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CHAPTER 11
AGREEMENT IN TRADITIONAL
AND E-CONTRACTS
ANSWERS TO QUESTIONS
AT THE ENDS OF THE CASES
CASE 11.1—QUESTION (PAGE 224)
WHAT IF THE FACTS WERE DIFFERENT?
Suppose that the day after Lucy signed the purchase agreement for the farm, he decided that he did not
want it after all, and Zehmer sued Lucy to perform the contract. Would this change in the facts alter the
court’s decision that Lucy and Zehmer had created an enforceable contract? Why or why not? No. In
CASE 11.2—QUESTIONS (PAGE 227)
WHAT IF THE FACTS WERE DIFFERENT?
Suppose that the attorneys for both sides had simply had a phone conversation that included all of the
terms they actually agreed on in their e-mail exchanges. Would the court have ruled differently? Why
or why not? Probably not. As the court pointed out, “the issues [were] whether the . . . terms were suf-
ficiently complete and definite to form an agreement and whether Amazon had intended to be bound
by them.” Terms expressed orally can be as binding as those expressed in writing. The court also deter–
THE LEGAL ENVIRONMENT DIMENSION
What does the result in this case suggest that a businessperson should do before she or he agrees to a
settlement of a legal dispute? The result in this case suggests that a businessperson should determine
96 UNIT THREE: CONTRACTS AND E-CONTRACTS
CASE 11.3—QUESTIONS (PAGE 229)
1A. Suppose that the plaintiffs had learned about the offer after the killer had been already been
found and arrested due to the their assistance but before the August 1, 2003, deadline? Would they be
legally entitled to claim the reward in this circumstance if they then called the tipline and provided the
information? Explain. Probably not. The offers contained specific terms and conditions indicating how
acceptance could be made. To qualify for the reward, the offeree, among other things, was required to
provide information “leading to the arrest” of the suspect. If the plaintiffs called the tipline and gave
them information after the suspect’s arrest, the information could no longer lead to that arrest. It is a
general principle of contract law that an acceptance must meet the conditions specified in an offer, or
no contract will be formed. As noted in the text, however, a few states may allow for the recovery of a
reward in similar circumstances under other laws or public policies.
2A. The plaintiffs argued that “providing information to law enforcement is a customary manner of
accepting reward offers from Crime Stoppers.” How did the court respond to this argument? The court
ANSWERS TO QUESTIONS IN THE REVIEWING FEATURE
AT THE END OF THE CHAPTER
1A. Offer
A bid can be an offer if it contains all of the requisite elements: a serious, objective intent on the part of
the offeror and an offer communicated to the offeree in certain, definite terms comprehensible to both
parties. Amstel’s bid met the requirements His intent appeared to be that of a serious, reasonable offer-
ee; the terms were sufficiently definite; and the bid was communicated to Durbin. If the price, materials,
and start date were left open, these factors might be sufficient to question the status of the bid as an
offer.
2A. Acceptance
To create a contract, an offer must be accepted unequivocally. Durbin questioned the materials included
in the bid and asked about the possibility of substituting different acoustic tiles and discussed a starting
date. Although this does not constitute an acceptance of the offer, neither is it a rejection. His questions
were inquiries, not a rejection of the bid. Durbin’s later call to say that he had changed his mind, howev-
er, was a rejection.
3A. Theory
When individuals rely on promises, as Amstel would have done in this scenario, and the reliance is con-
98 UNIT THREE: CONTRACTS AND E-CONTRACTS
sidered to form a basis for contract rights and duties, under the doctrine of promissory estoppel (or det-
rimental reliance), the party who has reasonably relied on the promise can often obtain some measure
of recovery.
4A. Termination
Yes, Durbin asked about better quality tiles; until that issue was settled, because it likely changed the
ANSWER TO DEBATE THIS QUESTION IN THE REVIEWING FEATURE AT THE END OF THE
CHAPTER
The terms and conditions in click-on agreements are so long and detailed that no one ever reads
one. Therefore, the act of clicking “Yes, I agree.” is not really an acceptance. The terms and conditions
included in click-on agreements have become so detailed, confusing, and most importantly, long, that no
one would ever take the time to read one. Knowing, though, that one is unable to purchase or license a
product or service purchased on the Internet without clicking “yes” means that everyone just clicks
“yes.” That is far from what we normally believe is voluntary assent. Indeed, the choice is all or noth-
ing—accept all terms and conditions or do not buy from us.
ANSWERS TO QUESTIONS AND CASE PROBLEMS
AT THE END OF THE CHAPTER
11-1A. Agreement
(Chapter 11—Pages 222–224)
For an offer to exist, the offeror must show a definite intention to make and be bound by the offer. Invi-
11-2A. QUESTION WITH SAMPLE ANSWER: Offer and acceptance
(a) Death of either the offeror or the offeree prior to acceptance automatically terminates a
revocable offer. The basic legal reason is that the offer is personal to the parties and cannot be passed
on to others, not even to the estate of the deceased. This rule applies even if the other party is unaware
of the death. Thus, Schmidt’s offer terminates on Schmidt’s death, and Barry’s later acceptance does
not constitute a contract.
(b) An offer is automatically terminated by the destruction of the specific subject matter of
the offer prior to acceptance. Thus, Barry’s acceptance after the fire does not constitute a contract.
(c) When the offer is irrevocable, under an option contract, death of the offeror does not
11–3A. Online acceptance
(Chapter 11—Page 235)
11-4A. Revocation
(Chapter 11—Pages 229–230 & 232–233)
11-5A. CASE PROBLEM WITH SAMPLE ANSWER: Offer
100 UNIT THREE: CONTRACTS AND E-CONTRACTS
The court refused to compel arbitration, and on Siller’s appeal, a state intermediate appellate court af-
firmed this decision. On further appeal, the California Supreme Court reversed the judgment of the low-
er court. The state supreme court concluded that the arbitration agreement, which had been signed af-
ter treatment for a different condition two years before, applied to the claim arising from the later
treatment because the agreement stated it “is intended to bind the patient and health care provider
. . . who now or in the future treat[s] the patient.” The court characterized this agreement as an “objec-
tive manifestation of the parties’ intent to arbitrate.” To counter this “objective manifestation,” Reigel-
11–6A. Online acceptances
(Chapter 11—Pages 235–236)
The court denied IA’s motion to dismiss this claim. The court set out the parties’ arguments: “Shell con-
tends that Internet Archive formed a contract with her when it reproduced her website contents, and
then breached this contract when it failed to pay her. . . fees. . . . Internet Archive argues that Shell
fails to state a claim for breach of contract because it only learned of the terms of Shell’s Copyright No-
tice after it copied the information, and also that Shell’s complaint fails to state that a human being at
Internet Archive (as opposed to its automated web browser) was ever aware that this agreement exist-
ed.” The court emphasized that Shell’s “advisement of the contract,” according to her, “is published on
11–7A. Acceptance
(Chapter 11—Pages 229–230 & 232)
The elements of an enforceable agreement include an offer and its acceptance. The moment of ac-
ceptance is the moment that the contract is created. For an acceptance to be effective, it must comply
CHAPTER 11: AGREEMENT IN TRADITIONAL AND E-CONTRACTS 101
with the terms of the offer and be clear, unambiguous, and unequivocal. In this case, the parties’ con-
duct established that they understood their dispute and that they intended its settlement through their
agreement. The Kowalchuks’ e-mail shows that Stroup made an offer. The same e-mail shows that the
11–8A. Offer and acceptance
(Chapter 11—Pages 222–225)
The reviewing court stated that “ * * * the traditional contract approach is * * * consistent with our
statutory scheme and precedent. [Iowa gambling law] refers to gambling contracts and provides that
such contracts are legal if permitted under [gambling law]. * * * We must, therefore, employ traditional
contract principles to analyze whether a contract requiring payment of Blackford’s winnings has been
formed under the facts of this case. ‘All contracts must contain mutual assent; mode of assent is termed
that [the recipient] can, by accepting, bind the sender.’
“In making an offer, ‘the offeror is the master of his offer; just as the making of any offer at all
can be avoided by appropriate language or other conduct, so the power of acceptance can be narrowly
limited.’ As master, the offeror may decide to whom to extend the offer. According to the Restatement,
(1) The manifested intention of the offeror determines the person or persons in whom is created a pow-
er of acceptance.
(2) An offer may create a power of acceptance in a specified person or in one or more of a specified
group or class of persons, acting separately or together, or in anyone or everyone who makes a specified
promise or renders a specified performance.’
“In this situation, Prairie Meadows is the offeror. It makes an offer to its patrons that, if accepted
11-9A. A QUESTION OF ETHICS: E-Contract Disputes
(a) The court held that the arbitration clause was not a part of the contract between Dell and
the plaintiffs, and that if the clause were a part of the contract, it would be unenforceable because it
was unconscionable. Dell appealed to a state intermediate appellate court, which reversed the lower
court’s holding and remanded the case. The appellate court held that the plaintiffs were bound by Dell’s
terms, including the arbitration clause.
The appellate court emphasized in part that the blue hyperlink entitled “Terms and Conditions of
Sale” appeared on many of the Web pages completed in the ordering process. A statement on three of
those pages explained that sales were subject to those terms. The court reasoned that these statements
(b) Arguments for and against these terms are discussed in the text. As long as shrink-wrap,
click-on, and browse-wrap terms are fair and reasonable, it could be maintained that they do not impose
too great a burden on purchasers, even though most of whom are individual consumers. Without such
terms, a merchant might find itself embroiled in numerous lawsuits in far-flung locales over relatively
small sums and thus might be less willing to do business, or would only agree to do business limited in
some other way. This would work to the advantage of almost no one.
When such terms are too one-sided, or otherwise unfair, however, it could be argued that the
burden on consumers is too great, especially if the unfair terms are enforced. In those cases, to avoid an
onerous burden, a consumer might need to read the terms intelligently and to have them considered by
an attorney. This would also seem to work to no one’s advantage.
(c) Sometimes, it is asserted that most buyers, especially individual consumers, do not read
shrink-wrap, click-on, or browse-wrap terms. The law does provide ways to avoid these terms for con-
sumers who have been taken advantage of by a clause in “fine print” or “legalese” that the consumers
ANSWER TO VIDEO QUESTION NO. 11–10
Real World Legal: Jack’s Restaurant, Scene 2
(a) In regards to the sale of Jack’s Restaurant, Jack (the seller) says that he is going to retain
the rights to the restaurant’s frozen food line. The buyers, however, thought that their sales
agreement included the rights to all of the restaurant’s signature dishes—whether fresh or fro-
CHAPTER 11: AGREEMENT IN TRADITIONAL AND E-CONTRACTS 103
zen. Did the parties have an “agreement to agree” on the terms of the sale of the restaurant?
Why or why not? It could be argued that no enforceable agreement to agree exists because the
right to sell the restaurant’s signature dishes is an essential term of the contract, and the parties
have already negotiated and agreed to the essential terms. An “agreement to agree” is an
agreement to agree to the material terms of a contract at some future date. There is a different
argument that might be made, however. In some cases, a preliminary agreement, in which the
parties agree on certain major terms but leave other terms open for further negotiation, may be
binding to the same extent—the parties have committed themselves to negotiate the undecided
terms in good faith in an effort to reach a final agreement. It might be contended that this is the
situation here.
(b) Suppose that Jack previously offered to sell the restaurant to these particular buyers and
they had all agreed on the price and date for delivery. Would such an offer meet the definiteness
offer did not mention the frozen food line, it would be definite enough. Jack would have a hard
time getting a court to supply the missing term about the frozen food at a later date, however.
agree on whether it was part of the sale of the restaurant. When the parties have clearly mani-
fested an intent to form a contract, courts sometimes are willing to supply a missing term. But a
court will not rewrite a contract if the parties’ expression of intent is too vague or uncertain.
(c) Does Jack’s statement that he intended to retain his rights to the frozen food line revoke
any earlier offer he made to sell the restaurant to these individuals? Why or why not? Jack’s
statement that he intended to retain the frozen food line could arguably revoke his earlier offer,
which did not include this limitation. The right to the frozen food line is a material term. But it
might also be argued that the earlier offer did not include all of the material terms and left some
things to be negotiated. In other words, the earlier offer might have had the characteristics of an
agreement to agree to discuss the sale of the restaurant and the terms of the sale, including the
right to frozen food line.
(d) Did the buyers unequivocally accept the terms of the offer that Jack expressed in this sce-
ne? Explain. No. To exercise the power of acceptance effectively, an offeree must accept une-
with the contract. And certain terms, when included in an acceptance, will not change the offer
sufficiently to constitute rejection. But if the acceptance is subject to new conditions or if the
that implicitly rejects the original offer. Here, the parties did not appear to come to an agreement