An offer is _________
An offer is a statement or act that creates a “power of acceptance.”
- Rule: An offer is the manifestation of a willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude the contract
- When a person makes an offer, she is indicating that she is **willing to be immediately bound by the other person’s acceptance without further negotiation. **
An offer must be:
Offer must be:
- Complete/Definite
- Selective
- Committed
- Serious
Offer requirements:
Complete/Definite
Complete/Definite
Rule: In order to be offer, it must include all essential terms
- It doesn’t need every single term, just all the essential ones
- Terms must be relatively certain enough to ascertain when a breach has occurred and what damages to award
Offer requirements:
Selective
Selective
Rule: If an offer is made to more parties than the contract could not be fulfilled to, the presumption is that it was not an offer
Offer requirements:
**Committed **
Committed
Rule: In order to be an offer, it must reflect a level of commitment by the offeror
Offer requirements:
Serious
Serious Rule: If the offer was evidently in jest (objective test), then no offer has been made
Offer requirements:
Serious
Test for “Evidently in Jest”
Test for “Evidently in Jest”
- Exaggerated Claim
- Improbability
- Fantasy
- Absurdity
- Not Serious
Offer requirements:
Serious Test
Objective Test: The test for distinguishing a bona fide offer from an expression of opinion, like the test for distinguishing an offer from a jest, is the objective “reasonable person” test.
- whether a reasonable person in the position of the offeree would have reasonably understood the offeror as having proposed a bargain, rather than as having merely stated an opinion.
Offer
Preliminary Negotiations
Rule for statements made
during preliminary negotiations
Rule: A party desiring to contract
- May make a statement which is not an offer but rather a solicitation of bids.
- Such statements cannot be “accepted,” but instead merely serve as a basis for preliminary negotiations.
Offer: Preliminary Negotiations
Statements during negotiations
Restatement (Second) of Contracts §26:
Objective Test:
Restatement (Second) of Contracts §26:
Objective Test: Whether a person in the offeree’s shoes would reasonably have understood that the offeror was merely seeking to invite bids or start preliminary negotiations.
The subjective intent of the offeror is relevant.
Offer: Preliminary Neg.
Statement of Future Intention
Statement of Future Intention: An announcement by a person that he intends to contract in the future will usually NOT be considered an offer.
- The mere statement of the price at which property can be had cannot be understood as an offer to sell
OFFER
Advertisements
Rule: **Advertisements are generally not considered offers. An advertisement is merely an invitation for the recipients of the advertisement to make an offer **
- Most advertisements appearing in the mass media, in store windows, etc., are not offers to sell, because they do not contain sufficient words of commitment to sell.
- There must be specific terms or promises. If the advertisement contains words expressing the advertiser’s commitment or promise to sell a particular number of units or to sell the items in a particular manner, there may be an offer.
- It is possible to make an offer through advertisement, but there has to be some language of commitment in it or some invitation to take action without further communication
OFFER
Written Memorial Contemplated
Involves letters of intent –> agreement in principle
- Not the agreement itself.
- The point in complex transaction when parties try to solidify terms agreed upon up to that point.
- This is parties simply marking their spot in negotiation
- Court often has to decide whether the agreement in principle was actually the agreement
OFFER
Written Memorial Contemplated
Letters of intent can mean ___________.
Letters of intent can mean:
- Agreement is conditioned on final written contract, [OR]
- Final written contract is simply another term in the agreement
OFFER
Analysis of Written Memorial Contemplated
Key to analysis: intent of the parties, as reflected in the words of the agreement
Factors to consider –> Whether:
- Party expressly reserves right to be bound by final agreement
- There was any partial performance
- All essential terms of the contract had been agreed on
- Complexity/magnitude of the deal was such that a written final agreement would be expected
“Subject to final written agreement” (not dispositive)
- Have to examine text and structure of the agreement in principle
OFFER
Revocation of an Offer
Power of acceptance continues until terminated by:
Rule: Power of acceptance continues until terminated by:
- Rejection or counter-offer by offeree
- Lapse of time
- Revocation by the offeror
- Death or incapacity of either party
Revocation of an Offer
Power of acceptance continues until terminated by:
Rejection or counter-offer by offeree
Rejection or counter-offer by offeree
If the offeree rejects the offer, her power of acceptance is terminated unless either:
- the offeror indicates that the offer still stands in spite of the rejection OR
- the offeree **states that although she does not intend to accept the offer, she wishes to consider it further. **
NOTE: **If the offer is irrevocable, a counter-offer will not terminate the offeree’s power of acceptance. **
Revocation of an Offer
Power of acceptance continues until terminated by:
Lapse of time
Because the offeror is the “master of his offer,” he can set a time limit for acceptance.
At the end of this time limit, the offeree’s power of acceptance automatically terminates by “lapse.”
Revocation of an Offer
Power of acceptance continues until terminated by:
Revocation by the offeror
Except in the case of an option contract, the offeror is free to revoke his offer at any time before it is accepted.
- Effective upon receipt: a revocation by the offeror does not become effective until the offeree receives it.
- Lost revocation: If the letter or telegram revoking the offer is lost through misdelivery, the revocation never becomes effective.
- What constitutes receipt of revocation: The offeree is deemed to have received the revocation when
- it comes to his own possession,
- **the possession of someone authorized to receive it for him, OR **
- when it is put into his mailbox.
U.C.C. Approach: The U.C.C. applies virtually the same test for determining when a revocation (or any other notice) has been “received. (U.C.C. §1-202(e))
Revocation of the offer is effective when_______.
Revocation of the offer is effective when offeree learns that offeror no longer intends to enter contract when:
- Notice is given of revocation to offeree (Expressly), OR
- Offeree becomes aware that offeror no longer intends to enter the proposed contract (Indirectly), OR
- Offeree acquires reliable information that offeror has taken definite action inconsistent with the intention to enter into the proposed contract (Indirectly).
Whether or not an offer was made is viewed from what persective?
Analyzed from the ** reasonable person** standard. Don’t be misled by a party’s own characterization of a statement as an “offer.”
Ask: Has the party exhibited a willingness to be bound without further action on her own part?
NOTE: Distinguish offers from mere inquiries or expressions of interest, which are not offers b/c they don’t indicate a willingness to be bound.
EX: Will $2,000 buy your piano? = inquiry, not offer
A price quotation is usually construed as an _________.
A price quotation is usually construed as an invitation, BUT it may be construed as an offer if it is specific enough that the offeree is reasonable in perceiving it as an offer.
EX: X sends a letter to A,B,C & D which states: “I need to sell my heart-shaped diamond ring by Jan 15 for $1,500. If interested, please contact me before Jan 15.”
On Jan 14, X receives a letter from A agreeing to pay $1,500. X doesn’t respond. On Jan 17, X receives a letter from B agreeing to pay $1,700. X responds to B: “I agree to the terms of your letter.”
Can A sue for breach?
No, because X’s letter was not an offer, just an invitation to make an offer. Therefore, A’s letter was an offer that X never accepted.
**** Watch for solicitations that include words indicating a commitment to sell to the highest bidder by a certain date. In this case, the solicitation becomes an offer and the solicitor is bound to the person fulfilling the stated conditions.
An offer must contain lainguage of _________.
&
An acceptance must be _________.
An offer must contain lainguage of commitment.
&
An acceptance must be unequivocal.
BUT REMEMBER: unequivocal acceptance may be implied through conduct, such as as shipment of the items, payment for the items, or the offeree’s later statement (to the offeror or a 3rd party) that a K exists.
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Definitions26
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Last day Review1
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Uniform Commercial Code - Straight Code Verbiage15
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Cases10
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Restatement (Second) of Contracts24
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General Principles40
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General Damages for Breach of Contract→ Expectancy Measure17
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UCC Damages § 2 applicable in contract for sale of goods1
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General Damages for Breach of Contract→ Reliance Measure4
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General Damages for Breach of Contract→ Restitution Measure13
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Equitable Remedies: Specific Performance9
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Contract Formation14
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Offer28
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Acceptance28
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E-Commerce and Mutual Assent3
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DISCERNING THE AGREEMENT Ambiguous or Vague Terms4
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DISCERNING THE AGREEMENT Filling in Gaps in the Terms OR Missing Terms11
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DISCERNING THE AGREEMENT: Identifying the Terms of the Agreement5
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Formation/Interpretation under the UCC14
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Parol Evidence Rule9
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Statute of Frauds9
