(A)(3) Offer and Acceptance - Termination of Offers

Question 1

when can an offer be accepted?

Answer 1

an offer can be accepted when it is still outstanding (i.e., before the offer is terminated)

Question 2

what are the different ways offers can be terminated?

Answer 2

(1) lapse of time in offer;
(2) death or mental incapacity;
(3) destruction or illegality;
(4) revocation

Question 3

lapse of time in offer

Answer 3

if the offer specifies a date on which the offer terminates, then the time fixed by the offer controls

Question 4

lapse of time in offer - # of days

Answer 4

if the offer states that it will terminate after a specified number of days, the time generally starts to run from the time the offer is received—not sent—unless the offer indicates otherwise

Question 5

lapse of time in offer - delay in the transmittal of the offer

Answer 5

if the offeree is aware (or should have been aware) that there is a delay in the transmittal of the offer, the offer expires when it would have expired had there been no delay

Question 6

lapse of time in offer - no specified time limit

Answer 6

if the offer does not set a time limit for acceptance, the power of acceptance terminates at the end of a reasonable period of time

Question 7

what is a reasonable period of time?

Answer 7

what is considered a reasonable period of time is a question of fact and depends on a variety of factors including:
- the nature of the contract;
- the purpose and course of dealing between the parties; and
- trade usage

Question 8

reasonable period of time - offer received by mail

Answer 8

for an offer received by mail, an acceptance that is sent by midnight of the day of receipt generally has been made within a reasonable period of time

Question 9

reasonable period of time - offer in person or via telephone

Answer 9

unless otherwise agreed upon, if the parties bargain in person or via telephone, the time for acceptance does not ordinarily extend beyond the end of the conversation

Question 10

death or mental incapacity

Answer 10

an offer terminates upon the death or mental incapacity of the offeror or offeree, even if the offeree does not learn of the offeror’s death or mental incapacity until after the offeree has dispatched what he believes is an acceptance

Question 11

death or mental incapacity exception

Answer 11

an exception to termination of offer due to death or mental incapacity is if that offer is an option, which does not terminate upon death or mental incapacity because consideration was paid to keep the offer open during the option period, and the offer is therefore made irrevocable during that period

Question 12

accepted offer + death or mental incapacity

Answer 12

if an offer has been accepted, death of the offeror, does not automatically terminate the contract—the contract may be enforceable unless there is some reason, such as impracticability, that justifies discharge of the contractual obligation

Question 13

termination by destruction

Answer 13

an offer involving a subject matter that is destroyed is terminated

Question 14

termination by illegality

Answer 14

an offer that becomes illegal is terminated

Question 15

revocation (generally)

Answer 15

an offer can be revoked by the offeror at any time prior to acceptance

Question 16

when is an offer considered to be revoked?

Answer 16

when the offeror makes a manifestation of an intention not to enter into the proposed contract

Question 17

manner and means of revocation

Answer 17

a revocation may be made in any reasonable manner and by an reasonable means

Question 18

when is a revocation effective?

Answer 18

a revocation is effective once communicated

Question 19

when is a revocation by mail effective?

Answer 19

a revocation sent by mail is not effective until received

Question 20

when is a written revocation considered to be received under common law?

Answer 20

at common law, a written revocation (as well as a written rejection or acceptance) is received when:
- it comes into the possession of the person addressed or the person authorized to receive it on his behalf; or
- when it is deposited in some place he has authorized for deposit for this or similar communications

Question 21

when is a written revocation considered to be received under the UCC?

Answer 21

under the UCC, a person receives notice when:
(i) it comes to that person’s attention; or
(ii) it is duly delivered in a reasonable form at the place of business or where held out as the place for receipt of such communications

Question 22

when is a written revocation considered to be received by an organization?

Answer 22

receipt by an organization occurs at the time it is brought to the attention of the individual conducting the transaction or at the time it would have been brought to that individual’s attention if due diligence were exercised by the organization

Question 23

revocation by definite action inconsistent with the offer

Answer 23

if the offeree acquires reliable information that the offeror has taken definite action inconsistent with the offer, the offer is automatically revoked (i.e., a constructive revocation occurs)

Question 24

how may an offeror’s power to revoke an offer be limited?

Answer 24

• option (promise not to revoke)
• UCC firm offer rule
• promissory estoppel
• partial performance

Question 25

what is an option (promise not to revoke)?

Answer 25

an independent promise to keep an offer open for a specified period of time—such a promise limits the offeror’s power to revoke the offer until after the period has expired, while also preserving the oferee’s power to accept

Question 26

requirements for promise not to revoke an offer to enter a new contract

Answer 26

if the option is a promise not to revoke an offer to enter a new contract, the offeree must generally give separate consideration for the option to be enforceable

Question 27

requirements for promise not to revoke an offer to enter a new contract - exception

Answer 27

if the option is within an existing contract, no separate consideration is required

Question 28

how can an offeree’s power of acceptance be terminated when an option contract is in effect?

Answer 28

while the option contract is in effect, the offeree’s power of acceptance cannot be terminated by rejection, counteroffer, revocation, or by death or incapacity of the offeror, UNLESS the requirements are met for the discharge of a contractual duty

Question 29

what is the UCC firm offer rule?

Answer 29

under the UCC, an offer to buy or sell goods is irrevocable if:
(i) the offeror is a merchant;
(ii) there is an assurance that the offer is to remain open; and
(iii) the assurance is contained in a signed writing from the offeror

Question 30

consideration under UCC firm offer rule

Answer 30

no consideration by the offeree is needed to keep the offer open under the UCC firm offer rule

Question 31

UCC definition of merchant

Answer 31

a merchant includes not only a person who regularly deals in the type of goods involved in the transaction or otherwise by their occupation holds themselves out as having knowledge or skill peculiar to the practices or goods involved in the transaction, but also any businessperson when the transaction is of a commercial nature

Question 32

UCC firm offer time period

Answer 32

if the time period during which the option is to be held open is not stated, a reasonable term is implied

Question 33

UCC firm offer - maximum period of irrevocability

Answer 33

irrevocability cannot exceed three months—regardless of whether a timer period is stated or implied UNLESS the offeree gives consideration to validate it beyond the three-month period

Question 34

UCC firm offer rule - signed writing

Answer 34

the primary purpose of the signed writing requirement is to ensure that the merchant deliberately makes a current firm offer binding

Question 35

is a full handwritten signature always required under the UCC firm offer rule?

Answer 35

no - a full handwritten signature is not always required, such as when merely initialing the relevant clause is appropriate under the circumstances OR when the offeror handwrites on her letterhead that she “confirms” that a firm offer was already made

Question 36

UCC firm offer rule - firm offer prepared by offeree

Answer 36

a firm offer in a form prepared by the offeree must be separately signed by the offeror to protect against inadvertent signing

Question 37

when does promissory estoppel (detrimental reliance) apply?

Answer 37

when the offeree reasonably and detrimentally relies on the offeror’s promise prior to acceptance, the doctrine of promissory estoppel may make the offer irrevocable

Question 38

burden of proof for promissory estoppel (detrimental reliance)

Answer 38

it must have been reasonably foreseeable that such detrimental reliance would occur in order to imply the existence of an option contract

Question 39

offeror liability for promissory estoppel (detrimental reliance)

Answer 39

the offeror is liable to the extent necessary to avoid injustice, which may result in holding the offeror to the offer, reimbursement of the costs incurred by the offeree, or restitution of the benefits conferred

Question 40

partial performance - unilateral contract

Answer 40

if the offer is for a unilateral contract, the offeror cannot revoke the offer once the offeree has begun performance

Question 41

partial performance - requiring completion of performance: unilateral contract

Answer 41

once performance has begun, the offeree will have a reasonable amount of time to complete performance but cannot be required to complete performance—a unilateral contract is not formed until performance is complete

Question 42

partial performance - bilateral contract

Answer 42

commencement of performance of a bilateral contract operates as a promise to render complete performance

Question 43

partial performance - knowledge

Answer 43

whether the contract is bilateral or unilateral, the offeree must have had knowledge of the offer when she began performance

Question 44

what is a general offer?

Answer 44

an offer made to a large number of people, generally through an advertisement

Question 45

revocation of general offers

Answer 45

a general offer can be revoked only by notice that is given at least the same level of publicity as the offer

Question 46

effectiveness of revocation of general offers

Answer 46

so long as the appropriate level of publicity is met, the revocation will be effective even if a potential offeree does not learn of the revocation and acts in reliance on the offer

Question 47

what happens if a person has actual knowledge of the intent to revoke but they did not see the notice? (general offers)

Answer 47

the revocation will be effective

Question 48

rejection by offeree

Answer 48

an offer is terminated by rejection—aka the offeree clearly conveys to the offeror that the offeree no longer intends to accept the offer

Question 49

when is a rejection by offeree effective?

Answer 49

a rejection by offeree is usually effective upon receipt

Question 50

offeree acceptance of terminated offer

Answer 50

an offeree cannot accept an offer once it has been terminated

Question 51

rejection by offeree - counteroffer

Answer 51

a counteroffer acts as a rejection of the original offer and creates a new offer

Question 52

rejection by offeree - counteroffer exception

Answer 52

an exception exists for an option holder, who has the right to make counteroffers during the option period without terminating the original offer

Question 53

revival of offer

Answer 53

a terminated offer may be revived by the offeror—as with any open offer, the revived offer can be accepted by the offeree