42. Does the customer have a claim against the bank for $25?

The mutual assent necessary for the formation of a valid contract generally takes place through an offer and an acceptance. An offer is a statement or act that creates a power of acceptance. When a person makes an offer, he is indicating that he is willing to be immediately bound by the other person's acceptance without further negotiation. An acceptance is a statement or act that indicates the offeree's immediate intent to enter into the deal proposed by the offer.

Most offers propose an exchange of promises. However, in some instances, the offer will propose an exchange of the offeror's promise for the offeree's act. A contract in which only one party promises to do something and the other party is free to act or not act as he wishes, is called a unilateral contract. When an offer proposes that the offeree accept by performing an act rather than by making a return promise, this is an offer for a unilateral contract.

The Restatement (Second) of Contracts § 45 provides that where an offer invites acceptance by performance, the offeree's beginning of performance creates an option contract that precludes the offeror from revoking its offer. Thus, § 45 prevents an offeror from withdrawing its offer for a unilateral contract once the offeree has begun to perform. An offer to form a unilateral contract is not accepted until performance is completed. However, the offeree is not obligated to complete performance merely because he has begun performance, as only complete performance constitutes an acceptance of the offer.

Generally, the offeree is not required to give the offeror notice that he has begun the requested performance, but is required to notify the offeror within a reasonable time after performance has been completed.

C is correct. The customer has a claim against the bank for $25 because the bank manager's removal of the poster was not a revocation and the customer completed performance. When an offer invites acceptance by performance, it amounts to a unilateral contract. The commencement of performance on a unilateral contract will create an option, preventing the offeror from revoking. Here, even though the bank manager tore down the poster, the customer had already begun timing the length of time spent in line and by beginning this performance, it rendered the offer irrevocable. By completing performance, the customer fully accepted the offer and thus has a claim for the $25 from the bank.

A is incorrect. Even though the manager tore down the poster, this did not constitute an effective revocation of the offer. The poster created a unilateral contract, which became an option once performance began. The customer's completion of the performance is only necessary for the acceptance to be effective, but completion is not required to create the option. Thus, once the customer was in line, the bank could not revoke the offer and it will be liable for the $25.

B is incorrect. This is an incorrect application of the law to the facts. This was not a non-binding gift promise, but a promise supported by valid consideration. The bank's promise to pay the customer $25 and the customer's standing in line constituted a bargained-for exchange.

D is incorrect. This answer reaches the correct answer with the wrong reasoning. The bank is liable for the $25, but not because the customer's presence notified the bank of acceptance. Rather, by standing in line, the customer began performance, which rendered the offer irrevocable. The customer's completion of performance was the acceptance (and communicated notice thereof). The bank is still liable because of the completed performance, as explained above.