Business Law: Chapter 2 Negotiations

Acceptance

Giving word either orally or in writing, that one agrees to the offer that one has recieved

Agreement

An agreement becomes final when an offer made by one party is accepted by the other party and the acceptance reaches the offerer

Breach of contract

One party to a contract does not meet the obligations imposed by the contract, thus resulting in damages to the other party

Damages

Costs and extra expenses one suffers as a result of a breach of contract or a tort committed by another party

Good faith

Generally accepted and morally justifiable behavior depending on the situation

Invitation to enter into negotiations

A proposal to come to an agreement that lacks some of the elements of an offer; an invitation to make an offer

Irrevocable offer

An offer that has become valid cannot be cancelled by the offerer, due to the content of the offer. The offer remains valid and cannot be cancelled e.g. because of the period of time mentioned in the offer

Letter of intent

A letter of intent is used to state the current status of negotiations between the parties involved and is intended to be a draft version of the final agreement

Loss of profit

Compensation for loss of profit means making financial restitution to an aggrieved party, putting that party in a position where it would have been had the agreement become final

Negotiations

Period of time during which parties, through making offers and counter offers, discuss the content of a possible future agreement and by acceptance of an offer make an agreement

Offer

A proposal to make an agreement contains a description of the object, the price and the number of objects

Offeree

He who recieves an offer made by another person

Offerer

He who makes an offer to another person

Preliminary stage

Stage of negotiations between two or more parties

Revoking an offer

The offerer cancels his own valid offer orally or in writing; a valid offer no longer exists. Possible up to the moment the offeree sends his acceptance, unless the offer is irrevocable

Stage

A moment in time, a period of time

Valid offer

An offer becomes a valid offer the moment it reaches the offeree

Withdrawing an offer

Preventing an offer from becoming a valid offer by using a faster means of communication than the one used for the offer itself in order to cancel one’s own offer. Possible up to and including the moment the offer reaches the offeree.