128 Of 174 documents

Corbin on Contracts

Copyright 2007, Matthew Bender & Company, Inc., a member of the LexisNexis Group.

PART I FORMATION OF CONTRACTS

TOPIC A OFFER AND ACCEPTANCE

Supp. To CHAPTER 3 ACCEPTANCE AND REJECTION OF OFFER

1-3 Corbin on Contracts Supp. to § 3.15

Supp. to § 3.15 Notice as a Condition Distinguished From Notice as an Acceptance

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(A) The following case cited the predecessor to this section:

(1) United States v. Donald Lane Construction, Commercial Indus. Constr. & Supply Co., 19 F. Supp. 2d 217 (D. Del. 1998) (quoting Corbin). The Miller Act grants a cause of action to ''every person who has furnished labor'' as part of a federal public building or work contract who has not been paid in full ''before the expiration of a period of ninety days after the day on which the last of the labor was done. ...'' B & R, a sub, sent notice to Donald Lane, the general, on the 89th day. Donald Lane received it on the 92nd day. Citing Corbin's distinction between notice as a necessary part of ''an operative acceptance'' and ''notice as a condition precedent,'' the court held that the notice provision requires receipt, not dispatch, within 90 days. This case is also noted in § 3.24 of this supplement.

129 Of 174 documents

Corbin on Contracts

Copyright 2007, Matthew Bender & Company, Inc., a member of the LexisNexis Group.

PART I FORMATION OF CONTRACTS

TOPIC A OFFER AND ACCEPTANCE

Supp. To CHAPTER 3 ACCEPTANCE AND REJECTION OF OFFER

1-3 Corbin on Contracts Supp. to § 3.17

Supp. to § 3.17 Offer of an ''Act'' for a Promise

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(A) The following case cites this section:

(1) Register.com, Inc. v. Verio, Inc., 356 F.3d 393 (2d Cir. 2004) . Register is one of more than fifty companies serving as registrars of domain names on the world wide web appointed under a contract with the Internet Corporation for Assigned Names and Numbers (ICANN). ICANN is a non-profit corporation established by U.S. government agencies to administer the Internet domain name system. Like other registrars, Register's agreement with ICANN precluded Register from imposing terms and conditions on the use made by others of its data, except as permitted under the ICANN agreement. In addition to its registrar functions, Register sold web-related services to entities that maintain websites. Competing with Register in this business, Verio would submit queries to access Register's data to discover new registrants and send them marketing solicitations by e-mail, telemarketing and direct mail, even though Register's responses to such queries contained a legend that prohibited the user of the information from sending solicitations to Reguster's customers via e-mail.

Register complained that Verio made reference to Register in Verio's solicitations and claimed that this practice harmed its good will. When Verio resisted, Register sought and was granted a preliminary injunction against Verio, which Verio sought to vacate on appeal. On the assumption that Register was entitled to demand that Verio not use Register's data for direct mail or telemarketing solicitations, Verio claimed that it never became contractually bound to Register since the legend prohibiting such use did not appear until Verio submitted its request and received the data. In making this argument, Verio relied on Specht v. Netscape Communications, Inc., discussed in § 3.37 of the supplement, where the same court held that users of the software were not bound by terms that could be discovered only by scrolling down their computer screens, as contrasted with terms appearing on a page where a prospective downloader would be compelled to click an ''I agree'' button before the data would become available. The court reaffirmed the Specht analysis since a single use of the data would not evidence awareness of such license terms sought to be imposed on its use (the ''browsewrap'' as contrasted with the ''clickwrap'' license). The court, however, contrasted Verio's daily use of Register's data, and Verio admitted that with each use, it was fully aware of the terms on which Register offered access to the data. Quoting the predecessor section of Corbin, the court held that accepting a benefit that is offered on stated conditions and taking the benefit with knowledge of the terms of the offer constitutes an acceptance of its terms that is binding on the offeree. This case is also noted in § 3.37 of the supplement.

(2) Multi Media Zone, Inc. v. Star E Media Corp., 2007 U.S. App. LEXIS 5625 (9th Cir. 2007) . Appealing the district court's summary judgment for the plaintiff, Multi Media Zone, Star E Media contended that the parties' 2003 agreement eliminated Star's duty, which originated under a 2001 agreement, to obtain approval of the four language CD-ROM works it produced. In fact, the 2003 agreement provided that Star ''may not sell or otherwise dispose of any Licensed Product that has not been approved by School Zone.'' The agreement also contained no language evidencing the parties' intent to eliminate the approval requirement for the works. The court rejected Star's assertion that any alleged breaches of the parties' 2001 agreement were no longer actionable. Citing Corbin, the court explained that in order for the 2003 agreement to operate as a release, it must express clearly the parties' intent to forego all claims arising out of their previous obligations. Since the 2003 agreement contained no express release language, it did not operate as a release.

(B) The following case is noteworthy:

(1) Fuller v. Terrell (Estate of Bush), 908 S.W.2d 809 (Mo. App. 1995) . An elderly married couple requested the husband's brother to move back home to take care of them. In reliance, the brother hired someone else to take care of his farm, moved back home, and cared for the couple for three years. The couple repeatedly promised that they would ''leave him everything.'' Both died intestate and the brother sought compensation for his services, either under a theory of express oral contract or under quantum meruit. Holding that there was sufficient evidence that the services rendered were not gratuitous, the court upheld a probate judge's award of compensation based on an hourly rate in quantum meruit, even though the terms of any express oral contract were not determinable with definiteness.

Supplement to Notes in Main Volume

2. Western Res. Life Assurance Co. v. Bratton, 2006 U.S. Dist. LEXIS 31177 (N. D. Iowa 2006) . The plaintiff, WRL, sought a declaratory judgment concerning its contractual relationship with the Brattons in selling WRL insurance products. The Brattons agreed to sell certain life insurance products for WRL under a contract containing a thirty-day termination clause. The Brattons, however, claimed to have a contract of some five years duration based on a presentation they made, various encouraging comments from WRL officials, and awareness by WRL that the Brattons were expending money and diligently pursuing the business based on their assumption that the contract would be of long duration. WRL did not specifically respond to the offer made by the Brattons to represent WRL for up to five years with expectations of major increases in sales during each of those years. The court, however, relied on Section 69(1) of the Restatement (Second) of Contracts that notes one of the traditional exceptions to the general rule that silence does not constitute acceptance of an offer, i.e., an offeree's silence or inaction will amount to an acceptance where the offeree takes the benefit of offered services with reasonable opportunity to reject them and with reason to know that the offeror expected to be compensated for the services.

Treiber & Straub, Inc. v. UPS 2007 U. S. App. LEXIS 363 (7[th] Cir. 2007) . Treiber & Straub (''Treiber'') was a jewelry retailer that needed to return a diamond ring to a California wholesaler. The ring was valued at $105,000 and Treiber decided to ship it ''next day air'' through UPS. The shipment was initiated through the UPS website which contained terms and conditions including a condition that no service would be rendered in the transportation of articles of ''unusual value'' that included ''any package with an actual value of more than $50,000 (U. S.).'' The UPS website which ''is not short,'' also contained a limitation of liability provision for any package which UPS stated it would not accept for shipment and that UPS' liability for any domestic package would not exceed $100 regardless of any excess value insurance purchased by the shipper. Moreover, excess value insurance did not provide insurance protection for packages that had an actual value of more than $50,000. Treiber purchased excess value insurance for the maximum amount of $50,000. The package containing the ring was lost. Treiber's claim for $50,000 was denied and it brought this action against UPS. The district court found that the UPS website notices concerning its disclaimer of liability was effective. On appeal, Treiber claimed that the notices were not sufficiently clear to indicate that it would be deprived of any insurance coverage simply because the value exceed that coverage. The court noted that as a new user of the UPS website, Treiber was required not only to click once that it agreed to the UPS terms and conditions, but to repeat the ''click'' indicating agreement. The court held that UPS did not have to prove that Treiber had actual knowledge of the pertinent UPS restrictions. Treiber's failure to read the matter plainly placed before it did not preclude a finding that Treiber assented to the terms and conditions. Quoting from Register.com, Inc. v. Verio (discussed supra in this supplement), the court agreed that while internet transactions exposed courts to many new situations, it had not fundamentally changed the principles of contract law as confirmed by § 69(1)(a) of the Restatement (Second) of Contracts, as paraphrased by the Register opinion: ''when a benefit is offered subject to stated conditions, and the offeree makes a decision to take the benefit with knowledge of the terms of the offer, the taking constitutes an acceptance of the terms, which accordingly become binding on the offeree.'' The judgment of the district court was affirmed.

4. In Leiton v. ARCO Marine, Inc., 896 F. Supp. 1001 (C.D. Cal. 1995) , an owner of a fishing vessel sued an owner of a tanker which had rescued the captain and crew on the high seas and the tanker owner counterclaimed seeking compensation for services rendered. Although the tanker left the fishing boat adrift on the high seas after the rescue, the tanker owner was not liable since the boat was not in any worse position, nor had any of its occupants suffered any physical injury, as a result. The court granted compensation to the tanker owner for its services because it was responding to an assistance signal of the fishing boat and returned the crew of the boat to safety, thereby incurring considerable expense. Performance of another's duty to a third person, if rendered by one qualified to perform such services with an intent to charge for them, is ground for recovery in quasi contract.

11. In Sabin v. Graves, 86 Ohio App. 3d 628, 621 N.E.2d 748 (1993) , a nephew sued his aunt's estate, seeking compensation for money and services he rendered to construct an addition to the aunt's home. The court invoked the ''family member'' rule to require the nephew to show the existence of a contract by clear and convincing evidence, which he had not done. The same judge on the same court addressed the family member rule again fifteen days later in Kroeger v. Ryder, 86 Ohio App. 3d 438, 621 N.E.2d 534 (1993) . In Kroeger, however, the judge decided that the family member rule did not apply to a sister and brother who were not living together, asserting that ''the vast majority of cases hold that any relationship more remote than parent and child, including the relationship of brothers and/or sisters, will not destroy the presumption of payment for services rendered unless the related parties were living together in the same household as members of the same family while the services were rendered.'' The judge did not cite his two-week old Sabin opinion in Kroeger, leaving it somewhat unclear why that limitation on the family member rule did not apply to the aunt and nephew in Sabin.

The reason may be found in recognizing that the law is in the process of catching up with sociological transformations and that the judge in these two cases has been caught in a consequent dilemma. The law of contracts applicable to arm's-length transactions presumes that actors do not intend provision of goods or services to be gratuitous or motivated by affection. The family member rule shifts that presumption by identifying a class of cases in which provision of goods or services are likely to be motivated by affection rather than the expectation of compensation. As the judge noted in Kroeger, that class of cases has been defined as ''parties living together in the same household as members of the same family.'' When Corbin wrote his treatise, both the presumption and the classification were viable because extended family members often dwelled together in the same household and the nuclear family bore a great resemblance to the legal description of kinship.

These circumstances have changed. It is no longer common for the extended family to live together in the same household and members of the same household are no longer necessarily of a conventional order. Unmarried couples, sometimes of the opposite gender and sometimes of the same gender, now commonly live together. As a result, both the presumption and the classification no longer seem safe and indeed are anachronistic. The decisions in Sabin and Kroeger reflect a sensitivity to this tension and the need to search for new legal classifications and presumptions to deal with the shape of contemporary living arrangements.

The judge resolved the tension in Kroeger by relaxing the family member rule presumption and in effect expanding the class of cases in which the arm's-length rules of contract apply. In light of contemporary living arrangements, this would seem to be a move in the right direction as it leads to a focus on the actual rather than the presumed intentions of the parties. Ironically, since Corbin wrote his treatise the class of cases in which the arm's-length rules of contract are displaced by the law of fiduciary obligation has expanded dramatically. Commercial relationships once considered purely arm's-length, such as the relation between franchisor and franchisee among others, have come to be characterized as fiduciary in nature. As a result of these cross-currents, the ambit of relationships contract law treats as arm's-length may well remain the same, though the ambit has shifted in significant ways.

22. In 1990, subsection 2 was added to § 1-207, clarifying that subsection 1 does not apply to accord and satisfaction.