Download ppt - OFFER & ACCEPTANCE

OFFER & ACCEPTANCEOFFER & ACCEPTANCE

Mr. CalkinsMr. Calkins

Spring 2008Spring 2008

CREATION OF OFFERSCREATION OF OFFERS TERMINATION OF OFFERSTERMINATION OF OFFERS ACCEPTANCESACCEPTANCES

OFFER & ACCEPTANCEOFFER & ACCEPTANCE

CONTRACT—CONTRACT—is an agreement is an agreement between two or more parties that between two or more parties that creates obligations.creates obligations.

OFFER & ACCEPTANCEOFFER & ACCEPTANCE“CREATION OF OFFERS”“CREATION OF OFFERS”

66 MAJOR REQUIREMENTS MAJOR REQUIREMENTS

TO ENFORCE A CONTRACTTO ENFORCE A CONTRACT1) 1) Offer and Acceptance—Offer and Acceptance—therethere must must

be an offer to contract. The person be an offer to contract. The person who makes the offer is the “who makes the offer is the “offeror” offeror” the the person who accepts the contract is the person who accepts the contract is the ““offereeofferee”.”.



TO ENFORCE A TO ENFORCE A CONTRACTCONTRACT2) 2) Genuine Assent—Genuine Assent—thethe agreement agreement

must not be made on one party must not be made on one party decieving the other.decieving the other.



TO ENFORCE A CONTRACTTO ENFORCE A CONTRACT3) 3) LEGALITY—LEGALITY—the parties agree to the parties agree to

must be legal. An agreement to pay must be legal. An agreement to pay someone to commit a crime cannot be someone to commit a crime cannot be a legal contract.a legal contract.



TO ENFORCE A TO ENFORCE A CONTRACTCONTRACT4) 4) CONSIDERATION—CONSIDERATION—an agreement an agreement

must involve both sides receiving must involve both sides receiving something of legal value as a result of something of legal value as a result of the transaction.the transaction.



TO ENFORCE A TO ENFORCE A CONTRACTCONTRACT5) 5) CAPACITY—CAPACITY—to have a completely to have a completely

enforceable agreement the parties enforceable agreement the parties involved must be able to contract for involved must be able to contract for themselves. Rather than being forced themselves. Rather than being forced to use parent’s or legal representation. to use parent’s or legal representation. If one of the parties is under the age of If one of the parties is under the age of 18 the contract is “voidable”. 18 the contract is “voidable”.



TO ENFORCE A TO ENFORCE A CONTRACTCONTRACT6) 6) WRITING—WRITING—somesome agreements must agreements must

be in writing to be fully enforceable inbe in writing to be fully enforceable in court. court.


CONTRACTUAL INTENT CONTRACTUAL INTENT

MUST BE PRESENTMUST BE PRESENTJESTS—JESTS—the law is not concerned with what is the law is not concerned with what is actually in the mind of a person making an offer. actually in the mind of a person making an offer. It is more concerned with appearance of the It is more concerned with appearance of the action. If you think you are joking but a action. If you think you are joking but a “reasonable” person would assume that you are “reasonable” person would assume that you are offering a contract it would be so. On the other offering a contract it would be so. On the other hand if a “reasonable” person would believe that hand if a “reasonable” person would believe that you are joking it would be viewed as such.you are joking it would be viewed as such.



MUST BE PRESENTMUST BE PRESENTSTATEMENTS MADE IN ANGER—STATEMENTS MADE IN ANGER—a a person yelling at someone to offer $100 for person yelling at someone to offer $100 for someone stealing their purse isn’t someone stealing their purse isn’t considered a valid offer. Therefore if considered a valid offer. Therefore if someone ran after the thief and expected someone ran after the thief and expected payment there is not requirement to do so.payment there is not requirement to do so.



MUST BE PRESENTMUST BE PRESENTPRELIMINARY NEGOTIATIONS—PRELIMINARY NEGOTIATIONS—

information often is communicated to information often is communicated to induce someone to begin bargaining. induce someone to begin bargaining. These are not seen as an intent to contract. These are not seen as an intent to contract. These are beginning talks in a process that These are beginning talks in a process that are non-binding until a formal offer has are non-binding until a formal offer has taken place.taken place.



MUST BE PRESENTMUST BE PRESENT SOCIAL AGREEMENTS–SOCIAL AGREEMENTS– if a pair of if a pair of

friends agree to go to a movie it isn’t friends agree to go to a movie it isn’t deemed a contract. Neither friend thinks of deemed a contract. Neither friend thinks of this as a legal binding agreement. If the this as a legal binding agreement. If the date is broken those involved may be date is broken those involved may be offended but may not file a law suit for offended but may not file a law suit for breach of contract.breach of contract.


ESSENTIAL TERMS MUST BE ESSENTIAL TERMS MUST BE COMPLETE AND DEFINITIVECOMPLETE AND DEFINITIVE1) Identity of the specific lot1) Identity of the specific lot

2) Price agreed upon2) Price agreed upon

3) Full terms of payment involved.3) Full terms of payment involved.

4) Date for delivery of possession.4) Date for delivery of possession.

5) Date for delivery of the deed. 5) Date for delivery of the deed.


OFFER & ACCEPTANCEOFFER & ACCEPTANCE“ACCEPTANCES”“ACCEPTANCES”

REQUIREMENTS OF REQUIREMENTS OF ACCEPTANCEACCEPTANCE

COME FROM THE PERSON OR COME FROM THE PERSON OR PERSONS TO WHOM OFFER PERSONS TO WHOM OFFER WAS MADE.WAS MADE.

MATCH THE TERMS OF OFFER.MATCH THE TERMS OF OFFER. BE COMMUNICATED TO THE BE COMMUNICATED TO THE

OFFEROR.OFFEROR.


ONLY OFFEREES MAY ACCEPT–ONLY OFFEREES MAY ACCEPT– an an offer made from one person to another may offer made from one person to another may NOT be accepted by another. In some NOT be accepted by another. In some cases an offer is made to a “group” in this cases an offer is made to a “group” in this case the offer may be accepted by another case the offer may be accepted by another member of the group.member of the group.

ACCEPTANCE MUST MATCH OFFER–ACCEPTANCE MUST MATCH OFFER– the the “mirror image” rule requires that acceptance must “mirror image” rule requires that acceptance must exactly match the terms contained in the offer.exactly match the terms contained in the offer.

1)1) If a party is a consumer not a merchant then new or If a party is a consumer not a merchant then new or changed terms are merely proposal an not part of the changed terms are merely proposal an not part of the contract.contract.

2) If both parties are merchants new or changed terms are 2) If both parties are merchants new or changed terms are not part of the contract of the original offer objects. Or in not part of the contract of the original offer objects. Or in absence of objection terms are material.absence of objection terms are material.

3) When parties are merchants new or changes terms of the 3) When parties are merchants new or changes terms of the contract if the original offeror is silent and terms are thus contract if the original offeror is silent and terms are thus minor. minor.



ACCEPTANCE MUST BEACCEPTANCE MUST BE

COMMUNICATED TO OFFEROR.COMMUNICATED TO OFFEROR.When parties are merchants new or changes When parties are merchants new or changes

terms of the contract if the original offeror is terms of the contract if the original offeror is silent and terms are thus minor.silent and terms are thus minor.

OFFER & ACCEPTANCEOFFER & ACCEPTANCE“TERMINATION OF OFFERS”“TERMINATION OF OFFERS”

TERMS THAT OFFERS CAN ENDTERMS THAT OFFERS CAN END• REVOCATION BY THE OFFERORREVOCATION BY THE OFFEROR

• TIME STATED IN THE OFFERTIME STATED IN THE OFFER

• REASONABLE LENGTH OF TIMEREASONABLE LENGTH OF TIME

• REJECTION BY THE OFFEREEREJECTION BY THE OFFEREE

• COUNTEROFFERCOUNTEROFFER

• DEATH OR INSANITY OF EITHERDEATH OR INSANITY OF EITHER

• DESTRUCTION OF THE SUBJECT MATTERDESTRUCTION OF THE SUBJECT MATTER

OFFER & ACCEPTANCEOFFER & ACCEPTANCE“TERMINATION OF OFFERS”“TERMINATION OF OFFERS” REVOCATION BY THE OFFEROR:REVOCATION BY THE OFFEROR:

After an offer has been made the offeror After an offer has been made the offeror can generally revoke it anytime before it can generally revoke it anytime before it is accepted by the offeree. This is true is accepted by the offeree. This is true even if the offeror promised that the even if the offeror promised that the offer would remain open for a particular offer would remain open for a particular period. A period. A “revocation” “revocation” is not effective is not effective until communicated to the offeree.until communicated to the offeree.

OFFER & ACCEPTANCEOFFER & ACCEPTANCE“TERMINATION OF OFFERS”“TERMINATION OF OFFERS” TIME STATED IN THE OFFER:TIME STATED IN THE OFFER:

In making an offer the offeror may state In making an offer the offeror may state how and when the offer must be how and when the offer must be accepted. Example: If Mr. Bigg applied accepted. Example: If Mr. Bigg applied for a loan for $50,000 on Oct. 1. And then for a loan for $50,000 on Oct. 1. And then Gimme—Cash Bank offered to lend on Gimme—Cash Bank offered to lend on specified terms and specified that the specified terms and specified that the acceptance must take place before acceptance must take place before October 15. Mr. Bigg didn’t mail in an October 15. Mr. Bigg didn’t mail in an acceptance until October 17 which acceptance until October 17 which Gimme Cash Bank didn’t receive until Gimme Cash Bank didn’t receive until October 20 the offer had expired.October 20 the offer had expired.


REASONABLE LENGTH OF TIMEREASONABLE LENGTH OF TIMEWhen nothing is stated in the offer about how When nothing is stated in the offer about how long it will remain open, it ends after a reasonable long it will remain open, it ends after a reasonable length of time. What a reasonable length of time length of time. What a reasonable length of time depends on the circumstances. Example: If a depends on the circumstances. Example: If a Produce Wholesaler in New Jersey telephones a Produce Wholesaler in New Jersey telephones a customer in Florida offering to sell a truckload of customer in Florida offering to sell a truckload of oranges if the offer isn’t accepted the contract will oranges if the offer isn’t accepted the contract will terminate. The seller understands that there may terminate. The seller understands that there may be contact with many buyers so that they must be contact with many buyers so that they must respond quickly to assure their product.respond quickly to assure their product.


REJECTION BY THE OFFEREEREJECTION BY THE OFFEREEWhen the offeree clearly rejects the offer, When the offeree clearly rejects the offer, the offer is terminated. Unless this offer is the offer is terminated. Unless this offer is renewed by the offeree. Any rejection of renewed by the offeree. Any rejection of the first offer nullifies the offeror’s the first offer nullifies the offeror’s obligation at that point.obligation at that point.

COUNTEROFFERCOUNTEROFFERNormally an offeree accepting terms must Normally an offeree accepting terms must accept the offer as it was exactly made. accept the offer as it was exactly made. However if the offeree changes the terms of However if the offeree changes the terms of the offeror and submits it back to them this the offeror and submits it back to them this is called a counteroffer. In making a is called a counteroffer. In making a counteroffer basically (legally) offeree is counteroffer basically (legally) offeree is saying in effect I refuse your offer but I will saying in effect I refuse your offer but I will accept these exceptions to it that I have accept these exceptions to it that I have stated forth.stated forth.



DEATH OR INSANITYDEATH OR INSANITYContracts are agreements made and Contracts are agreements made and entered into by the parties subject to their entered into by the parties subject to their control. If someone dies or insanity control. If someone dies or insanity happens this eliminates control of it being happens this eliminates control of it being fulfilled. Therefore civil law intervenes fulfilled. Therefore civil law intervenes when either party can no longer fulfill their when either party can no longer fulfill their obligation and terminates their offers.obligation and terminates their offers.


DESTRUCTION OF SUBJECT MATTERDESTRUCTION OF SUBJECT MATTERIn the event of the item involved in an offer In the event of the item involved in an offer the offer becomes terminated immediately. the offer becomes terminated immediately. Example: Billy-bob agrees to purchase a Example: Billy-bob agrees to purchase a 1968 Camaro from Jill’s City Slicker Car’s 1968 Camaro from Jill’s City Slicker Car’s for $3000. The evening prior to picking up for $3000. The evening prior to picking up the vehicle a storm blows through and a the vehicle a storm blows through and a tree is uprooted and lands on the car tree is uprooted and lands on the car totalling it. Neither party is held to the totalling it. Neither party is held to the terms of the offer based on this.terms of the offer based on this.


HOW AN OFFER CAN BE KEPT OPENHOW AN OFFER CAN BE KEPT OPENOPTIONS—OPTIONS—if the offeree gives the offeror if the offeree gives the offeror something of value in return for a promise to something of value in return for a promise to keep the offer open, this agreement itself is a keep the offer open, this agreement itself is a binding, legal agreement.binding, legal agreement.

FIRM OFFERS– FIRM OFFERS– an offer which contains terms an offer which contains terms stating how long it is to stay open and for how stating how long it is to stay open and for how much.much.

OFFER & ACCEPTANCEOFFER & ACCEPTANCE“ACCEPTANCE OF OFFERS”“ACCEPTANCE OF OFFERS”

REQUIRMENT OF AN ACCEPTANCEREQUIRMENT OF AN ACCEPTANCE ONLY OFFEREES MAY ACCEPTONLY OFFEREES MAY ACCEPT THE ACCEPTANCE MUST MATCH THE OFFERTHE ACCEPTANCE MUST MATCH THE OFFER ACCEPTANCE COMMUNICATED TO OFFEROR ACCEPTANCE COMMUNICATED TO OFFEROR


ONLY OFFEREES MAY ACCEPTONLY OFFEREES MAY ACCEPTAn offer made to another person may An offer made to another person may not be accepted by another. Sometimes not be accepted by another. Sometimes however an offer which is made to a however an offer which is made to a particular group such as an agency the particular group such as an agency the offer may/may not be accepted by the offer may/may not be accepted by the group involved.group involved.


ACCEPTANCE MUST MATCH OFFERACCEPTANCE MUST MATCH OFFERThe “The “mirror-image”mirror-image” rule states that the rule states that the

acceptance must exactly match the terms acceptance must exactly match the terms contained in the offer. If an attempted contained in the offer. If an attempted acceptance is altered in any way it becomes acceptance is altered in any way it becomes a “counteroffer”.a “counteroffer”.


ACCEPTANCE MUST BE ACCEPTANCE MUST BE COMMUNICATED TO THE OFFERORCOMMUNICATED TO THE OFFERORSILENCE AS ACCEPTANCESILENCE AS ACCEPTANCEBILATERAL ACCEPTANCEBILATERAL ACCEPTANCEUNILATERAL ACCEPTANCEUNILATERAL ACCEPTANCE


SILENCE AS ACCEPTANCESILENCE AS ACCEPTANCEOne it not obligated to reply to offers One it not obligated to reply to offers made by others. An offeror’s attempt to made by others. An offeror’s attempt to word the offer so that silence would word the offer so that silence would appear to be an acceptance will not appear to be an acceptance will not work. No contract would result from work. No contract would result from such a case.such a case.


BILATERAL ACCEPTANCEBILATERAL ACCEPTANCEMost offers are bilateral meaning Most offers are bilateral meaning the offer implies that it can be the offer implies that it can be

accepted by giving a promise accepted by giving a promise instead instead of performing a contract of performing a contract for for an act. an act. These contracts require that These contracts require that the the offeree accept by communicating offeree accept by communicating the requested promise to the offeror.the requested promise to the offeror.


UNILATERAL ACCEPTANCEUNILATERAL ACCEPTANCEThe offeror in a unilateral promises The offeror in a unilateral promises something in return for the offeree’s something in return for the offeree’s performance and indicates that this performance and indicates that this performance is the way acceptance is to performance is the way acceptance is to be made.be made.