Chapter 10 Mutual Assent Offer and Acceptance Objective

Chapter 10 Mutual Assent- Offer and Acceptance

Objective Theory of Contracts • What the party said when entering into the contract • How the party acted or appeared • The circumstances surrounding the transaction • As interpreted by a reasonable person, rather than by the party’s own secret, subjective intentions.

Three Elements of an Offer • A serious, objective intent • The terms of the offer must be reasonably certain and definite so that the parties can ascertain the terms of the contract • The offer must be communicated to the offeree

Intention • Concept of objective intent • Expressions of Opinion do NOT evidence an intent to enter into a binding agreement • Statements of Intention, or “thinking about” something, is not indicate intention. • Preliminary Negotiations/Invitations to Deal are NOT offers – Advertisements, Catalogs, Circulars are Invitations to Deal (exception if clear, definite promise with nothing left to negotiate OR Ads offering a Reward

Auctions - Offer of sale through an Auctioneer • With Reserve - A right to withdraw the goods. Seller does not have to accept the final bid. All auctions assumed “with reserve” unless stated otherwise • Without Reserve Goods can’t be withdrawn and must be sold to highest bidder

Definiteness of Terms • Terms must be reasonably certain and unambiguous to allow the court to determine the parties intent. • However, missing terms may be filled in under the Code (open price, absence of date for payment; absence of specified place for delivery, time for performance) • Output and Requirement contracts do NOT fail for lack of definite terms

Output & Requirement Contracts • Output Contracts • Requirement. Contracts Buyer agrees to purchase Seller’s purchase, and Seller entire output (e. g. , agrees to sell, all that Farmers Market agrees the Buyer needs or to buy ALL of the requires (e. g. , Pizza eggs Mr. Smith’s hens Store agrees to buy all produce. the soda products it needs from Coca. Cola)

Communication • A person must know about an offer in order to accept an offer. • Generally, a failure to reply (silence) will not be an acceptance of an offer (UNLESS, prior dealings, OR silence which is evidence of a positive and unequivocal acceptance) • Unordered merchandise is not deemed accepted (unless it was solicited)

Duration Of Offers o • Lapse of Time • Revocation - Offer can be revoked anytime before acceptance, even if there is a promise to keep it open (except option K’s; Firm offers • Rejection • Counteroffer • Death/incompetency of offeror or offeree • Subsequent illegality of the contract • Destruction of Subject Matter

Mail Box Rule • Acceptances are Valid upon Dispatch (unless the offeree states otherwise or the offeree uses an unauthorized means of communication)

Firm Offer • Must be made by a Merchant • Merchant agrees not to revoke offer for a stated period of time • Must be a SIGNED WRITING