Ch. 6 Offer and Acceptance
Ch. 7 Genuineness of Assent
Ch. 8 Consideration
Ch. 9 Legal Capacity to Contract
Ch. 10 Legal Purposes and Proper
Form
Ch. 11 Contractual Obligations and
Their Enforcement
Chapter 6
Offer and
Acceptance
Section 1
Creation of Offers
Juan and Susan were talking one day
after school. Juan would turn 16 on the
upcoming July 13 and wanted to buy
Susan’s car. Susan, 17,had been
working and saving her money to buy a
new car. Selling her old car for $2,800
would giver her enough to do so. She
offered it to Juan for that amount, and
he accepted.
Did the two friends create a legally
enforceable contract?
What is a Contract?
An agreement between 2 or more
parties that creates an
obligation.
6 Requirements in a Legally
Enforceable Contract
1. Offer and Acceptance
2. Genuine Assent (True and
Complete Agreement)
3. Legality
4. Consideration
5. Capacity
6. Writing
1. Offer and Acceptance
• Offeror: person who makes the offer.
• Offeree: person to whom the offer is
made to
• The terms of the offer must be:
– Definite (clear)
– Accepted without change by the party
to whom it was intended to be offered.
2. Genuine Assent
(True and Complete Agreement)
• The agreement (offer and
acceptance) CANNOT be based on:
–a lie
–mistake
–the use of unfair pressure to
obtain offer or acceptance
(duress)
3. Legality
• What the parties agree to must
be legal.
• Ex: an agreement to pay
someone to commit a crime or
tort cannot be a contract.
4. Consideration
• The agreement must involve
both sides receiving something
of legal value (money,
materials object) as a result of
the transaction.
5. Capacity
• Parties must be able to contract
for themselves rather than being
forced to use parents or legal
representatives.
Minimum Age to Contract = 18
6. Writing
Some agreements must be
placed in writing to be
fully enforceable in court.
Elements of an Offer
• Definition: Proposal by an
offeror to do something.
• Offer is the basis of the bargain.
• If offer is NOT valid, there is
NO contract.
3 tests a valid offer MUST pass
1. Intent
2. Communication from offer to
offeree.
3. Complete and defined terms
1. Intent
• Words that take the form of offer, but
would not be enforced are spoken as:
– a joke
– in anger
– preliminary negotiations
– a social agreement
Jokes
• The law considers an offer valid not by the
intent of the person making the offer, but by
how other reasonable people would
perceive the offer.
• If you think you are joking but a reasonable
person would interpret your conduct as
indicating that you intend to contract, you
have made an offer.
Anchors Aweigh, a boat retailer, placed an
ad in a local newspaper announcing a oneday sale of cabin cruisers for the “bargain
price” of $35, 500 each. The dealer had
five cruisers in stock, and they were all sold
out within one hour. During the rest of the
day, seven other would-be buyers came in
to purchase a bargain cruiser.
Did the Anchors Aweigh advertisement
make offers to the would-be buyers?
Preliminary Negotiations
It’s all about the wording!
Would you pay $1,000 for my car?
vs.
I’ll sell you my car for $1,000.
Social Agreements
Social arrangements do not
create legal obligations!
2. Communication
If you do not know someone is
making an offer you cannot
accept it
3. Complete and Definite Terms
complete?
• identity of specific lot
• price
• full terms of payment
• date of delivery/possession
• date for delivery of deed
definite?
• essential terms are identified clearly
Section 2
Termination of
Offers
On May 15th, Melissa offered to sell her collection of
baseball cards for $3,000 at anytime before the first of
the next month to her friend and fellow collector,
Raoul. While Raoul was trying to raise the money,
Melissa had second thoughts. So she called Raoul and
said, “I’ve changed my mind, I’m not interested in
selling the cards.” Raoul responded, “It’s too late, you
said the offer would be open for this whole month.
This is just the 20th , and I’ve got the money so I
accept.”
Was Melissa’s offer terminated before Raoul’s
attempted acceptance?
Termination of Offers
A. Revocation by the Offeror
•anytime before acceptance by offeree
B. Time Stated in Offer
•how and when offer must be accepted
C. Reasonable Length of Time
•when no time stated for offer
•depends on circumstances
D. Rejection by the offeree
•offeree clearly rejects
E. Counteroffer
•terms changed in important ways
by offeree
•offeree must accept as made
•original offer terminated
•becomes new offer
F. Death or Insanity
•of offeror or offeree
•law acts in their place
•terminates offer
G. Destruction of Specific Subject
Matter
•automatic termination
*destroyed possessions
Keeping Offers Open
Options - Offeree gives
offeror something of value to
keep offer open. *down
payment
Firm Offer – Special rule
(same as option) for
merchants. Written statement
of how long to keep offer open.
*UCC 3 month max. rule
Section 3
Acceptances
Acceptance
occurs when a party to whom the
offer has been made agrees to
proposal
1. Only offeree may accept
2. Must match offer
“mirror image rule”
3. Must be communicated to offeror
• Silence - NOT acceptance
• Bilateral Acceptance – promising
instead of performing contracted act
• Unilateral Acceptance - performance
of obligations under contract
Modes of Communication
e-mail
fax
delivery
service
mail
When is Acceptance
Effective???
“when received”
exception: when sent through same means
as offer