View
52
Download
0
Category
Tags:
Preview:
DESCRIPTION
Lessons. CHAPTER 7. Offer and Acceptance. 7-1 Creation of Offers 7-2 Termination of Offers 7-3 Acceptances. GOALS. LESSON 7-1. Creation of Offers. List the elements required to form a contract Describe the requirements of an offer. Hot Debate – pg. 110. - PowerPoint PPT Presentation
Citation preview
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Chapter 7Chapter 7 Slide Slide 11
Offer and Acceptance
7-17-1 Creation of Offers
7-27-2 Termination of Offers
7-37-3 Acceptances
CHAPTER 7
Lessons
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Chapter 7Chapter 7 Slide Slide 22
Creation of Offers
List the elements required to form a contractDescribe the requirements of an offer
LESSON 7-1
GOALS
Chapter 7Chapter 7 Slide Slide 33
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Hot Debate – pg. 110
1) Should Celia be bound because the literal meaning of her words suggests she intended to sell the car?
1) Argument can be made - should be bound by literal meaning of words
2) Should Celia not be bound to sell the car because the circumstances (new car stalls and people are honking) suggest that she did not intend to sell?
1) Argue - literal meaning of sentences often is quite different from what someone intended
Chapter 7Chapter 7 Slide Slide 44
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
WHAT IS A CONTRACT?
A contract is an agreement that courts will enforce.
Contracts between two parties are the basis for all economic activity.
Contracts are the legal links between the individuals and companies producing and consuming goods and services.
Chapter 7Chapter 7 Slide Slide 55
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
CONTRACT REQUIREMENTS
There are six major requirements that must be satisfied before courts will treat transactions as contracts.Offer and acceptanceGenuine assentLegality
ConsiderationCapacityWriting
Chapter 7Chapter 7 Slide Slide 66
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
CONTRACT REQUIREMENTS
Offer and AcceptanceOffer and Acceptance – there must be a serious, definite offer to contract.
And the terms of the offer must be accepted by the party to whom it was to whom it was communicated communicated
Chapter 7Chapter 7 Slide Slide 77
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
CONTRACT REQUIREMENTS
Genuine Assent –
cannot be based on:DeceptionImportant mistakeUse of unfair pressure
to obtain offer/acceptance
Chapter 7Chapter 7 Slide Slide 88
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
CONTRACT REQUIREMENTS
Legality - make up of agreement must be legali.e. Cannot create
an agreement to have someone commit a crime for you
Chapter 7Chapter 7 Slide Slide 99
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
CONTRACT REQUIREMENTS
Consideration – agreement must involve bothboth sides receiving something of legal value as a result of the transaction
Chapter 7Chapter 7 Slide Slide 1010
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
CONTRACT REQUIREMENTS
Capacity – parties must be able to contract for themselves
Chapter 7Chapter 7 Slide Slide 1111
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
CONTRACT REQUIREMENTS
Writing - some agreements must be placed in writing to be fully enforceable in court
Chapter 7Chapter 7 Slide Slide 1212
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Contracts - oral or written
Does it matter if a contract is only oral?
Chapter 7Chapter 7 Slide Slide 1313
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
REQUIREMENTS OF AN OFFER
Expression of intent to create a legal obligation
Offer must be complete and clearOffer must be communicated to the
offeree
Chapter 7Chapter 7 Slide Slide 1414
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Contract: Painter ExamplePainter promises to paint house within
30 days for $3,000 (Offer)Homeowner agrees to the time frame
and the $3,000 (Acceptance)
Painter OFFERORHomeowner OFFEREE
Chapter 7Chapter 7 Slide Slide 1515
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
CONTRACT REQUIREMENTS Offer – proposal by an offeror to do
something, provided the offeree does something in return
If the offeree accepts the proposal, a contract arises
Valid Offer: 1) Offeror must appear to intend to create a legal
obligation (serious)1) Objective test of the reasonable person
1) Not based on what someone was thinking – unreasonable to expect courts to figure out what you were thinking
Chapter 7Chapter 7 Slide Slide 1616
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
CONTRACT REQUIREMENTS
2) Appearance counts – If you think you are joking, but a reasonable person would interpret your conduct as indicating that you intend to contract – you have made an offerOn the other hand, if you are serious, but a reasonable person would interpret your conduct as a joke, then no legally enforceable offer is made
2) terms must be definite and complete3) Offer must be communicated to the
offeree
Chapter 7Chapter 7 Slide Slide 1717
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Test of Reasonable Person
Examines:
offeror’s words conduct in light of all relevant facts and
circumstances
Words spoken in jest / frenzied terror / anger = no offer intended
Chapter 7Chapter 7 Slide Slide 1818
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Preliminary Negotiations
Tentative terms, inviting others to make offers
i.e. “I think I’m interested in selling my laptop computer for around $1,000. Is anybody interested?”
-- not an offer
Chapter 7Chapter 7 Slide Slide 1919
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Where do you stand?
Brent and Lisa were students in a class on movie production.
Knowing that the final movie in the Alien Cheerleader trilogy was about to come out, Brent camped out overnight at the theater. He bought two tickets, and then asked Lisa to go with him.
Chapter 7Chapter 7 Slide Slide 2020
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Where do you stand?
Lisa agreed.Lisa would have to call in sick to her evening
job as waitress in order to goCalling out sick would cost her more than
$100 in wages & tipsShe still made the callWhen Brent did not show up to get her, she
confronted him
Chapter 7Chapter 7 Slide Slide 2121
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Where do you stand?
Brent admitted he sold the tickets to someone else for $50 each
Should Lisa be allowed to sue Brent for not taking her to the movie??
Chapter 7Chapter 7 Slide Slide 2222
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Where do you stand?
Almost every state would NOT allow such a lawsuit
Social invitations do not produce enforceable contracts
Chapter 7Chapter 7 Slide Slide 2323
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Social Arrangements
Friends agreeing to go to movies
Social arrangements = not contracts
Chapter 7Chapter 7 Slide Slide 2424
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Offer Must be Complete & Clear
terms must be sufficiently complete and clear to allow a court to determine what the parties intended
Pg. 112 – “In this case”
Chapter 7Chapter 7 Slide Slide 2525
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Complete Terms
Offers should contain price / subject matter / quantity
Amount of detail depends on complexity of transactioni.e. Real estate sale (identify lot, price,
terms of payment, delivery date)Candy bar sale (price, subject matter,
quantity)
Chapter 7Chapter 7 Slide Slide 2626
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Clear
“In this case” - Delgados agreed on “one lot” – no specification as to which lot.
lacking essential information
Chapter 7Chapter 7 Slide Slide 2727
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
READ B E F O R E signing
Chapter 7Chapter 7 Slide Slide 2828
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Implied Terms
Terms can be implied by law or common business practice
i.e. Merchants and customers - price is not specified; current market price is the basis for the contract
Chapter 7Chapter 7 Slide Slide 2929
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Advertisements
NOT offers - invitationsinvitations to make offersWhat’s Your Verdict – pg. 112Did the Anchors Aweigh advertisement
make offers to the would-be buyers?Customers: made OffersSellers must make reasonable supply
available – no expectation to meet every demand
Chapter 7Chapter 7 Slide Slide 3030
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Advertisements
Can be offers:
1) Written clearly and indicating limited quantities -- book example of selling car to first person
2) Asks offeree to perform an act as a way of accepting -- first person to appear at the main door of a shopping mall on …
Chapter 7Chapter 7 Slide Slide 3131
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Offer Must be Communicated to Offeree
Non-intended offeree cannot accept the offer
Cannot accept if unaware of offer (reward)
Chapter 7Chapter 7 Slide Slide 3232
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
What’s your Verdict?
Pg. 111Did the two friends create a contract?Yes – even though delivery and
payment will occur later
Chapter 7Chapter 7 Slide Slide 3333
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
E-Contracts: Agreeing Online
When I'm online and I click on a button that says "I ACCEPT," are all of those terms actually enforceable against me, even if I didn't read them?
West's Digital Video Library – video #23
Chapter 7Chapter 7 Slide Slide 3434
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
If you don’t satisfy the law’s requirement for creating an offer, then you usually don’t have a contract.
TRUE / FALSE
Chapter 7Chapter 7 Slide Slide 3535
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
TRUE
Chapter 7Chapter 7 Slide Slide 3636
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
To be valid, an offer must indicate an intent to create a legal obligation.
TRUE / FALSE
Chapter 7Chapter 7 Slide Slide 3737
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
TRUE
Chapter 7Chapter 7 Slide Slide 3838
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Which of the following are reasons why an offer may not be valid?
A) It is apparent that the speaker is jokingB) It is clear that the speaker is trying to
obtain additional information rather than commit to an agreement
C) The subject of the agreement is only social
D) all of the above
Chapter 7Chapter 7 Slide Slide 3939
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
D - all of the above
Chapter 7Chapter 7 Slide Slide 4040
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
The requirement that an offeror show an intent to contract is a(n) ______ test rather than a test which focuses on the purported offeror’s actual thoughts.
Chapter 7Chapter 7 Slide Slide 4141
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Objective
Chapter 7Chapter 7 Slide Slide 4242
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Which of the following is evidence showing an intent to contract
A) spoken or written wordsB) conduct other than speaking or writingC) other facts and circumstancesD) all of the above
Chapter 7Chapter 7 Slide Slide 4343
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
D – all of the above
Chapter 7Chapter 7 Slide Slide 4444
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Advertisements can be offers whenA) they are completeB) they are clearC) they address the problem of
numerous recipients and a limited supply of the advertised product
D) all of the above
Chapter 7Chapter 7 Slide Slide 4545
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
D - all of the above
Chapter 7Chapter 7 Slide Slide 4646
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
If an offer is made, it can be accepted by anyone who learns of it.
TRUE / FALSE
Chapter 7Chapter 7 Slide Slide 4747
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
FALSE
Chapter 7Chapter 7 Slide Slide 4848
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
The test of the reasonable person is used by a jury or judge to evaluate all the relevant evidence to determine whether there has been a manifestation of an intent to contract.
TRUE / FALSE
Chapter 7Chapter 7 Slide Slide 4949
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
TRUE
Chapter 7Chapter 7 Slide Slide 5050
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
To meet the contract requirement of genuine assent, the agreement must not be based on
A) deceptionB) an important mistakeC) using unfair pressureD) all of the above
Chapter 7Chapter 7 Slide Slide 5151
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
D - all of the above
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Chapter 7Chapter 7 Slide Slide 5252
Termination of Offers
Describe how an offeror can end an offerTell how an offeree can end an offerExplain how the parties can create offers that
cannot be ended by the offeror
LESSON 7-2
GOALS
Chapter 7Chapter 7 Slide Slide 5353
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
HOW CAN OFFERS BE ENDED?Revocation by the offeror – can be
revoked anytime before it is accepted by the offereeREVOCATION - right to withdraw an offer before it is accepted
Not effective until communicated to the offeree
Chapter 7Chapter 7 Slide Slide 5454
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
HOW CAN OFFERS BE ENDED?
Time stated in the offer – offeror may state how and when the offer must be completed
i.e. Bank agrees to give loan but specifies acceptance must be received by Oct. 18
Boggs mails acceptance on Oct. 17 -- arrives Oct. 20 at bank
offer NOT received by time specified Offer E-X-P-I-R-E-D
Chapter 7Chapter 7 Slide Slide 5555
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
HOW CAN OFFERS BE ENDED?
Reasonable length of time – amount of time depends on surrounding circumstances
Rejection by the offeree – offer is terminated by the offeree’s rejection
Chapter 7Chapter 7 Slide Slide 5656
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Negotiation Terms
JOE BOBOffer Accept or
Reject or
Accept or Counteroffer
Reject or
Counteroffer
Chapter 7Chapter 7 Slide Slide 5757
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
HOW CAN OFFERS BE ENDED?
Counteroffer – offeree must accept offer exactly as it was made (no changes) – otherwise, it becomes a counteroffer
In this Case – pg. 116Haviland submitted written offer to sell to Ping a luxury apt. bldg in San Fran.Property Price $15.5 million cashPing replied (certified mail) offering to pay $14.4 million cashHaviland rejected price.Ping writes “I am shocked by your price but feel it is urgent to invest in San Fran.
Therefore, I accept your offer and will pay $15.5 million cashWas a contract formed?No, Ping’s $14.4 m price was a counteroffer eliminated Haviland’s offer at $15.5
Chapter 7Chapter 7 Slide Slide 5858
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
HOW CAN OFFERS BE ENDED?
Death or insanity of either the offeror or offeree
Contracts are agreements voluntarily entered into by the parties and subject to their control
Death or insanity eliminates such control terminating their offers
Chapter 7Chapter 7 Slide Slide 5959
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
What’s Your Verdict?
Melissa offered her collection of baseball cards to Raoul for $3,0000.
Raoul requested time to think it over – Melissa agreed
Melissa changed her mind, called Raoul and said “I’ve changed my mind, I’m not interested in selling the cards.”
Raoul – “It’s too late, you promised to sell them to me, and I’ve got the money so I accept.”
Chapter 7Chapter 7 Slide Slide 6060
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
What’s your Verdict?
Pg. 115Was Melissa’s offer terminated before
Raoul tried to accept?Because Melissa revoked first, there
was no offer alive when Raoul tried to accept
Chapter 7Chapter 7 Slide Slide 6161
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
The Mailbox Rule
Chapter 7Chapter 7 Slide Slide 6262
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
HOW CAN AN OFFER BE KEPT OPEN?
Generally, offeror is NOT obliged to keep offers open even if offeror agreed to do so IF OFFEREE HAS GIVEN NOTHING IN EXCHANGE FOR THE PROMISE
Chapter 7Chapter 7 Slide Slide 6363
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
HOW CAN AN OFFER BE KEPT OPEN?
Options – offeree gives the offeror something of value in return for a promise to keep the offer open
Firm offers – special rule that applies to merchants for sale of goods/services stating in a signed writing how long it is to stay open
Not open more than three monthsTrue even when nothing is paid by offereeDeath/Insanity do not terminate option contracts or firm
offers
Chapter 7Chapter 7 Slide Slide 6464
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Offers expire at the time stated in the offer.
TRUE / FALSE
Chapter 7Chapter 7 Slide Slide 6565
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
T R U E
Chapter 7Chapter 7 Slide Slide 6666
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
If an offeree clearly rejects the offer, the offer is said to be:
a) Counteroffered
b) Revoked
c) Expired
d) Terminated
Chapter 7Chapter 7 Slide Slide 6767
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
d) Terminated
Chapter 7Chapter 7 Slide Slide 6868
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
When an offeree changes the offeror’s terms in important ways, the offeror makes a(n) ________________
Chapter 7Chapter 7 Slide Slide 6969
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Counteroffer
Chapter 7Chapter 7 Slide Slide 7070
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Which of the following does not describe a method used to terminate offers?
a) Revocation by the offeror
b) Offeror is admitted to the hospital for tests
c) Counteroffer
d) Death of the offeree
Chapter 7Chapter 7 Slide Slide 7171
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
B) Offeror is admitted to the hospital for tests
Chapter 7Chapter 7 Slide Slide 7272
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
An offeree who rejects an offer can later accept it if the acceptance occurs within a reasonable time after the rejection.
TRUE / FALSE
Chapter 7Chapter 7 Slide Slide 7373
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
F A L S E
Chapter 7Chapter 7 Slide Slide 7474
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Which of the following will cause an offer to end?a) Occurrence of an event, such as the passage
of time, which the offer said would cause it to end
b) Passage of a reasonable time if nothing is said in the offer about the length of its life
c) Revocation by the offerord) Counteroffer by the offereee) All of the above
Chapter 7Chapter 7 Slide Slide 7575
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
E) All of the above
Chapter 7Chapter 7 Slide Slide 7676
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
If an offeree gives the offeror something of value to keep an offer open, this is called a(n) ________________
Chapter 7Chapter 7 Slide Slide 7777
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Counteroffer
Chapter 7Chapter 7 Slide Slide 7878
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
A barber, speaking to a longtime customer said, “I promise not to raise my prices for you this year.”
Is this offer binding?
YES / NO ?
Chapter 7Chapter 7 Slide Slide 7979
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
NO
Chapter 7Chapter 7 Slide Slide 8080
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
A barber said, “I promise not to raise my prices for you this year if you pay me $10 today.” If this offer binding if you pay the ten dollars?
Y E S / N O
Chapter 7Chapter 7 Slide Slide 8181
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Y E S
Chapter 7Chapter 7 Slide Slide 8282
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
If a hardware store salesman said, “This price on the lawnmowers is good for 30 days,” would this be a firm offer?
Y E S / N O
Chapter 7Chapter 7 Slide Slide 8383
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
N O
Chapter 7Chapter 7 Slide Slide 8484
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
If a beauty salon hair designer said, “This price on the cut and dry is good for 30 days,” then wrote it down on a piece of paper and signed it, would this be a firm offer?
Y E S / N O
Chapter 7Chapter 7 Slide Slide 8585
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Y E S
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Chapter 7Chapter 7 Slide Slide 8686
Acceptances
Discuss the requirements of an effective acceptance
Determine at what point in time an acceptance is effective
LESSON 7-3
GOALS
Chapter 7Chapter 7 Slide Slide 8787
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
HOW AREACCEPTANCES CREATED?
ACCEPTANCE occurs when a party to whom an offer has been made agrees to the proposal
To create an enforceable contract the acceptance must:
1) Be made by the person or persons to whom the offer was made
2) Match the terms in the offer3) Be communicated to the offeror
Chapter 7Chapter 7 Slide Slide 8888
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
HOW AREACCEPTANCES CREATED?
Who can accept an offer? – can only be accepted by person to whom offer was madeWhat’s Your Verdict? Darrow offered to trade his
digital camera to Monette in exchange for her camcorder. Schorling, who had a camcorder of the same make and model, overheard the offer and said she would make the swap
Did a contract result from Schorling’s statement?Only Monette, not Schorling, could accept Darrow’s offer
Chapter 7Chapter 7 Slide Slide 8989
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
HOW AREACCEPTANCES CREATED?
Acceptance must match the offer – offeror may specify the terms of acceptance
Acceptance must be communicated to the offeror – must be more than a mental decision
Chapter 7Chapter 7 Slide Slide 9090
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
In This Case
RING LOST at Zuma Beach in front of beach house. Lady’s yellow-gold band with 12 small diamonds. Inside inscribed “Like diamonds. Forever Yours, J.R.J.” $1,00 reward. Call 555-8142
Dowell saw this newspaper advertisement and rushed to the beach with a homemade sand sifter. About ten other people were also searching, using various devices. After four hours, Dowell shouted. “Eureka! I’ve found it!” She promptly returned the ring to its owner. She alone was legally entitled to the reward.
Chapter 7Chapter 7 Slide Slide 9191
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
ACCEPTANCE MUST MATCH THE OFFER
Mirror image rule – terms in the acceptance must exactly match the terms contained in the offer
If it varies any term, it is a counterofferCourts in some states apply this rule only when
the term in the offer is material (important) By statute (UCC) the rule has been changed in
contracts for sale of goods such as books, computers, clothing, and food
Chapter 7Chapter 7 Slide Slide 9292
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
ACCEPTANCE MUST MATCH THE OFFER
Goods – if offeror requires acceptance must exactly match terms set forth in the offer, than any variation is a counterofferAbsent this requirement in the offer, an
unequivocal acceptance of an offer for a contract for a sale of goods can be valid even if it includes new or conflicting terms
Chapter 7Chapter 7 Slide Slide 9393
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
G O O D SIn This Case - On Thursday, the manager of Volume Value
Vacuum, Inc. (VVV), offered by mail to sell model 234A vacuum cleaners to Susan’s Shops, a retailer, at the bargain price of $129 each, with payment to be made on delivery. Susan accepted in writing but stated, “payment due 30 days after delivery.”
VVV said nothing in reply. A contract resulted on the area of agreement (model 234A at $129). Because both parties are merchants and VVV did not object to the modification, it will become a part of the contract if it is not material. Because an extension of credit is probably material, it does not become a part of the contract
Chapter 7Chapter 7 Slide Slide 9494
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
ACCEPTANCE MUST BE COMMUNICATED TO THE OFFEROR
Silence as acceptance – one is not obliged to reply to offers made by others
In This Case – Kulich, an art dealer, wrote Chang, “I understand you are interested in selling your four-panel Chinese lacquer screen. I sold it to you in 1997 for $500 and said it would go up in value. Now I offer to buy it back for $3,000. Unless I hear from you to the contrary. I’ll treat your silence as acceptance and send my truck to pick it up next Monday morning. The driver will bring my certified check for the full amount.”
Chang did not reply
Chang would not be bound to sell the screen
Chapter 7Chapter 7 Slide Slide 9595
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Silence as acceptance You receive by mail a calculator. The
sender states that if you wish to keep it, you must send in a check for $40, otherwise send it back.
What does the law require you to do?Nothing
Chapter 7Chapter 7 Slide Slide 9696
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
ACCEPTANCE MUST BE COMMUNICATED TO THE OFFEROR
Unilateral acceptance – offeror requires that the offeree indicate acceptance by performing his or her obligations under the contract
Bilateral acceptance – require that the offeree accept by communicating the requested promise to the offeror
When acceptance is effective – may be communicated orally, in person, or by telephone
Chapter 7Chapter 7 Slide Slide 9797
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
Will Your Contract Be Enforced Under the Law?
The unconscionability defense is concerned with the fairness of both the process of contract formation and the substantive terms of the contract. When the terms of a contract are oppressive or when the bargaining process or resulting terms shock the conscience of the court, the court may strike down the contract as unconscionable.
Chapter 7Chapter 7 Slide Slide 9898
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
The unconscionability defense applies to a wide variety of types of conduct, so a court will look at a number of factors in determining if a contract is unconscionable.
If there is a gross inequality of bargaining power, so the weaker party to the contract has no meaningful choice as to the terms, and the resulting contract is unreasonably favorable to the stronger party, there may be a valid claim of unconscionability.
Chapter 7Chapter 7 Slide Slide 9999
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
A court will also look at whether one party is uneducated or illiterate, whether that party had the opportunity to ask questions or consult an attorney, and whether the price of the goods or services under the contract is excessive.
Chapter 7Chapter 7 Slide Slide 100100
LAW FOR BUSINESS AND PERSONAL USE LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING© SOUTH-WESTERN PUBLISHING
How much consideration, or payment, must there be for a contract to be valid?
There is no minimum amount. A price is only how people agree to value something, so there's no absolute standard of whether a price is fair or reasonable. The courts presume that people will only make deals that they consider worthwhile. So if you want to sell your car to your friend for $1 instead of $1,000, you can do it
An exception may be found if the consideration given is so out of line with what is being received that it would "shock the conscience of the court."
Recommended