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Offer and Acceptance

Lessons. CHAPTER 7. Offer and Acceptance. 7-1 Creation of Offers 7-2 Termination of Offers 7-3 Acceptances. GOALS. LESSON 7-1. Creation of Offers. List the elements required to form a contract Describe the requirements of an offer. Hot Debate – pg. 110.

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Offer and Acceptance

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  1. Lessons Chapter 7 CHAPTER 7 Offer and Acceptance 7-1 Creation of Offers 7-2 Termination of Offers 7-3 Acceptances

  2. GOALS Chapter 7 LESSON 7-1 Creation of Offers List the elements required to form a contract Describe the requirements of an offer

  3. Chapter 7 Hot Debate – pg. 110 • Should Celia be bound because the literal meaning of her words suggests she intended to sell the car? • Argument can be made - should be bound by literal meaning of words • Should Celia not be bound to sell the car because the circumstances (new car stalls and people are honking) suggest that she did not intend to sell? • Argue - literal meaning of sentences often is quite different from what someone intended

  4. Chapter 7 WHAT IS A CONTRACT? • A contract is an agreement that courts will enforce. • Contracts between two parties are the basis for all economic activity. • Contracts are the legal links between the individuals and companies producing and consuming goods and services.

  5. Chapter 7 CONTRACT REQUIREMENTS There are six major requirements that must be satisfied before courts will treat transactions as contracts. • Offer and acceptance • Genuine assent • Legality • Consideration • Capacity • Writing

  6. Chapter 7 CONTRACT REQUIREMENTS • Offer and Acceptance – there must be a serious, definite offer to contract. • And the terms of the offer must be accepted by the party to whom it was communicated

  7. Chapter 7 CONTRACT REQUIREMENTS • Genuine Assent – cannot be based on: • Deception • Important mistake • Use of unfair pressure to obtain offer/acceptance

  8. Chapter 7 CONTRACT REQUIREMENTS • Legality - make up of agreement must be legal • i.e. Cannot create an agreement to have someone commit a crime for you

  9. Chapter 7 CONTRACT REQUIREMENTS • Consideration – agreement must involve both sides receiving something of legal value as a result of the transaction

  10. Chapter 7 CONTRACT REQUIREMENTS • Capacity – parties must be able to contract for themselves

  11. Chapter 7 CONTRACT REQUIREMENTS • Writing - some agreements must be placed in writing to be fully enforceable in court

  12. Chapter 7 Contracts - oral or written • Does it matter if a contract is only oral?

  13. Chapter 7 REQUIREMENTS OF AN OFFER • Expression of intent to create a legal obligation • Offer must be complete and clear • Offer must be communicated to the offeree

  14. Chapter 7 Contract: Painter Example • Painter promises to paint house within 30 days for $3,000 (Offer) • Homeowner agrees to the time frame and the $3,000 (Acceptance) • Painter OFFEROR • Homeowner  OFFEREE

  15. Chapter 7 CONTRACT REQUIREMENTS • Offer – proposal by an offeror to do something, provided the offeree does something in return • If the offeree accepts the proposal, a contract arises • Valid Offer: • Offeror must appear to intend to create a legal obligation (serious) • Objective test of the reasonable person • Not based on what someone was thinking – unreasonable to expect courts to figure out what you were thinking

  16. Chapter 7 CONTRACT REQUIREMENTS 2) Appearance counts – 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 On the other hand, if you are serious, but a reasonable person would interpret your conduct as a joke, then no legally enforceable offer is made 2) terms must be definite and complete 3) Offer must be communicated to the offeree

  17. Chapter 7 Test of Reasonable Person Examines:  offeror’s words • conduct in light of all relevant facts and circumstances Words spoken in jest / frenzied terror / anger = nooffer intended

  18. Chapter 7 Preliminary Negotiations • Tentative terms, inviting others to make offers • i.e. “I think I’m interested in selling my laptop computer for around $1,000. Is anybody interested?” -- not an offer

  19. Chapter 7 Where do you stand? • Brent and Lisa were students in a class on movie production. • Knowing that the final movie in the AlienCheerleader trilogy was about to come out, Brent camped out overnight at the theater. He bought two tickets, and then asked Lisa to go with him.

  20. Chapter 7 Where do you stand? • Lisa agreed. • Lisa would have to call in sick to her evening job as waitress in order to go • Calling out sick would cost her more than $100 in wages & tips • She still made the call • When Brent did not show up to get her, she confronted him

  21. Chapter 7 Where do you stand? • Brent admitted he sold the tickets to someone else for $50 each ShouldLisa be allowed to sue Brent for not taking her to the movie??

  22. Chapter 7 Where do you stand? Almost every state would NOT allow such a lawsuit Social invitations do not produce enforceable contracts

  23. Chapter 7 Social Arrangements • Friends agreeing to go to movies • Social arrangements = not contracts

  24. Chapter 7 Offer Must be Complete & Clear • terms must be sufficiently complete and clear to allow a court to determine what the parties intended • Pg. 112 – “In this case”

  25. Chapter 7 Complete Terms • Offers should contain price / subject matter / quantity • Amount of detail depends on complexity of transaction • i.e. Real estate sale (identify lot, price, terms of payment, delivery date) • Candy bar sale (price, subject matter, quantity)

  26. Chapter 7 Clear • “In this case” - Delgados agreed on “one lot” – no specification as to which lot. • lacking essential information

  27. Chapter 7 • READ B E F O R E signing

  28. Chapter 7 Implied Terms • Terms can be implied by law or common business practice i.e. Merchants and customers - price is not specified; current market price is the basis for the contract

  29. Chapter 7 Advertisements • NOT offers - invitations to make offers • What’s Your Verdict – pg. 112 Did the Anchors Aweigh advertisement make offers to the would-be buyers? Customers: made Offers Sellers must make reasonable supply available – no expectation to meet every demand

  30. Chapter 7 Advertisements • Can be offers: • Written clearly and indicating limited quantities -- book example of selling car to first person • Asks offeree to perform an act as a way of accepting -- first person to appear at the main door of a shopping mall on …

  31. Chapter 7 Offer Must be Communicated to Offeree • Non-intended offeree cannot accept the offer • Cannot accept if unaware of offer (reward)

  32. Chapter 7 What’s your Verdict? • Pg. 111 • Did the two friends create a contract? • Yes – even though delivery and payment will occur later

  33. Chapter 7 E-Contracts: Agreeing Online • When I'm online and I click on a button that says "I ACCEPT," are all of those terms actually enforceable against me, even if I didn't read them? • West's Digital Video Library – video #23

  34. Chapter 7 • If you don’t satisfy the law’s requirement for creating an offer, then you usually don’t have a contract. • TRUE / FALSE

  35. Chapter 7 • TRUE

  36. Chapter 7 • To be valid, an offer must indicate an intent to create a legal obligation. • TRUE / FALSE

  37. Chapter 7 • TRUE

  38. Chapter 7 • Which of the following are reasons why an offer may not be valid? • A) It is apparent that the speaker is joking • B) It is clear that the speaker is trying to obtain additional information rather than commit to an agreement • C) The subject of the agreement is only social • D) all of the above

  39. Chapter 7 • D - all of the above

  40. Chapter 7 • The requirement that an offeror show an intent to contract is a(n) ______ test rather than a test which focuses on the purported offeror’s actual thoughts.

  41. Chapter 7 • Objective

  42. Chapter 7 • Which of the following is evidence showing an intent to contract • A) spoken or written words • B) conduct other than speaking or writing • C) other facts and circumstances • D) all of the above

  43. Chapter 7 • D – all of the above

  44. Chapter 7 • Advertisements can be offers when • A) they are complete • B) they are clear • C) they address the problem of numerous recipients and a limited supply of the advertised product • D) all of the above

  45. Chapter 7 • D - all of the above

  46. Chapter 7 • If an offer is made, it can be accepted by anyone who learns of it. • TRUE / FALSE

  47. Chapter 7 • FALSE

  48. Chapter 7 • The test of the reasonable person is used by a jury or judge to evaluate all the relevant evidence to determine whether there has been a manifestation of an intent to contract. • TRUE / FALSE

  49. Chapter 7 • TRUE

  50. Chapter 7 • To meet the contract requirement of genuine assent, the agreement must not be based on • A) deception • B) an important mistake • C) using unfair pressure • D) all of the above

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