Issue “agreement in principle” as indication of intent to be bound between parties – held for P

Issue “agreement in principle” as indication of intent to be bound between parties – held for P

Press release stated “agreement in principle” ; we will agree to agree in the future. Violated US securities law…contract was void…one of the reasons why abandoned

1. 
   agreement in principle does not express an intent to be bound between parties
   
2. 
   subject to language, intent to formalize an agreement in writing is evidence of intent to be bound, not dispositive; must be viewed in light of other factual circumstances – Winston Factors:
   
   1. 
      Whether parties expressly state intent to be bound only by subsequent signed written agreement
      
   2. 
      Whether any partial performance that the other party accepted
      
   3. 
      Whether all essential terms of alleged contract had been agreed upon
      
   4. 
      Whether complexity and magnitude of transaction suggest formal, executed writing expected
      

1. 
   unless otherwise unambiguously indicated by the language or circumstances
   
   1. 
      an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances;
      
   2. 
      an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt to ship or by the prompt or current shipment of conforming or non-conforming goods, but such a shipment of non-conforming goods does not constitute an acceptance if the seller reasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.
      
2. 
   where the beginning of a requested performance is a reasonable mode of acceptance and offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.
   

Note: when drafting definitive contract do not use (or limit the use) of the word, “should.” You may want to use may instead…

Klick-Lewis, D, a car dealer, reneged on a pledge to give away a car to a golfer who scored an ace, a feat achieved by Cobaugh, P. Rule: an offer to give away a prize contingent upon performance of an act is enforceable by one doing the act. Offer remains open until withdrawn. An offer is a manifestation of a willingness to enter into a bargain and to be bound by the terms of the bargain if the offer is accepted. An offer can call for acceptance either by a promise to do an act or by an act itself. When the offer calls for acceptance by doing an act, it becomes enforceable upon the doing of that act. Such a contract does not fail from lack of consideration because performing the act in question constitutes consideration. Here D manifested an intent to award a car to one acing the 9^th hole. P wasn’t required to perform an act he was under no legal duty to perform and accepted the offer by doing so. That D had made a mistake by leaving the car there is immaterial. It is the objective manifestation of an intent to make an offer, not an subjective intent to the contrary, that controls. A contract was formed. Trial court granted P’s motion for summary judgment and this judgment is affirmed.

Note: unilateral contract; the act of acceptance with the act of consideration – hole in one.
Allied Steel & Conveyors, Inc. v. Ford Motor Co. (Control over Contract Formation) (Suggested Method of Acceptance)

Hankins, an employee of Allied, D, was injured during performance of Allied’s, D, contract with Ford, P, before Allied, D, had formally accepted the contract as per terms of Ford’s, P, offer. Rule: Where the offeror merely suggests a permitted method of acceptance, other methods of acceptance are not precluded. The court held that the words “should be” executed and returned were just suggestions, and that P was not prescribing an exclusive manner of acceptance. In the latter instance, an attempt by D to accept by undertaking performance would not create a contract. But where acceptance by return promise is only a suggested rather than an exclusive method, the offeree may also accept by undertaking the performance called for by the contract with the offeror’s knowledge and consent. In such a case, the undertaking of performance operates as a promise to render a complete performance.

1. 
   offeree’s power of acceptance may be terminated by:
   
   1. 
      rejection or counter-offer by offeree (effective upon receipt (2RSC(38)(39))
      
   2. 
      lapse of time (specified offer or reasonable time 2RSC(41))
      
   3. 
      revocation by offer (effective when received by offeree 2RSC(42))
      
   4. 
      death or incapacity by offeror or offeree
      
2. 
   also terminated by non-occurrence of any condition of acceptance under terms of offer