78 Of 174 documents

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

CHAPTER 3 ACCEPTANCE AND REJECTION OF OFFER

1-3 Corbin on Contracts 3.syn

§ 3.syn Synopsis to Chapter 3: ACCEPTANCE AND REJECTION OF OFFER

§ 3.1 Two Parties Necessary for a Contract, a Promisor and a Promisee

§ 3.2 In a Bargaining Transaction, Only the Offeree Has Power to Accept

§ 3.3 Assignment of Power by an Option Holder-Irrevocable Offers

§ 3.4 Motive With Which Offeree Renders Performance

§ 3.5 Knowledge of Offer as a Pre-requisite to Acceptance

§ 3.6 Knowledge of the Offer After Part Performance Already Rendered

§ 3.7 Acceptance ''Subject to Approval'' by a Third Party

§ 3.8 Acceptance by Overt Act

§ 3.9 Unilateral Contract-Acceptance by Beginning Requested Performance

§ 3.10 Acceptance of a Published Offer of a Reward for Action or Contest Prize

§ 3.11 When the Words ''I Accept Your Offer'' Would Be Ineffective

§ 3.12 Acceptance by Forbearance From Action

§ 3.13 When Notice of Acceptance Is Necessary

§ 3.14 Notice as a Requisite of Guaranty and Letters of Credit

§ 3.15 Notice as a Condition Distinguished From Notice as an Acceptance

§ 3.16 Offer of a Promise, Requesting Non-promissory Action in Return

§ 3.17 Offer of an ''Act'' for a Promise

§ 3.18 Silence as a Mode of Acceptance

§ 3.19 Can Offeror Make Silence Operate as Acceptance?

§ 3.20 Belated or Conditional Acceptance Followed by Offeror's Silence

§ 3.21 Silence Plus Additional Circumstances

§ 3.22 Multiple Acceptances

§ 3.23 Alternative Modes of Acceptance

§ 3.24 Acceptance by Post

§ 3.25 Acceptance by Telephone or Other Electronic Means

§ 3.26 Withdrawal of a Letter of Acceptance From the Mails

§ 3.27 Acceptance by Telegraph-When Operative

§ 3.28 Acceptance Must Manifest Assent and Be Unconditional

§ 3.29 An Acceptance May Be Unconditional Even Though the Acceptor Makes a Conditional Promise

§ 3.30 Acceptance Not Conditional, Even Though Grumbling or Accompanied by a Request or by a New Offer

§ 3.31 Subsequent Erroneous Interpretation Does Not Make an Acceptance Conditional

§ 3.32 Attempts by the Offeree to Restate in the Acceptance the Terms of the Offer

§ 3.33 Attempts by the Offeree to State in the Acceptance the Legal Operation of the Agreement

§ 3.34 Mode of Acceptance Can Be Prescribed by the Offeror

§ 3.35 Counter-Offers and Their Effect

§ 3.36 Power to Accept an Offer Is Terminated by a Counter-Offer or Conditional Acceptance

§ 3.37 Conditional Acceptances and Counter-Offers Under the Uniform Commercial Code and the United Nations Convention

[a] Is there a definite expression of acceptance?

[b] Is the Definite Expression of Acceptance ''Expressly Conditional on Assent to the Additional or Different Terms''?

[c] Assuming the Writings Create a Contract, What Are Its Terms?

[d] If the Writings Do not Make a Contract What Is the Effect of the Parties' Behavior if They Proceed as if They Had Made a Contract?

[e] Confirmations

[f] The United Nations Convention

§ 3.38 A Counter-Offer or Rejection by One Who Has a ''Binding Option'' or an Irrevocable Offer Does Not Terminate the Power of Acceptance

§ 3.39 Power of Acceptance Not Terminated by a Counter-Offer if Either Offeror or Offeree So Prescribes

§ 3.40 Inquiries and Separate Offers Distinguished From Counter-Offers

§ 3.41 Effect of Rejection of an Offer

79 of 174 DOCUMENTS

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

CHAPTER 3 ACCEPTANCE AND REJECTION OF OFFER

1-3 Corbin on Contracts § 3.1

§ 3.1 Two Parties Necessary for a Contract, a Promisor and a Promisee

[Go To Supp]

As has been stated earlier, a contract does not necessarily involve reciprocal promises or reciprocal duties. It may be ''unilateral,'' in that only one party makes a promise, with the result that the promisor alone is under a legal duty and the other party alone has a legally enforceable right. It does indeed take two to make a ''bargain''. There must be mutual assent to the exchange of performances. It takes only one to make a promise, but there must be another one to whom the promise is made. For any executory contract, there must be at least two parties, a promisor and a promisee.

It has often been said that one cannot contract with oneself.n1 This is a mere truism if we have first defined contract as requiring the existence of legal rights and duties. If we define a legal relation as a relation existing between persons, it is obvious that there must be at least two persons for such a relation to exist.n2 However, corporate entities controlled by the same owners have distinct legal personalities and may bind themselves to each other by contract.n3 Human beings, similarly, may have more than one legal personality and may contract with themselves in such several personalities.

The statement, that one may not contract with oneself, however, truism though it is, may be so used as to lead to unfortunate and incorrect results. As is the case with most absolute statements, it fails to take into account the whole universe of human behavior. Restatement (Second) of Contracts § 9, comment b, provides, in part: ''One person may have different capacities, as for instance as trustee, as executor, as partner, and as individual. If he purports to make a promise in one capacity to himself in another capacity, there may be legal consequences... Even if his intention is manifested by execution of a formal document, or by other conduct, it may not be technically accurate to say that in one capacity he holds a claim against himself in another capacity, but that may be substantially the effect of his acts.'' If the effect of the conduct is to create contractual liability, the supposed ''technical'' inaccuracy stems from an overgeneralization about the inability to contract with oneself. As is well known, humans can have more than one legal capacity, and thus can have more than one legal personality.n4 Where the United States retained the defendant as its agent to manage a government-owned merchant ship, and the defendant, as agent, contracted with its own stevedoring division for services, it was ruled that the contract was binding on the defendant upon its ratification by the United States.n5 Even a corporation can have more than one legal personality. Thus, a bank acting as executor may borrow money for the estate from its loan division.n6 Such rulings are in conformity with the realistic approach under which one department of the executive branch of government may sue another.n7

It may be supposed, for example, that an agreement is entirely inoperative if it purports to be made by a partnership or other unincorporated association with a member of such association. There is no reason why such an agreement should not operate as a valid and enforceable contract between the individual member and the other members of the association that purports to make the agreement.n8 For the purpose of giving a judicial remedy and for other practical purposes, there is nothing to prevent a court from treating the association of individuals as if it were an independent unit. The adopting of such procedure as this does not result in holding that the association is a corporation, and that the legal relations of its members are to be determined by the law of corporations.

It may well be that an agreement made in this way should be subjected to severe scrutiny in the search for fraud and illegality. Yet the mere fact that the agreement purports to be made between the unincorporated association and one of its members does not in itself prove either fraud or illegality. The narrow rules of pleading and procedure at common law may have been such as to prevent the direct enforcement of such a contract as this, but such difficulties did not exist in equity and do not exist under modern procedure. The legal relations of the actual persons involved in the contract can easily be determined and a proper decree entered in accordance therewith.

The early common law courts themselves did not treat such a contract as this as absolutely void. An unincorporated association could force the payment of dues in accordance with a promise by a member to pay such dues.n9 A negotiable instrument given by a member of a partnership to the firm or by the firm to the individual member is not a void document, although a direct action at earlier common law by one of the contracting parties against the other perhaps could not be maintained. An indorsee of such an instrument could maintain an action against the maker.

An individual whose name appears on both sides of a contract transaction is contracting with the others. The individual gets no rights against himself or herself in the same capacity and owes himself or herself no duties. Neither law nor equity ever recognized such relations. The individual's rights and duties with respect to the others are determined just as their rights and duties are determined. Suppose that A and B execute a contract whereby they promise to sell land to A and C. In such case A will have an enforceable right against B that B shall make the promised conveyance. B will have a correlative right against A. And C, as a third party beneficiary, may have rights against both A and B.n10

Legal Topics:

For related research and practice materials, see the following legal topics:

Contracts LawTypes of ContractsExecutory ContractsContracts LawFormationAcceptanceGeneral OverviewContracts LawTypes of ContractsBilateral ContractsContracts LawTypes of ContractsUnilateral ContractsGeneral Overview

FOOTNOTES:

(n1)Footnote 1. ''It is a first principle that, in whatever different capacities a person may act, he can never contract with himself, nor maintain an action against himself. He can in no form be both obligor and obligee.'' Eastman v. Wright, 23 Mass. (6 Pick.) 316 (1828) ; Gorham's Adm'r v. Meacham's Adm'r, 63 Vt. 231, 22 A. 572 (1891) . Dogmatic generalizations of this kind are almost always wrong. The universe is too large to be governed by such generalizations.

(n2)Footnote 2. In Schmaeling v. Schmaeling, 127 Misc.2d 763, 487 N.Y.S.2d 494 (1985) , the landlord purported to lease certain premises to himself, doing business as ''Hilltop Service Station.'' He then purported to sublease the premises to one Coven. He then brought proceedings to evict himself and Coven on the grounds that the sublease, being for a longer term than the lease, expired with the termination of the lease to himself. The court ruled that the lease was a nullity and that the purported sublease was a lease for the term provided in the writing between the landlord (in the guise of a lessee) and Coven.

(n3)Footnote 3. In re Caveney, 761 F.2d 671 (Fed.Cir.1985) .

(n4)Footnote 4. Morgan Wightman Supply Co. v. Smith, 764 S.W.2d 485 (Mo.App.1989) , involved the complexities of Missouri's Mechanics' lien statutes and turns on a determination of whether the particular lienor was an original contractor or a subcontractor because the notice requirements applicable to subcontractors differ from those applicable to original contractors. The owners, Robert and Elizabeth owned property as tenants by the entirety. Robert was developing the land through his wholly owned business, the R.C. Smith Construction Co. The court was willing to accept the possibility that there was a binding contract between Robert and Elizabeth as owners and Robert as construction contractor but found no evidence of such a contract. The dissent thought that an implied contract had been proved.

(n5)Footnote 5. United States v. Alaska S.S. Co., 491 F.2d 1147 (9th Cir.1974) .

(n6)Footnote 6. Breedlove v. Freudenstein, 89 F.2d 324, 112 A.L.R. 777 (5th Cir.1937) , cert. denied, 302 U.S. 701 , noted 51 Harv.L.Rev. 351 (1937).

(n7)Footnote 7.

U.S. - United States v. Nixon, 418 U.S. 683, 94 S.Ct. 3090, 41 L.Ed.2d 1039 (1974) .

Cal. - Yosemite Portland Cement Corp. v. State Bd. of Equalization, 59 Cal.App.2d 39, 138 P.2d 39 (1943) . The City by competitive bidding ''contracted'' with a department, the ''Hetch Hetchy Project.'' This was held to be a contract within the meaning of a tax exemption statute, the court stating, however, that this was not a matter of ''general contract law.'' This realistic approach was achieved despite the dogma that the court considered to be general contract law.

(n8)Footnote 8. Restatement (Second) of Contracts § 11, provides: ''A contract may be formed between two or more persons acting as a unit and one or more but fewer than all of these persons, acting either singly or with other persons.'' Thus, a partner can contract with the partnership. Forsyth v. Butler, 152 Cal. 396, 93 P. 90 (1907) .

(n9)Footnote 9. Anderson v. Amidon, 114 Minn. 202, 130 N.W. 1002 (1911) .

(n10)Footnote 10. In Welling v. Crosland, 129 S.C. 127, 123 S.E. 776 (1924) , A and B contracted to sell land to A and 19 others, each of these buyers promising severally to pay separate sums. It was held that A and B could get a decree for specific performance by the 19 others. ''It is true that A was a party to the trust agreement, one of the syndicate. How this fact may relieve the other members from their obligations we cannot conceive. They were aware of it when they entered into the agreement, and as it has turned out, the entry of A was a benefit to them rather than otherwise, for he bears his proportion of the purchase price, to that extent relieving the others.''

In Barlow v. Gregory, 31 Conn. 261, 265 (1863) it was said: ''A contract is an agreement between two or more persons....'' But where one person has different capacities, as in the case of a trustee, executor, administrator, agent, or other fiduciary, he has the power to contract in his representative capacity with himself as an individual, the contract being voidable, however, at the instance of the beneficiary. See Mallory v. Mallory-Wheeler Co., 61 Conn. 131, 138, 23 A. 708, 711 (1891) .

In Moore v. Denslow, 14 Conn. 235 (1841) , it was held that an action at law could not be maintained by A against B and C on a promissory note made to A's order by A, B and C; but it was recognized, on the authority of Nevins v. Townsend, 6 Conn. 5 (1825) , that if the note had been endorsed by A to X, the latter might have sustained an action against all the makers. The court said that, in such a case, ''the technical rule of law that a party cannot be both plaintiff and defendant would be obviated.'' The inference to be drawn from the opinion is that the obstacle in the path of A's action was a procedural one and not because of any infirmity in the contract; for, if an action by X against A, B and C would be sustained, the power of A, B and C to contract with A is recognized.

Compare, however, People's Bank of Butler v. Allen, 344 Mo. 207, 125 S.W.2d 829 (1939) .