estoppel theory. The court noted the absence of the critical element of reasonable reliance which Harlee could not possibly demonstrate. While noting that Pote may have exhausted whatever goodwill it had ''by bucking industry custom,'' the disclaimer in Pote's quotation was so plain that the court had no choice but to enforce it. The court affirmed the judgment below.

Supplement to Notes in Main Volume

5. U.S.- Linear Tech. Corp. v. Micrel, Inc., 275 F.3d 1040 (Fed. Cir. 2001) . Promotional material about a future product, solicitations of information from sales representatives to determine the value of the product to assist in setting its price, publication of preliminary data sheets and the dissemination of advertising and other information about the product to customers did not justify an understanding that the party to whom such communications were sent could conclude a bargain by assent. There was no offer.

6. U.S.- Fisher-Price, Inc. v. Safety 1st, Inc., 2002 U.S. Dist. LEXIS 10569 (D. Del. June 14, 2002) . Fisher-Price filed an action for a declaratory judgment asserting that certain of the defendant's products infringed Fisher-Price's patents. Safety 1st asserted that certain Fisher-Price patents were invalid under the ''on-sale'' bar outlined in 35 U.S.C. § 102(b), which precludes the issuance of a patent if the product was in public use or on sale in the United States more than one year before the patent application was filed. Fisher-Price claimed that it made no offer to sell these products within the one-year bar, and even if an offer had been made, the sale did not take place in the United States.

The court held that, if Fisher-Price made an offer, it was made in the United States, but there must be a definite offer to sell before the ''on-sale'' bar will apply. The offer will be considered definite if it would constitute an offer in the commercial community. Though the court was guided by the Uniform Commercial Code, the UCC does not define the term ''offer.'' Thus, federal courts may draw guidance from state and federal courts interpreting the UCC when deciding whether an offer has been made. The Restatement of Contracts is also a permissible source of guidance. The court quoted the Restatement (Second) of Contracts, § 24, which defines an offer as ''the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it,'' but ''a manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent'' (Restatement (Second) of Contracts § 26). Safety 1st argued that since certain Fisher-Price ''Initial In-Line'' forms were in writing, contained somewhat specific terms, and were drafted after some negotiation, they should be considered offers. The court found this evidence inconclusive, stating that the Restatement teaches that even where the parties have made ''promissory expressions or words of assent'' and memorialized them in writing, such writing may not be an offer if ''the document is intended not as an offer but only as a step in the preliminary negotiation of terms, or as a specimen for use in other transactions, or as something to be shown to a third person to influence his action.'' Restatement (Second) of Contracts, § 26, comment e. The court found that there was a question of fact as to whether Fisher-Price manifested an intention that their ''Initial In-Line forms'' were offers.

Subsequently, a jury found that the ''in-line'' agreements did not rise to the level of commercial offers for sale. Safety 1[st] then sought a judgment as a matter of law which the district court denied and this judgment was affirmed in Fisher-Price, Inc. v. Safety 1st, Inc., (9th Cir. 2004) . The case is also noted under § 2.2 of this supplement.

Iowa- Allied Mut. Ins. Co. v. Colby Dev. Co., 2003 Iowa App. LEXIS 545 (Iowa Ct. App. June 25, 2003) . In this declaratory judgment action by the plaintiff insurance company, the defendants claimed insurance coverage for roof damage caused by faulty workmanship on their townhouses. The plaintiff's letter of June 30 stated that the plaintiff was prepared to offer the defendants $1 million ''to bring this claim to a mutually agreeable conclusion.'' The letter stated that the plaintiff insurer was also working with a roofing contractor to contribute additional funds to cover other costs. Finally, the letter indicated that the writer, representing the insurer, expected to receive an appropriate release form. Apart from the letter, the insurer also required confirmation that the representative of the defendants had the authority to bind them. The representative's authority was confirmed in writing and was delivered to the insurer on July 2 along with a release form that was essentially the same as an earlier release form the insurer found acceptable. In a July 30 letter, the insurer stated that it had ''made an offer'' in its June 30 letter which was never accepted and was withdrawn. In its petition for a declaratory judgment that there was no insurance coverage for the defendants' claims, the court granted the plaintiff's motion for summary judgment. The instant court reversed, finding that the June 30 letter was an offer because it manifested a willingness to enter into a bargain in a fashion that justified the defendants in believing that their assent would conclude a bargain. The court resolved any doubt about that interpretation by reference to the plaintiff's July 30 letter, which clearly identified the June 30 letter as an offer. The court found that the offer required a satisfactory release form and a confirmation of the representative's authority, both of which had been delivered on July 2 in response to the June 30 offer.

Mo.- Volker Court, LLC v. Santa Fe Apartments, LLC, 130 S.W.3d 607 (Mo. Ct. App. 2004) . Where the plaintiff negotiated for the purchase of an apartment building, and the defendant clearly stated that he did not have the authority to form a contract absent the agreement of his brother-partner, the court quoted this section of Corbin to the effect that a manifestation of willingness to enter into a bargain is not an offer if the party to whom it is addressed knows or has reason to know that the person making the statement does not intend to conclude the bargain absent a further manifestation of assent.

7. U.S.- Frazier v. Harris, 218 F.R.D. 173 (C.D. Ill. 2003) . The defendant, City of Springfield, made a purported offer of settlement under Rule 68 of the Federal Rules of Civil Procedure which requires the plaintiff either to accept the offer or to reject it and assume the risk of paying the defendant's litigation expenses as well as its own if a judgment or verdict lower than the offered amount is rendered for the plaintiff. A Rule 68 offer is governed by the rules of contract law. The purported offer in this case required the plaintiff to agree to its terms but then required the city council to decide whether to approve the agreement. Thus, the court held that the City's proposal was not an offer since the plaintiff's acceptance would not form a contract. No power of acceptance was conferred upon the plaintiff. Only the City's acceptance would conclude a contract. Thus, the City's proposal was a mere invitation to the plaintiff to make an offer, and the plaintiff was not subject to Rule 68.

Ind.- Rosi v. Business Furniture Corp., 615 N.E.2d 431 (Ind. 1993) (interoffice document not an offer to employee because employee was not given a copy and had not even seen it at the time of his hiring).

8. Cf. Resolution Trust Corp. v. Carr, 13 F.3d 425 (1st Cir. 1993) (bank's minute book is ''merely an internal record of the corporate proceedings'' and memorialization of authorization to grant extension of a loan did not create contract with borrower).