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Contracts I > Offer > Flashcards

Offer Flashcards

1
Q

An offer is _________

A

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. **
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2
Q

An offer must be:

A

Offer must be:

  1. Complete/Definite
  2. Selective
  3. Committed
  4. Serious
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3
Q

Offer requirements:

Complete/Definite

A

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
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4
Q

Offer requirements:

Selective

A

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

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5
Q

Offer requirements:

**Committed **

A

Committed

Rule: In order to be an offer, it must reflect a level of commitment by the offeror

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6
Q

Offer requirements:

Serious

A

Serious Rule: If the offer was evidently in jest (objective test), then no offer has been made

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7
Q

Offer requirements:

Serious

Test for “Evidently in Jest”

A

Test for “Evidently in Jest”

  • Exaggerated Claim
  • Improbability
  • Fantasy
  • Absurdity
  • Not Serious
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8
Q

Offer requirements:

Serious Test

A

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.
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9
Q

Offer

Preliminary Negotiations

Rule for statements made

during preliminary negotiations

A

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.
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10
Q

Offer: Preliminary Negotiations

Statements during negotiations

Restatement (Second) of Contracts §26:

Objective Test:

A

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.

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11
Q

Offer: Preliminary Neg.

Statement of Future Intention

A

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
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12
Q

OFFER

Advertisements

A

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
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13
Q

OFFER

Written Memorial Contemplated

A

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
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14
Q

OFFER

Written Memorial Contemplated

Letters of intent can mean ___________.

A

Letters of intent can mean:

  • Agreement is conditioned on final written contract, [OR]
  • Final written contract is simply another term in the agreement
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15
Q

OFFER

Analysis of Written Memorial Contemplated

A

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
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16
Q

OFFER

Revocation of an Offer

Power of acceptance continues until terminated by:

A

Rule: Power of acceptance continues until terminated by:

  1. Rejection or counter-offer by offeree
  2. Lapse of time
  3. Revocation by the offeror
  4. Death or incapacity of either party
17
Q

Revocation of an Offer

Power of acceptance continues until terminated by:

Rejection or counter-offer by offeree

A

Rejection or counter-offer by offeree

If the offeree rejects the offer, her power of acceptance is terminated unless either:

  1. the offeror indicates that the offer still stands in spite of the rejection OR
  2. the offeree **states that although she does not intend to accept the offer, she wishes to consider it further. **

NOTE: **If the offer is irrevocable, a counter-offer will not terminate the offeree’s power of acceptance. **

18
Q

Revocation of an Offer

Power of acceptance continues until terminated by:

Lapse of time

A

Because the offeror is the “master of his offer,” he can set a time limit for acceptance.

At the end of this time limit, the offeree’s power of acceptance automatically terminates by “lapse.”

19
Q

Revocation of an Offer

Power of acceptance continues until terminated by:

Revocation by the offeror

A

Except in the case of an option contract, the offeror is free to revoke his offer at any time before it is accepted.

  • Effective upon receipt: a revocation by the offeror does not become effective until the offeree receives it.
  • Lost revocation: If the letter or telegram revoking the offer is lost through misdelivery, the revocation never becomes effective.
  • What constitutes receipt of revocation: The offeree is deemed to have received the revocation when
    • it comes to his own possession,
    • **the possession of someone authorized to receive it for him, OR **
    • when it is put into his mailbox.

U.C.C. Approach: The U.C.C. applies virtually the same test for determining when a revocation (or any other notice) has been “received. (U.C.C. §1-202(e))

20
Q

Revocation of the offer is effective when_______.

A

Revocation of the offer is effective when offeree learns that offeror no longer intends to enter contract when:

  1. Notice is given of revocation to offeree (Expressly), OR
  2. Offeree becomes aware that offeror no longer intends to enter the proposed contract (Indirectly), OR
  3. Offeree acquires reliable information that offeror has taken definite action inconsistent with the intention to enter into the proposed contract (Indirectly).
21
Q

Whether or not an offer was made is viewed from what persective?

A

Analyzed from the ** reasonable person** standard. Don’t be misled by a party’s own characterization of a statement as an “offer.”

Ask: Has the party exhibited a willingness to be bound without further action on her own part?

NOTE: Distinguish offers from mere inquiries or expressions of interest, which are not offers b/c they don’t indicate a willingness to be bound.

EX: Will $2,000 buy your piano? = inquiry, not offer

22
Q

A price quotation is usually construed as an _________.

A

A price quotation is usually construed as an invitation, BUT it may be construed as an offer if it is specific enough that the offeree is reasonable in perceiving it as an offer.

23
Q

EX: X sends a letter to A,B,C & D which states: “I need to sell my heart-shaped diamond ring by Jan 15 for $1,500. If interested, please contact me before Jan 15.”

On Jan 14, X receives a letter from A agreeing to pay $1,500. X doesn’t respond. On Jan 17, X receives a letter from B agreeing to pay $1,700. X responds to B: “I agree to the terms of your letter.”

Can A sue for breach?

A

No, because X’s letter was not an offer, just an invitation to make an offer. Therefore, A’s letter was an offer that X never accepted.

**** Watch for solicitations that include words indicating a commitment to sell to the highest bidder by a certain date. In this case, the solicitation becomes an offer and the solicitor is bound to the person fulfilling the stated conditions.

24
Q

An offer must contain lainguage of _________.

&

An acceptance must be _________.

A

An offer must contain lainguage of commitment.

&

An acceptance must be unequivocal.

BUT REMEMBER: unequivocal acceptance may be implied through conduct, such as as shipment of the items, payment for the items, or the offeree’s later statement (to the offeror or a 3rd party) that a K exists.

25
Q

An offeror who is a merchant may extend

an irrevocable firm offer, even without consideration

as long as _______________________.

A

**An offeror who is a merchant may extend **

an irrevocable, firm offer, even without consideration

as long as** the writing is signed.**

26
Q

Under the UCC, a firm offer for which no consideration is given cannot be made irrevocable for a period _______________.

A

Under the UCC, a firm offer for which no consideration is given cannot be made irrevocable for a period longer than 3 months.

  • Even if the offer states that it’s irrevocable for longer than 3 months, the irrevocability only lasts 3 months.
  • BUT even if it is no longer a firm offer, it may still be an offer still in force if it hasn’t been revoked by the offeror. If it hasn’t been revoked then the offeror may still be bound to his offer.
27
Q

If a non-merchant gratuitously (without consideration) to hold an offer open, is he bound to that promise?

A

No, under UCC a non-merchant is not held to a promise to hold an offer open if the offer was made without consideration.

28
Q

4 essential elements to an agreement are:

  3. 4.
A

4 essential elements to an agreement are:

  1. **parties to the K **
  2. subject matter
  3. time for performance
  4. ** price**

Contracts I (21 decks)

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