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Agreement
By Dhoni Yusra
Introduction
Contracts are voluntary agreements between the parties.
One party makes an offer that is accepted by the other party.
Without mutual assent, there is no contract.
Agreement
Agreement The manifestation by
two or more persons of the substance of a contract
Agreement The manifestation by
two or more persons of the substance of a contract
Parties Offeror
Person who makes an offer
Offeree Person to whom an
offer has been made
Parties Offeror
Person who makes an offer
Offeree Person to whom an
offer has been made
Offer
“The manifestation of 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 it.”
Requirements of an Offer
For an offer to be effective: The offeror must objectively intend to be
bound by the offer. The terms of the offer must be definite or
reasonably certain. The offer must be communicated to the
offeree.
Objective Theory of Contracts
A theory that says the intent to contract is judged by the reasonable person standard and not by the subjective intent of the parties.
Objective Theory of Contracts (continued)
No valid contract results from: Preliminary negotiations Offers that are made in jest, anger, or undue
excitement Offers that are an expression of opinion
Definiteness of Terms
The terms of an offer must be clear enough to the offeree to be able to decide whether to accept or reject the terms of the offer.
If the terms are indefinite, the courts cannot enforce the contract or determine an appropriate remedy for its breach.
Definiteness of Terms (continued)
An offer (and contract) must contain the following terms: Identification of the parties Identification of the subject matter and quantity Consideration to be paid Time of performance
Definiteness of Terms (continued)
Implied Terms The court can supply a missing term if a
reasonable term can be implied. Terms that are supplied in this way are called
implied terms.
Communication
An offer cannot be accepted if it is not communicated to the offeree by the offeror or a representative or agent of the offeror.
Special Offer Situations
AdvertisementsAdvertisements
RewardsRewards
AuctionsAuctions
Advertisements
A general advertisement is an invitation to make an offer.
A specific advertisement is an offer.
Rewards
An offer to pay a reward is an offer to form a unilateral contract.
To collect a reward, the offeree must:1. Have knowledge of the reward offer prior to
completing the requested act
2. Perform the requested act
Auctions
Auction with reserve Unless expressly stated
otherwise, an auction is an auction with reserve, i.e., the seller retains the right to refuse the highest bid and withdraw the goods from auction
Auction with reserve Unless expressly stated
otherwise, an auction is an auction with reserve, i.e., the seller retains the right to refuse the highest bid and withdraw the goods from auction
Auction without reserve An auction in which the
seller expressly gives up his or her right to withdraw the goods from sale and must accept the highest bid
Auction without reserve An auction in which the
seller expressly gives up his or her right to withdraw the goods from sale and must accept the highest bid
Termination of an Offer by Action of the Parties
Revocation Withdrawal of an offer by the offeror
terminates the offer. An offeror can revoke an offer at any time prior
to its acceptance by the offeree. Rejection
Express words or conduct by the offeree that rejects an offer.
Rejection terminates the offer.
Termination of an Offer by Action of the Parties (continued)
Counteroffer A response by an offeree that contains terms
and conditions different from or in addition to those of the offer.
A counteroffer terminates an offer.
Termination of the Offer by Operation of Law Destruction of the subject matter
The offer terminates if the subject matter of the offer is destroyed through no fault of either party prior to its acceptance.
Death or incompetency of the offeror or offeree The death or incompetency of either party
terminates the offer.
Termination of the Offer by Operation of Law (continued)
Supervening illegality The enactment of a statute, regulation, or
court decision that makes the object of an offer illegal.
This action terminates the offer. Lapse of time
An offer terminates when a stated time period expires.
Acceptance
Acceptance
A manifestation of assent by the offeree to the terms of the offer in a manner invited or required by the offer as measured by the objective theory of contracts.
[Section 50 of the Restatement (Second) of Contracts]
Acceptance (continued)
Only the offeree can legally accept an offer and create a contract.
The offeree’s acceptance must be unequivocal. Mirror image rule requires the offeree to
accept the offeror’s terms. Silence is not considered acceptance even if
the offeror states that it is.
Time and Mode of Acceptance
Contract law establishes the following rules concerning the time and mode of acceptance: Mailbox Rule Proper Dispatch Rule Mode of Acceptance
Express Authorization Implied Authorization
Time and Mode of Acceptance (continued)
Mailbox Rule A rule that states that an acceptance is
effective when it is dispatched, even if it is lost in transmission.
Also called the acceptance-upon-dispatch rule.
If an offeree first dispatches a rejection and then sends an acceptance, the mailbox rule does not apply to the acceptance.
Time and Mode of Acceptance (continued)
Proper Dispatch Rule The acceptance must be properly dispatched. The acceptance must be properly addressed,
packaged, and posted to fall within the mailbox rule.
Under common law, if an acceptance is not properly dispatched, it is not effective until it is actually received by the offeror.
Mode of Acceptance
Express Authorization A stipulation in the offer
that says the acceptance must be by a specified means of communication.
Use of an unauthorized means of communication makes acceptance not effective.
Express Authorization A stipulation in the offer
that says the acceptance must be by a specified means of communication.
Use of an unauthorized means of communication makes acceptance not effective.
Implied Authorization Mode of acceptance
that is implied from what is customary in similar transactions, usage of trade, or prior dealings between the parties.
Implied Authorization Mode of acceptance
that is implied from what is customary in similar transactions, usage of trade, or prior dealings between the parties.
Offer and Acceptance: Summary (1 of 2)
Communication by Offeror
Effective When
Offer Received by offeree
Revocation of offer Received by offeree
Offer and Acceptance: Summary (2 of 2)
Communication by Offeree
Effective When
Rejection of offer Received by offeror
Counteroffer Received by offeror
Acceptance of offer Sent by offeree
Acceptance after previous rejection of offer
Received by offeror
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