Offer and AcceptanceChapter 7

7-1: Contract

An agreement that courts will enforce.

What do you think are some examples of contracts?

What do you think are some examples of agreements that would not be enforceable in court?

6 Elements of a Contract

Offer and Acceptance Genuine Assent – no deceiving one

another, no unfair pressure. Legality – Must be legal. Consideration – both sides receiving

something of legal value. Capacity – must be capable

themselves. Writing – Some must be in writing to

be enforceable in court.

Offer

Proposal by the OFFEROR to do something, providing the OFFEREE does something in return.

A painter measures the exterior of a home and promises to paint the house within 30 days for $3,000. This is the OFFER. If the home owners agree to the time frame and the $3,000, this is the ACCEPTANCE.

Offerer

The painter. Communicated a serious, definite

proposal.

Offeree

The home-owners Persons to whom the offer is made

Requirements of an Offer

The offeror must appear to intend to create a legal obligation

The terms must be definite and complete.

The offer must be communicated to the offeree.

A. Expression of Intent to Create a Legal Obligation

Test of the Reasonable Person Concerned with the appearance of the

person making the offer. Depends on how a “reasonable person”

would take your offer…joking? Serious? Facts and Circumstances

Words spoken in obvious jest, frenzied terror, or anger would not be offers if a reasonable listener would realize that no offer was intended.

Expression of Intent Cntd… Preliminary Negotiations

“Would you take $800 for that computer?” “Look Jeff, I’ll give you $800 today for that

computer…are you interested? Which one of the above is an offer?

Social Agreements Your friend doesn’t show up at the movies

at 8:00, like you had planned…can you take them to court for breach of contract?

B. Offer must be Complete and Clear

Complete – not missing any essential info…Price, Subject Matter, Quantity.

Clear Implied Terms – Implied by law or

common business practice. Advertisements – Ads in newspapers and

magazines, on radio or television, or in direct mailings are generally not offers. Instead they are “invitations to customers to

make offers.”

Why would this be?

A person who advertises something for sale has a limited stock and cannot be expected to sell to the many thousands who might be interested. Black Friday Deals Day after Christmas Sales

What’s your Verdict?

Page 112 The “would-be-buyers” were the

ones making an offer.

Advertisements may occasionally be Offers

First – the ad must be clearly worded in way to address lots of possible purchasers and minimum products to purchase. “Car will be sold only to the first person

to accept the terms contained in the offer.”

“Subject to stock on hand.”

Ads = Offer

Second – If it asks the offeree to perform an act as a way of accepting. Lawn mower will be sold for $20 to “the

first person to appear at the main door of a shopping mall on Saturday morning after 6am”

C. Offer must be communicated to the Offeree

A person who is not the intended offeree cannot accept the offer.

A person cannot accept an offer without knowing it has been made.

7-2: How Offers End

Revocation by the Offeror Time Stated in the Offer Reasonable Length of Time

Perishable product…short length of time Rejection by the Offeree Counteroffer Death or Insanity

How Offers Can be Kept Open

Options Separate contract arising when the

offeree gives the offeror something of value in return for a promise to leave the offer open.

Firm Offers An offer by a merchant for the sale or

purchase of goods stating in a signed writing how long it stays open is a Firm offer.

7-3: ACCEPTANCE

Occurs when a party to whom an offer has been made agrees to the proposal.

Requirements of Acceptance

Be made by the person or persons to whom the offer was made.

Match the terms in the offer Be communicated to the Offeror

B. Acceptance must match the offer

Mirror Image Rule Requires that the terms in the

acceptance must exactly match the terms in the offer.

Tax preparation & Realty Goods

C. Acceptance Must be Communicated to the Offeror

Silence as Acceptance Proactiv – Until you CANCEL your

shipment, you are accepting the offer. Unilateral Acceptance

Offerees performance is the way acceptance is made.

Bilateral Acceptance Requires that the offeree accept by

communicating the requested promise to the offeror.