Business Law Chapter 7 Mrs. A Creation of Offers Creation of Offers Terminating Offers Terminating Offers Acceptance of Offers Acceptance of Offers

WHAT IS A CONTRACT? A contract is an agreement that courts will enforce. Contracts between two parties are the basis for all business activity. 2

CONTRACT REQUIREMENTS There are six major requirements that must be satisfied before courts will treat transactions as contracts. Write the definition of each item below in your legal journal from Chapter 7 in the book or from the wikispace electronic chapter. Offer and Acceptance Genuine Agreement Legality Consideration Capacity Writing 3

What is an Offer? An offer is a proposal by one party to another party to enter into a contract. An offeror is… An offeree is… 4

Case #1: Wetting the Carpet Paula purchased a really cute “weenie dog” two weeks ago for $500. While friends were over at her house, the dog peed all over the carpet. A frustrated Paula said, “My mom is going to kill me! This dog has peed on the carpet 6 times since I got him. I would give this dog to anyone who offered me a $1!” Her friend Eli pulled out $1 and handed it to Paula stating, “I accept, here’s your money.” Was a contract made?? Why or why not? 5

Requirements of an Offer Three requirements of an offer: 1. Seriously Intended – Offeror Offers made when angry or just joking around “Reasonable Person” test Social Agreements – A Date 2. Must be definite and certain 3. Must be communicated to the Offeree 6

Offer Must be Definite & Certain All essential information is present in the contract: price, quantity, and subject manner Clear and specific Advertisements – Only Invitations to negotiate 7

Case #2: Missing Purse Sarah accidentally left her purse in the math classroom at her community college. She returned to the room and it wasn’t there. Sarah posted an ad on the student bulletin board offering $100 to whoever returned her purse. Major, another student, hadn’t seen the ad but found Sarah’s purse and returned it to her. Is Major legally entitled to the reward? Why or why not? 8

COMMUNICATED TO THE OFFEREE A person CANNOT accept an offer without knowing an offer has been made. She may pay him because she is an ethical person. 9

 Offeror BEFORE  Revocation – the offeror must communicate to the offeree they want to revoke or take back the offer BEFORE it is accepted  Time stated in the offer  Death or Insanity  Offeree  Rejection – terminates an offer  Counteroffer  Death or Insanity 10

 Options – Offeree gives the offeror something of value in return for a promise to keep the offer open  Firm Offer – Special Rule for vendors (those who buy and sell goods)  An offer by a vendor for the sale or purchase of goods stating in a signed writing how long it is to stay open is a firm offer. 11

1. An offer made to one person CANNOT be accepted by another person 2. Acceptance Terms Match the Offer Terms Mirror – Image Rule Terms of acceptance = Terms of offer  Counteroffer 12

1. The acceptance must be communicated to the offeror Acceptance in Silence – only if agreed upon in advance Unilateral – Offeror promises something in return for offeree’s performance ie. Pay someone to mow the lawn Bilateral – Most Common – A promise is traded for a promise ie. I promise to pay if you promise to deliver my new furniture 13

 Shirley offered to trade her digital camera to Paul in exchange for his camcorder. Joe, who had a camcorder of the same make and model as Paul, overheard the offer and said he would make the swap.  Did a contract result from Joe’s statement?  Why or why not? 14

UCC: a set of laws covering the sales of goods.  When different terms are added to a contract between vendors, they become part of the contract as long as:  The terms do not change the nature of the contract  The offeror does not object within a reasonable time  The original offer doesn’t state the terms could not be changed 15

sent  When sent (fax, mail, telegram, )  Except when the contract specifies acceptance is effective when received.  UCC – acceptance may be made “in any manner and any medium reasonable in the circumstances” unless otherwise clearly stated in the contract. 16