Contract Formation Flashcards
Requirements for an Offer
- Outward manifestation (oral, written, or via conduct)
- A signal that acceptance will conclude the deal
Communications that are NOT offers:
- Preliminary negotiations
- Is generic term that applies to the give-and-take that occurs during bargaining
- Invitation for an Offer
- Is an advanced stage of prelimary negotiations, where the communicating party is closing in on a deal but wants other party to commit first
Multiple Offerees
(3 situations)
- Commercial advertisements
- Reward offers
- Auctions
Commerical Advertisements
American Advertising Rule
Ads addressed to multiple recipients are generally treated as invitations for offers, rather than offers
EXCEPTION: if the language in the ad is “first-come, first-served,” or “first 10 customers only” constitutes an offer because the means by which the goods/services will be allocated i nthe event of an excess of demand eliminates the need for further assent from the advertiser
Reward Offers
Generally, treated as offers becasue they are considered communications that promise a bounty in exchange for the performance of a specified task
Types of reward offers
- Self-limiting awards
- Open-field rewards
Auctions
General rule: the auctioneer is inviting offers, and the responsive bidsd are the offers
EXCEPTION: Where the auction is “without reserve.” The auctioneer is making an offer to sell to the highest bidder.
An offer creates the power of acceptance . . .
In the offeree
Ways To Terminate The Power Of Acceptance
- Lapse of time
- Death or incapacity of either party
- Revocation by offeror
- Rejection by offeree
Termination by Lapse of Time
An offer lapses after time stated
OR
After a reasonable time
Reasonable time determination is based on:
- Subject matter and market conditions
- Degree of urgency and means of transmission
Face-To-Face Rule
An offer made in a face-to-face convo generally lapses at the end of the convo
Revocation by Offeror
- Offeror is free to revoke an outstanding offer,
- terminating offeree’s power of acceptance,
- at any time and for any reason,
- so long as the revocation occurs prior to acceptance and is effectively communicated
Two ways to communicate revocation
Direct: offeror directly communicates intent to withdraw the offer
Indirect: offeror takes some action that is inconsistent with intent to go through with the offer
Rejection By Offeree
- Outright rejection
- Counteroffer – rejects the initial offer and creates a new offer
- *Mere inquiry does not create a counteroffer
- Rejection via nonconforming acceptance
Revocation of an Offer Made to Multiple Offerees
Under the Second Restatements, where an offer is made by advertisement in a newspaper or other general notification to the public or some segment thereof, the power of acceptance is terminated when the notice of revocation is com- municated by advertisement or other general notification equivalent to that used for the offer and no better means of notification is reasonably available (the functional equivalents rule).
Reviving An Offer
Offeror has the power to revive an offer that offeree has rejected or has lapsed
Offeror must communicate the revival to offeree:
(a) by language OR
(b) giving offeree more time to make a decision
Unilateral Contract
Offer seeking performance in return
When is a unilateral contract created?
When offeree completes performance
Two Types of Unilateral Contracts
- Reward Offer
- Offeror offers to pay a reward for the successful peformance of some act
- Real Estate Brokerage Agreement
- Promise by the owner of real estate to pay a fee in exchange for the actual sale of the property
When may offeror revoke a an option contract?
Before performance begins.
Once performance begins, an option contract is created.
Bilateral Contract
Promosie in exchange for promise
