1. CHAPTER 6 Offer and Acceptance
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CHAPTER 6 Offer and Acceptance
6-1 Creation of Offers
6-2 Termination of Offers
6-3 Acceptances
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2. 6-1 Creation of Offers GOALS
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6-1 Creation of Offers
GOALS
List the elements required to form a contract
Describe the requirements of an offer
Contract definition: an agreement between two parties that creates an obligation
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3. https://www. youtube. com/watch
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4. REQUIREMENTS OF A LEGALLY ENFORCEABLE CONTRACT
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REQUIREMENTS OF A LEGALLY ENFORCEABLE CONTRACT
Offer and acceptance
Genuine assent
Legality
Consideration
Capacity
Proper form
Why would each of these requirements be necessary in order to form an enforceable contract?
Offer and acceptance
Offer is made by the offeror
Offer is accepted by the offeree
Terms of the contract must be definite and without change
Genuine assent means no deception or undue force
Agreement must be legally binding
Consideration: what a person demands and must receive in order to make the contract binding. May be money or services.
Must have the legal capacity to agree to a contract.
Certain contracts must be in writing in order to be enforceable.
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5. NATURE AND CLASSES OF CONTRACTS
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NATURE AND CLASSES OF CONTRACTS
Executed and executory contracts
Express, implied-in-fact, and implied-at-law (quasi) contracts
Unilateral and bilateral (multilateral) contracts
What is an executed contract? One that all of the terms of the contract have been fulfilled.
An executory contract? A contract that has not been fully performed.
Express contract? A contract in which all the terms are expressly stated either orally or in writing
Implied-in-fact? A contract that does not have its terms expressly stated but the terms can be inferred from the parties’ acts or conduct
Quasi or implied-at-law? An obligation that the law creates in the absence of an agreement between the parties. Usually invoked by the courts where unjust enrichment , which occurs when a person retains money or benefits that in all fairness belong to another, would exist without judicial relief.
Unilateral contract? A one-sided contract where one party, known as the offeror, makes a promise in exchange for an act or absention from an act, by another party, known as the offeree. If the offeree acts on the offeror’s promise, the contract is legally binding on the offeror; however, the offeree cannot be forced to act or not to act since no return promise was made. Example would be a reward offered for something.
Bilateral contract? Both parties exchange mutual promises.
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6. Chapter 6
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What is a contract?
First video explains express and implied contracts very well.
2nd video clip explains the existence of quasi contracts or contracts in law
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7. Implied in fact and Quasi Contracts
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Implied in fact and Quasi Contracts
First video describes the differences between express and implied contracts
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8. CHECKPOINT
  
What elements are required to form a legally enforceable contract?
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9. REQUIREMENTS OF AN OFFER
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REQUIREMENTS OF AN OFFER
Contractual intent must be present
Jests
Statements made in anger or terror
Preliminary negotiations
Social agreements
Offer must be communicated to the offeree
Essential terms must be complete and definite
Offerby an offeror to do something provided the offeree does or refains from doing something in return.
Jests: be careful. Reasonableness rules.
Preliminary negotiations are usually looked upon as invitations to negotiate.
Social agreements: cannot sue if you get stood up by a date.
Completeness of terms: minimum must identify the price, subject matter and quantity.
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10. CHECKPOINT
  
What are the requirements of an offer?
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11. 6-2 Termination of Offers
GOALS
Describe the various ways to end offers
Explain how an offeree can ensure an offer will remain open
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12. HOW CAN OFFERS BE ENDED? Revocation by the offeror Revocation
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HOW CAN OFFERS BE ENDED?
Revocation by the offeror
Revocation
Can be done by the offeror anytime before the offeree accepts the offer.
Promise to keep offer open is not legally binding.
Revocation: withdrawing an offer before it’s accepted.
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13. Time stated in offer
Offeror may state how and when the offer must be accepted.
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14. Reasonable length of time
Offer ends after a reasonable length of time when not specifically stated.
Reasonableness depends on the circumstances surrounding the offer
Set time table for acceptance of offer.
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15. Rejection by the Offeree
If the offeree rejects the offer, he cannot later try to accept.
If offeree approaches offeror to accept after rejecting, this is a new offer that the offeror either can accept or reject.
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16. Counteroffer
Offeree’s response to an offer which modifies the original offer.
Terminates the original offer and a new offer is made.
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17. Counteroffer Video
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18. Death or insanity of Either the Offeror or Offeree
Both of these eliminate control over the contract.
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19. Destruction of the Specific Subject Matter
If the offer relates to something specific and that item is destroyed, the offer is terminated
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20.    CHECKPOINT Explain two ways in which offers can be terminated.
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21. HOW CAN AN OFFER BE KEPT OPEN?
Options
Separate contract arising when the offeree gives the offeror something of value in return for a promise to leave an offer open.
Mailbox rule; proper dispatch
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22. HOW CAN AN OFFER BE KEPT OPEN?
Firm offers
Applies to merchants who make offers in writing.
A proposal in writing made by a merchant stating how long the offer is to stay open
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23. Firm offers
§ Firm Offers An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror
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24. CHECKPOINT
  
How could an offeree ensure that an offer will stay open for a set period of time?
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25. 6-3 Acceptances
GOALS
Discuss the requirements of an effective acceptance
Determine at what point in time an acceptance is effective
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26. WHAT IS REQUIRED OF AN ACCEPTANCE?
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WHAT IS REQUIRED OF AN ACCEPTANCE?
Only offerees may accept
The acceptance must match the offer
Acceptance must be communicated to the offeror
Silence as acceptance
Promises as acceptance
Performance as acceptance
Modes of contractual communication
When acceptances are effective
Acceptance is when a party to whom an offer has been made agrees to the proposal.
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27. Only Offeree May Accept
Offer made to one person must be accepted by that person
Made to the general public or a group
Any member who knows of the offer may accept
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28. Acceptance must be mirror image
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Acceptance must be mirror image
Must exactly match the terms contained in the offer.
Including how the acceptance is made.
Normally only applied when the when the term altered is considered to be
“material” and related to providing
service or sale of real estate.
If the contract stipulates how the contract is to accepted, the acceptance must be made in that manner.
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29. Contracts: What is the Mirror Image Rule?
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Contracts: What is the Mirror Image Rule?
USALawEssential: Contracts: What is the Mirror Image Rule? (2:18)
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30. What is the Uniform Commercial Code?
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What is the Uniform Commercial Code?
USALawEssential: What is the Uniform Commercial Law? (2:11)
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31. Uniform Commercial Code: Changes to Mirror Image Rule
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Uniform Commercial Code: Changes to Mirror Image Rule
Are the two parties merchants or not?
USALawEssential: How Does the UCC modify the Mirror Image Rule Part I (2:41)
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32. Uniform Commercial Code
If the two parties to the contract are merchants:
Additional terms are proposals that become part of the contract between merchants unless…………
The offer says the offeree CANNOT add terms
The additional terms materially alter the contract
The offeror objects
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33. Uniform Commercial Code: Changes to Mirror Image Rule
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Uniform Commercial Code: Changes to Mirror Image Rule
USALawEssential: How does the USS modify the mirror image rule? Part 2
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34. One of three approaches to dealing with changes
Knockout rule
Contradictory terms are “knocked out” of the contract
Use the UCC to fill in for the contradictory terms
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35. If both parties are merchants, the new terms are not part of the contract
If the offeror objects or
If the terms are material
If both parties are merchants, the new terms are considered part of the contract if the offeror is silent about the changes and the terms are not material.
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36. Acceptance Must Be Communicated to the Offeror
1 Silence as acceptance: DOES NOT WORK!!!
2 Promises as acceptance: can give a promise instead of performing the contracted act. This for that (bilateral contracts)
3 Performance as acceptance: Unilateral contract. If one performs the act, the contract is valid (finding a lost dog)
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37. 4. Modes of contractual acceptance
“may be made by telephone, fax, , text, mail, delivery service.”
UCC: acceptance of offer may be made in any manner and by any medium reasonable in the circumstances unless otherwise clearly indicated by the language of the circumstances.
A set of principles that the UCC attempted to put into law to cover contracting by computer was overwhelmingly turned down by the states.
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38. When acceptances are effective
All forms of contractual communications take effect when received EXCEPT FOR:
Acceptance!
Effective when sent.
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39. Use the “customary” method for that type of acceptance:
Stock market uses hand signals
Next-day delivery
When customary service is used, the acceptance is effective when sent unless the contract states otherwise.
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40. What if there is no specified or customary method?
Use the same method used by the offer.
UCC: If the acceptance of an offer for the sale or purchase of goods is sent by “reasonable” means, it is effective when sent.
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41. Questions: When is an oral acceptance effective?
When spoken directly to the offerer
When is a posted or telegraphed acceptance effective?
When it is irretrievably separated from the offeree by it being placed in a mail box or given to a clerk to send
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42. Questions: When is an acceptance by fax effective?
Immediately upon being sent
__________ occurs when a party to whom an offer has been made agrees to the proposal.
True or false: If an offeror specifies in the offer that the acceptance must be made by fax, an ed acceptance will not be effective.
True
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43. Questions:
True or False: All forms of acceptance take effect only when received.
False
If the parties to a contract have mutual obligations to perform it, the contract is termed
A. unilateral
B bilateral
Neither of these
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44. Questions
True or False: When there is no specified or customary means for communicating acceptances, a faster means than that employed by the offeror to make the offer would be considered effective by the courts
True
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45.    CHECKPOINT What are the requirements of an effective acceptance?
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46. 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
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47. 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, , or fax machine to withdraw or revoke an offer.
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