Chapter 7 Offer and Acceptance Contracts z An

Chapter 7 Offer and Acceptance

Contracts z. An agreement that courts will enforce. z. Contracts between two parties re the basis for all economic activity. z. Contracts are the legal links between individuals & companies producing & consuming goods and services.

6 Requirements of a Contract z 1) Offer & Acceptance y. There must be a serious, definite offer. z 2) Genuine Assent y. The terms of the offer can y. The agreement must be accepted only by the not be based on one party to whom it was party’s deceiving communicated. another, on an important mistake, or unfair pressure.

6 Requirements of a Contract z 3) Legality y. What the parties agree to must be legal. z 4) Consideration y. The agreement must involve both sides receiving something of legal value as a result of the transaction.

6 Requirements of a Contract z 5) Capacity y. The parties must be able to contract for themselves. y. No minors, mentally ill, etc. z 6) Writing y. Some agreement must be placed in writing to be fully enforceable in court.

Offeror vs. Offerees z. Offeror - Makes the offer. z. Offeree - Person to whom the offer is made.

Requirements of an Offer z. An offer is a proposal by an offeror to do something provided the offeree does something in return. z. To be an offer y 1. Offeror must appear to intend to create legal obligation. y 2. Terms must be definite and complete. y 3. Offer must be communicated to the offeree.

Offeror must appear to intend to create legal obligation z. Test of reasonable person applies -objective, legal test used by jurors/judges z. Preliminary negotiations are not intent to contract z. How about social agreements?

Offer must be definite & complete z. Generally advertisements are not offers. They are invitations to customers to make offers. Adv CAN be an offer if: 1. Clearly worded in ways that address the problem of numerous people wanting to buy limited product…”subject to stock” OR 2. If it asks the offeree to perform an act as a way of accepting…”first 20 at door”

Offer must be Communicated to the Offeree z. Read “a question of ethics” on pg 101 z. A person who is not the intended offeree cannot accept the offer.

Assignment z. Think About Legal Concepts 1 -9 z. Think Critically about Evidence 10 -13 Page 102

Lesson 7 -2 Termination of Offers Read “What’s Your Verdict” on page 103

Revocation by the Offeror z. Revocation - The right to withdraw an offer before it is accepted. z. After an offer has been made, the offeror can generally revoke it anytime before it is accepted by the offeree.

Ending Offers z. Time stated in the offer. z. Reasonable length of time. z. Rejection by the offeree. z. Counteroffer - Refusing the offer and making a new proposal. z. Death or insanity of either the offeror of offeree.

How can an offer be kept open? z. Options = y. Give the offeror something of value in return for a promise to keep the offer open. y. The offer may not be withdrawn during the option period. y. Read “What’s Your Verdict” on page 104

How can an offer be kept open? z. Firm Offer - A offer by a merchant for the sale or purchase of goods stating in writing how long the option stays open. y. Does not end with death or insanity. y. Read “In This Case” on page 104

Assignment z. Think About Legal Concepts 1 -11 z. Think Critically about Evidence 12 -15 Page 105

Lesson 7 -3 Acceptance

Acceptances z 1) Must be made by the person or persons to whom the offer was made. z 2) Must match the terms in the offer. Mirror image rule —if terms in acceptance don’t exactly match offer, it is a counteroffer. Proposal—new or changed terms in some cases with sale of goods…. NOT part of the contract unless agreed to by the original offeror OR unless parties are both merchants (not consumers).

Acceptances …cont z 3) Must be communicated to the offeror; cannot be just a mental decision. Can silence be an acceptance? Only if parties have agreed in advance, such as book clubs

Unilateral Contracts z. Acceptance is indicated by performing his/her obligations. z. Example: Reward $ for lost dog Once the offeree has begun performance of the act requested (look for lost dog), the offer cannot be revoked until a reasonable amount of time has passed.

Bilateral Acceptance z. Most offers are bilateral. z. The offer is accepted by a promise to perform an act. z. Example: I will pay you $50 to scoop my driveway.

Effective Acceptance May be communicated orally, in person, or by telephone. All forms of contractual communications but one take effect when received. (When mail is received not sent). The exception to this is the acceptance, which is effective when sent. z. The offeror may require a certain type of acceptance. Examples—oral, hand signals, mail, fax.

Assignment z. Think About Legal Concepts 1 -5 page 108 z. Think Critically about Evidence 6 & 7 page 109 z. Your Legal Vocabulary 1 -10 page 110