Page 4 Flashcards
What is the question you should ask when determining whether a commitment/intention to be bound was present for an offer?
Would a reasonable person, hearing the words spoken, under the circumstances, believe the speaker intended to enter a contractual relationship?
Why do you not usually have to judge on an MBE question whether a commitment or intention to be bound was made for an offer?
Because examiners know that different people have different opinions, so you just have to recognize the rule
Does it matter what the intention of the speaker is when making an offer?
No, so just look at the language and the circumstances
What are things that can cause trouble for an offer?
- preliminary negotiations
- ads
- reward offers
- joke or frolic
- ambiguous language
- auctions
Are preliminary negotiations considered offers with intention to be bound?
No, they are a manifestation of a willingness to enter a bargain without the intent to conclude a bargain until a further manifestation of intent has been made
What are some examples of things that are not considered offers?
- opinions
- predictions
- encouragement
- hopes
- intentions
- estimates
- inquiries
If an offeror retains the right to make a final decision, is that an offer?
No, it’s an invitation to negotiate or make an offer
What are some examples of situations where an offeror retains the right to make a final decision and is therefore not an offer?
- asking someone if they’re interested
- asking if they would give you something
- saying “I quote”
- “I would consider”
Are ads considered offers?
No, they are just invitations to deal or statements of intention to sell
What is the caveat for when an ad is an offer?
If it states a:
- QUANTITY #
- Language of COMMITMENT
- with all material TERMS
The language “first come, first served” can change an ad into what?
An offer
Can mass mailings, catalogs, or pricelists be treated as offers?
No, those are also advertisements
Do price quotes show an intention to be bound enough to be an offer?
No
What is the reason that most ads are not offers?
- most ads are indefinite about quantity and other terms
- the seller should be able to choose who they deal with
- ads are usually addressed to the general public, so if that were an offer, the seller would’ve overaccepted
What are the ways that an ad will be an offer?
- has definite terms
- clearly an intention to be bound
- invites addressees to take specific action without further communication
- over acceptance is unlikely
What are the times that quoting a price can be considered an offer?
If it is directed at a specific person and other words like “for immediate acceptance” are included
Why is a first person offer usually considered an offer?
Because only one person can form a contract by accepting
Are reward offers considered offers?
Yes, and the power of acceptance is limited to the person that does the act, since only one person can claim a reward
Why is a letter of intent not considered an offer?
Because no one is bound to the terms of the letter
What is an offering circular?
A general mailing sent out by merchants to a number of potential customers setting forth terms
Why are offering circulars not usually considered offers?
They are treated as ads and the test is:
- whether a reasonable person in the shoes of the addressee would think it was addressed to him individually (treated as an offer)
- or only as one of a number of recipients (invitation to deal)
Usually the word offer means what, and the word quote means what?
Offer means offer and quote means invitation to deal, but this isn’t always the case
If a reasonable person would conclude that something was a joke, made in anger, or mere banter, is that an offer?
No. Ie: PepsiCo case with the harrier jet
If you’re unsure because of ambiguous language whether an offer was made, what are the two situations that courts will consider in this case?
- business context
- social/domestic context
How is ambiguous language treated in a business context about whether or not an offer has been made?
Court presumes intent to be bound
How is ambiguous language treated about whether or not an offer has been made in a social or domestic context?
Court presumes legal relations were not intended
What is the role of an auctioneer?
To accept or reject the bids
Who makes an offer in an auction situation?
The bid is the offer and the auctioneer just present the items
What type of auction are most auctions?
With reserve unless otherwise stated
What are the two types of auctions?
- With reserve
- Without reserve
What is an auction “with reserve”?
The owner reserves the right to refrain from holding the auction, to interrupt it, terminate it, or withdraw the item even after the bidding starts. The owner can also make a bid and buy his own property.
Who is the offeror in a “with reserve” auction?
The bidder and the contract is complete when the hammer falls
When can a bidder withdraw in a “with reserve” auction?
Before the hammer falls and that terminates all prior bids
When an auctioneer puts an item on the block, and calls for bids, what happens?
That is an invitation to make offers. Because it is not an offer, he can withdraw the item any time, even after bidding has started (until he hammers down or accepts).
What does each new bid do in a with reserve auction?
Discharges all earlier ones
If a bid is withdrawn before it is hammered down in a “with reserve” auction, can an earlier bid be accepted?
No, because each new bid discharges all earlier ones
What is a “without reserve” auction?
Promise by the owner that:
- the auction will be held
- the property will be sold to the highest bidder
- nothing will be held back or withdrawn (unless no bid is placed within a reasonable time).
Once an auctioneer calls for a bid in a “without reserve” auction, can he withdraw the item?
No, he has made an irrevocable offer
Is putting a contract out for bids considered an offer?
No, the bids that get submitted in response are the offers, and the builder is free to decline or accept any bid even if it isn’t the lowest
What does it mean that an offer has to have definite terms?
Essential terms of the offer must be certain and unambiguous or empower the other person to specify terms to clear up any uncertainties
Does an offer have to contain all material terms?
No, but it needs:
- subject matter
- parties
- price
- sometimes a few other key items
If an offer is missing terms, can the law fill them in?
Yes, If they are not material
If one of the major things that needs to be present for an offer is not present, does that mean there isn’t an offer?
Not necessarily, as long as the expression otherwise shows intent to make a bargain, or the court can fill in the omitted term
What does the UCC say about definite terms in an offer?
If a few terms are left open, a contract doesn’t fail for indefiniteness if the parties:
- intended to make a contract, and
- there’s a reasonably certain basis for giving an appropriate remedy
What is the modern rule about definite terms for an offer?
You can have an offer that states the subject matter with certainty and leaves out all other major terms and it is still is a good offer because everything else can be reasonably implied.
Exam - If an offer only states the subject matter and then tries to state another material term but doesn’t do it with certainty, does that fall under the modern rule for definite terms for an offer?
No, if it tries to address something like price, because it doesn’t have to, it cannot do it ambiguously, otherwise the offer will fail
What are the four major rules for definite terms for an offer?
- modern rule
- traditional rule
- significant minority rule
- common-law and UCC
What is the traditional rule for definite terms for an offer?
Subject matter and quantity have to be included
What is the significant minority rule for definite terms for an offer?
That all material terms have to be stated in order to have a contract. This is no longer in effect, so if you see this on an exam, it is the wrong answer
How does the UCC justify having requirements and output contracts be valid offers?
Because of the implication of good faith
Is the commitment/intention to be bound element of an offer an objective or subjective test?
Objective according to the outward appearance from their language or conduct that is a reasonable person standard
