6
CHAPTER
Offer and Acceptance
6-1 Creation of Offers
6-2 Termination of Offers
6-3 Acceptances
Question
Juan and Susan were talking one day after school.
Juan would turn 16 on the upcoming July 13 and
wanted to buy Susan’s car. Susan, 17, had been
working and saving her money to buy a new car.
Selling her old car for $2,800 would give her
enough to do so. She offered it to Juan for that
amount, and he accepted. Did the two friends
create a legally enforceable contract?
Minimum age to be bound by contract is 18 in most states.
Therefore if either one wanted out of the contact they would be
able too.
FOCUS

What distinguishes a contract
from other agreements?
Contracts are enforceable by courts. In
contrast social agreements are not
enforceable by law.

What two actions are necessary to form an
agreement which may result in a contract
An offer and an acceptance
WHAT MUST BE IN
A CONTRACT?
• Offer and acceptance
• Genuine assent
• Legality
• Consideration
• Capacity
• Writing
Offer and Acceptance





Offeror – one who makes the offer
Offeree – the one whom it is made to.
============================
Terms must be definite and accepted without
change by the party to whom it was intended to be
offered.
Without offer and acceptance the courts would not
have an agreement that could be enforced.
To enforce arbitrary terms against the parties would
be involuntary servitude and prohibited by the
Constitution

Genuine Assent


Consideration (cont)


What the parties agree
to must be legal.
Consideration

The agreement must
involve both sides
receiving something of
legal value as a result of
the transaction.


Without this we have
merely a promise to make a
gift.
Capacity

Legality


An agreement based on
deception, improper
pressure, these types of
mistakes not an
agreement

The court must not have to
enforce unfair bargains
made due to a lack of
ability to contract in the first
place.
Parties must be able to
contract for themselves.
Writing

Some contracts are so
important that the courts
must have a writing to be
sure the proper terms are
being enforced.
REQUIREMENTS OF AN OFFER
Offer – is a proposal by an offeror to do
something, provided the offeree does
something in return (“I will PAY you to
CLEAN my house”).
Offer must be valid to be a contract. Three tests
that a valid offer must pass are:
1. Contractual intent must be present in the offer.
2. The offer must be communicated to the offeree.
3. The essential terms of the offer must be
complete and definite.
REQUIREMENTS OF AN OFFER
Contractual intent must be presentMust use the reasonable person test to
say whether their was intent to make an
offer.
 Objective Test – are they behaving like a
“reasonable person”?
 Subjective Test – Does the judge believe
how you really felt about the transaction
(did you know what was going on and
understand it completely)?
REQUIREMENTS OF AN OFFER

Offer must be communicated to the offeree 

A person who is not the intended offeree cannot
accept the offer.
Essential terms must be complete and definite–


complete – all offers must at minimum include, price,
subject matter and quantity, either directly or
indirectly, to be legally effective. (any terms missing
not a valid offer)
Definite – each essential term must be identified
clearly.
REQUIREMENTS OF AN OFFER

The following show non-intent to
contract:
o
o
o
o
The law is not concerned with what is in
the mind of the person making an offer
by rather with the appearance of this
action.
Jests – Statement made as a joke
Statements made in anger or terror
Social agreements
REQUIREMENTS OF AN OFFER

Preliminary negotiations
information
communicated merely to
induce someone to
initiate bargaining.
(Newspaper ads are just
an invitation to bargain).
The offer typically comes
from the party
responding to the ad.
REQUIREMENTS OF AN OFFER
• For an Ad to be offer it must clearly be
worded in ways that address the problem
of numerous people receiving the ad for a
limited amount of product. “Sold to First
person or subject to stock on hand”
• Asks the offeree to perform an act as a
way to accept the offer. “to the first
person to appear at the main door
Saturday 6th and 6:00 am.”
• Mismarked goods does not make the seller
accept the wrong price.
Question
Anchors Aweigh, a boat retailer, placed an ad in a
local newspaper announcing a one-day sale of
cabin cruisers for the “bargain price” of $35,500
each. The dealer had five cruisers in stock, and
they all were sold within one hour. During the
rest of the day, seven other would-be buyers
came in to purchase a bargain cruiser. Did the
Anchors Aweigh advertisement make offers to
the would-be buyers?
This is just an invitation to bargain.
Preliminary negotiations.
Question—Are these Contracts??
Nick asks Kim to go to dinner at the Sunset Restaurant at
7:00 PM on Saturday.
Social Agreement, No contract
Andrea mentions to Sabra that she is considering selling
her car to Sheila for $750.00 Without Andrea’s
permission to do so, Sabra later tells Shelia of Andrea’s
statement. Sheila shows up with the money to buy the
car. No communication by the offeror to the would-be offeree. No
contract unless Sheila’s actions would constitute offer if Andrea
wanted to accept it.
Tim says to Blake, “I’ll buy one of your cars.”
Incomplete information no contract would result
Question—Are these Contracts??
The owner of a small color television set offers to
sell it to a neighbor for $75. As the neighbor
stands there thinking about the offer, a
bystander says, “That’s a bargain. I’ll take it.”
Is there a contract between the bystander and
the owner?
No Contract because the offer was not
made to the bystander.
Question—Are these Contracts??
Watch This Clip
In Marsha Brady’s famous “something suddenly
came up episode” was there a contract for the
original date.
No! A Social engagement is not a contract.
Question—Are these Contracts??
The Nationwide Credit Union agreed to allow Heidi
to borrow up to $10,000. Nothing was specified
as the length of the agreement, the rate of
interest the credit union would charge, or the
terms of repaying any loan. The credit union did
not make a loan of $8,000 to Heidi when she
requested it four months later. Is the credit
union liable for breach of contract.
No, the credit union is not liable because no contract arose. The
agreement was missing essential terms such as the rate of
interest.
Question—Are these Contracts??
G. Whiz Sports Shop published this advertisement
in the local newspaper. “Congratulations to the
winners of the Tour de France! Now you too can
be a champ! Get an 18-sped Blue Lightning
bicycle for only $2,295 – marked down from
$2,795, the manufacturer’s suggested retail
price. What a bargain. Come and get it!”
Baxter visited the discount store the following
day and said, “I’ll take on of the Blue Lightning
bike.” The clerk replied, “Sorry we had only ten
bikes in stock and they’ve all been sold.” Was
the advertisement an offer?
No, the advertisement was not an offer because it did not address
the problem of a limited quantity of the bikes.
6-2 Termination of Offers
GOALS
 Describe the various ways to end offers
 Explain how an offeree can ensure an
offer will remain open
Question
On May 15th, Melissa offered to sell her collection of
baseball cards for $3,000 at anytime before the first of
the next month to her friend and fellow collector, Raoul.
While Raoul was trying to raise the money, Melissa had
second thoughts. So she called Raoul and said, “I’ve
changed my mind, I’m not interested in selling the
cards.” Raoul responded, “It’s too late, you said the
offer would be open for this whole month. This is just
the 20th, and I’ve got the money so I accept.” Was
Melissa’s offer terminated before Raoul’s attempted
acceptance?
Because Melissa revoked first, there was no offer for Raoul to
accept. The promise to keep it open until the end of the month
was not legally binding to her.
HOW CAN OFFERS BE ENDED?

Once made an offer does not last forever.
It can be terminated in a variety of ways.
1. Revocation by the offeror--the right
to withdraw an offer before it is
accepted is know as the right of
revocation. Not effective until
communicated to the offeree.
•
Can revoke anytime before it is accepted by
the offeree. Even if promised to keep
open.
HOW CAN OFFERS BE ENDED?
(cont.)
2.
3.
Time stated in the offer – When making
an offer it may be stated how and when
the offer must be accepted. If not within
that time or way no contract.
Reasonable length of time – When
nothing is said in the offer about how
long it will remain open, it will end after a
reasonable time. It depends on the
surrounding circumstances.
HOW CAN OFFERS BE ENDED?
(cont.)
4.
Rejection by the offeree
•
5.
When offeree clearly rejects the offer, the offer is
terminated (unless renewed th the original
offeror)
Counteroffer
•
When offeree changes the offeror’s terms in
important ways and sends it back to the offeror.
This becomes the new offer.
HOW CAN OFFERS BE ENDED?
(cont.)
6.
Death or insanity of either the offeror
or offeree
•
7.
Contracts are agreements voluntarily entered
into by the parties and subject to their control.
These people do not have control.
Destruction of the specific subject
matter
•
If whatever was offered is destroyed no contract.
HOW CAN AN OFFER BE
KEPT OPEN?

Options –


If the offeree gives the offeror something of value in
return for a promise to keep the offer open, this
agreement is itself a binding contract called an
option. Offer cannot be withdrawn during the period
of the option.
Firm offers

A written offer stating how long it is to stay open
called a firm offer. The UCC makes firm offers
binding for the time stated but not longer than 3
months. Applies to Merchants (grocery store ads
that expire every Saturday at F. Meyer).
Question
The Downings had placed their idle factory
building on the market for $950,000. Robinson,
a developer, was interested in buying it, but she
needed time to persuade a group of investors to
join her in a syndicate to purchase the building.
Robinson offered $10,000 to the Downings to
keep the offer open to her alone for 60 days.
The Downings accepted the money. Are they
now legally bound to keep the offer open to the
Robinson.
This was an option and the Downings could not legally withdraw
the offer or sell to another party during the 60 days.
Question
While her car was in Prescott’s garage for repairs, Wood
noticed a large, seemingly unused, metal tool chest in
the corner, complete with about 400 standard and
metric tools. Wood offered to buy it for $3,000 and said,
“You can take a week to think about it before you decide
whether to accept.” Four days later, before Prescott had
responded, Wood told Prescott that she was withdrawing
her offer as she had found a better set for less money.
Can Prescott still accept Wood’s original offer? If wood
had put the offer in writing, could she have withdrawn
it before the week was over?
Yes, Wood can withdraw an offer even when he promised to leave
it open. A firm offer or option is required to bind on offer to the
promise to leave an offer open.
Question
Frank saw a wheelchair advertised in the paper for sale for
$900. When he called the seller, who had bought it to
use while he was recovering from a skiing accident, the
seller said it had not yet been sold. Frank drove out to
see it but found it needed work. So Frank offered $700.
The seller seemed insulted, and said he wasn’t
interested at that price. Frank left. About an hour later,
he went back and found the wheelchair had not been
sold. He then offered the $900 specified in the ad.
However, the seller refused to sell it to him. Frank
became upset and sued to get the court to force the
owner to sell it to him for $900. Will the seller have to
do so? Why or why not?
No, the seller’s offer at $900 was rejected by Frank so he cannot
later accept it.
Question
Gus walked into his local hardware store to buy
exterior paint for his house. It was on sale for
$35.00 a gallon. Gus wanted to check around
but didn’t want to lose the change to buy at the
sale price. In response to Gus’s request, the
manager of the paint department wrote Gus a
not stating, “Gus Almondson may buy up to 15
gallons of Old Dutch Exterior Grade paint for $35
per gallon anytime within the next two weeks.”
The manager signed and dated the note. Is this
offer binding?
Yes, this is a firm offer and therefore a binding offer.
Question
Phil was talking with Sharon about Opie, his
Springer Spaniel dog. Phil explained that Opie
has a strong personality, loves to snuggle up to
people, likes to eat “people food,” and is a good
watchdog. Sharon liked Opie a lot and needed a
dog. She asked Phil how much he paid for Opie.
Phil said, “I paid $75, but I wouldn’t sell Opie for
ten times that amount. Sara said, “Well okay,
it’s a deal then. I’ll give you $800, more than
ten times the $75.” Has Opie been sold?
Opie has not been sold because Phil did not make an offer.
6-3 Acceptances
GOALS
Discuss the requirements of an
effective acceptance
o Determine at what point in time
an acceptance is effective
o
FOCUS
Scenario
 John makes an offer to Paul. Paul is not
interested, but Paul’s friend, who was
standing nearby, hears the offer and says
she accepts.
Question
 Has a contract been formed?
No, it can only be accepted by the
person(s) whom it has been made.
WHAT IS REQUIRED
OF AN ACCEPTANCE?
• Only offerees may accept
• The acceptance must match the
offer
• Acceptance must be communicated
to the offeror
WHAT IS REQUIRED
OF AN ACCEPTANCE?
1. Only offerees may accept –
 If made to general public then anyone can accept.
“Cash for Clunkers” (at least $7,000 if trade-in vehicle
meets requirements)
2. The acceptance must match the offer
 Mirror image rule – requires that the acceptance must
exactly match the terms contained in the offer.
 Under the UCC an attempted acceptance of an offer
for a contract for a sale of goods can be valid where
the offer and acceptance agree.
WHAT IS REQUIRED
OF AN ACCEPTANCE (cont)?
3. Acceptance must be communicated to the offeror
Silence cannot be an acceptance of an offer.
• Bilateral (both) acceptance –
Most offers are these (bilateral contracts) Contains two
promises. Can be accepted by giving a promise.
• Unilateral (one) acceptance –
Indicate acceptance by offeree by performing a
certain act.
Unilateral Contracts Example: promise to pay reward
to anyone who returns a lost camera. When camera
returned is acceptance of offer.
WHAT IS REQUIRED
OF AN ACCEPTANCE (cont)?
Modes of contractual communication
• When acceptances are effective – Courts say
acceptance is effective when sent by the same
means used for the offer or by faster means.
• Acceptances sent by mail generally take effect when
properly posted.
• The offeror may specify what is necessary means of
acceptance
Question
When Blithely found Jack on Blithely’s used car lot
looking at an SUV, she introduced herself and
then showed him the features of the vehicle.
After a period of time they discussed the price,
and then she opened the driver’s door for him.
As he slid behind the wheel, she said, “Tell you
what. I believe that once a customer gets
behind the wheel of one of these beauties, he’s
sold. So, if you don’t say no within the next ten
seconds, we’ve got a deal at $15,750.” Jack
said nothing within the ten seconds. Did Jack
legally agree to Blithely’s offer.
No Contract would result by the silence.
Question
To help pay for housing renovations, Jeanne placed an ad
on the bulletin board at the public golf course showing a
picture of her prized set of golf clubs, her phone
number, and the figure $2,000. Eve, after seeing the ad
called Jeanne and then drove to her house with $2,000
in hand. When se presented the $2,000 to Jeanne, the
latter refused it, stating that she had received several
calls raising it to $2,500. Can Eve sue and force Jeanne
to accept her $2,000 for the clubs. Why or why not?
No. The $2,000 was merely an invitation to negotiate.
Therefore, Eve’s presenting the $2,000 was not an acceptance but
an offer. Jeanne has as much right to raise that price as others
do to try and get her to lower it.
Question
Office Suppliers, Inc. ordered 2,000 of 20lb. paper
from Dimension Paper for $1.75 per ream to be
delivered at the Office Suppliers warehouse on
April 24. Dimension responded that 2,000 reams
would be delivered on April 25 at the price of
$1.75 per ream. Office Suppliers made no
further response. Has a valid contract been
formed? If so, what are the terms? If not, why
not?
A Valid contract has been formed based on Office Suppliers offer.
UCC code minor changes