Chapter 12 Flashcards
Mutual Assent
Ordinarily, the mutual assent of the parties to an agreement is evidenced by an offer and an acceptance.
Objective Assent
only present, apparent, objective intent of the parties, which the parties have manifested by such words or conduct as would indicate to a reasonable person an intention to be bound by the same terms, is recognized in law.
Requirements of the Offer
- Offeror must have serious intent to make an offer
- There must be reasonably certain and definite terms
- The offer must be communicated
Intention
The offeror must manifest his or her objective, serious intention to be bound by the terms of the offer. The court cares about what is visual, not what is in your head.
Lucy v. Zehmer
Involves 2 issues. Only one of our landmark cases with 2 issues. Virginia 1950s. Mr. and Mrs. Zehmer own a farm, the Ferguson Farm. The farm has been in the family for 100s of years. Everyone in town knows that Mr. Zehmer has no intent to sell the farm. Mr. and Mrs. Lucy are at dinner with Mr. and Mrs. Zehmer. Napkin – terms of a deal are written. Two drafts of this, one on a napkin, one of a receipt. The amount, lot and plot number, title insurance, are all on the napkin contract. Signing a contract is the first step of a real estate contract. Mr. Zehmer refuses to comply with the title company. Does Mr. Zehmer show serious intent? He’s arguing that he was kidding, but his actions say otherwise.
- Intent to sell: legal terms (very detailed), rewritten to include his wife
- Lucy’s win the case, Zehmer’s lose the family farm
Situations in Which Intent May be Lacking
- Expressions of opinion
- Statements of intention to make an offer in the future.
- Preliminary negotiations, requests to negotiate, and invitations for bids.
- Advertisements, catalogues, circulars, and price lists.
- Live and Online Auctions
- Agreements to agree in the future – modern view is they can be binding agreements
- Preliminary agreements – sometimes they are binding and sometimes they are not.
Expressions of opinion
“this looks like a great car and an excellent price”
Statements of intention to make an offer in the future.
“I plan to sell my car for $15,000”
Preliminary negotiations, requests to negotiate, and invitations for bids.
“would you be interested in buying my car?”
“I am interested in building a pool, and so I talk to 3 pool builders. Am I making offers to each offer?”
The homeowner is actually the offeree, the people making the bids are the offeror.
Live and Online Auctions
The auctioneer is the offeree (agent of the sellor).
Definiteness of Terms.
An offer must have reasonably definite terms so that a court can determine if a breach has occurred.
In general, the following terms are required:
- Identification of the parties
- Identify the subject matter
- Consideration
- Statement about the time for performance (some courts want to see this – but not absolutely essential for every offer.)
FIRST 3 are absolutely essential!
Courts are willing to supply missing reasonable terms when…
the parties have clearly manifested their intent to form a contract.
When the parties have tried to use a term, but the meaning is vague, courts will…
not supply a “reasonable’ term in its place.
Communication
- The offeror must have the intention of making the terms known to the offeree and those terms must be received by the offeree.
- The offeree must have knowledge of the terms of the offer.
- An offer may be made to a specific offeree to whom it is communicated. But it can also be made to the public.
Golden doodle puppy, Ginger. She has run away. Lost puppy reward posters ($500 reward, picture, address on the poster). I find her, I’ve never seen a reward poster, but I see the address on the collar, I bring her home. I never saw the poster, it was not communicated, Legally I am not entitled to the reward?
No. Ethically, maybe.
Revocation of the offer by the offeror
In general, an offer may be revoked by the offeror at any time before acceptance:
1) expressly; or (“I don’t want to sell my watch anymore”)
2) by acts that are inconsistent with the existence of the offer and are known to the offeree. (implied revocation by the offeror) – must be communicated
Golden doodle has puppies. Hailey is selling the puppies, I go hold one, and I tell Hailey I need to think about it. My roommate walks in with Hailey’s last puppy “look, I just bought Hailey’s last puppy.” Was this communicated?
It is done in such a way that I am now aware of it – Hailey would know that I would see it.
A revocation is effective when…
RECEIVED by the offeree
“R” and “R”
A public offer is effectively _________ when the revocation is communicated in the same manner as that used in order to make the offer.
terminated
Irrevocable offers
Once it’s made, the offeror cannot revoke.
1. Option Contracts
2. Detrimental Reliance
3. Unilateral contracts once performance has been substantially undertaken
Option Contracts
An option contract is a separate contract that exists when an offeror has promised to hold the offer open and the offeree has given consideration for this promise of the offeror.
What is the most common irrevocable offer?
Option Contracts (Option clause within a contract)
Example of an option clause
buying a house – pay an option fee and you are allowed to walk away from the contract within _____ days (usually 3-5 days) ONLY the buyer gets the option.
