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Requirements for an offer

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Offeror makes offer to offeree to enter into a contractual agreement. Offer then must be accepted.

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No Contracts if

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1)invitation to negotiate (ads, price quotations, catalogs) 2) offer made in jest or excitement 3) Social Invitations 4)Agreement to make contract later

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Valid Agreement

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1) Valid Offer made by Offeror 2) Valid acceptance by offeree

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Offer

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a promise that is given in exchange for 1)an act 2)Forbearance 3)A return Promise

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Price Quotation Limitation

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A price quotation may be an offer due to a trade custom or due to prior dealings between the parties in which they viewed a price quotation as being an offer.

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Definiteness

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Offer must be certain by indicating important terms of contract: 1) terms stated in writing that are referred to or incorporated into the contract 2)terms can be determined by reference to prior dealing between the parties or trade customs 3)terms Implied by law or the parties conduct Output and requirements contracts are definite. An agreement to use one's "best efforts" to do something may be sufficiently definite

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Invalid Offer

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when 1)Materials are missing 2) are so vague that their meaning cannot be determined 3)are left to be agreed upon later

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Limitations for definiteness

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-may be definite EVEN if: 1)contains a vague term or provides the term shall be agreed upon later, if the term is not important. 2)it states an objective standard or formula by which terms can be determined. Ex:"blue book" for car price. 3)If its a divisible contract partially indefinite, the definite part will be enforced not the indefinite portion.

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"Best Efforts"

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clause in agreement to do something may be definite. Court says the very least some effort must be made, no zero effort.

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Divisible Contract

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agreement between two or more parts and calls for corresponding performances of each part by the parties

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Requirements Contract

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contract to buy all requirements of the buyer from the seller

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Output Contract

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Contract of a producer to sell its entire production or output to a given buyer

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Communication of Offer to Offeree

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An offer must be communicated to the offeree. -unilateral contracts are not formed by one party doing an act if the party didn't know of the offer at the time it was performed.

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Termination of Offer

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An offer can not be accepted after it has been terminated which is done in many ways. 1)Revocation of Offer by Offeror 2) Counteroffer by Offeree 3)Rejection of Offer by Offeree 4)Lapse of Time 5)Death or Disability of Either Party 6)Subsequent Illegality

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Termination by Revocation

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-can be cancelled at any time before offer is accepted -may result from words or conduct of the offeror that clearly indicate the offeror's intent to terminate the offer. -some states:not effective until received -A subcontractor cannot cancel a bid that has been detrimentally relied upon by a general contractor.

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Revocation Limitatons

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1) an option contract(binding promise to keep an offer open) 2) A firm offer(signed, written promise by a merchant not to revoke an offer to buy or sell goods.enforceable for 3 months)

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Communication of offer to offeree

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offer must be communicated to the offeree unilateral contract isn't formed if party doing act did not know the offer at the time the act was performed

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Counteroffer by offeree

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any deviations from or addition of terms to the offer and the acceptance is a Counteroffer. In court- acceptance that varies the terms of the offer. Rejecting the original offer and making new one with new terms and it forms when its accepted by original offeror.

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Rejection of Offer by Offeree

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-Offeree rejecting offer before it expires to Offeror because it's unacceptable, terminating offer. -it may be renewed if offeror wants to

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Lapse of Time

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-Offer not accepted automatically terminates when 1) expiration date or time 2) Within a reasonable time of offer if time not stated

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Death or Disability of Either Party

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-Offer is terminated if person dies or becomes mentally ill before offer is accepted

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Subsequent Illegality

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-If subject matter is illegal, it can be terminated before it is accepted.

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Acceptance of offer

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-is the assent(approval) of the terms of the offer. Unqualified assent.

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Constituting Acceptance

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No particular words or mode express acceptance, just clear agreement of terms.

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Acceptance Privileges of Offeree

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-can refuse any offer- not legally obligated to accept and no acceptance allows subsequent offers acceptance

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Effect of Acceptance

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Once accepting, accepting all binding terms and no one can unilaterally terminate without communicating with other party first.

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Nature of Acceptance

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-definite, unconditional expression of intent by an offeree to agree to the terms of offer Common Law- must accept ALL terms without changing anything or adding something -made by word or conduct -offeree's intent is determined by the offeree's objective(outward) intent, not by subjective or secret intentions.

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Who may Accept?

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-only the person given the offer can accept -Large class/group: one of the members may accept

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Manner and Time of Acceptance

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-must accept in stated time or manner (orally or written) -Late acceptances or done in diff matter terminates offer, creating no contract

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Limitations of Manner and Time of Acceptance

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-Failure to accept in manner stated by the offeror doesn't invalidate an acceptance if: 1)the manner of acceptance stated by the offeror was a suggestion, not a requirement 2) the offeror acts as if a contract has been formed

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Silence of Acceptance

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-silence and failure to act of offeree is not acceptance -applies to Seller and Recipient for goods. -cannot modify terms without others accepting

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Postal Reorganization Act

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-provides that the person who receives unordered mailed merchandise from a commercial sender has the right to "retain use, discard, or dispose of it in any manner the recipient sees fit without any obligation whatsoever to the sender" -statement must be clear and conspicuous on mailed merchandise .

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Communication of Acceptance

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-Last step in bilateral contract is acceptance by offeree. -receipt of Offeror's acceptance should be when contract is formed and terms apply -Face to Face: once offeror gets receipt of acceptance (shake hands) -Mailbox Rule

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Mailbox Rule

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Acceptance takes effect when the acceptance is placed into the control of the U.S Postal Service or third party carrier. Properly addressed postage paid mailed. Effective upon dispatch even before it is received by the offeror. Unless offeror stated its effective when received.

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Determining the applicable means of Communication

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-unless otherwise ambiguously indicated in the offer, it shall be construed(understood) as inviting acceptance in any manner and by any medium reasonable under the circumstances.

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Telephone and Electric Communication of Acceptance

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-have applied mailbox rule, holding that telephoned acceptances are effective where and when dispatched.

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Auction Sales

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-merely an invitation to negotiate placing goods for sale -A bid is an offer -contract formed only when auctioneer accepts the bid -Auctioneer can refuse to sell anything unless the sale is conducted "without reverse" If so, then property must be sold to the highest bidder. -"With Reverse" the auctioneer takes bids for the seller with the understanding that no contract is formed with bidder until the seller accepts the transaction.

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Essential conditions of an Offer

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1)Communication 2)Intent 3) Definiteness

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Issues with Communication

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1)Form of communication: email, written, orally, documented forms of communication are some types of communication that can be used to make an offer. 2)Knowledge: a person who was made an offer must have knowledge of the offer. If an offer was made but the person being offered never received the offer then the offer was not communicated.

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Intent

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-There must be intent to make a legally valid offer. -measured by what a reasonable person would believe if being offered the offer .

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Issues with Intent

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1)Preliminary Negotiations 2)Advertisements 3)Auction Sales

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Preliminary Negotiations

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-initial communications between the party making the offer and the party being given the offer. -where terms and conditions are discussed. -terms are not meant to be binding which can be specified by the parties.

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Business Law: Formation of Contracts: Offer and Acceptance – Flashcards

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