Business Law: Chapter 10 Mutual Assent

Essentials of an offer definition

indication of willingness to enter into a contract

Essentials of an offer commnication

offeree must have knowledge of the offer and the offer must be made by the offeror to the offeror to the offeree

Essentials of an offer intent

determined by an objective standard of what a reasonable offeree would have believed

Essentials of an offer definiteness

offer's terms must be clear enough to provide a court with a basis for giving an appropriate remedy

Duration of offers lapse of time

offer remains open for the time period specified or, if no time is stated, for a reasonable period of time

Duration of offers revocation

generally, an offer may be terminated at any time before it is accepted, subject to the following exceptions

good faith is

defined as honesty in fact and observance of reasonable commercial standards

The ways in which an offer may be terminated, other than by acceptance, are through:

1. lapse of time
2. revocation
3. rejection
4. counteroffer
5. death or incompetency of the offeror or offeree
6. destruction of the subject matter to which the offer relates
7. subsequent illegality of the type of contract the offer proposes

A merchant is defined as

a person who
1. is a dealer in goods of a given kind
2. who by his occupation holds himself out as having knowledge or skill peculiar to the goods or practices involved
3. who employs an agent or broker whom he holds out as having such knowledge or skills

option contract is

a contract that binds offeror to keep an offer open for a specified time

a firm offer is

a merchant's irrevocable offer to sell or buy goods in a signed writing ensures that the offer will not be terminated for up to 3 months

a statutory irrevocability is

an offer made irrevocable by statute.
ex: bid made to state made irrevocable by statute

irrevocable offer of unilateral contract is

a unilateral offer ma not be revoked for a reasonable time after performance is begun

Promissory estoppel is

a noncontractual promise that binds the promisor because she should reasonably expect that the promise will induce the promisee to take action in reliance on it

rejection is

refusal to accept an offer terminates the power of acceptance

counter offer is

a counterproposal to an offer that generally terminates the original offer

death or incompetency

death or incompetence of either the offeror or offeree terminates the offer

destruction of subject matter

ex. offeror sells car to offeree, the car explodes the next day, offeree is unaware and accepts the offer, but the offer is terminated because the subject matter is destroyed

subsequent illegality

if performance of a valid contract is subsequently made illegal, the obligations of both parties under the contract are discharged

Communication of acceptance

1. general rule
2. stipulated provisions
3. authorized means
4. unauthorized means
5. acceptance following a prior rejection
6. defective acceptance

General rule is

the rule to all offers to enter into bilateral contracts. Because acceptance manifests the offeree's assent to the offer, the offeree must communicate this acceptance to the offeror

stipulated provisions is

if the offer specifically stipulates the mean of communication the offeree is to use, the acceptance must conform to that specification

authorized means are

the means the offeror expressly authorized in the offer. EX: a contract is formed at the time and place that offeree mails the letter

unauthorized means is

acceptance is effective when RECEIVED, provided that it is received within the time within the authorized means

acceptance following a prior rejection

An acceptance sent AFTER a prior rejection is NOT EFFECTIVE when sent by the offeree. Only effective when and if the offeror receives it before he receives the rejection. THE FIRST COMMUNICATION RECEIVED BY THE OFFEROR IS THE EFFECTIVE ONE

Deceptive acceptance

does not create a contract but serves as a new offer