Chapter 6-1
CREATION
OF OFFERS
Contract
Generally defined as
agreements between two
or more parties that create
obligations
What distinguishes a contract from
other agreements
Contracts are enforceable
by courts
Social agreements are not
enforceable by law
6 Major Requirements Before Courts will Treat a
Transaction as a Legally Enforceable Contract:
1.
Offer and Acceptance: there must be an offer and an
acceptance upon which to base the contract


Offeror-the person who make the offer
Offeree- the person to whom the offer is made
2. General Assent: agreement must not be made on one party
deceiving another or the use of unfair pressure
3. Legality: What parties agree to must be legal
4. Consideration: Both sides receive what the law considers value
in some form as a result of the transaction
5. Capacity: Parties must have legal ability to contract for themselves
(age, mental capacity)
6. Writing: Some agreements must be place in writing to be fully
enforceable in court
WHY EACH ESSENTIAL ELEMENT IS
NECESSARY
 Offer and Acceptance: Without them the courts would not have an
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agreement that could be enforced
Genuine Assent-Agreements based on deception, improper pressure,
certain types of mistakes is NOT an agreement that society wants to be
involved in enforcing
Legality-Courts should not have to enforce contracts requiring illegal or
tortious conduct
Consideration- Without something of value being exchanged we have
merely an unenforceable promise to make a gift
Capacity- The courts must not have to enforce unfair bargains make to a
lack to ability to contract in the first place
Writing-Some contracts are so important that the courts must have them
in writing to be sure the proper terms are being enforced
(Sales of real property, promises to pay someone's debt obligations, a contract that takes
longer than one year to complete, real property leases that run for more than a year,
contracts for an amount or other consideration that exceeds the state's threshold, a contract
that will go beyond the lifetime of the one performing the contract, the transfer of property
upon the death of the party performing the contract)
REQUIRMENTS OF AN OFFER
 An offer is a proposal by an offeror to do something,
provided the offeree does or refrains from doing
something in return
 The offer is the basis of the bargain. If it is not valid,
there can be no contract for the courts to enforce
 Three Tests That an Offer Must Pass to be
Legally Enforceable:
1.
2.
3.
Contractual intent must be present in the offer
The offer must be communicated to the offeree
The essential terms of the offer must be complete and definite
Contractual Intent
 Words that take the form of offers
but which are spoken in just ( as a
joke, in extreme terror or anger, or
as preliminary negotiations or
social agreement would not be
enforced.
Offers
• Offers must be communicated to the offeree
• The term of an offer must be sufficiently
complete and definite to allow a court to
determine what the parties intend and to
identify the parties legal rights and duties
So What Are the Requirements
of an Offer?
1. CONTRACTUAL INTENT
2. BE COMPLETE AND
DEFINITE
3. BE COMMUNICATED TO
THE OFFEREE BY THE
OFFEROR
6-2
Termination of Offers
Once made an offer does not last forever. It may be terminated in number of ways
HOW CAN OFFERS BE ENDED?
•
•
•
•
•
•
•
REVOCATION BY THE OFFEROR
TIME STATED IN THE OFFER
REASONABLE LENGTH OF TIME
REJECTION BY THE OFFEREE
COUNTEROFFER
DEATH OR INSANITY OF EITHER THE
OFFEROR OR OFFEREE
DESTRUCTION OF THE SPECIFIC
SUBJECT MATTER
1. Revocation by the Offeror: After an offer has been made, the offeror can
generally revoke it anytime before it is accepted by the offeree even if it
was promised that the offer would remain open for a particular period.
Revocation: The right to withdraw an offer before it is accepted
2. Time Stated in the Offer: In making an offer, the offeror may stat how
and when the offer must be accepted.
3. Reasonable Length of Time: When nothing is said in the offer about how
long it will remain open, it will end after a reasonable length of time
4. Rejection by the Offeree: When an offeree clearly rejects the offer, the
offer is terminated
5. Counteroffer: Generally an offeree accepting an offer must accept it as
made but if the offeree changes the offeror’s terms and sends it back to
the offeror, a COUNTEROFFER results
6. Death or Insanity of Either the Offeror or Offeree: Contracts are
agreements voluntarily entered into by the parties and subject to their
control. Death or insanity eliminates such control
7. Destruction of the Specific Subject Matter: If the offer refers to
unique subject matter and is subsequently destroyed the offer is
automatically terminated
How Can an Offer be Kept
Open?
AN OFFEROR IS NOT LEGALLY OBLIGATED TO KEEP AN
OFFER OPEN FOR A SPECIFIED TIME EVEN IF THE
OFFEOR HAS PROMISED TO DO SO
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 (option)
2. Firm Offers: A contractual proposal in writing by a
merchant stating how long the offer is to stay open
1.
6-3
Acceptances
Acceptance occurs when a party to whom an offer has
been made agrees to the proposal
• KATIE MAKES AN OFFER TO KERRY
BUT KERRY IS NOT INTERESTED.
KERRY’S FRIEND, WHO WAS
STANDING NEARBY HEARS THE OFFER
AND SAYS SHE ACCEPTS.
Has a contract been made?
An offer can only e accepted by the person(s) to who it has bee made.
WHAT IS RQUIRED OF AN
ACCEPTANCE?
1. ACCEPTANCE MUST BE MADE ONLY BY THE PERSON(S) TO
WHOM THE OFFER WAS MADE
2. THE ACCEPTANCE MUST MATCH THE TERMS IN THE
OFFER
3. THE ACCEPTANCE MUST BE COMMUNICATE TO THE
OFFEROR
A DIFFERENT RULE APPLIES TO APPEARANCES FOR OFFERS
FOR SERVICES AND REALTY THAN FOR OFFERS OF GOODS.
Mirror Image Rule
REQUIRES THAT THE ACCEPTANCE MUST
EXACTLY MATCH THE TERMS CONTAINED IN
THE OFFER
Acceptance Must Be Communicated to
the Offeror
An acceptance must be more than a mental decision. It
must be communicated to the offeror
SILENCE AS ACCEPTANCE -NOT OBLIGATED TO REPLY TO
OFFERS MADE BY OTHERS- an offeror’s attempt to word the
offer so that silence would appear to be an acceptance will not
work.
2. BITLATERAL ACCEPTANCE -MOST OFFERS ARE BILATERALmeaning the offer implies that it can be accepted by giving a
promise instead of performing the contracted for act. ( a seller
promises to deliver oil in exchange for the homeowner paying
$3.70 a gallon)REQUIREMNTS: the offeree accept by
communicating the requires promise to the offer. Until this is
done there is no contract
3. Unilateral Acceptance – THE OFFEROR REQUIRES THAT THE
OFFEREE INDICATE ACCEPTANCE BY PERFORMING HIS OR HER
OBLIAGATION UNDER THE CONTRACT- the offeror in a unilateral
contract promise something in return for the offereee’s
performance and indicates that this performance is the way
acceptance is to be made. (A reward is promised to anyone who
returns a lost dog- Many people may look for the dog since but
the promise to look is not a contract- only the one who returns
the dog can earn the reward.
1.
Solution 1
No, Cheya is just
determining how much
the calculator is worth
Solution 2
Neither Duane nor the representative
specified which fifty of the animals
would be sold. The animals could be
of different weights and therefore of
different market values. No contract
is made when an essential term is
missing.