Offer Flashcards
An offer is _________
An offer is a statement or act that creates a “power of acceptance.”
- Rule: An offer is the manifestation of a willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude the contract
- When a person makes an offer, she is indicating that she is **willing to be immediately bound by the other person’s acceptance without further negotiation. **
An offer must be:
Offer must be:
- Complete/Definite
- Selective
- Committed
- Serious
Offer requirements:
Complete/Definite
Complete/Definite
Rule: In order to be offer, it must include all essential terms
- It doesn’t need every single term, just all the essential ones
- Terms must be relatively certain enough to ascertain when a breach has occurred and what damages to award
Offer requirements:
Selective
Selective
Rule: If an offer is made to more parties than the contract could not be fulfilled to, the presumption is that it was not an offer
Offer requirements:
**Committed **
Committed
Rule: In order to be an offer, it must reflect a level of commitment by the offeror
Offer requirements:
Serious
Serious Rule: If the offer was evidently in jest (objective test), then no offer has been made
Offer requirements:
Serious
Test for “Evidently in Jest”
Test for “Evidently in Jest”
- Exaggerated Claim
- Improbability
- Fantasy
- Absurdity
- Not Serious
Offer requirements:
Serious Test
Objective Test: The test for distinguishing a bona fide offer from an expression of opinion, like the test for distinguishing an offer from a jest, is the objective “reasonable person” test.
- whether a reasonable person in the position of the offeree would have reasonably understood the offeror as having proposed a bargain, rather than as having merely stated an opinion.
Offer
Preliminary Negotiations
Rule for statements made
during preliminary negotiations
Rule: A party desiring to contract
- May make a statement which is not an offer but rather a solicitation of bids.
- Such statements cannot be “accepted,” but instead merely serve as a basis for preliminary negotiations.
Offer: Preliminary Negotiations
Statements during negotiations
Restatement (Second) of Contracts §26:
Objective Test:
Restatement (Second) of Contracts §26:
Objective Test: Whether a person in the offeree’s shoes would reasonably have understood that the offeror was merely seeking to invite bids or start preliminary negotiations.
The subjective intent of the offeror is relevant.
Offer: Preliminary Neg.
Statement of Future Intention
Statement of Future Intention: An announcement by a person that he intends to contract in the future will usually NOT be considered an offer.
- The mere statement of the price at which property can be had cannot be understood as an offer to sell
OFFER
Advertisements
Rule: **Advertisements are generally not considered offers. An advertisement is merely an invitation for the recipients of the advertisement to make an offer **
- Most advertisements appearing in the mass media, in store windows, etc., are not offers to sell, because they do not contain sufficient words of commitment to sell.
- There must be specific terms or promises. If the advertisement contains words expressing the advertiser’s commitment or promise to sell a particular number of units or to sell the items in a particular manner, there may be an offer.
- It is possible to make an offer through advertisement, but there has to be some language of commitment in it or some invitation to take action without further communication
OFFER
Written Memorial Contemplated
Involves letters of intent –> agreement in principle
-
Not the agreement itself.
- The point in complex transaction when parties try to solidify terms agreed upon up to that point.
- This is parties simply marking their spot in negotiation
- Court often has to decide whether the agreement in principle was actually the agreement
OFFER
Written Memorial Contemplated
Letters of intent can mean ___________.
Letters of intent can mean:
- Agreement is conditioned on final written contract, [OR]
- Final written contract is simply another term in the agreement
OFFER
Analysis of Written Memorial Contemplated
Key to analysis: intent of the parties, as reflected in the words of the agreement
Factors to consider –> Whether:
- Party expressly reserves right to be bound by final agreement
- There was any partial performance
- All essential terms of the contract had been agreed on
- Complexity/magnitude of the deal was such that a written final agreement would be expected
“Subject to final written agreement” (not dispositive)
- Have to examine text and structure of the agreement in principle