Business Law Chapter 11 Agreement in Traditional and E-Contracts – Flashcards
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acceptance
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a voluntary act (either words or conduct) by the offeree that shows assent to the terms of an offer. Except in special circumstances, only the person to whom the offer is made can accept it.
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agreement
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a meeting of two or more minds in regard to the terms of a contract; usually broken down into two events-an offer by one party to perform an acceptance of the offer by the person to whom the offer is made
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browse-wrap terms
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Terms and conditions of use that are presented to an Internet user at the time certain products, such as software, are being downloaded but that need not be agreed to (by clicking "I agree," for example) before being able to install or use the product.
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click-on agreement
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an agreement that arises when a buyer, engaging in a transaction on the computer, indicates his or her assent to be bound by the terms of an offer by clicking on a button that says, for example, "I agree"; sometimes referred to as a click-on license or a click-wrap agreement
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counteroffer
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a rejection and a simultaneous making of a new offer Offeree rejects the original offer and simultaneously makes a new offer
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e-contract
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a contract that is entered into in cyberspace and is evidenced only by electronic impulses (such as those that make up a computer's memory), rather than, for example, a typewritten form
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e-signature
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as defined by the Union Electronic Transactions Act, "an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record"
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forum-selection clause
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a provision in a contract designating the court, jurisdiction, or tribunal that will decide any disputes arising under the contract
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mailbox rule
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a rule providing that an acceptance of an offer becomes effective on dispatch. Acceptance takes effect, thus completing formation of the contract, at the time the offeree sends or delivers the communication via the mode expressly or impliedly authorized by the offeror.
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mirror image rule
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requires that the offeree's acceptance match the offeror's offer—any material change in the terms automatically terminates the offer and substitutes a counteroffer
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offer
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a promise or commitment to do or refrain from doing some specified action/thing in the future
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option contract
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Offeror promises to hold an offer open for a specified period of time in return of consideration or in exchange for a payment by the oferee
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partnering agreement
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An agreement between a seller and a buyer who frequently do business with each other concerning the terms and conditions that will apply to all subsequently formed electronic contracts.
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revocation
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In contract law, the withdrawal of an offer by an offeror. Unless an offer is revocable, it can be revoked at any time prior to acceptance without liability
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shrink-wrap agreement
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An agreement whose terms are expressed in a document located inside a box in which goods (usually software) are packaged; sometimes called a shrink-wrap license.
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Generally, these definite terms must be included, either expressed in the contract or capable of being reasonably inferred from it:
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(1) identification of the parties (2) the object or subject matter of the contract, including work to be performed, with specific identification of goods, services, and land involved, and quantity when appropriate; (3) the consideration to be paid; (4) the time of payment, delivery, or performance.
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The elements necessary for an effective offer are:
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(1) a serious intent by the offeror; (2) reasonably certain, or definite, terms (so that they can be ascertained by the parties and a court); and (3) communication of the offer to the offeree.
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Offer is judged by
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what a reasonable person in the Offeree's position would conclude about the offer, not the offeror's subjective intentions, beliefs. Offers made in obvious anger, jest, or undue excitement are usually not offers and do not meet the test.
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Case 11.1: Lucy v. Zehmer
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These are NOT offers
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- Expressions of opinion - Statements of Intention or preliminary negotiations - Advertisements, Catalogues, Price - Lists, and Circulars are treated as invitations to negotiate - Auctions (generally) - Invitations to submit bids - When a party says that he or she plans to do something
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auction with reserve
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the owner may withdraw the goods any time before the auctioneer closes the sale. An auction is assumed to be with reserve, unless it is stated to be without reserve.the bidder is the offeror. A bidder may revoke his or her bid, or the auctioneer may reject it, before the auctioneer strikes the hammer, which constitutes acceptance of the bid. When a bid is accepted, all previous bids are rejected.
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auction without reserve
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the goods cannot be withdrawn and must be sold to the highest bidder
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Agreements to Agree
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serve valid commercial purposes and can be enforced if the parties clearly intended to be bound by the agreements. In other words, the emphasis is on the parties' intent rather than on form.
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The enforcement of preliminary agreements
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Two Types: 1. All essential terms have been agreed on and no disputed issues remain to be resolved 2. Parties agree on certain terms but leave others open for future negotiation Other Factors include: - Whether the parties expressly stated they would not be bound in the absence of a formal contract - Whether the agreement has been partially performed - Whether all of the terms have been agreed on What Did The Parties Intend?
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Element Necessary for an Effective Offer: Communication
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________ of the offer to the offeree, resulting in the offeree's knowledge of the offer: directly by the offeror, or through the use of agents. An offer must be communicated to the offeree, so that the offeree knows it Ordinarily, one cannot agree to a bargain without knowing that it exists
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An offer may be terminated prior to acceptance by either:
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Action of the Parties; or by Operation of Law.
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Termination of an Offer by Action of the Parties
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Revocation Rejection Counteroffer
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Revocation of the Offer by the Offeror
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Generally, an offer may be revoked any time before acceptance, even if the offeror agreed to hold it open, but revocation is effective only on receipt by the offeree or offeree's agent. Revocation can be express or implied by conduct inconsistent with the offer. Revocation of an offer made to the general public must be communicated in the same manner in which the offer was communicated.
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Exceptions to Revocation
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Irrevocable Offers-Option Contract
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Detrimental Reliance or Promissory Estoppel
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where Offeree relies on offer to his or her detriment, thus Offeror is barred from revoking the offer
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Termination by Operation of Law
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Lapse of Time Destruction of the Subject Matter Death or Incompetence of the Offeror or Offeree Supervening Illegality of the Proposed Contract
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Lapse of Time
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An offer terminates automatically when the time specified in the offer has passed ("This offer is good until 5:00 p.m. on Monday, July 15" or "This offer expires in two months"). The specified time begins to run when the offeree receives the offer, not when it is sent. If the offer is delayed, the period begins to run from the date the offeree would have received it, but only if the offeree knows or should know of the delay. If no time is specified, the offer terminates at the end of a reasonable period, as determined by the subject matter of the contract, business and market conditions, and other relevant circumstances.
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Destruction of the Subject Matter
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Automatically terminates offer
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Death or Incompetence of the Offeror or Offeree
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power of acceptance is terminated (and does not generally pass to heirs, guardian, estate) This rule applies whether or not the other party had notice of the death or incompetence.
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Supervening Illegality of the Proposed Contract
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A statute or court decision that makes an offer illegal automatically terminates the offer.
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Unequivocal Acceptance
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required by the mirror image rule. An acceptance subject to new conditions or with terms that materially change the offer ("I accept the offer, but only if I can pay on ninety days' credit") may be considered a counteroffer An acceptance may be unequivocal even though the offeree expresses dissatisfaction ("I accept the offer, but I wish I could have gotten a better price" is effective) Conditions that add no new terms do not turn an acceptance into a rejection ("I accept; please send written contract") unless the acceptance is made conditional ("I accept if you send a written contract").
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Silence as Acceptance
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Ordinarily, silence cannot be acceptance. However, sometimes Offeree has a duty to speak. Silence can operate as acceptance if an offeree takes the benefit of offered goods or services even though he or she had an opportunity to reject and knew that they were offered with the expectation of compensation Silence can operate as acceptance when the parties have had prior dealings in which the offeree has led the offeror reasonably to understand that the offeree will accept all offers unless the offeree sends notice to the contrary
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Communication of Acceptance
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Notice is necessary if the offeror requests it or has no adequate means of determining whether there has been performance, or if the law requires it. In a bilateral contract, communication of acceptance is necessary because acceptance is in the form of a promise, and the contract is formed when the promise is made. Communication of acceptance is not necessary if the offer dispenses with it. If an offer can be accepted by silence, no communication is necessary.
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