Business Law and the Regulation of Business Chapter 10: Mutual Assent

1
Business Law and the Regulation of Business
Chapter 10 Mutual Assent

• By
• Richard A. Mann
• Barry S. Roberts

2
Topics Covered in this Chapter

• I. Offer
• A. Essentials of an Offer
• B. Duration of Offers
• II. Acceptance of Offer
• A. Communication of Acceptance
• B. Variant Acceptances

3
Essentials of an Offer

• Communication offeree must have knowledge of
  the offer and the offer must be made by the
  offeror to the offeree.
• Intent determined by an objective standard of
  what a reasonable offeree would have believed.
• Definiteness offers terms must be clear enough
  to provide a court with a basis for giving an
  appropriate remedy.

4
Duration of Offers

• Lapse of Time offer remains open for the time
  period specified or if no time is stated for a
  reasonable period of time.
• Revocation generally an offer may be
  terminated at any time before it is accepted
  subject to the following exceptions.
• Rejection refusal to accept an offer terminates
  the power of acceptance.
• Counteroffer counterproposal to an offer that
  generally terminates the original offer.

5
Duration of Offers

• Death or Incompetency of either the offeror or
  the offeree terminates the offer.
• Destruction of Subject Matter of an offer
  terminates the offer.
• Subsequent Illegality of the purpose or subject
  matter of the offer terminates the offer.

6
Duration of Revocable Offers
Offer EffectiveCommunicated IntentDefinite
and certain
OFFER OPEN
No Offer
No Offer
Offer TerminatedLapse of time
DeathRevocation IncompetencyRejection
Destruction of subject
matterCounteroffer Subsequent illegality
7
Revocation

• Option Contract contract that binds offeror to
  keep an offer open for a specified time.
• Firm Offer a merchants irrevocable offer to
  sell or buy goods in a signed writing ensures
  that the offer will not be terminated for up to
  three months.
• Statutory Irrevocability offer made irrevocable
  by statute.

8
Revocation

• Irrevocable Offer of Unilateral Contract a
  unilateral offer may not be revoked for a
  reasonable time after performance is begun.
• Promissory Estoppel noncontractual promise that
  binds the promisor because she should reasonably
  expect that the promise will induce the promisee
  (offeree) to take action in reliance on it.

9
Acceptance of Offer

• Definition positive and unequivocal expression
  of a willingness to enter into a contract on the
  terms of the offer.
• Mirror Image Rule except as modified by the
  Code an acceptance cannot deviate from the terms
  of the offer.

10
Communication of Acceptance

• General Rule acceptance effective upon dispatch
  unless the offer specifically provides otherwise
  or the offeree uses an unauthorized means of
  communication.
• Stipulated Provisions in the Offer the
  communication of acceptance must conform to the
  specification in the offer.
• Acceptance Following a Prior Rejection first
  communication received by the offeror is
  effective.

11
Communication of Acceptance

• Authorized Means the Restatement and the Code
  provide that unless the offer provides otherwise
  acceptance is authorized to be in any reasonable
  manner.
• Unauthorized Means acceptance effective when
  received provided that it is received within the
  time within which the authorized means would have
  arrived.
• Defective Acceptance does not create a contract
  but serves as a new offer.

12
Offer and Acceptance
13
Mutual Assent
No
Has a definite and certain offer been
communicated
No offer
Yes
Yes
Has the offer been revoked by the offeror
No
Offer terminated
Has the offeror received a rejection or
counteroffer
Yes
No
Has lapse of time death incompetency
destruction of subject matter or subsequent
illegality occurred
Yes
No
No
No contract
Is acceptance effective
Contract formed
Yes