Contracts: Offer

Offer R2d

An offer is the manifestation of willingness to enter a bargain, so made as to justify another in understanding that his assent to that bargain is invited and will conclude it.

Posner Standard

If a reasonable person would think “If I agree, am I bound and they are bound,” it is an offer.

Preliminary negotiations

NOT AN OFFER, rather a time in which parties are establishing terms.

Offeror is the master

The offeror controls an offers terms, what is an is not complete acceptance.

Ambiguity in a contract

is skewed against the drafter. In practice, this means that if you want definite terms, state them.

Mutual Assent Definition

The mutual agreement between two parties to the same terms of a contract.

Mutual assent (MA) Test

Objective; Did all the parties agree on the same terms? Did the parties understand what they were agreeing to? If no, then no MA. If yes, then yes MA.

Examine: Were parties able to comprehend the deal (conscionablitty); Intent to be legally bound (zehmer); What is the surrounding context (Mason)

Common exceptions to offer

ADS: rarely an offer, but can be if terms are explicit enough (Kearney)

Implied contracts lack

an express (stated) offer.

Ways to destroy the offer:

Rejection, Revocation, Lapse, Death/Incapacity

Counteroffers are a form of

Rejection

Revocation can happen anytime

Prior to acceptance

Direct revocation

Explicit revocation by an offeror EX: asking to change price and terms; Plain ole “I don’t wanna“; A disagreement on the form of allowable acceptance, etc.

Indirect Revocation

Revocation on non-direct means, expansive, many examples. 1 EX: Selling a single use item 1 time (Dodds).

Lapse

The expiration of an offer

Lapse for “prompt“

Sooner than reasonable

Stated Lapse

Offer fails because it beyond explicitly agreed time.

Unstated Lapse

Offer fails because it beyond an implied or unstated time. If legit nothing is is said, then a reasonable offer.

Rejection

Offeree denies an offer.

Death or Incapacity

If either offeror or offeree dies, the offer fails

Death or incapacity of 1 offeror or offeree

May or may not revoke an offer, depends on if the other party has to hold up their part or not.

Option contracts

Remove irrevocability from the contract.

Option contracts function

The same as a typical contract, with offer, acceptance, and consideration. Mutal asse

When an option contract fails

The underlying offer is now revocable!

Implied in fact options

Created when the offeror or offeree has established either reliance or partial performance

Determining an if an implied in fact option exists

Does revocation unfairly damaged one party?

Mutual Assent

The “meeting of the minds”

Mutual Assent Test

From a reasonable person’s perspective, did all the parties agree on the same terms at the same time?

Examining Mutual assent (Objective Standard)

1. Were the parties able to reasonably comprehend a deal was offered to them (Concionability)

2. Intent to be legally bound? (Zehmer)

3. What was the context? (What was the context)

A binding contract requires

Mutual assent, Offer, acceptance, and consideration

Express contract

A contract where the parties agree on explicitly stated or given terms.

Implied in fact

Implicit contract, parties agree on unstated terms. EX: man gives you a hot dog, you give him a dollar.

Unilateral contract

Only one party has to perform (missing dog poster)

Bilateral contract

promissory acceptance not generally permissible, requires performance.

Acceptance required for bilateral contract

Promissory acceptance is permissible.

When it is unclear if a contract is bilateral or unilateral, a contract is assumed to be…

Bilateral to protect the parties.

The more specific the terms of performance are…

The closer a contract becomes to a unilateral contract and therefore the less promissory acceptance is allowed.

Complete Acceptance requirement

Acceptance must be complete I.E. a party must agree and accept ALL terms, not just some terms.

Offeror controls forms of valid acceptance…

In the offer

If no stated time is listed on a contract, an offeree has until a ______ _______ to accept.

Reasonable time