Termination of the Power to Accept. Flashcards
R. 2d § 35. The Offeree’s Power of Acceptance
An offeree holds a continuing power to complete the manifestation of mutual assent by accepting the offer, unless the power of acceptance was terminated by one of the methods.
R. 2d § 36. Methods of Termination
a. Rejection or counter-offer
b. Lapse of time
c. Revocation
d. Death/Incapacity
e. Non-occurrence of any condition of
acceptance specified by the offer
Death or Incapacity- R. 2d § 48
i. An offeree’s power to accept an offer terminates upon the death or incapacity of the offeror.
ii. The incapacity of either the offeror or the offeree, as evidenced by adjudication or the appointment of a guardian, will terminate the power of acceptance.
Revocation- General Rule:
- The offeror is free to revoke an outstanding offer, terminating the offeree’s power of acceptance, at any time ad for any reason, so long as the revocation:
a. Occurs prior to acceptance;
b. Is effectively communicated.
Irrevocable Unilateral Contracts;R. 2d § 45. Option Contract Created by Part Performance
or Tender.
a. An option contract is created when the offeree begins the performances invited by the offeror.
b. Offeror’s duty of performance is conditional on the completion of the offeree’s performance in
accordance with the offer.
R. 2d § 45
2.Although an offer cannot be revoked once the offeree
has begun performance, acceptance of the offer is still effective only upon the completion of the performance.
a. Offeree can abandon at any time before performance is complete.
R. 2d §42/43. Revocation by Communication from Offeror Received by Offeree/Indirect Communication of Revocation
An offeree’s power of acceptance is terminated when:
a. [Direct revocation] The offeree receives an intention NOT to be bound from the offeror;
or
b. [Indirect revocation] The offeror takes
affirmative action that is inconsistent with the intention to be bound, and the offeree has knowledge about this.
i. Example:
1. Selling offered real estate to a third
party, and offeree learning of this from a real estate broker.
PETTERSON V PATTBERG CASE LAW
RULE: A unilateral contract is revocable at any time before the performance of the requested action.
DICKINSON V DODDS CASE LAW
RULE: An offeror can revoke even if he has expressly promised to keep the offer open.
Lapse of Time- An offeree’s power of acceptance terminates at the time stated in the offer.
- If the offer does not state a time, then the power of
acceptance will expire after a reasonable time.
a. [Reasonable time will depend on the subject
matter and the market conditions.] - Face to Face Conversation Rule:
a. An offer made by one person to another in a
face-to-face conversation is ordinarily deemed to remain open only until the close of the conversation.
AKERS V SEDBERRY CASE LAW
RULE: Face-to-face offers continue only until the end of the conversation. There is no contract unless the offer or surrounding circumstances indicate that the offer is intended to continue beyond the immediate conversation.
Outright Rejection
The power of acceptance can be terminated by the offeree’s rejection of the offer. He has the power to accept, but cannot change his mind and try to accept the offer once he has rejected it.
Rejection via nonconforming acceptance- Mirror Image Rule:
Any acceptance must mirror the terms of the offer, and any variation results in a counteroffer and rejection of the initial offer.
R. 2d § 39. Counter-Offers
a. An offer;
b. By the offeree;
c. To the offeror;
d. Relates to the same subject-matter;
e. Proposes a substituted bargain;
f. Differs from that proposed by the original
offer.
LIVINGSTONE V EVANS CASE LAW
RULE: A counter-offer is a rejection of an offer that
cannot be accepted unless the offeror
expresses consent to accept.
