Exercise: An offer is a proposal by an offeror that, if accepted, will create a contract. Offers require that the offeror make a promise. The promise can be express or implied. The offer must bargain for a return promise, an act, or forbearance, and it must describe what is being offered (the subject matter) with enough certainty so that a court will not have to guess at what the offeror intended. The offer must be communicated to the offeree, and it must be proven that the offeror manifested the intent to make an offer. How would an offeree prove that an offeror intended to make an offer if the offeror alleged that she was only kidding or that her proposal was merely an invitation to the other party to make an offer? Here is what I would consider in this problem from a legal perspective: The complaining party must prove four elements to show that a contract existed: 1. Offer - One of the parties made a promise to do or refrain from doing some specified action in the future. 2. Consideration - Something of value was promised in exchange for the specified action or nonaction. This can take the form of a significant expenditure of money or effort, a promise to perform some service, an agreement not to do something, or reliance on the promise. Consideration is the value that induces the parties to enter into the contract. 3. Acceptance - The offer was accepted unambiguously. Acceptance may be expressed through words, deeds or performance as called for in the contract. Generally, the acceptance must mirror the terms of the offer. If not, the acceptance is viewed as a rejection and counteroffer. (a) the terms of the acceptance significantly alter the original contract; or (b) the offeror objects within a reasonable time. 4. Mutuality - The contracting parties had “a meeting of the minds” regarding the agreement. This means the parties understood and agreed to the basic substance and terms of the contract. When the complaining party provides proof that all of these elements occurred, that party meets its burden of making a prima facie case that a contract existed. For a defending party to challenge the existence of the contract, that party must provide evidence undermining one or more elements. Directly to this problem, Proposals obviously made in jest which a reasonable person would not be justified in treating as offers to enter into contracts, do not, upon acceptance, give rise to binding agreements. However, if the speaker intends to create in the listener the perception that the speaker is committing himself to a particular proposal and a reasonable person in the position of the offeree would so believe, an offer has been made. (Lucy v. Zehmer (1954 Sup.Ct. VA) 84 S.E.2d 516) Exercise: Offerors have the legal right to revoke their offers if they effectively do so before the offeree accepts. There are, however, several circumstances that would preclude the offeror from revoking the offer. Please identify these circumstances and give an example of each. Irrevocable offers: Options Contract: an offer cannot be revoked if the offeror has (1) promised to keep the offer open AND (2) the promise is supported by payment or other consideration Firm Offer (UCC): an offer for the sale of goods cannot be revoked for up to 3 months if (1) signed, written promise to keep the offer open, by (2) a merchant. Detrimental reliance by the offeree that is reasonably foreseeable. Start performance in a unilateral contract makes the offer irrevocable for a reasonable time to complete the performance Here are some examples: Offeror is the apartment manager offering the nice 3 bedroom unit with the nice view. Offeree cannot move for another month but really wants that apartment so the offeror offers to hold this unit if the offeree gives them a refundable deposit. Good for 1 month. The offeror is in violation if they sign a contract with another tenant before this time (even if the contract wasn't in place with the offeree). Consideration was paid with the promise that they would hold the unit for a time period. If the offeree did not pay that deposit, then the consideration given rule is not valid and the manager was in compliance for renting to another party. The offeror offers $100000 if the offeree builds him a custom home. The contract is complete once the performance has been completed. And in this case (substantially completed). The offeree is 80% done completing this home (has plenty of capital to do this - often they require a deposit but this time no consideration was given). The offeror cannot revoke the contract at this point as the offeree has used substantial resources to build this custom home and has created a hardship if revoked. Legally, the offeror cannot quit at this point.