Recording-2025-03-10 CH 12

Offer and Acceptance Overview

• Meeting of the Monies: The offeror (the person making the offer) and offeree (the person receiving the offer) must agree on the terms to create a valid contract.

• Nature of an Offer: An offer can be an act or statement proposing definite terms allowing the offeree to create a contract through acceptance.

• Completeness of an Offer: An offer is considered complete upon being made.

Objective Assessment by Courts

• Objective Standard: Courts evaluate offers and acceptances based on how a reasonable person would interpret the actions, not on the subjective intentions of the parties involved.

• Example - Auction Paddle: Waving a paddle at an auction is interpreted as a bid, not as an action based on personal feelings.

Roles in a Transaction

• Offeror vs. Offeree:

  • The offeror initiates the deal (e.g., proposes a price).

  • The offeree responds (e.g., agrees to a price).

• Negotiation Dynamics: The roles can swap during negotiation; participation in offers can change depending on where the discussion leads to agreement.

Evaluation of Offers

• Two Key Questions:

  1. Did the offer engage in a bargain?

  2. Are the terms reasonably definite?

• Importance of Definiteness: Clear terms are crucial for understanding obligations.

Types of Communications Not Considered Offers

• Invitation to Bid: Inviting bids does not constitute an offer; the bids themselves are offers to the inviter.

• Price Quotes: Simply providing a price is not an offer. It may vary and does not create a binding agreement.

• Letters of Intent: Indicates intent for further negotiation rather than a definite offer.

• Advertisements: Generally considered invitations for offers, not offers themselves.

Exceptions to Advertisements

• Black Friday Context: Advertisements may have specific terms (e.g., limited quantities) that bind them under certain circumstances due to societal expectations.

• Unilateral Contracts:

  • Example 1: Car dealership offering a car for a whimsical trade (e.g., 5,000 bananas).

  • Example 2: Pepsi advertisement for a military jet which was deemed mere puffery and unenforceable.

Auction Dynamics

• Characterization: Putting an item up for auction is not an offer. Bidders make offers through their bids.

• Final Acceptance: "Going once, going twice, sold" indicates acceptance of the highest bid.

Definiteness and Enforceability

• Importance of Clear Terms: Contracts should specify what is being offered to establish clarity in the performance required.

• Case Study - Johnny: A promise to provide assistance without specifics is not actionable, illustrating the need for definite commitments.

Differences Between Common Law and UCC

• Common Law: Enforces contracts only if there is strict parity between offer and acceptance (mirror image rule).

• UCC: Allows more flexibility. Contracts can be valid even with missing essential terms; includes gap fillers for price or quantity.

• Gap Filling Provisions: If terms like price or quantity are omitted, UCC can provide a reasonable substitute, facilitating a transaction.

Examples of Quantity in Contracts

• Requirements Contracts: Parties agree on all their needs for specified goods (e.g., all broccoli harvest).

• Output Contracts: Agreement to supply all output (e.g., all aluminum needed without a specific quantity).

Termination of Offers

• Revocation: An offer can be revoked at any time before acceptance.

• Irrevocable Contracts: Limited situations such as option contracts (bilateral commitment to keep an offer open) and firm offers (written offers by merchants).

Termination by Rejection

• Mechanics of Rejection: Any response that is not a clear acceptance is a rejection (including counteroffers).

Other Forms of Termination

• Expiration: Offers expire at the end of a specified time or when reasonably determined.

• Destruction of Subject Matter: If the item to be sold is destroyed, the offer is immediately void.

Acceptance of Offers

• Valid Acceptance: Needs to be communicated explicitly through action or spoken agreement. Silence is not acceptance.

• Battle of the Forms: UCC allows for discrepancies in acceptance forms and modifies the mirror image rule to facilitate business transactions.