Chapter 6 Offer and Acceptance

Chapter 6Offer and Acceptance 6-1 Creation of Offers 6-2 Termination of Offers 6-3 Acceptances Chapter 6

6-1 Creation of Offers GOALS • List the elements required to form a contract • Describe the requirements of an offer Chapter 6

WHAT MUST BE IN A CONTRACT? • Offer and acceptance • Offeror makes offer & offeree accepts • Terms must be definite and accepted without change • Genuine assent • Agreement can’t be based on an important mistake, unfair pressure, or deceipt • Legality • Can’t have an agreement to commit crime/tort Chapter 6

WHAT MUST BE IN A CONTRACT? • Consideration – both parties have to receive value • Capacity – most states minimum age 18 • Writing – some K’s must be in writing Chapter 6

What elements are required to form a legally enforceable contract? Chapter 6

REQUIREMENTS OF AN OFFER • Contractual intent must be present – facts & circumstances are considered “would a reasonable person disregard” • Jests • Statements made in anger or terror • Preliminary negotiations • Ads are not offers UNLESS: • “Subject to stock on hand”, etc • “First 10 customers, first to arrive,” etc. • Social agreements – not legal obligations Chapter 6

REQUIREMENTS OF AN OFFER • Offer must be communicated to the offeree • Must be accepted by the intended offeree • Can’t accept an offer if you didn’t know one existed (rewards) • Essential terms must be complete and definite (allows courts to determine intent) • COMPLETE: at minimum identified the price, subject matter, and the quantity • DEFINITE: each essential term must be clearly identified Chapter 6

What are the requirements of an offer? Chapter 6

6-2 Termination of Offers GOALS • Describe the various ways to end offers • Explain how an offeree can ensure an offer will remain open Chapter 6

HOW CAN OFFERS BE ENDED? • Revocation by the offeror • Anytime before offeree accepts • Revocation is not effective until communicated to the offeree • Time stated in the offer • Reasonable length of time • Depends on the circumstances • Rejection by the offeree • Even if the time limit has not expired Chapter 6

HOW CAN OFFERS BE ENDED? • Counteroffer • Changes to important terms of the K • Death or insanity of either the offeror or offeree • Destruction of the specific subject matter Chapter 6

Explain two ways in which offers can be terminated. Chapter 6

HOW CAN AN OFFER BE KEPT OPEN? • Options • Offeree gives the offeror something of value in return for a promise to keep the offer open • Firm offers • A contractual proposal in writing by a merchant stating how long the offer is to stay open Chapter 6

How could an offeree insure that an offer will stay open for a set period of time? Chapter 6

6-3 Acceptances GOALS • Discuss the requirements of an effective acceptance • Determine at what point in time an acceptance is effective Chapter 6

WHAT IS REQUIRED OF AN ACCEPTANCE? • Only offerees may accept • The acceptance must match the offer • If terms aren’t identical, a counteroffer is created • Acceptance must be communicated to the offeror • Silence, bilateral, unilateral acceptance • Modes of contractual communication • When acceptances are effective Chapter 6

WHAT IS REQUIRED OF AN ACCEPTANCE? • Acceptance must be communicated to the offeror • Modes of contractual communication • In person, telephone, fax, email, text, etc. • Any reasonable means • When acceptances are effective • Acceptances are effective when SENT Chapter 6

WHAT IS REQUIRED OF AN ACCEPTANCE? • Acceptance must be communicated to the offeror • Silence • Bilateral K – K’s in which the offer implies that it can be accepted by giving a promise instead of performing the contracted for act. • unilateral acceptances – require that the offeree indicates acceptance by performing his/her obligation Chapter 6

WHAT IS REQUIRED OF AN ACCEPTANCE? • Acceptance must be communicated to the offeror • Modes of contractual communication • When acceptances are effective Chapter 6

What are the requirements of an effective acceptance? Chapter 6

PREVENT LEGAL DIFFICULTIES When you seek to enter into a contract . . . • When negotiating, assume the worst and include terms in the contract addressing potential problems. • For important contracts, put offers and acceptances in writing. If either an offer or an acceptance is made orally, promptly confirm it in writing. • Obtain and keep a copy of every important document you sign. • Express your intentions in offers and acceptances with clear, complete, and understandable language. Continued on the next slide Chapter 6

PREVENT LEGAL DIFFICULTIES • Remember that the offeror may specify how and when the offer must be accepted. Otherwise the offeree may use the same means used by the offeror, a faster means, or other reasonable means. • When appropriate, buy an option, if one is available, to keep the offer open for as long as you need. • Remember that for an offeror to withdraw or revoke an offer, the offeree must receive notice. For speed, use the telephone, e-mail, or fax machine to withdraw or revoke an offer. Chapter 6

Chapter 6 Offer and Acceptance