2. Agreement - Offer and Acceptance Flashcards
What is required for a communication to be an offer?
It must create a reasonable expectation in the offeree that the offeror is willing to enter into a contract on the basis of all material terms contained in the offer
An expression of what is required for a communication to be an offer?
An expression of a promise, undertaking, or commitment to enter into a contract
What is required of the essential terms of an offer?
The essential terms must be definite and certain, and not too vague, uncertain, or incomplete
What is the basic inquiry required to determine if an offer contains definite and certain terms?
Whether enough of the essential terms have been provided so that a contract including them would be capable of being enforced
Does an offeree need to have knowledge of an offer?
Yes
How does an offeree acquire knowledge of an offer?
The offer must be communicated to them
Is a statement made in response to a request for information an offer?
No
What is a unilateral contract?
A contract which arises when an offeror promises to do something if the offeree does something in return and the offeree actually does this thing
What is the effect of termination of an unaccepted offer?
It cannot be accepted
What is a revocation?
A retraction of an offer by the offeror
How is an offer revoked directly?
By directly communicating the revocation to the offeree before acceptance
How is an offer revoked indirectly?
If the offeree receives:
- Correct information
- From a reliable source
- Of acts of the offeror which would indicate to a reasonable person that the offeror no longer wishes to make the offer
What is required for revocation to be effective?
It must be received by the offeree
What are two limitations on an offeror’s power to revoke?
- Collateral contract
- Beginning performance under an offer for a unilateral contract
What is a collateral contract?
A separate contract which is collateral to an offer, in which the offeror promises (supported by consideration from the offeree) to not revoke an offer within an agreed time period
Why is a unilateral offer irrevocable once performance has begun?
Because it would be unfair on the offeree if the offeror could revoke the offer after the offeree has already begun performance
Even though a unilateral offer is irrevocable once performance has begun, when is the contract formed and what is the effect of this for the offeree?
The contract is formed when performance is complete.
This allows the offeree to withdraw from performance at any time, even though the offeror cannot revoke after they begin.
Even though beginning performance under a unilateral and bilateral offer both make the offer irrevocable, what are the differing reasons for this?
Unilateral: beginning performance would make it unfair for offeror to revoke, even though contract is not formed until completion
Bilateral: beginning performance accepts the offer and a contract is formed
How may an offeree terminate an offer?
By rejection, either expressly, or impliedly e.g. through a counteroffer
What is an express rejection?
A statement by the offeree that they do not intend to accept the offer
When is a rejection effective?
When received by the offeror
What is the effect of a counteroffer?
It rejects the original offer and makes a new one, reversing the roles of the parties
What is the test for whether a communication is a counteroffer or a mere inquiry consistent with the original offer being live?
Whether a reasonable person would believe that the original offer had been rejected
Does rejection or counteroffer regarding a collateral contract affect the offer that the collateral contract concerns?
No
How is an offer terminated through lapse of time?
If offeree does not accept within a time specified by the offeror, or within a reasonable time if no time is specified
What does the court take into account when determining if a time period is reasonable for the purposes of lapse?
The subject matter of a contract, e.g. a reasonable time in which to accept an offer for perishable goods will be shorter than non-perishable
What are the four ways in which an offer may be terminated by operation of law?
- Death of offeror/offeree
- Destruction of subject matter of offer/proposed contract
- Supervening illegality
- Failure of a condition contained in the offer
What is acceptance?
A manifestation of unqualified assent to the terms of an offer
Who has the power to accept an offer?
Anyone (including anyone within a particular class) to whom the offer was made
Can the power to accept be assigned?
No
Why does an agent accepting the terms of an offer on behalf of a principal not breach the prohibition on assigning the power to accept?
Because the agent is entering the agreement on behalf of the principal, and it is the principal who will be party to the contract
Can a person accept an offer they are not aware of?
No.
Even if they unknowingly perform what would be required of an offeree, there is no contract if they were not aware of the offer.
How can an offer be accepted?
Unless a specific method is stipulated in the offer, an offer can be accepted in any reasonable manner and by any reasonable medium
What is the effect of an offeree accepting the offer but not through a method stipulated in the offer?
The acceptance is not valid, unless the method is just different but no less advantageous to the offeror
Is someone who accepts a unilateral offer by performance obligated to complete performance?
No
Is the offeree in a unilateral offer required to notify the offeror that they have begun performance?
No
(applies to unilateral only)
What is the offeree in a unilateral offer required to notify the offeror of?
That performance has been completed, within a reasonable time after completion
If a non-unilateral offer is to be accepted by conduct, what must the offeree do?
Make the offeror aware, so as to satisfy the communication of acceptance requirement
Must acceptance always be communicated?
Yes, unless the offer provides that acceptance need not be communicated
Must waiver to communication of acceptance be express?
No, it can be implied through conduct, e.g. merely sending goods without other communication can be deemed acceptance of an offer to buy
What is the postal rule?
Acceptance by post is effective when posted
What are 3 instances in which the postal rule will not apply?
- Letter not properly addressed and stamped
- Unreasonable for acceptance to be communicated by post
- Offer stipulates, expressly or impliedly, that acceptance is not effective until received
What is the only element to which the postal rule applies?
Acceptance
Does the postal rule apply to instantaneous communication, e.g. email?
No
What is the battle of the forms?
In a battle between parties regarding whose standard terms to use, the last party to make an offer on their own terms is likely to win the battle, because the other party will have accepted that offer by their conduct
What is a prevail clause?
A clause in a party’s draft contract stating that their terms will prevail over any terms which the offeror seeks to introduce
What difficulty do prevail clauses present?
When the other party makes a counteroffer to enter into the contract on their terms, they are rejecting the whole of the original offer, which would include the prevail clause
