Contracts

• Offer


  Manifestation of willingness to enter a bargain
• Offer

  • Must have strong language
  • Where an offer doesn't exist, often the parties are just engaging in preliminary negotiations or inquiries
• Negotiation


  • "I wouldn't take less than $100"
  • "It would not be possible for me to sell my Ostrich unless I get $16,000"
• Inquiry


  When a person says something like, "Hey would you take $40,000 instead of the $50,000", this is considered an Inquiry and NOT a Counteroffer
• Bilateral Offer


  A promise for a promise: When an offeror makes a promise in exchange for a return promise by the offeree
• Unilateral Offer


  A promise for a performance: a promise in exchange for a return performance by the offeree. Option contract is created when the person begins the performance. The person is not required to complete the performance
• Mere preparations for performance DO NOT constitute performance
• Joke or offer made in jest

  Can be a valid offer, but only if the offeree neither knows nor has reason to know that the offer is a joke. The offeree must not realize that the offer is made in jest and must believe that it has been made seriously
• Advertisements


  Are NOT offers - they are invitations to negotiate, unless the advertisement has clear, definite and explicit language and leaves nothing open for negotiations
• Price Quotations


  Are generally not considered offers, unless they quote the price for a specified quantity and have "for prompt or immediate acceptance language"
• Acceptance


  An agreement between an offeror and an offeree that an offer will remain irrevocable for a period of time
• Unilateral Acceptance


  An offer for a unilateral contract is accepted by full performance of the requested act
• Starting a performance does not obligate the offeree to complete the performance, the offeror is bound by the contract when the performance began
• Payment is not made until the performance is completed
• When an offeror invited the offeree to accept by rendering a performance, no notification of the acceptance is necessary unless the offeror requests it
• If an offeree accepts an offer by rendering a performance has reasons to know that the offeror has no adequate means of learning of the performance with reasonable promptness and certainty, the contractual duty of the offeror is discharged unless: 1) The offeree exercises reasonable diligence to notify the offeror, 2) The offeror learns of the performance within reasonable time, or 3) The offer indicates that notification of acceptance is not required
• A customer is waiting in line at a bank when he sees a poster that says, "If you stand in line for more than 5 minutes, we will pay you $25!"


  The customer will win because it is a unilateral contract (the customer learned about the offer revocation AFTER starting performance)
• Option Contract


  A promise to keep an offer open that is paid for by Consideration. With an option contact, the offeror is not permitted to revoke the offer because with the payment, he is bargaining away his right to revoke the offer
• No timing is required for an option contract, and the offeror may promise to pay the consideration later
• Mailbox rule does not apply to acceptance of an option contract - offer is accepted when it is communicated to the offeror
• Master of the Offer Rule

  The offeror has the power to specify the precise time, place, and manner in which the acceptance must be communicated
• Mirror Image Rule


  Acceptance must mirror the offer's terms; it cannot omit or add new terms (only applies to acceptance)
• Pro CD


  If a buyer is presented with additional terms and offered the opportunity to reject and return the goods and subsequently does not reject the goods, then the buyer will have accepted those terms
• Mailbox Rule


  An acceptance is effective when mailed not when received by the offeror
• A revocation is effective when received
• The mailbox rule is NOT VALID if the offer specifies the acceptance is effective only when received
• The mailbox rule is not valid when the offeree mails a rejection followed by an acceptance. Whichever mailing the offeror receives first governs
• The mailbox rule doesn't apply to accepting offers held open under option contract because the acceptance is valid when communicated to the offeror
• Knowledge of an Offer


  An offeree must have knowledge of an offer to accept the offer, except when an offeree learns of the unilateral contract offer after full performance, the offerees power to accept the offer has terminated
• Reward Offers


  To accept a reward, a person must know of the offer and complete the performance
• Silence as Acceptance


  Silence does not constitute acceptance, unless: a) The offeree takes goods/services with opportunity to reject them, knowing compensation is expected, b) The offeror has given offeree reason to believe that silence can show assent and offeree does so intending to accept offer, or c) Prior dealings indicate that a history of offeree's silence as manifesting assent
• When a person accepts an offer by performing, but simultaneously breaches the contract formed
• Termination of an Offer


  Termination of a contract must be done prior to the offeree's acceptance for the following reasons: 1) Revocation of the offer by the offeror, 2) Lapse of the offer, 3) Rejection of the offer by the offeree, 4) Counteroffer by the offeree
• Revocation


  A contract is always revocable up until the offer is accepted even when there is a time of acceptance or when the offeror assures the offeree that it will be held open, except on non-revocable offers (option contracts)
• Express Revocation


  Manifestation of revocation is expressly stated or written by the offeror and communicated to the offeree
• Indirect Revocation


  An offeree's power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into a proposed contract and the offeree acquires the information from a reliable source
• A revocation is effective when received by the offeree not when mailed
• Bilateral Option Contract


  An agreement between the offeree and the offeror under which they agree that an offer will remain irrevocable for a certain period of time. There must be paid or promised consideration
• Unilateral Option Contract


  A Unilateral option contract is created when an offer invites an offeree to accept by rendering a performance. An option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it
• UCC Firm Offers


  A firm offer is a signed writing by a merchant who deals in goods, explicitly assuring the offeree that an offer to buy or sell goods will be held open for a limited amount of time. Firm offers do not require consideration, but must be in a signed writing, and are irrevocable for a maximum of three months, even if the specified amount of time is longer