Offer

Question 1

What is the definition of an offer?

Answer 1

1) manifestation of a willingness to enter into an agreement (by the offeror)

2) creates a power of acceptance (in the offeree)

Question 2

How could one determine if objectively an offer has been made?

Answer 2

Whether the offeror displays a serious intent to be bound

Question 3

True or false: An offer must usually be directed at a special offeree

Answer 3

True. One cannot accept an offer unless its directed at them.

Question 4

Are there any limited exceptions to the rule that offers must be directed at a particular individual?

Answer 4

Yes! Contests or rewards that promises something to anyone who accomplishes a certain task.

Question 5

What are the rules of specificity for an offer (UCC vs. CL)?

Answer 5

CL: All essential terms must be covered by the agreement (subject, price, quantity, parties)

UCC: Law is more willing to fill in the gaps and find a contract, even if the agreement leaves out key terms. One essential term: quantity. Price does NOT need to be included.

Question 6

“I don’t know how many I need over the next year, but I promise to buy all of them from you” – what kind of contracts is this under the UCC?

Answer 6

Requirements contract = buyer is offering to buy 100% of whatever amount is needed from this individual seller

Specific enough under UCC, even without an exact quantity

Question 7

“I don’t know how many I will make over the next year, but I promise to sell all of them to you” – what kind of contract is this under the UCC?

Answer 7

Output contract = the seller is offering to sell 100% of whatever amount is produced to this individual buyer

Specific enough under UCC, even without an exact quantity

Question 8

What must a valid offer convey to the other side?

Answer 8

A valid offer must convey the power of acceptance to the other side

(i.e., the offeree can simply say “I accept” and know that the deal is complete)

Question 9

I tell you that “you’d better decide fast if you want to buy my house, as I expect to have a ton of offers next week.” You say, “I accept.” Is this a contract?

Answer 9

No, this is an invitation to deal, where a preliminary communication reserves the final right of approval from the speaker. No conveyance of a power of acceptance to the other side.

Question 10

I place an advertisement in the paper promising “to sell my 1994 Jeep Wrangler for $5,000, first come, first served.” You show up at my house, waving a check and say, “I accept.” Is there a contract?

Answer 10

Yes, assuming you were the first person to show up that day with the money. The ad was specific enough and left nothing open to negotiation, including how the acceptance can occur.

Question 11

True or false: Duration is an essential element in all contracts

Answer 11

False. In most ongoing contracts, if a duration term is not specified in an agreement, courts will imply that a contract lasts for an indefinite period of time

Question 12

What happens if an employment contract does not state a duration?

Answer 12

There is a rebuttable presumption that employment is “at will,” where either party may terminate the working relationship at any time without termination being considered a breach of contract

Question 13

True or false: A bilateral contract is a promise exchanged for a promise

Answer 13

True. If an act is requested, the contract is unilateral.

Question 14

I offer to sell you my house for $1 million. A day later, you are talking with someone else and learn that she bought my house that morning for $1.1 million.

You run to my house, waving a check and say, “I accept.” Is this a contract?

Answer 14

NO. This is constructive revocation, where the offeree (you) learn that the offeror (me) has taken an action that is absolutely inconsistent with the continuing ability to contract.

Question 15

I offer to sell you my house for $1 million. A day later, I decide that I don’t want to move and mutter to myself in my office, “Forget it. I revoke that offer.” Is there a contract?

Answer 15

YES. The revocation needed to be express and clearly communicated to you.

Question 16

I offer to sell you my Jeep for $5000. A split second later you yell, “No… I mean YES.” Is there a contract?

Answer 16

No. An offer is terminated by rejection.

A rejection is usually effective upon receipt. An offeree cannot accept an offer once it has been terminated.

Question 17

I offer to sell you my Jeep for $5,000. A split second later, you say, “I offer to buy it for $4500.” I remain silent. A minute later you say, “OK, OK, I’ll buy it for $5000.” Is there a contract?

Answer 17

NO. The counteroffer made squashes the contract.

A counteroffer acts as a rejection of the original offer and creates a new offer.

Question 18

Are there any exceptions to the rule of counteroffer and acceptance?

Answer 18

Yes. Option contracts give the right to make counteroffers during the option period without terminating the original offer.

Question 19

How do you know the difference between a counteroffer and inquiry?

Answer 19

Examine the offeree’s statement closely. It may be a rejection, but it may also be only an inquiry (e.g., “Is that a 2005 model car?”) or merely indecision (e.g., “I’ll keep your offer under advisement.”); in either case the offer remains open.

Question 20

If the offeror dies before acceptance, what happens next?

Answer 20

Death of one party during contract FORMATION (i.e., the offeror dies) means that the offer is revoked.

Question 21

I offer to sell you 1000 barrels of oil for $100 each. You remain silent and I never revoke. Five years later, when the price of oil has jumped to $500, you call me up and accept. Is there a contract?

Answer 21

No. The offer has been revoked due to a reasonable amount of time passes.

BUT note that even if the offer no longer exists, it may brought up again with the same terms via revival.

Question 22

What are the six ways in which an offer may be revoked?

Answer 22

1) Offeror Revokes via express communication to offeree
2) Constructive revocation
3) Offeree rejects the offer
4) Offeree makes a counteroffer
5) Offeror dies
6) Reasonable amount of time passes

Question 23

True or false: the offeror is usually free to revoke his/her offer at any time prior to acceptance

Answer 23

True.

Question 24

In which four ways may an irrevocable offer arise?

Answer 24

1) Option
2) Firm Offer
3) Unilateral Contract - performance has begun
4) Detrimental reliance

Question 25

What is an option contract?

Answer 25

An option is an independent promise to keep an offer open for a specified period of time. Such a promise limits the offeror’s power to revoke the offer until after the period has expired, while also preserving the offeree’s power to accept.

Question 26

True or false: If the option is a promise not to revoke an offer to enter a new contract, the offeree does not need to give separate consideration for the option to be enforceable.

Answer 26

False.
If the option is a promise not to revoke an offer to enter a new contract, the offeree must generally give separate consideration for the option to be enforceable.

If the option is within an existing contract, no separate consideration is required

Question 27

What are the requirements for a firm offer?

Answer 27

UCC territory

1) Merchant - someone who regularly deals in the type of good at issue
2) Firm offer in writing, signed by offeror and contain a promise not to revoke
3) Time period as stated in the offer OR reasonable time, not to exceed 90 days

Question 28

True or false: Additional consideration is required to keep a firm offer open under the UCC

Answer 28

False.No consideration by the offeree is needed to keep the offer open under the UCC firm offer rule.

Question 29

I offer to sell you a contracts textbook for $100 and promise via signed writing not to revoke this offer for one week. Five minutes later, I say “never mind, I revoke the offer.” Can you still accept?

Answer 29

NO, not even under the firm offer rule because I am not a merchant, I’m a law student.

Question 30

Can a unilateral contract be revoked?

Answer 30

If the offeree has begun performance, no. Once performance has begun, the offeree will have a reasonable amount of time to complete performance but cannot be required to complete the performance.

But if no performance has begun, the offeror can revoke.

Question 31

True or false: A unilateral contract is not formed until performance is complete

Answer 31

True

Question 32

How is detrimental reliance defined?

Answer 32

When the offeree reasonably and detrimentally relies on the offeror’s promise prior to acceptance

Note: the doctrine of promissory estoppel may make the offer irrevocable.