Offer Flashcards
What does a valid K require?
A valid K requires offer, acceptance, consideration, no formation defenses, and enforceability (SOF).
What is an offer?
An offer is a manifestation of a willingness to enter into an agreement by the offeror that creates a power of acceptance in the offeree.
Intent: a statement is an offer only if:
- Person to whom it is communicated could reasonably interpret it as an offer
- Expresses present intent of a person to be legally bound by a K
What kind of test governs offer and acceptance?
Objective test – objective analysis of the parties’ words and actions.
Did the offeror display an objectively serious intent to be bound?
Name two examples that would fail the objective theory of offers.
Humor – offeror was not displaying an objectively serious intent to be bound.
Expression of opinion – offeror was not expressing an intent to be bound.
List the requirements of an offer
- An offer must display an objectively serious intent to be bound.
- An offer must be directed to a specific offeree, unless the offer is a contest offer or reward offer that promises something to anyone who completes a certain task.
- An offer must be specific (but specificity differs for CL and UCC).
- An offer must convey the power of acceptance to the other side. Invitations to deal are not offers; they do not convey power of acceptance. Advertisements are usually invitations to deal. Except, advertisements are invitations to deal when they are reward advertisements, or the advertisement is very specific and leaves nothing open to negotiation, including how acceptance can occur.
How specific does an offer governed by CL need to be?
At CL, all essential terms must be covered in the agreement: parties, subject, price, quantity.
How specific does an offer governed by UCC need to be?
UCC can gap fill. Under UCC, the only essential term is quantity. Price does not need to be stated.
Requirements K and output Ks are specific enough under UCC, even though they don’t specify an exact quantity because they provide a formula for quantity calculation.
How to breach a requirements or output K?
If requirements, buy from other seller. If output, sell to other buyer.
List the 6 ways to terminate an offer
- Offeror revokes the offer by express communication to the offeree. An offeror is normally free to revoke at any time prior to acceptance, unless the offer is irrevocable.
- Offeree learns that the offeror has taken an action that is absolutely inconsistent with a continuing ability to contract. This is called a constructive revocation.
- The offeree rejects the offer.
- The offeree makes a counter offer. A counteroffer is a rejection and a new offer.
- The offeror dies. Death does not terminate a K, but it does terminate an offer.
- A reasonable amount of time passes. Offeror can revive with a new offer with the exact same terms.
List the 4 kinds of irrevocable offers.
- Option
- A merchant in the UCC universe can make a firm offer to buy or sell goods.
- Unilateral K – the offeree has started performance.
- Detrimental reliance
How do option Ks work? What are the requirements?
An option is an independent promise to keep an offer open for a specified period of time.
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.
While the option contract is in effect, the offeree’s power of acceptance cannot be terminated by rejection, counteroffer, revocation, or by death or incapacity of the offeror, unless the requirements are met for the discharge of a contractual duty.
How do UCC firm offers work? What are the requirements
Under the UCC, an offer to buy or sell goods is irrevocable if:
- the offeror is a merchant
- the assurance is (1) written, (2) explicitly promises not to revoke, and is (3) signed by the offeror
- time period of irrevocability is as long as stated in offer, or reasonable time period not to exceed 90 days
Under the UCC’s firm offer rule, what is a signature?
- A full handwritten signature is not always required.
- Merely initialing the relevant clause can be appropriate under the circumstances
- When the offeror handwrites on her letterhead that she “confirms” that a firm offer was already made.
Under the UCC’s firm offer rule, who is a merchant?
A merchant is
- someone who regularly deals in the type of good at issue
- a businessperson who holds himself out as having knowledge or skills particular to the goods
- any businessperson when the transaction is commercial in nature.
Unlike CL, no consideration by the offeree is needed to keep the offer open under the firm offer rule.
