CH10: Offer and Acceptance

Introduction

• Consent requires consent of parties

• Assuming other requirements are present, contract formed when offer is accepted

• Upon formation of a binding contract, parties are obligated and can be sued for breach of failure to perform

Requirements of a Valid Offer

• Valid offer must contain :

  • unqualified, unambiguous promise to enter into a contract

  • must be communicated by the offeror to the offeree

Revocation of an Offer

• Offer can be revoked until acceptance or lapse

• Offeror may revoke b communicating to offeree

  • Notice is effective when received

  • Notice received by offeree of intention of offeror to revoke

• Offer may also expire

  • Unless offeree has paid consideration to keep offer open

    • Firm offer

  • Terminates after reasonable time even if not revoked

    • “Reasonable” depends on circumstances

• Automatic lapse

  • Accidental destruction of subject matter of offer

  • Death of incapacity of offeror

Acceptance

• Offeree must signal unqualified, unambiguous assent to the terms of the offer

• Must communicate acceptance to offeror

• Must accept exact terms of offer (mirror image rule)

  • Any material deviation in acceptance constitutes rejection

• Counteroffer is rejection of offer

  • Offeror becomes offeree

  • Offeror can accept or reject

  • Original offeree loses ability to accept original offer

• Acceptance must be unqualified and unambiguous

  • The word “accept” not required, but acceptance must be unqualified

Modes of Acceptance

• Offer can be accepted through any reasonable means that communicates acceptance of offer

  • Acceptance of a valid offer creates a contract

• Acceptance through mail

  • Acceptance is effective as of the moment that it is sent regardless of when or even whether it is received by the offeror (mailbox rule)

• Acceptance of a Unilateral Contract

  • Unilateral contract is the exchange of a promise for an act

  • Acceptance occurs at the beginning of performance

  • Once performance begins, offeror cannot withdraw offer

    • Must allow offeree to continue

  • Acceptance is complete when task is completed