3 - 4. Basic Elements (I) Definiteness, offer, & acceptance

Question 1

3.1) What are the two basic elements that every legal system demands for a contract to exist?

Answer 1

Parties intent to be legally bound

Parties reach a sufficient agreement

(Some legal systems require additional elements for a valid contract [ex: English law with consideration])

Question 2

3.2) What is the definiteness of a contract?

Answer 2

Minimum degree of specificity of the terms in a contract that parties must agree on for a court to enforce them in a potential dispute

Ex: sales contracts under French law require a specific object and price

Question 3

3.3) What is the concept of offer?

Answer 3

A proposal that:
- is intended to result in a contract upon acceptance
- contains sufficiently definite terms to form a contract

Ex: I propose you to buy three specific paintings from my collection

Question 4

3.4) What is an invitation to treat? Refer to the ‘reasonable person’ test

Answer 4

A proposal that does not meet the requirements of an offer

Easily distinguishable when proposal includes phrases like “subject to agreement”, then it is a proper offer and not an invitation to treat

When one party intended to make an offer and the other interpreted it as an invitation to treat, one must decide the dispute by considering what a “reasonable person” would think upon receiving the first party’s offer

Question 5

3.5) What is termination? Under what conditions does an offer terminate?

Answer 5

Termination: offer ceases to exist, no longer acceptable

A. Expiration of time: if deadline provided by offeror is not met, then the offer can no longer be accepted. Offers w/o deadline continue to exist “for a resonable time” depending on context (nature of goods, price, means of communication)

B. The nature of the goods or services: offer for perishable goods (food) lasts shorter than one for non-perishables

C. Express rejection: if offeree rejects it explicitly and the rejection reaches the offeror

D. Revocation: offeror no longer wants to be bound by offer

E. Withdrawal: offeror takes back the offer before or just as it reaches offeree

Question 6

3.6) What are the three approaches to revocation?

Answer 6

German:
- Cannot revoke offer until it is ceases to exist (rejected or expired)

English:
- Can be revoked at any time before acceptance, no consideration shown by the other party

French:
- Offers can be revoked as long as they do not frustrate legitimate expectations of oferee, if so, offeror has to pay damages

Question 7

3.7) What is the concept of acceptance?

Answer 7

Offeree’s unconditional agreement with the offer received

Acceptance must exactly mirror the offer, if not, it is a counteroffer

Question 8

3.8) What are the methods of acceptance?

Answer 8

A. Prescribed method: offer specifies an acceptance method (fill out form, send to x address), if the prescribed method is specified only because of speed, any other speedy mechanisms are valid

B. Silence: usually not enough, unless there is a long-standing business relationship and/or a way of operating that parties are accustomed to

Question 9

3.9) When are advertisements considered genuine offers to the general public?

Answer 9

French law:
- Ads are always offers
- Maltzkorn v. Braquet case
- French civil code states offers to the public should be treated in the same way as offers to individuals
- Protects consumer by binding seller and not letting them change the price

English and German law:
- Ads are invitations to treat
- Gibson v. Manchester City Council case
- Preliminary steps in larger negotiation process
- Protects seller by not binding their limited stock to numerous potential consumers

Promises of reward:
- Bounty posters and other things of that nature are ads
- Obviously binding for the French
- Also binding under English law because they are treated as unilateral contracts (promise of reward is offer and performing the act is acceptance and consideration from other party), however, if party performs act without knowing of the reward, not binding
- Also binding under German law which places it outside contract law as a different juridical act, if party performs act without knowing, still binding

Store windows/online ads:
- French say prices displayed in these settings constitute offer
- English and German say they do not, EU directives say online businesses should provide extensive info but leave the binding of the price up to national law