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Chapter 11: Contracts—Agreement

Chapter 11: Contracts—Agreement . Introduction. Agreement = offer and acceptance. Once an agreement is reached, if the other elements of a contract are present, a valid contract is formed. §1: Requirements of the Offer. Offeror’s serious intention. Definiteness of terms. Communication.

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Chapter 11: Contracts—Agreement

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  1. Chapter 11:Contracts—Agreement

  2. Introduction • Agreement = offer and acceptance. • Once an agreement is reached, if the other elements of a contract are present, a valid contract is formed.

  3. §1: Requirements of the Offer • Offeror’s serious intention. • Definiteness of terms. • Communication.

  4. Offeror’s Serious Intention • Objective theory of contracts: Contract is judged by what a reasonable person in the Offeree’s position would conclude about the offer. • Offers made in anger, jest, or undue excitement are usually not offers. • Expressions of opinion are not offers. • Statements of Intention or preliminary negotiations are are not offers. • Advertisements, Catalogues, Price Lists, and Circular are treated as Invitations to negotiate and not as offers. • Case 11.1: Lucy v. Zehmer (1954).

  5. Offer-Definiteness of Terms Terms (Expressed or Implied). • Identification of the parties. • Object or subject matter of the contract. • Consideration to be paid. • Time of payment, Delivery, or Performance. • Case 11.2: R.K. Chevrolet, Inc. v. Hayden(1997).

  6. Offer-Communication Offeree’s knowledge of the offer: • Directly by the Offeror. • Use of Agents.

  7. §2: Termination of the Offer • An offer may be terminated prior to acceptance by either: • Action of the Parties; or by • Operation of Law.

  8. Termination by Action of the Parties [1] • Revocation of the offer by the Offeror: • Offer can be withdrawn anytime before Offeree accepts the offer. • Effective when the Offeree or Offeree’s agent receive it. • Exceptions: • Irrevocable Offers. • Option Contract: Promise to hold an offer open for a specified period of time in return of consideration.

  9. Termination by Action of the Parties [2] • Exceptions (Cont’d): • Detrimental Reliance or Promissory Estoppel where Offeree relies on offer to his or her detriment, thus Offeror is barred from revoking the offer. • Rejection of the offer by the Offeree: • Rejection by the Offeree (expressed or implied) terminates the offer. • Effective only when it is received by the Offeror or Offeror’s agent.

  10. Termination by Action of the Parties [3] • Rejection by Offeree (Cont’d). • A counteroffer by the Offeree is a rejection of the original offer and making of a new offer. • Mirror Image Rule. • Offeree’s acceptance to match the the Offeror’s offer exactly.

  11. Termination by Operation of Law • Lapse of Time. • Offer terminates by law when the period of time specified in the offer has passed. • If no time period for acceptance is specified, the offer terminates at the end of a reasonable period of time. • Destruction of the Subject Matter.

  12. Termination by Operation of Law [2] • Death or Incompetence of the Offeror or Offeree. • Supervening Illegality of the Proposed Contract.

  13. §3: Acceptance • Voluntary act (expressed or implied)- • by the Offeree that- • shows assent (agreement)- • to the terms of an offer.

  14. Mode and Timeliness of Acceptance • Mail Box Rule - Acceptance becomes effective on dispatch, providing that authorized means of communication is used. Offeree accepts by using the stipulated means of acceptance. • Offeror specifies (expressly or impliedly) how acceptance should be made. • Effective when dispatched (mailed, shipped).

  15. Means of Acceptance • Exceptions: • If acceptance is not properly dispatched by the Offeree. • If Offeror specifies that acceptance will not be effective until it is received. • If acceptance is sent after rejection, whichever is received first is given effect. • Unauthorized Means of Acceptance. • Not effective until it is received by the Offeror. If timely sent and dispatched it is considered to have been effective on its dispatch. • Case 11.3: Osprey LLC v. Kelly-Moore Paint Company(1999).

  16. Law on the Web • Law Office’s Website. • Lectric Law’s Sample Contracts. Legal Research Exercises on the Web.

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