1. Business Law and the Regulation of Business Chapter 10: Mutual Assent By Richard A. Mann & Barry S. Roberts

2. Topics Covered in this Chapter I. Offer A. Essentials of an Offer B. Duration of Offers II. Acceptance of Offer A. Communication of Acceptance B. Variant Acceptances

3. Essentials of an Offer n Communication – offeree must have knowledge of the offer and the offer must be made by the offeror to the offeree. n Intent – determined by an objective standard of what a reasonable offeree would have believed. n Definiteness – offer's terms must be clear enough to provide a court with a basis for giving an appropriate remedy.

4. Duration of Offers n Lapse of Time – offer remains open for the time period specified or, if no time is stated, for a reasonable period of time. n Revocation – generally, an offer may be terminated at any time before it is accepted, subject to the following exceptions. n Rejection – refusal to accept an offer terminates the power of acceptance. n Counteroffer – counterproposal to an offer that generally terminates the original offer.

5. Duration of Offers n Death or Incompetency – of either the offeror or the offeree terminates the offer. n Destruction of Subject Matter – of an offer terminates the offer. n Subsequent Illegality – of the purpose or subject matter of the offer terminates the offer.

6. Duration of Revocable Offers Offer Effective Communicated Intent Definite and certain No Offer OFFER OPEN Offer Terminated Lapse of time Death Revocation Incompetency Rejection Destruction of subject matter Counteroffer Subsequent illegality No Offer

7. Revocation n Option Contract – contract that binds offeror to keep an offer open for a specified time. n Firm Offer – a merchant's irrevocable offer to sell or buy goods in a signed writing ensures that the offer will not be terminated for up to three months. n Statutory Irrevocability – offer made irrevocable by statute.

8. Revocation n Irrevocable Offer of Unilateral Contract – a unilateral offer may not be revoked for a reasonable time after performance is begun. n Promissory Estoppel – noncontractual promise that binds the promisor because she should reasonably expect that the promise will induce the promisee (offeree) to take action in reliance on it.

9. Acceptance of Offer n Definition – positive and unequivocal expression of a willingness to enter into a contract on the terms of the offer. n Mirror Image Rule – except as modified by the Code, an acceptance cannot deviate from the terms of the offer.

10. Communication of Acceptance n General Rule – acceptance effective upon dispatch unless the offer specifically provides otherwise or the offeree uses an unauthorized means of communication. n Stipulated Provisions in the Offer – the communication of acceptance must conform to the specification in the offer. n Acceptance Following a Prior Rejection – first communication received by the offeror is effective.

11. Communication of Acceptance n Authorized Means – the Restatement and the Code provide that unless the offer provides otherwise, acceptance is authorized to be in any reasonable manner. n Unauthorized Means – acceptance effective when received, provided that it is received within the time within which the authorized means would have arrived. n Defective Acceptance – does not create a contract but serves as a new offer.

12. Offer and Acceptance

13. Mutual Assent Has a definite and certain offer been communicated? No offer Offer terminated Has lapse of time, death, incompetency, destruction of subject matter, or subsequent illegality occurred? Yes No Has the offer been revoked by the offeror? Has the offeror received a rejection or counteroffer? Is acceptance effective? No No contract No Yes Contract formed