Offer

Question 1

What is required for a party’s communication to be an offer?

Answer 1

To be an offer, a party’s communication must meet two elements:
1. outward manifestation, whether oral, written or conduct
2 signal that acceptance will conclude the deal (power of acceptance)

Question 2

What is the American rule regarding commercial advertisements as offers?

Answer 2

Ads, catalogs, price lists are invitations for offers, since responses may exceed available supply of goods or services

Question 3

What is the exception to the American rule regarding commercial advertisements as offers?

Answer 3

Language that identifies who gets limited supplies of goods, even if there is excess demand, creates an actual offer rather than invitation for an offer.

Question 4

Are rewards offers, offers?

Answer 4

Yes, reward offers are offers because they are communications that promise money in exchange for performance of specific tasks

Question 5

What type of power does the offer create in the offeree?

Answer 5

Offer creates the power of acceptance in the offeree

Question 6

How can power of acceptance be terminated?

Answer 6

1. lapse of time
2. death or incapacity
3. revocation of offer by offeror
4. termination by offerees rejection

Question 7

When does an offer lapse?

Answer 7

An offer lapses after the time stated in the offer or after a reasonable time.

Question 8

How is a reasonable time determined for purposes of establishing when an offer lapses?

Answer 8

1. subject matter and market conditions
2. degree of urgency and means of transmission

Question 9

When may an offeror revoke an offer?

Answer 9

An offeror may revoke an offer at any time for any reason, so long as meeting requirements

Question 10

What are requirements for successful revocation of an offer?

Answer 10

1. offer must be revoked before acceptance
2. revocation must be communicated to the offeree by either direct or indirect revocation

Question 11

What is direct revocation?

Answer 11

An offeror directly communicates to the offeree their intent to withdraw the offer

Question 12

What is required for indirect revocation?

Answer 12

1. Offeror takes action that is inconsistent with the intent to go through with the offer
2. Offeree learns of such an action from a reliable source

Question 13

What is an option contract?

Answer 13

An option contract is a means of preventing revocation

Question 14

What are requirements for a valid option contract?

Answer 14

Under common law, requirements for an option contract are:
1. Offer
2. Separate promise to keep the offer open
3. valid mechanism for enforcing subsidiary promise, generally through consideration

Question 15

When will offers be construed as being held open despite purported revocation?

Answer 15

Courts will hold offers open when the offeree has detrimentally relied on them, such as when general contractors rely on subcontractor’s bids in forming their own bids on a project

Question 16

What are firm offers under the UCC?

Answer 16

Irrevocable offers by merchants to buy or sell goods without consideration

Question 17

What are requirements for a firm offer under the UCC?

Answer 17

1. Offer made by a merchant
2. In writing signed by the merchant
3. expressly stating it will be held open

Question 18

How long are firm offers held open for under the UCC?

Answer 18

Firm offers are irrevocable for either the time stated or a reasonable time, at most three months unless otherwise stated

Question 19

When does a firm offer under the UCC need consideration to be held open?

Answer 19

When the firm offer is to be open for longer than 3 months

Question 20

How can an offer be terminated by the offeree’s rejection

Answer 20

1. outright rejection
2. rejection via counteroffer
3. rejection via non-conforming acceptance

Question 21

What is rejection by counteroffer?

Answer 21

A counter offer is rejection + new offer

Question 22

When is an answer not rejection by counter-offer?

Answer 22

If the offeree is testing the waters by making a mere inquiry regarding the nature of the offer, then the offer might be considered not rejected

Question 23

What is the mirror image rule?

Answer 23

The mirror image rule under common law dictates that acceptance must mirror the terms of the offer, and any variation is a counteroffer that rejects the initial offer

Question 24

What is a bilateral contract?

Answer 24

Offer seeking acceptance by a promise, such that a promise is being exchanged for a promise.

Question 25

When are parties bound under a bilateral contract?

Answer 25

Both parties are bound once promises are exchanged

Question 26

What is a unilateral contract?

Answer 26

An offer seeking performance in return (common of reward offers)

Question 27

When do parties become bound under a unilateral contract?

Answer 27

Common law: offeror free to revoke until offeree completes performance

Modern majority rule: once offeree begins performance an option contract is created and offeror may not revoke