Black-letter propositions
- 01
Advertisements, catalogs, price quotes, and invitations to bid ordinarily solicit offers unless clear, definite, explicit, and leaving nothing open.
- 02
Common law generally requires essential terms capable of enforcement; the UCC can form a sales contract despite open terms if intent and a remedy basis exist.
- 03
Requirements and output quantities are measured by actual good faith and cannot be unreasonably disproportionate to stated estimates or prior output.
- 04
An offer can invite promise, performance, or either, and the invited mode affects acceptance.
Use this attack sequence under time
Frame the issue
Find objective commitment, not subjective intent.
Resolve the next checkpoint
Identify offeree and essential terms.
Resolve the next checkpoint
Apply common-law or UCC certainty.
Finish the conclusion
Determine invited acceptance method.
Common wrong turns
- A stated price alone is often not an offer.
- Vagueness about an immaterial term is different from no basis for a remedy.
- Courts do not enforce an agreement to agree without a workable standard.
Worked example
A store posts: 'One new laptop, serial 44, $300, first customer at 9 a.m.'
The unusually specific advertisement identifies the item, price, quantity, and acceptance method and leaves little to negotiate, so it may be an offer rather than a mere invitation.
Practice this topic
Formation and open terms under Article 2
UCC 2-204(1) says a contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties that recognizes the existence of a contract. Section 2-204(3) says a contract does not fail for indefiniteness even though terms are left open if the parties intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.
UCC 2-305 lets parties conclude a contract even though the price is not settled, and in that case the price is a reasonable price at the time for delivery if nothing is said, if it is left to be agreed and they fail to agree, or if it is to be fixed by a standard that is not set. A price to be fixed by one party means a price fixed in good faith. Section 2-306 treats output and requirements terms as measuring quantity by the actual output or requirements that occur in good faith.
The common-law offer
Cornell's summary says an offer must be stated and delivered in a way that would lead a reasonable person to expect a binding contract to arise from its acceptance, and that a valid offer gives the offeree the ability to accept and form an enforceable contract. It also notes an offer can be withdrawn by notification to the offeree of the intent to withdraw before acceptance.
Preliminary negotiation is different from an offer because it does not invite acceptance. Ask whether the words would lead a reasonable person to expect a binding contract from a simple yes.
Frequently asked questions
What is the controlling rule for offer, preliminary negotiation, and indefiniteness?+
An offer is an objectively definite present commitment that gives the offeree power to conclude the bargain by the invited acceptance.
How should I analyze offer, preliminary negotiation, and indefiniteness on the bar exam?+
Find objective commitment, not subjective intent. Identify offeree and essential terms. Apply common-law or UCC certainty. Determine invited acceptance method.
Can a contract for goods be formed by conduct?+
Yes. UCC 2-204(1) says a contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties recognizing the contract.
Does an open term make a goods contract fail for indefiniteness?+
Not if the parties intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy, according to UCC 2-204(3).
What is the price if it is left open under UCC 2-305?+
A reasonable price at the time for delivery if nothing is said, the parties fail to agree, or an agreed standard is not set.
What does an output or requirements term measure?+
Actual output or requirements as may occur in good faith, and no quantity unreasonably disproportionate to a stated estimate or normal prior figures may be tendered or demanded, under UCC 2-306.
What makes a communication an offer?+
It is stated and delivered in a way that would lead a reasonable person to expect a binding contract to arise from its acceptance, according to Cornell's summary.