Chapter 6 Offer and Acceptance 7/16/2019 Chapter 6 Offer and Acceptance 6-1 Creation of Offers 6-2 Termination of Offers 6-3 Acceptances Chapter 6 LAW

6-1 Creation of Offers GOALS List the elements required to form a contract Describe the requirements of an offer Chapter 6

WHAT MUST BE IN A CONTRACT? Offer and acceptance Offeror makes offer & offeree accepts Terms must be definite and accepted without change Genuine assent Agreement can’t be based on an important mistake, unfair pressure, or deceipt Legality Can’t have an agreement to commit crime/tort Chapter 6

WHAT MUST BE IN A CONTRACT? Consideration – both parties have to receive value Capacity – most states minimum age 18 Writing – some K’s must be in writing Chapter 6

What elements are required to form a legally enforceable contract? Chapter 6

REQUIREMENTS OF AN OFFER Contractual intent must be present – facts & circumstances are considered “would a reasonable person disregard” Jests Statements made in anger or terror Preliminary negotiations Ads are not offers UNLESS: “Subject to stock on hand”, etc “First 10 customers, first to arrive,” etc. Social agreements – not legal obligations Chapter 6

REQUIREMENTS OF AN OFFER Offer must be communicated to the offeree Must be accepted by the intended offeree Can’t accept an offer if you didn’t know one existed (rewards) Essential terms must be complete and definite (allows courts to determine intent) COMPLETE: at minimum identified the price, subject matter, and the quantity DEFINITE: each essential term must be clearly identified Chapter 6

What are the requirements of an offer? Chapter 6

6-2 Termination of Offers GOALS Describe the various ways to end offers Explain how an offeree can ensure an offer will remain open Chapter 6

HOW CAN OFFERS BE ENDED? Revocation by the offeror Anytime before offeree accepts Revocation is not effective until communicated to the offeree Time stated in the offer Reasonable length of time Depends on the circumstances Rejection by the offeree Even if the time limit has not expired Chapter 6

HOW CAN OFFERS BE ENDED? Counteroffer Changes to important terms of the K Death or insanity of either the offeror or offeree Destruction of the specific subject matter Chapter 6

Explain two ways in which offers can be terminated. Chapter 6

HOW CAN AN OFFER BE KEPT OPEN? Options Offeree gives the offeror something of value in return for a promise to keep the offer open Firm offers A contractual proposal in writing by a merchant stating how long the offer is to stay open Chapter 6

How could an offeree insure that an offer will stay open for a set period of time? Chapter 6

6-3 Acceptances GOALS Discuss the requirements of an effective acceptance Determine at what point in time an acceptance is effective Chapter 6

WHAT IS REQUIRED OF AN ACCEPTANCE? Only offerees may accept The acceptance must match the offer If terms aren’t identical, a counteroffer is created Acceptance must be communicated to the offeror Silence, bilateral, unilateral acceptance Modes of contractual communication When acceptances are effective Chapter 6

WHAT IS REQUIRED OF AN ACCEPTANCE? Acceptance must be communicated to the offeror Modes of contractual communication In person, telephone, fax, email, text, etc. Any reasonable means When acceptances are effective Acceptances are effective when SENT Chapter 6

WHAT IS REQUIRED OF AN ACCEPTANCE? Acceptance must be communicated to the offeror Silence Bilateral K – K’s in which the offer implies that it can be accepted by giving a promise instead of performing the contracted for act. unilateral acceptances – require that the offeree indicates acceptance by performing his/her obligation Chapter 6

WHAT IS REQUIRED OF AN ACCEPTANCE? Acceptance must be communicated to the offeror Modes of contractual communication When acceptances are effective Chapter 6

What are the requirements of an effective acceptance? Chapter 6

PREVENT LEGAL DIFFICULTIES When you seek to enter into a contract . . . When negotiating, assume the worst and include terms in the contract addressing potential problems. For important contracts, put offers and acceptances in writing. If either an offer or an acceptance is made orally, promptly confirm it in writing. Obtain and keep a copy of every important document you sign. Express your intentions in offers and acceptances with clear, complete, and understandable language. Continued on the next slide Chapter 6

PREVENT LEGAL DIFFICULTIES Remember that the offeror may specify how and when the offer must be accepted. Otherwise the offeree may use the same means used by the offeror, a faster means, or other reasonable means. When appropriate, buy an option, if one is available, to keep the offer open for as long as you need. Remember that for an offeror to withdraw or revoke an offer, the offeree must receive notice. For speed, use the telephone, e-mail, or fax machine to withdraw or revoke an offer. Chapter 6