Opinion ID: 2599628
Heading Depth: 4
Heading Rank: 1

Heading: Contract formation in the government context, generally

Text: Restatement (Second) of Contracts sections 24 and 26 (1981) delimit what can be considered an offer. Section 24 defines an offer as the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it. [7] Section 26 informs us that [a] manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent. [8] Two factors are relevant: the language of the motion, and the teachers' understanding of the board-administration relationship. According to one leading municipal corporations treatise, the language of a motion has the following contractual significance: [A]n ordinance granting a right, accepted and acted upon by the grantee, becomes an irrevocable contract. But an ordinance or resolution authorizing the mayor, or other officers[,] to enter into a contract does not of itself create a contract, if not acted upon. [9] The Oregon Supreme Court quoted this language in Winklebleck v. City of Portland. [10] That case illuminates the issues presented here. The city condemned Winklebleck's property in order to extend a road; Winklebleck learned from city officials that the city needed only some of his property. [11] He lobbied for return of the rest of his property, and the city council passed a motion directing the city auditor to return the disputed land if Winklebleck filed a release. [12] The motion stated that upon the execution and filing of such document with the City Auditor [the property] shall be released. [13] The city then realized that it had erred, and a city attorney told Winklebleck's attorney that Winklebleck could not reclaim the land. [14] The council repealed its earlier ordinance, but before it did so, Winklebleck accepted the offer and delivered a declaration of compliance with the requirements of the ordinance; he apparently also delivered a release. [15] The court reasoned that the ordinance did not contemplate that the auditor and the plaintiff should execute some contract before the language could be closed ... but that the lot owner should demonstrate his right to secure [the land] by waiving the privilege of an appeal, and taking other actions commensurate with ownership. [16] The court held that the ordinance was a valid offer, and that because Winklebleck had accepted the offer, he was entitled to his land. [17] The Winklebleck court held a motion fairly capable of construction as an offer to be an offer. [18] But even if a motion is fairly capable of being construed as an offer, the issue is not conclusively resolved. For example, if a person had a history of dealings with a municipality, and had reason to know that the municipality did not intend to make an offer (whatever the language of its ordinance), a court should apply Restatement section 26, and should not treat the ordinance as an offer. [19] Accordingly, when a board motion is expressed in terms of a delegation, it should be considered a delegation and not an offer; but when it is couched in terms of an offer, further inquiry may be required. When there is a continuing relationship like the employment relationship here, the language of the motion must be considered in context of the contracting parties' relations. [20] The commentary to Restatement section 26 includes language to this effect: If the addressee of a proposal has reason to know that no offer is intended, there is no offer even though he understands it to be an offer. Reason to know depends not only on the words or other conduct, but also on the circumstances, including previous communications of the parties and the usages of their community or line of business. [21] One writer notes: That the alleged offeree has reason to know that no offer has been made depends not solely on the words used but also on the circumstances surrounding the communication. Thus, if the parties have dealt with one another before ... or if the custom in a particular location or trade suggests that an offer is intended ... an offer will be found. [22] This leaves us with the following process. First, courts must look to the language of the motion. If the motion is not expressed in terms of an offer, there is no offer. If the motion is expressed in terms of an offer, courts must look to the underlying context. If the context suggests that the legislative body normally acts as an offeror, there is a valid offer. But if the context suggests that the legislative body normally delegates the role of making the offer, a presumption arises that the motion is not an offer, but a delegation of power to make an offer. For a motion to be an offer, then, its language must be clear enough to overcome this presumption. This approach answers the district's public policy argument that it should not automatically be bound every time its board passes a motion. The school board can prevent itself from being bound merely by incorporating into its motions appropriate delegation language, such as the board delegates the authority to carry out specific tasks. We deal below with the other part of the district's public policy questionwhat happens when a school board makes a mistake and the district's administrators realize it.