1. Chapter 10 Offer and Acceptance

2. What is a Contract? n Contract - an agreement that is enforceable by law n Offeror - the person who makes an offer n Offeree - person to whom the offer is made

3. Who may enter into contracts? n Capacity - the ability to understand one’s actions and the effects of those actions n Legally competent - persons with the capacity to contract n Minors, intoxicated persons, and insane persons lack capacity, at least to some degree.

4. What are the requirements of an offer? n Offer - a proposal by an offeror to do or not to do some specified thing in the future –the offeror must intend to create a legal obligation –the terms must be definite and complete –the offer must be communicated to the offeree

5. How is an offer ended? n An offer ends at the time stated in the offer n An offer not stating how long it will remain open terminates after a reasonable length of time n An offer ends if it is rejected by the offeree n An offer ends if the offeree makes a counteroffer n An offer usually ends if it is revoked or modified by the offeror before the offeree has accepted n An offer is terminated by death or insanity of either the offeror of offeree

6. How can an offer be kept open? n Option - underlying contract to keep an offer open n Firm offer - a binding offer stating in writing how long it is to be held open

7. What is required for acceptance? n Acceptance - occurs when a party to whom an offer has been made agrees to the proposal or does what is proposed –Acceptance must be by the person(s) to whom the offer was made –Acceptance must be unconditional and must match the offer

8. More requirements for acceptance –Acceptance must be communicated to the offeror n Unilateral contract - only one of the parties makes a promise n bilateral contract - both parties make promises

9. What is the effect of acceptance? n Valid contract - one that is legally effective and enforceable in court n Void agreement - cannot be enforced in court by either party n Voidable contract - if a party chooses to withdraw from a transaction n Unenforceable contract - valid contract’s time has expired