Post on 25-Feb-2016
description
Just a Bit More Acceptance; Termination of Offers
Contracts – Prof. Merges
Feb. 14, 2011
Crowdsourcing an M&A Transaction
Deal terms
• 3 purchase options
• Minimums, upside sharing etc.
Corinthian Pharma Systems v. Lederle Labs
Most commonly, bacteria multiply in the throat, where a grayish membrane forms. This membrane can choke the person. Sometimes, the membrane forms in the nose, on the skin, or other parts of the body. The bacteria can release a toxin that spreads through the bloodstream and may cause muscle paralysis, heart and kidney failure, and death. Approximately 5% of people who develop diphtheria (500 out of every 10,000) die from the disease and many more suffer permanent damage.
In the 1920s, before the diphtheria vaccine, there were 100,000 to 200,000 reported cases in the United States each year. Because of the high level of immunization, only one case of diphtheria was reported in the United States in 1999.
Corinthian Pharma v. Lederle
• Facts & Procedural History
What is at stake?
• 950 vials at $171 (instead of $65)
• $100,700–Worth litigating this claim?
Corinthian Pharma v. Lederle
• UCC Review
• UCC § 2-206
Analyzing the communications
• Lederle’s letter to customers
• Top p. 162
Key terms
• “all orders subject to acceptance by Lederle”
• Prices “submitted without offer and subject to change without notice”
Analyzing the communications
• Lederle’s letter to customers
Invitation to offer
Analyzing the communications
• Lederle’s 5/20/86 letter to customers Invitation to offer
• Lederle Price Letter E-48
Analyzing the communications
• Lederle’s 5/20/86 letter to customers Invitation to offer
• Corinthian’s telephone order 5/19/86
• P. 162
Analyzing the communications
• Lederle’s 5/20/86 letter to customers Invitation to offer
• Corinthian’s telephone order 5/19/86
Offer
Analyzing the communications
• Lederle’s 5/20/86 letter to customers Invitation to offer
• Corinthian’s telephone order 5/19/86 Offer
• Telgo system tracking # 5/19/86 No legal significance
• Corinthian’s 2 confirmations attempted acceptance – no legal effect
• Lederle’s shipment of 50 vials of vaccine and letter of 6/3/86
• P. 162, bottom
• Lederle’s shipment of 50 vials of vaccine and letter of 6/3/86
Counteroffer
UCC Analysis
• § 2-206
• Promise or shipment can be acceptance of offer (order)
• But: nonconforming goods may be “accommodation”
Accommodation
• Treated as a counteroffer
• On what terms? On terms stated (here, quantity of 50 at old price, remaining 950 at new price)
Terminating Power of Acceptance
1. Lapse2. Revocation3. Death of Offeror4. Rejection
Lapse
• Recall Ever-Tite Roofing
Lapse: Loring v. City of Boston – p. 173
Dickinson v. Dodds
1. Lapse2. Revocation3. Death of Offeror4. Rejection
Dickinson v. Dodds• Facts; procedural history
6/10/1874 Memorandum
“I hereby agree to sell to Mr. George Dickinson . . . [Signed] John Dodds.
PS: This offer to be left over until Friday 9 o’clock a.m.”
Facts subsequent to 6/10 memo
• The “cast of characters”
–Mr. Berry
–Mr. Allan
–Mrs. Burgess
Facts subsequent to 6/10 memo
Opinion of James, LJ• How does consideration come into it?
Dodds: $$ for land
Dickinson: Convey title to property
The “Underlying” Deal
Dodds: Think about buying land
Dickinson: Refrain from revoking or terminating offer before 9 am 6/12
The Deal About the Offer
DoddsDickinson
DoddsDickinson
¢ -- ?
The sequence of events . . .
[Both thought the agreement to keep offer open was binding, and] “this probably explains a good deal of what afterwards took place” – p. 173, top
Dickinson’s purported acceptance at Mrs. Burgess’s
home
• Why not effective?
• Does it matter that Dodds was not home?
Dickinson’s purported acceptance at Mrs. Burgess’s
home
• Why not effective?
• Does it matter that Dodds was not home?
– Why did Mrs. Burgess conveniently “forget” to give Dickinson’s note to Dodds?
The scene at the Darlington Railway Station . . .
What was each party trying to do?
• Dodds
• Dickinson
What was each party trying to do?
• Dodds
• Dickinson
– Why send Berry?
Darlington
Hello, Mr. Berry!
Mr. Dodds, hiding in the rear
Hello, Mr. Berry!
“I revoke!!”
Mr. Dickinson
“I accept!!”
Dodds/Berry