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Chapter 6 Offer and Acceptance. 6-1 Creation of Offers 6-2 Termination of Offers 6-3 Acceptances. 6-1 Creation of Offers. GOALS List the elements required to form a contract Describe the requirements of an offer. WHAT MUST BE IN A CONTRACT?. Offer and acceptance

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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
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
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 contract1
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

requirements of an offer
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 offer1
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

6 2 termination of offers
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
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 ended1
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

how can an offer be kept open
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

6 3 acceptances
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
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 acceptance1
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 acceptance2
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 acceptance3
WHAT IS REQUIRED OF AN ACCEPTANCE?
  • Acceptance must be communicated to the offeror
    • Modes of contractual communication
    • When acceptances are effective

Chapter 6

prevent legal difficulties
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 difficulties1
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

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