Formation of Contracts - Offer Flashcards
What does a legally enforceable K require?
- Mutual Assent (Offer & Acceptance)
- Consideration
- Lack of valid defenses
What is an offer?
- objective manifestation of a willingness by offeror to enter into agreement
- That creates power of acceptance in the offeree (nothing left to do but say “yes” to conclude the deal)
Requirements for a valid offer
- Intent to be bound
- Definite & Certain Terms
- Communicated to the offeree
What standard is used in determining if an offer exists?
Statement is offer if:
- Reasonable Person Std. AND
- Person to whom it is communicated could reas. interpret it as an offer
- Expresses the present intent to be legally bound by a K
Terms of the offer - Common Law
The terms must be certain and definite or the K fails for indefiniteness
- Essential terms must be covered in K
- Parties
- Subj. Matter
- Price
- Quantity
Terms of Offer - UCC
K is formed if:
- both parties intend to K AND
- There is a reas. certain basis for giving a remedy
The only essential term is quantity & UCC Fills gaps if other terms are missing
- Exception - Requirements or Output Ks (UCC implies Good Faith)
Missing Terms - Common Law
K may still be formed when a term is missing if it appears the parties intended to create a K
- Ct. may supply the terms b/c there is a presumption that the parties intended to include a reas. term
Missing Terms - UCC
UCC fills the gap
- Time - Reasonable
- place for delivery - Seller’s place of bus.
- Time of Payment - When buyer gets the goods
- Assortment of Goods - Reas. choice of B
- Price for Goods - Reas. price at time of delivery
- NOT for subj. matter or quantity
What must the language of the offer contain?
words of promise, undertaking or commitment and be targeted to a number of people who can accept
Employment K
If duration is not specified & Offer is accepted = K will be considered terminable at will
Advertisements
Advertisements are not offers, they are invitations to make an offer
- Ads lack the intent to commit
What is the legal effect of an offer?
Creates the power of acceptance in the offeree
How can an offer be terminated?
- Lapse
- Death/mental incapacity of offeror
- Destruction/Illegality
- Revocation
- Rejection by offeree
Termination by Lapse
- Offeree fails to accept within time pd. stated in the offer OR
- W/in reas. time pd. if not time is stated
Termination of Offer by Death/Mental Incapacity
After offer but b/f acceptance - if death by either party OR if either party becomes ment. incompetent the power of acceptance is terminated
Termination of Offer by Revocation
Offer can be revoked any time prior to acceptance by unamb. words or actions indicating the offer no longer may be accepted
Multiple Offers & Revocation
If one offeree accepts
- Offeror must notify every other offeree to effectively revoke the other offers
When are offers irrevocable?
- Option K
- UCC Firm Offer
- Promissory Estoppel
- Partial Performance
What are the elements of a common law option contract ?
- An offer
- A second promise to keep the offer open for a set pd. of time
- Consideration for the second promise
UCC Firm Offer Rule
Offer is irrevocable for a reas. amount of time (no more than 90 days) if:
- Offeror is a merchant AND
- Includes anyone who deals in the type of goods AND anyone who holds themselves out as having knowledge ro skill peculiar to the goods involved
- assurances are made that the offer will remain open
- In an authenticated writing
- NO consideration required
Irevocable by Promisorry Estoppel
If offeree reas. & detrimentally relies on offer it may become irrevocable
Irrevocable by Partial Performance
Offeree must have knowledge of offer when perf. begins
- Unilateral K - Offeror can’t revoke once offeree has begun perf.
- Bilateral K - Commencement of performance operates as promise to render complete perf.
How can an offeree reject an offer?
- Offeree clearly conveys to offeror that he no longer intends to accept the offer
- Rejection is effective upon receipt
- Counteroffer - acts as rejection of orig. offer and creates a new offer
Who is the offeror in an auction?
The Bidder
- The auctioneer is inviting offers
- The responsive bidders are the offerors
Advertisements - Exceptions
Exception - Language exists that is sufficiently specific & limits who can accept (e.g. 1st come, 1st serve)
Exception - Ad in nature of a reward - gen. is an offer b/c offer $ in exchange for perf. of specified task
Termination of Offer by Death/Mental Incapacity
Exception
Exception - Offer is an option K b/c can’t be revoked
When is a revocation effective?
It is not effective until it is communicated:
- Can be by actions, if offeree learns about it from a reliable source
When does a revocation sent by mail become effective?
not effective until it is received
What is the effect of a common law option contract?
Promise limits the offeror’s power to revoke until after the pd. has expired
Empliyment Contract - Contract states “ Permanent Employment”
Perm. employment = at will employment
Either party can term. agreement at any time w/out the term. being a breach
