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CHAPTER III: TERMINATION of the POWER of ACCEPTANCE Table of Contents I

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CHAPTER III: TERMINATION of the POWER of ACCEPTANCE Table of Contents I CHAPTER III: TERMINATION OF THE POWER OF ACCEPTANCE Table of Contents I. Termination of the Power of Acceptance .................................................................................................. 2 A. Rejection & Counteroffer ..................................................................................................................... 2 B. Time Lapse – Open Option.................................................................................................................... 4 C. Revocation by the Offeror .................................................................................................................... 8 D. Death or Incapacity of the Offeror or Offeree...................................................................................... 9 (i). Death of the Offeror or Offeree .................................................................................................... 11 (ii). Incapacity of the Offeror or the Offeree ...................................................................................... 11 E. Non-Occurrence of a Condition .......................................................................................................... 13 II. The Mailbox Rule .................................................................................................................................... 16 III. Common Law or U.C.C. Article 2 ............................................................................................................ 22 A. Mixed Contracts with Goods & Services - Majority ............................................................................ 23 B. Mixed Contracts with Goods & Services - Minority ........................................................................... 25 As readers may have noted, the contract-formation element acceptance requires more than a single chapter to fully cover the topic. Chapter II addressed the components of an acceptance. This Chapter deals with the ways by which an acceptance may be terminated. Offerors, as masters of the offer, determine who may accept an offer and how long the offer remains open. Sometimes an offer clearly indicates who may accept (e.g., “Jim, I offer to sell to you, and only to you, my vintage Dodge Charger.”). In other cases, the intended offerees are implied. For example, if an offer is made at a meeting of colleagues, the likely offerees are those attending the meeting. For offers such as rewards, which are unilateral, the intended offeree is wide open, i.e., it is to anyone who first performs the requested act (e.g., “I will pay $500 for return of my lost dog Cuddles.”). Just as important is the time within which an intended offeree may accept an offer. Whether expressly stated or implied under the circumstances, all good offers come to an end – following which an offeree is no longer empowered to accept. Where the temporal end of an offer’s validity is set out, it is easy to determine its lapse such that the power of acceptance has been terminated. If an end to an offer’s validity is not stated, courts would infer an end after a reasonable time under the circumstances. Furthermore, certain occurrences are treated as a terminating event – their occurrence implies an end to the offer period. Some offers are contingent on some event, the non- occurrence of which suspends an offeree’s power to accept an offer unless and until the event occurs. All of these concepts are addressed in this Chapter. We will also introduce the role of the Restatement of Contracts. There are now two editions, designated (First) and (Second), and priority should be given to the latter since it is the most recent, © 2018 Carrier, Marin & Marin 2 and therefore the most current pronouncement on what the law is or should be. This demonstrates a chronological importance. Moreover, courts may apply various sources of law to contracts cases, with differing levels of precedential importance. This is another nuance with which readers must become familiar. Obviously, more recently issued pronouncements of law take precedence over prior statements of the same law. But what about the relationship between different sources of law? Some rules must be applied, such as pronouncements of the state Supreme Court where the issues and facts have already been addressed and ruled upon. This primacy is often indicated by use of words such as binding or authoritative. Other rules may be applied, such as opinions from other District Courts of Appeal than the one in which a controversy is being litigated. These would be trumped, or course, by rulings in that particular District which state something different. Still others are suggestions which, where there are no rules higher up the chain of hierarchy, may also be applied to fill a void in direct, binding precedent. Though it takes some time to grasp, readers will need to develop a sense of the hierarchy. Analogy to card games may help. In poker, two aces beat two kings. In euchre, the right bauer trumps the left bauer, trumps the on-suit ace, etc. Lawyers must base their case on the strongest law possible. In short, we introduce the Restatement (Second) of Contracts as a non-binding but helpful source of law which in this case helps to make outlining of how offers conclude relatively simple. I. Termination of the Power of Acceptance A brief discussion of the importance of terminology is in order. Words bear specific legal meaning, and the ability to use the right word for the right concept may win or lose a contracts case. When an offer ends after its time runs out, the typical phraseology is that the offer has lapsed. If an offeror withdraws an open offer before it has lapsed or otherwise ended, that offeror has revoked the offer. Where an offeree wishes to indicate that he or she declines to accept an offer, such offeree has rejected the offer. Where an offeree proposes to accept but only on condition that new terms are made part of the agreement, such response, no longer a “mirror image” of the offer, is treated as a counteroffer, which acts as a rejection of the offer. Several activities or occurrences terminate the power of acceptance in the offeree. Lapse of time on an open offer and the death or incapacity of either party are such occurrences. A revocation or rejection/counteroffer are specific, extra acts and one may use a more active verb of rejection (by an offeree) or revocation (by an offeror) if preferred. Use of proper terminology instills confidence in the graders of bar exams. A. Rejection & Counteroffer RIBICH v. EVERGREEN SALES & SERVICE, INC. District Court of Appeal of Florida, Second District, 2001 784 So. 2d 1201 NORTHCUTT, Judge. * * * While bicycling on September 8, 1998, Ribich suffered serious injuries in a collision with a truck owned by Evergreen and driven by Baldorossi. Shortly after the accident, Hartford Insurance Company claims specialist Jim Castellani met Ribich’s wife at the hospital and learned that Ribich © 2018 Carrier, Marin & Marin 3 was in the military. After this meeting, he sent a letter to Ribich on October 9, 1998, offering to pay Hartford’s $50,000 policy limits to settle the claim. The settlement offer had two conditions: the execution of a release and the execution of a no-lien affidavit, both of which were transmitted with the letter. The no-lien affidavit required Ribich to affirm under penalty of perjury that he had not been treated in any veteran’s hospital and that he had not received any medical care at the government’s expense. On January 11, 1999, Castellani received the executed release, but Ribich had not signed or returned the no-lien affidavit. That day Castellani wrote to Ribich stating that Hartford could not issue the $50,000 draft without an executed no-lien affidavit. On February 2, 1999, Mrs. Ribich advised Castellani by telephone that neither she nor her husband wanted to execute the no-lien affidavit. As a U.S. Naval officer, Ribich would have been committing perjury had he signed it. Castellani spoke with Mrs. Ribich the next day and confirmed that Hartford was not going to waive execution of the no-lien affidavit as a condition of settlement. On February 9, Castellani spoke with Ribich’s attorney, Denise Vaughan, and again advised that Hartford would not settle the case unless the Ribiches executed the no-lien affidavit. Vaughan, likewise, reiterated her clients’ refusal to sign the affidavit and demanded that Hartford deliver its settlement check the next day. However, no check was sent. * * * Settlement agreements are governed by the law of contracts. Robbie v. City of Miami, 469 So.2d 1384, 1385 (Fla.1985). The party seeking judgment based on a settlement has the burden of establishing assent by the opposing party and must establish that there was a meeting of the minds or mutual or reciprocal assent to certain definite propositions. Id. To result in a contract, an acceptance of an offer must be absolute and unconditional, identical with the terms of the offer and in the mode, at the place and within the time expressly or impliedly required by the offer. Sullivan v. Econ. Research Props., 455 So.2d 630, 631 (Fla. 5th DCA 1984). A counteroffer operates as a rejection of a preceding offer. Padron v. Plantada, 632 So.2d 113 (Fla. 3d DCA 1994). In this case the circuit court ruled that the Ribiches’ counteroffer to accept the liability limits without executing the no-lien affidavit remained outstanding on February 22, when Hartford accepted it by delivering the check. We disagree. The Ribiches’ last offer to settle
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