Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Heart of contract law is the 6 elements Offeror/Offeree Requirements of an Offer An offer has three basic requirements. It must be: 1.Made seriously 2.Definite and certain – so it is clear and measurable 3.Communicated to the offeree

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise An offer must be made with the intention of entering into a legal obligation. Serious Intent

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Serious Intent Due to supply and demand there is limited merchandise for a retailer to sell Invitations to negotiate will replace straight up offers

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise An offer must be definite and certain to be enforceable. Offers that use vague words or terms that cannot be quantified lack definiteness and certainty. Definiteness and Certainty You and your roommate do not agree to share utilities, you agree to split them evenly, 50/50.

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Offers may be made by any method that communicates the offer to the offeree, including: Communication to the Offeree TelephoneLetter Video conference Fax machine Face to face

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Requirements of an Acceptance To be legally binding, the acceptance must meet certain basic requirements. The acceptance must be unconditional.

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Unconditional Acceptance Any change in the terms of the offer means the offeree has not really accepted the offer. The offeree has made a counteroffer. Mirror image rule: When the offer and acceptance mirror each other. (no changes to the contract) Typically, retail goods are exempt from this rule

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise According to common law, an acceptance that must be sent over long distances is effective when it is sent. Ex. Post-mark date Methods of Acceptance An acceptance is implied when the offeree accepts by the same or a faster means than that used by the offeror. Mail offer, online acceptance. Cannot impose silence as a means of acceptance

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise The authorization of an acceptance can also be implied by any reasonable means, including: Methods of Acceptance Past practices between the parties ex. Insurance The usual method in the trade ex. Lawn care services Customary means in comparable transactions Ex. Restaurant dining

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Termination of an Offer 1.Revocation: the taking back of an offer 2.Rejection: of an offer by the offeree brings the offer to an end 3.Counteroffer: The offeree creates a new offer 4.Expiration of time: If the offeror sets a time limit for the acceptance of the offer, it must be honored 5.Death or insanity: If the offeror dies or becomes insane before the offer is accepted, the offer comes to an end