Mutual assent

     Except in some special cases, the formation of a contract requires: (1) mutual assent by two or more persons to an exchange of promises (bilateral contract) or to an exchange of a promise for performance (unilateral contract) and, (2)  a consideration.  R.2d Contracts 17, 3.  Here we explore the requirement of mutual assent to an exchange.  We explore the requirement of a consideration, and also explore some special cases in which contracts are formed without mutual assent to an exchange or a consideration, in Commentary.Consideration and estoppel.     

     The application of a variety of rules, many of them grouped under the rubric "offer and acceptance," determine whether or not, and when, parties have manifested mutual assent to an exchange.  Mutual assent to an exchange occurs if and when one party (an "offeree") timely accepts an offer made by another (an "offeror"). Accordingly, part of the study of mutual assent may be conveniently grouped into these questions:  (1) What is an offer and when is it made?  (2) What is acceptance and when does it occur?  (3) At what point does the power to accept an offer terminate such that an attempted acceptance is no longer timely?  

     We consider the rules governing mutual assent in three stages.  First we consider the basic rules of offer and acceptance.  Donovan v. RRL Corporation considers whether a automobile dealer's newspaper advertisement of the sale of a used Jaguar was an offer or simply an invitation to negotiate.  Beard Implement Company, Inc. v. Krusa considers the manner of acceptance invited by a farmer's offer to a farm implement dealership to purchase a combine.  Three problems (Problem.Dispute.Duration of offers, Problem.Dispute.Graduation party, and Problem.Dispute.Sale of used Jaguar) offer opportunities to sort through and apply the relevant rules concerning rejection of offers, revocation of offers, counter-offers, lapse of offers, and the effect of death or incapacity of the offeror or offeree.  In working through these cases and problems, it is important to bear in mind, as R.2d Contracts 22 (2) and UCC 2-204(2) candidly acknowledge, that the rules can oversimplify human behavior.  In many cases, such as in complex commercial deals resulting from months of negotiation and culminating in the ceremonial mutual signing of a carefully crafted written agreement, one finds mutual assent without being able to identify discrete events as either an offer or an acceptance.  Alternatively, as we explore in Marvin v. Marvin and in Problem.Dispute.Soccer trainer, some contracts are implied from facts and circumstances rather than from overt expression of offer and acceptance. 

     Second, we consider the special problems posed by what has become known as the "battle of the forms."  This battle, addressed by UCC 2-207, arises because merchants frequently consummate transactions with one another through the exchange of standardized but not identical forms, such as a Purchase Order sent by a merchant buyer and an Acknowledgment or Confirmation of Order thereafter returned to the buyer by a merchant seller.  Normally the transaction proceeds without hitch notwithstanding any difference in the forms, but, in the event of later dispute, each party is tempted to argue either that a contract was never formed because the exchanged forms were not identical or that that the terms of the contract are those contained in their own form.  Problem.Dispute.University purchase of fire extinguishers, and Steiner v. Mobil Oil Corp. expose you to two of the battles.  Following many years of discussion and debate, amendments to UCC Article 2 offer a different solution to the battle of the forms.  We consider that new solution in Part C of the fire extinguisher problem.  

     Third, we consider issues of mutual assent posed both by the marketing of digital technology and by the use of electronic communication in commerce.  ProCD v. Zeidenberg considers the formation issues posed by a "shrinkwrap license" accompanying the sale of a CD-ROM; Hill v. Gateway 2000, Inc. considers formation issues posed by the sale of a PC over the telephone.  Wholly apart from the marketing of digital technology, the use of electronic communication in commerce has required the development of new vocabulary and new rules, including rules relating to mutual assent.  We introduce this vocabulary and the sources of some of the new rules in Commentary.Electronic communication. 

     We also consider several other issues implicated by the requirement of mutual assent.  In some cases, overt behavior suggests mutual assent although the parties do not share the same understanding of terms being proposed.  In other cases, overt behavior suggests mutual assent even though one or both of the parties do not intend to assent (joking perhaps).  A time worn legal phrase "meeting of the minds" (a phrase that for Trekkies may conjure the image of the Vulcan mind meld) suggests that in either of these cases no contract can be formed because the parties did not subjectively intend to form a contract.  That phrase is misleading because, for the most part, contract doctrine attends to the objective manifestations of assent rather than to the subjective intentions of the parties.  We explore these issues in the classic case of Raffles v. Wichelhaus, where two minds, if not two ships, were passing in the night, and in Leonard v. Pepsico, in which a member of the Pepsi generation claimed that Pepsico owed him a Harrier jet fighter.  On the issue of misunderstanding, also see R.2d Contracts 20.    

     In yet other cases, one party may claim that assent was to be manifest only through mutual execution of a document or electronic record (notwithstanding earlier communication signaling agreement) while the other party claims that a contemplated document or record was to serve only as a written memorial of an agreement already reached.  Lafayette Place Associates v. Boston Redevelopment Authority offers an interesting example of such a dispute in the context of a complex agreement for redevelopment of land in the City of Boston. 

     The complexity of exchanges to which parties assent varies enormously, from the simple exchange of a quarter for a pack of gum to a book size written plan of reorganization of a publically traded corporation in a Chapter 11 bankruptcy proceeding.  No agreement articulates every term that the parties might consider; implication is often required for even the most detailed of written agreements.  But there must be some minimum content, which the relevant rules (e.g. R.2d Contracts 33 and UCC 2-204(3)) describe as a requirement for "reasonably certainty" or "definiteness."  Lafayette Place Associates v. Boston Redevelopment Authority also considers this requirement.    

     Here is a roadmap to most of the issues and to the applicable rules.  As with many other questions of contract law, Article 2 of the Uniform Commercial Code supplies some rules applicable to the sale of goods but leaves much to the common law through UCC 1-103.     

   Supplementary reading:  Farnsworth, Chapter 3; White & Summers, 1-3 - 1-5.