Contracts 2 - Offer and Acceptance Flashcards Preview

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Flashcards in Contracts 2 - Offer and Acceptance Deck (48)
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1

Offer - 2 Requirements

(1) Outward manifestation.
(2) A signal that acceptance will conclude the deal.

2

Preliminary Negotiations

Not an offer. It's the general give and take that occurs during bargaining.

3

Invitation for an Offer

Not an offer. It's when someone is closing in on a deal but wants the other party to commit first. "How much are you willing to pay me for these goods?"

4

Commercial advertisements

Are not offers because responses may exceed supply. However, if language identifies who gets the limited supply of goods then it's an offer. e.g. first come first served, first 10 customers only.

5

Reward Offers

Generally treated as offers. Can have language in the offer that specifies a limitation on how many can accept.

6

Self-Limiting Reward offers

Offers that indicate the task to be rewarded can only be performed once.

7

Open-Field Reward Offers

Reward offers that indicate the task to be performed can potentially be performed by multiple parties.

8

Auctions

The auctioneer is inviting offers and the responsive bids are the offers. But if auction is held 'without reserve', auctioneer is making an offer to sell to the highest bidder.

9

Legal Effect of an Offer

Creates the power of acceptance in the offeree.

10

4 Ways to Terminate Power of Acceptance

(1) Lapse.
(2) Death or incapacity.
(3) Revocation by offeror.
(4) Rejection by offeree.

11

Termination by Lapse of Time

The time stated in the offer or if no time is stated then after a reasonable time. reasonable factors include (1) looking at subject matter and market conditions, and (2) degree of urgency and means of transmission.

12

Face-to-Face Conversation Rule

An offer made in a face-to-face conversation generally lapses at the end of the conversation, unless the offer specifies otherwise.

13

Termination by Death or Incapacity of Either Party

Death terminates power of acceptance and so does either party becoming mentally incompetent.

14

Termination by Offeror's Revocation

Offeror may revoke at any time and for any reason so long as: (1) revoked before offer is accepted and (2) revocation is communicated to the offeree.

15

Indirect Revocation

(1) Offeror takes some action that is inconsistent with the intention to go through with the offer and (2) The offeree learns about such action from a reliable source.

16

Functional Equivalents Rule

With an offer made to multiple people, offeror revokes by communicating the revocation in a functionally equivalent manner as the offer was made. But if there's a better means of communicating that is reasonably available, those means must be used to revoke. Terminates power of acceptance even if offeree is unaware.

17

Preventing Revocation - Common Law

The offeror could revoke even if he expressly promised the offeree that he would hold the offer open.

18

Common Law Option Contract

(1) Offer
(2) Subsidiary promise to keep that offer open. Sell by/lapse date doesn't count.
(3) Consideration for subsidiary promise.

19

Option Contract - False Recital

Majority, recital of consideration is rebuttable. Minority, it's ok to be false.

20

Option Contract - Promissory Estoppel

Courts will sometimes, not often, enforce a subsidiary promise to keep an offer open if there has been a detrimental reliance.

21

Construction Contracts

Promissory estoppel applies when a general contractor relies on bid of subcontract to formulate his own bid.

22

Firm Offer (UCC) - Requirements

(1) Offer is made by merchant.
(2) Offer is made in writing signed by merchant.
(3) Offer expressly states by its terms that it will be held open.

23

Firm Offer - Time

Will remain irrevocable for period of time specified, if not specified then for reasonable time. Can't be more than 3 months, if more than 3 months is stated it's only irrevocable for first 3 months. If you want to keep it open longer than 3 gotta have an option contract.

24

Rejection via Counteroffer

Is a rejection, while also creating a new offer. However a mere inquiry is not a counteroffer.

25

Mirror Image Rule (Common Law)

Acceptance must mirror the terms of the offer. Any variation results in a counteroffer and thus rejection of the initial offer.

26

Revival of an offer after rejection or lapse

Offeror can revive a terminated offer by language or conduct restating the offer or giving more time to decide.

27

Bilateral Contract

Exchange promise for a promise. Once promises are exchanged, both parties are bound.

28

Unilateral Contract

A promise in exchange for performance. The offeror is bound only when performance is completed, offeree is never bound.

29

Revocation of Unilateral Contract Offer - Common Law

The offeror was free to revoke the unilateral offer up until the moment the offeree actually completed performance.

30

Revocation of Unilateral Contract Offer - Modern Law

Once the offeree begins performance, an option contract is created. Offeree is still free to abandon performance or not do it, acceptance is still effective only upon completion. Mere preparations do not create an option contract.