Just a Bit More Acceptance; Termination of Offers
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Transcript of Just a Bit More Acceptance; Termination of Offers
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Just a Bit More Acceptance; Termination of Offers
Contracts – Prof. Merges
Feb. 14, 2011
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Crowdsourcing an M&A Transaction
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Deal terms
• 3 purchase options
• Minimums, upside sharing etc.
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Corinthian Pharma Systems v. Lederle Labs
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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.
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Corinthian Pharma v. Lederle
• Facts & Procedural History
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What is at stake?
• 950 vials at $171 (instead of $65)
• $100,700–Worth litigating this claim?
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Corinthian Pharma v. Lederle
• UCC Review
• UCC § 2-206
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Analyzing the communications
• Lederle’s letter to customers
• Top p. 162
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Key terms
• “all orders subject to acceptance by Lederle”
• Prices “submitted without offer and subject to change without notice”
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Analyzing the communications
• Lederle’s letter to customers
Invitation to offer
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Analyzing the communications
• Lederle’s 5/20/86 letter to customers Invitation to offer
• Lederle Price Letter E-48
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Analyzing the communications
• Lederle’s 5/20/86 letter to customers Invitation to offer
• Corinthian’s telephone order 5/19/86
• P. 162
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Analyzing the communications
• Lederle’s 5/20/86 letter to customers Invitation to offer
• Corinthian’s telephone order 5/19/86
Offer
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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
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• Corinthian’s 2 confirmations attempted acceptance – no legal effect
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• Lederle’s shipment of 50 vials of vaccine and letter of 6/3/86
• P. 162, bottom
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• Lederle’s shipment of 50 vials of vaccine and letter of 6/3/86
Counteroffer
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UCC Analysis
• § 2-206
• Promise or shipment can be acceptance of offer (order)
• But: nonconforming goods may be “accommodation”
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Accommodation
• Treated as a counteroffer
• On what terms? On terms stated (here, quantity of 50 at old price, remaining 950 at new price)
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Terminating Power of Acceptance
1. Lapse2. Revocation3. Death of Offeror4. Rejection
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Lapse
• Recall Ever-Tite Roofing
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Lapse: Loring v. City of Boston – p. 173
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Dickinson v. Dodds
1. Lapse2. Revocation3. Death of Offeror4. Rejection
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Dickinson v. Dodds• Facts; procedural history
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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.”
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Facts subsequent to 6/10 memo
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• The “cast of characters”
–Mr. Berry
–Mr. Allan
–Mrs. Burgess
Facts subsequent to 6/10 memo
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Opinion of James, LJ• How does consideration come into it?
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Dodds: $$ for land
Dickinson: Convey title to property
The “Underlying” Deal
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Dodds: Think about buying land
Dickinson: Refrain from revoking or terminating offer before 9 am 6/12
The Deal About the Offer
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DoddsDickinson
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DoddsDickinson
¢ -- ?
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The sequence of events . . .
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[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
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Dickinson’s purported acceptance at Mrs. Burgess’s
home
• Why not effective?
• Does it matter that Dodds was not home?
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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?
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The scene at the Darlington Railway Station . . .
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What was each party trying to do?
• Dodds
• Dickinson
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What was each party trying to do?
• Dodds
• Dickinson
– Why send Berry?
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Darlington
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Hello, Mr. Berry!
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Mr. Dodds, hiding in the rear
Hello, Mr. Berry!
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“I revoke!!”
Mr. Dickinson
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“I accept!!”
Dodds/Berry