Offer Flashcards
What is required for a party’s communication to be an offer?
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)
What is the American rule regarding commercial advertisements as offers?
Ads, catalogs, price lists are invitations for offers, since responses may exceed available supply of goods or services
What is the exception to the American rule regarding commercial advertisements as offers?
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.
Are rewards offers, offers?
Yes, reward offers are offers because they are communications that promise money in exchange for performance of specific tasks
What type of power does the offer create in the offeree?
Offer creates the power of acceptance in the offeree
How can power of acceptance be terminated?
- lapse of time
- death or incapacity
- revocation of offer by offeror
- termination by offerees rejection
When does an offer lapse?
An offer lapses after the time stated in the offer or after a reasonable time.
How is a reasonable time determined for purposes of establishing when an offer lapses?
- subject matter and market conditions
- degree of urgency and means of transmission
When may an offeror revoke an offer?
An offeror may revoke an offer at any time for any reason, so long as meeting requirements
What are requirements for successful revocation of an offer?
- offer must be revoked before acceptance
- revocation must be communicated to the offeree by either direct or indirect revocation
What is direct revocation?
An offeror directly communicates to the offeree their intent to withdraw the offer
What is required for indirect revocation?
- Offeror takes action that is inconsistent with the intent to go through with the offer
- Offeree learns of such an action from a reliable source
What is an option contract?
An option contract is a means of preventing revocation
What are requirements for a valid option contract?
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
When will offers be construed as being held open despite purported revocation?
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
What are firm offers under the UCC?
Irrevocable offers by merchants to buy or sell goods without consideration
What are requirements for a firm offer under the UCC?
- Offer made by a merchant
- In writing signed by the merchant
- expressly stating it will be held open
How long are firm offers held open for under the UCC?
Firm offers are irrevocable for either the time stated or a reasonable time, at most three months unless otherwise stated
When does a firm offer under the UCC need consideration to be held open?
When the firm offer is to be open for longer than 3 months
How can an offer be terminated by the offeree’s rejection
- outright rejection
- rejection via counteroffer
- rejection via non-conforming acceptance
What is rejection by counteroffer?
A counter offer is rejection + new offer
When is an answer not rejection by counter-offer?
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
What is the mirror image rule?
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
What is a bilateral contract?
Offer seeking acceptance by a promise, such that a promise is being exchanged for a promise.
