Chapter 10 – The Agreement: Offer
Transcript of Chapter 10 – The Agreement: Offer
Introduction to ContractsThe Agreement: Offer
The Agreement: AcceptanceConsideration
Reality of Consent
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Capacity to ContractIllegality
WritingRights of Third Parties
Performance and Remedies
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There is nothing more likely to start disagreement among people or countries than an agreement.
E.B. White
The Agreement: Offer
© 2010 The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
Requirements for an offer Intent Definiteness of Terms
Special ProblemsTermination of an offer
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An offer is a promise conditional on an act, return promise, or forbearance (refraining from doing something)
Parties to a contract must have intent to enter binding agreement, terms must be definite, and the offer must be communicated to the offeree
Requirements for an Offer
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An offeror must indicate present intent to contract, or the intent to meet the contract obligation upon acceptance
Courts use the objective theory of contracts: Would a reasonable person judge the
offeror’s words and acts in the context of the circumstances to signify intent?
Intent
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Offer and resulting contract must be definite and certain Offer cannot be vague about major
points Example:
“I’ll paint your house until I’m tired” is vague, but “I’ll finish painting your house in three days” is definite
Armstrong v. Rohm and Haas Company, Inc.
Definiteness of Terms
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Armstrong v. Rohm and Haas Company, Inc.
Facts: Plaintiffs worked at a manufacturing plant closed
by RH, which gave employees a choice: accept a severance package or transfer to another facility
Plant manager told plaintiffs to accept severance and begin a company, stating that RH “would like to” give plaintiffs “all [outsourced] work”
Plaintiffs followed manager’s suggestions, but there was little work since RH still outsourced elsewhere, so plaintiffs sued for breach of contract
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Court’s Decision: Defendant’s alleged promise is too vague to
ascertain a reasonably certain basis for providing an appropriate remedy Court listed issues about the alleged
“contract” The lack of definiteness is fatal because the
court cannot supply these terms RH’s alleged promise is therefore
unenforceable as a matter of law
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Armstrong v. Rohm and Haas Company, Inc.
UCC often creates contractual liability where no contract would result under common law
Article 2 sales contracts can be created “in any manner sufficient to show agreement, including conduct…” [2–204(1)]
A price, quantity, delivery, and time for payment term left open in a contract can be filled by inserting a presumption found in the Code’s rules
Definiteness Under the UCC
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Advertisements for the sale of goods at specified prices generally are not considered offers, but are invitations to offer or negotiate Examples: flyers, handbills, catalogs
listing prices, “for sale” ads in newspaper or yard
Sales puffery is not an offer
Advertisements
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Advertisements offering rewards for lost property, information, or capture of criminals are treated as offers for unilateral contracts To accept the offer and receive the
reward, an offeree must perform the requested act
Rewards
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Sellers at auctions and advertisements for bids are generally treated as making an invitation to offer, so those who bid are making an offer that the seller may accept or reject
Auctions and Bids
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Termination by Revocation
An offer may be terminated by revocation if revoked & communicated to offeree before the offer is accepted
Exceptions: Option contract in which an offeror agrees
not to revoke the offer for a stated time in exchange for some valuable consideration
Offers for unilateral contracts (e.g., rewards)
Promissory estoppel circumstances Firm offers for sale of goods
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Other Methods of Termination
Rejection: Offeree expressly rejects (unwilling to accept) offer or impliedly rejects the offer by making a counteroffer An offer to contract on terms materially
different from the terms of the original offer
Lapse of time and expiration of offer Death or disability of either party Destruction of subject matter Subsequent illegality
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Test Your Knowledge
True=A, False = B Courts apply the subjective theory of
contracts when determining whether intent to contract existed
The UCC often creates contractual liability where no contract would result under common law
Sales puffery may be deemed to be a valid offer
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Test Your Knowledge
Multiple Choice An offer requires:
(a) Intent and communication to offeree(b) Motive(c) Definiteness of terms(d) All of the above(e) All of the above except (b)
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Test Your Knowledge
Multiple Choice Which is not an invitation to negotiate:
(a) Advertisement of sale(b) Offer of Reward(c) Auction
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Thought Questions
When you go to a department store and purchase an item, what have you done according to contract law?
Is the law sensible about these contracts?
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