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Chapter 10 Contracts: Agreement . Introduction. Agreement = offer and acceptance. Parties must show mutual assent to terms of contract. Once an agreement is reached, if the other elements of a contract are present, a valid contract is formed. §1: Requirements of the Offer.

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chapter 10 contracts agreement
Chapter 10

Contracts: Agreement

  • Agreement = offer and acceptance.
  • Parties must show mutual assent to terms of contract.
  • Once an agreement is reached, if the other elements of a contract are present, a valid contract is formed.
1 requirements of the offer
§1: Requirements of the Offer
  • Offeror’s serious intention.
  • Definiteness of terms.
  • Communication to Offeree.
offeror s serious intention
Offeror’s Serious Intention
  • Contract is judged by what a reasonable person in the Offeree’s position would conclude about the offer.
    • Case 10.1: Lucy v. Zehmer (1954).
  • 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.
offer definiteness of terms
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 10.2:Satellite Entertainment Center v. Keaton (1997).
offer communication

Offeree’s knowledge of the offer:

  • Directly by the Offeror.
  • Use of Agents.
2 termination of the offer
§2: Termination of the Offer
  • An offer may be terminated prior to acceptance by either:
    • Action of the Parties; or by
    • Operation of Law.
termination by action of the parties 1
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    • Offer can be withdrawn anytime before Offeree accepts the offer.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.
termination by action of the parties 2
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.
termination by action of the parties 3
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.
termination by operation of law
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.
termination by operation of law 2
Termination by Operation of Law [2]
  • Death or Incompetence of the Offeror or Offeree.
  • Supervening Illegality of the Proposed Contract.
3 acceptance
§3: Acceptance
  • Acceptance is the
    • Voluntary act (expressed or implied),
    • by the Offeree that,
    • shows assent (agreement),
    • to the terms of an offer.
  • “Mirror Image” Rule.
silence as acceptance
Silence as Acceptance
  • Acceptance of Services by Silence.
    • Sometimes Offeree has a duty to speak.
  • Prior Dealings and Acceptance.
    • Silence can be acceptance if there are prior dealings.
  • Solicited Offers.
    • Offeree has a duty to reject.
mode and timeliness of acceptance
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).
means of acceptance
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 10.3:Osprey LLC v. Kelly-Moore Paint Company (1999).
4 technology and acceptance
§ 4: Technology and Acceptance
  • Traditional rules provide framework for digital age.
  • But traditional rules may not apply to acceptances via Fed Ex, email, or fax.
  • Generally, ‘mailbox rule’ does not apply to online offers.
law on the web
Law on the Web
  • Law Office’s Website.
  • Contracts Site.
  • Legal Research Exercises on the Web.