Agreement
By Dhoni Yusra
Introduction
 Contracts are voluntary agreements between
the parties.
 One party makes an offer that is accepted by
the other party.
 Without mutual assent, there is no contract.
Agreement
Agreement
Parties
 The manifestation by
 Offeror
two or more persons of
the substance of a
contract
Person who makes
an offer
 Offeree
 Person to whom an
offer has been made

Offer
 “The manifestation of willingness to enter into
a bargain, so made as to justify another
person in understanding that his assent to
that bargain is invited and will conclude it.”
Requirements of an Offer
For an offer to be effective:
 The offeror must objectively intend to be
bound by the offer.
 The terms of the offer must be definite or
reasonably certain.
 The offer must be communicated to the
offeree.
Objective Theory of Contracts
 A theory that says the intent to contract is
judged by the reasonable person standard
and not by the subjective intent of the parties.
Objective Theory of Contracts
(continued)
 No valid contract results from:



Preliminary negotiations
Offers that are made in jest, anger, or undue
excitement
Offers that are an expression of opinion
Definiteness of Terms
 The terms of an offer must be clear enough to
the offeree to be able to decide whether to
accept or reject the terms of the offer.
 If the terms are indefinite, the courts cannot
enforce the contract or determine an
appropriate remedy for its breach.
Definiteness of Terms (continued)
 An offer (and contract) must contain the
following terms:




Identification of the parties
Identification of the subject matter and quantity
Consideration to be paid
Time of performance
Definiteness of Terms (continued)
Implied Terms
 The court can supply a missing term if a
reasonable term can be implied.
 Terms that are supplied in this way are called
implied terms.
Communication
An offer cannot be
accepted if it is not
communicated to the
offeree by the offeror
or a representative or
agent of the offeror.
Special Offer Situations
Advertisements
Rewards
Auctions
Advertisements
 A general advertisement is an invitation
to make an offer.
 A specific advertisement is an offer.
Rewards


An offer to pay a reward is an offer to form a
unilateral contract.
To collect a reward, the offeree must:
1. Have knowledge of the reward offer prior to
completing the requested act
2. Perform the requested act
Auctions
Auction with reserve
 Unless expressly stated
otherwise, an auction is
an auction with reserve,
i.e., the seller retains
the right to refuse the
highest bid and
withdraw the goods
from auction
Auction without reserve
 An auction in which the
seller expressly gives
up his or her right to
withdraw the goods
from sale and must
accept the highest bid
Termination of an Offer by Action of the
Parties
 Revocation


Withdrawal of an offer by the offeror
terminates the offer.
An offeror can revoke an offer at any time prior
to its acceptance by the offeree.
 Rejection


Express words or conduct by the offeree that
rejects an offer.
Rejection terminates the offer.
Termination of an Offer by Action of the
Parties (continued)
 Counteroffer


A response by an offeree that contains terms
and conditions different from or in addition to
those of the offer.
A counteroffer terminates an offer.
Termination of the Offer by Operation
of Law
 Destruction of the subject matter

The offer terminates if the subject matter of
the offer is destroyed through no fault of either
party prior to its acceptance.
 Death or incompetency of the offeror or
offeree

The death or incompetency of either party
terminates the offer.
Termination of the Offer by Operation
of Law (continued)
 Supervening illegality


The enactment of a statute, regulation, or
court decision that makes the object of an
offer illegal.
This action terminates the offer.
 Lapse of time

An offer terminates when a stated time period
expires.
Acceptance
 Acceptance
A manifestation of assent by the offeree to
the terms of the offer in a manner invited or
required by the offer as measured by the
objective theory of contracts.
[Section 50 of the Restatement (Second) of Contracts]
Acceptance (continued)
 Only the offeree can legally accept an offer
and create a contract.
 The offeree’s acceptance must be
unequivocal.

Mirror image rule requires the offeree to
accept the offeror’s terms.
 Silence is not considered acceptance even if
the offeror states that it is.
Time and Mode of Acceptance
 Contract law establishes the following rules
concerning the time and mode of acceptance:



Mailbox Rule
Proper Dispatch Rule
Mode of Acceptance
 Express Authorization
 Implied Authorization
Time and Mode of Acceptance (continued)
 Mailbox Rule



A rule that states that an acceptance is
effective when it is dispatched, even if it is lost
in transmission.
Also called the acceptance-upon-dispatch
rule.
If an offeree first dispatches a rejection and
then sends an acceptance, the mailbox rule
does not apply to the acceptance.
Time and Mode of Acceptance (continued)
 Proper Dispatch Rule



The acceptance must be properly dispatched.
The acceptance must be properly addressed,
packaged, and posted to fall within the
mailbox rule.
Under common law, if an acceptance is not
properly dispatched, it is not effective until it is
actually received by the offeror.
Mode of Acceptance
Express Authorization
 A stipulation in the offer
that says the
acceptance must be by
a specified means of
communication.
 Use of an unauthorized
means of
communication makes
acceptance not
effective.
Implied Authorization
 Mode of acceptance
that is implied from what
is customary in similar
transactions, usage of
trade, or prior dealings
between the parties.
Offer and Acceptance: Summary (1 of 2)
Communication by
Effective When
Offer
Received by offeree
Revocation of offer
Received by offeree
Offeror
Offer and Acceptance: Summary (2 of 2)
Communication by
Effective When
Rejection of offer
Received by offeror
Counteroffer
Received by offeror
Acceptance of offer
Sent by offeree
Offeree
Acceptance after previous Received by offeror
rejection of offer