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Chapter 9 Contracts: Agreement

Chapter 9 Contracts: Agreement Learning Objectives What elements are necessary for an effective offer? What are some examples of non-offers? In what circumstances will an offer be irrevocable? What are the elements that are necessary for an effective acceptance?

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Chapter 9 Contracts: Agreement

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  1. Chapter 9Contracts: Agreement

  2. Learning Objectives • What elements are necessary for an effective offer? • What are some examples of non-offers? • In what circumstances will an offer be irrevocable? • What are the elements that are necessary for an effective acceptance? • Can silence ever operate as an acceptance?

  3. Requirements of the Offer • An agreement consists of a valid offer and acceptance. • An offer is the Offeror’s promise to perform. An offer requires: • Serious, objection intention • Opinions are not offers • Good Intentions are not offers • Preliminary Negotiations are not offers • Agreements to Agree are not offers

  4. Requirements of the Offer • An offer requires (continued): • Reasonably definite terms so that a court can determine if a breach has occurred and give an appropriate remedy. • Communication to Offeree

  5. Termination of the Offer • Termination By Act of the Parties • Revocation by Offeror • Generally, a revocation is effective upon receipt. • Irrevocable offers and option contracts cannot be revoked. • Rejection by Offeree (or counteroffer) when received by Offeror.

  6. Termination of the Offer • Termination by Operation of Law • Lapse of Time: specified in offer. • Destruction of the Subject Matter before acceptance. • Death of Incompetence of the Offeror or Offeree. • Supervening Illegality of the Proposed Contract.

  7. Acceptance • Voluntary act by Offeree that shows assent to terms of original offer. • Intended Offeree must accept. • Unequivocal Acceptance: Mirror Image Rule • Offeree must unequivocally accept offer. • Additional terms may be considered a counteroffer. • Acceptance by Silence • Only if Offeree benefited from service and had the opportunity but did not reject.

  8. Acceptance • Communication of Acceptance • Authorized Means of Communication is either express or implied by form of offer (e.g., U.S. mail, fax, email) • “Mailbox Rule”: Offeree accepts offer when the acceptance is dispatched to Offeror in the form it was received, unless offer requires a different method (e.g., Fed-Ex, or receipt by Offeror).

  9. Acceptance • Exceptions to “Mail Box” Rule (authorized means): • Acceptance not properly dispatched • Offer is conditioned on receipt by certain time • First communication received by Offeror determines whether a contract is formed

  10. Technology & Acceptances • Mailbox Rule Today… • Mailbox rule today is virtually obsolete • Internet makes communications almost instantaneous • Discussion: what if email sent but server problem prevents it from being received, or received but unreadable?

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