Chapter 6 Offer and Acceptance

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Chapter 6Offer and Acceptance

• 6-1 Creation of Offers
• 6-2 Termination of Offers
• 6-3 Acceptances

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6-1 Creation of Offers

• GOALS
• List the elements required to form a contract
• Describe the requirements of an offer

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WHAT MUST BE IN A CONTRACT?

• Offer and acceptance
• Offeror makes offer offeree accepts
• Terms must be definite and accepted without
  change
• Genuine assent
• Agreement cant be based on an important mistake,
  unfair pressure, or deceipt
• Legality
• Cant have an agreement to commit crime/tort

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WHAT MUST BE IN A CONTRACT?

• Consideration both parties have to receive
  value
• Capacity most states minimum age 18
• Writing some Ks must be in writing

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What elements are required to form a legally
enforceable contract?
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REQUIREMENTS OF AN OFFER

• Contractual intent must be present facts
  circumstances are considered would a reasonable
  person disregard
• Jests
• Statements made in anger or terror
• Preliminary negotiations
• Ads are not offers UNLESS
• Subject to stock on hand, etc
• First 10 customers, first to arrive, etc.
• Social agreements not legal obligations

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REQUIREMENTS OF AN OFFER

• Offer must be communicated to the offeree
• Must be accepted by the intended offeree
• Cant accept an offer if you didnt know one
  existed (rewards)
• Essential terms must be complete and definite
  (allows courts to determine intent)
• COMPLETE at minimum identified the price,
  subject matter, and the quantity
• DEFINITE each essential term must be clearly
  identified

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What are the requirements of an offer?
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6-2 Termination of Offers

• GOALS
• Describe the various ways to end offers
• Explain how an offeree can ensure an offer will
  remain open

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HOW CAN OFFERS BE ENDED?

• Revocation by the offeror
• Anytime before offeree accepts
• Revocation is not effective until communicated to
  the offeree
• Time stated in the offer
• Reasonable length of time
• Depends on the circumstances
• Rejection by the offeree
• Even if the time limit has not expired

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HOW CAN OFFERS BE ENDED?

• Counteroffer
• Changes to important terms of the K
• Death or insanity of either the offeror or
  offeree
• Destruction of the specific subject matter

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Explain two ways in which offers can be
terminated.
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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
• A contractual proposal in writing by a merchant
  stating how long the offer is to stay open

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How could an offeree insure that an offer will
stay open for a set period of time?
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6-3 Acceptances

• GOALS
• Discuss the requirements of an effective
  acceptance
• Determine at what point in time an acceptance is
  effective

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WHAT IS REQUIRED OF AN ACCEPTANCE?

• Only offerees may accept
• The acceptance must match the offer
• If terms arent identical, a counteroffer is
  created
• Acceptance must be communicated to the offeror
• Silence, bilateral, unilateral acceptance
• Modes of contractual communication
• When acceptances are effective

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WHAT IS REQUIRED OF AN ACCEPTANCE?

• Acceptance must be communicated to the offeror
• Modes of contractual communication
• In person, telephone, fax, email, text, etc.
• Any reasonable means
• When acceptances are effective
• Acceptances are effective when SENT

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WHAT IS REQUIRED OF AN ACCEPTANCE?

• Acceptance must be communicated to the offeror
• Silence
• Bilateral K Ks in which the offer implies that
  it can be accepted by giving a promise instead of
  performing the contracted for act.
• unilateral acceptances require that the offeree
  indicates acceptance by performing his/her
  obligation

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WHAT IS REQUIRED OF AN ACCEPTANCE?

• Acceptance must be communicated to the offeror
• Modes of contractual communication
• When acceptances are effective

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What are the requirements of an effective
acceptance?
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PREVENT LEGAL DIFFICULTIES

• When you seek to enter into a contract . . .
• When negotiating, assume the worst and include
  terms in the contract addressing potential
  problems.
• For important contracts, put offers and
  acceptances in writing. If either an offer or an
  acceptance is made orally, promptly confirm it in
  writing.
• Obtain and keep a copy of every important
  document you sign.
• Express your intentions in offers and acceptances
  with clear, complete, and understandable language.

Continued on the next slide
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PREVENT LEGAL DIFFICULTIES

• Remember that the offeror may specify how and
  when the offer must be accepted. Otherwise the
  offeree may use the same means used by the
  offeror, a faster means, or other reasonable
  means.
• When appropriate, buy an option, if one is
  available, to keep the offer open for as long as
  you need.
• Remember that for an offeror to withdraw or
  revoke an offer, the offeree must receive notice.
  For speed, use the telephone, e-mail, or fax
  machine to withdraw or revoke an offer.