Formation Flashcards
Offer
Two requirements: An outward manifestation and; the signal that acceptance will conclude the deal
Commercial advertisements
Advertisements addressed to multiple recipients are generally treated as invitations for offers rather than offers.
Exception: language an advertisement such as first come first serve or first 10 customers only constitute an offer
Four ways to terminate the power of acceptance
Lapse of time
Death or incapacity of either party
Revocation by the offeror
Rejection by the offeree
Lapse of time
Power of acceptance it’s terminates at this time stated in the offer
if none stated in the power of acceptance will terminate after reasonable time.
Death or incapacity of either party
Supervening death or incapacity of either the offeror or offeree will terminate the power of acceptance with respect to the offer
Revocation
The offer or is free to revoke an outstanding offer:
Prior to acceptance, and
And effectively communicated
Indirect revocation
Where the offeree learns of the offeror’s intention to abandon the deal from a third-party
The offeror has taken definite action inconsistent with intent to enter the proposed contract and the offeree acquires reliable information of the inconsistent action
Revocation of an offer to multiple offerees
Notice of revocation must be made in a manner that is the functional equivalent of that used in making the offer
Three forms of rejection by the offeree
Out right rejection
Rejection via a counter offer
Rejection via nonconforming acceptance
The mirror image rule
At common law acceptance must mirror the terms of the offer
Option contract
Three requirements
First, and offer
Second a subsidiary promise to keep the offer open
Third, a consideration for keeping the promise open
Construction contracts
Most courts will bind subcontractors to their bids with implied option contracts to protect general contractors
UCC firm offer rule
A merchant can make a firm offer to buy or sell goods without consideration with three requirements being met:
First: the offer is made by merchant
Second: the offer is made in writing signed by the merchant
Third: the offer expressly states by its terms that it will be held open.
Duration of firm offer
Firm offer becomes your revocable either for the period of time stated in the firm offer or for a reasonable time
Firm offer can be no more than three months unless The merchant creates a common-law option contract
Unilateral contracts
Seek a return performance The offeror is bound only when the offeree completes performance
A bilateral contract
A promise is exchanged for a promise
Revocation of the unilateral contract
Under common law, the offer or was free to revoke the unilateral offer until performance was completed
Under the modern rule, minority of courts will impose an option contract once the offeree has begun performance and has gone beyond mere preparations
Communicating acceptance
The acceptance must mirror the terms of the offer and
The acceptance must be communicated to the offeror
Reasonable forms of acceptance
First: the means used by the offer or
Second: that means customarily used in similar transactions
Third: a means of communication equivalent in expeditiousness and reliability to the offer
Acceptance by silence
Silence is generally not acceptance except:
First: where the offeree takes the benefit of the offers services with a reasonable opportunity to reject
Second: where the offer or has given the offeree reason to understand that acceptance may be communicated by silence
Third: previous dealings make it reasonable that the offeree should notify the offeror if he does not intend to
The mailbox rule – acceptance by mail
Acceptance by mail is effective upon dispatch so long as properly posted with the correct address and postage. Here, the parties are bound even if lost in transmission.
Offers, revocations, rejections, counteroffers are only effective upon receipt
A UCC seller can except the buyers offer to purchase goods in three ways
First: a promise to ship goods in conformity with the terms of the offer
Second: a prompt or current shipment of the goods in conformity with the terms of the offer.
Third: the seller can also accept the buyers offer by shipping nonconforming goods
Accommodations
A shipment of nonconforming goods will not constitute acceptance if the seller notifies the buyer that the shipment is offered as an accommodation this is a counter offer
The battle of the forms
An acceptance which contains terms that differ from the buyer’s order will be considered a nonconforming acceptance unless acceptance is expressly made conditional to the additional on assent to the new or different terms
Additional or Different Terms - Transactions involving a consumer and a merchant
Here, the additional or different terms are construed as proposals for addition to the contract.
Additional terms
Become part of the contract unless:
First: the offer expressly limits acceptance to the terms of the offer
Second: the offer or objects to the additional terms within a reasonable time after receiving notice
Third: the additional terms would materially alter the contract
Materially alter - General definition/standard
Terms that would result in surprise or hardship if added without the express awareness of the party
Written confirmations
Additional terms are automatically part of the contract unless they materially alter the contract or the receiving party objects within a reasonable time.
Confirmations that differ from the terms of the prior agreement are proposals for inclusion.
