Flashcards in Contracts 2 - Offer and Acceptance Deck (48)
Offer - 2 Requirements
(1) Outward manifestation.
(2) A signal that acceptance will conclude the deal.
Not an offer. It's the general give and take that occurs during bargaining.
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?"
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.
Generally treated as offers. Can have language in the offer that specifies a limitation on how many can accept.
Self-Limiting Reward offers
Offers that indicate the task to be rewarded can only be performed once.
Open-Field Reward Offers
Reward offers that indicate the task to be performed can potentially be performed by multiple parties.
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.
Legal Effect of an Offer
Creates the power of acceptance in the offeree.
4 Ways to Terminate Power of Acceptance
(2) Death or incapacity.
(3) Revocation by offeror.
(4) Rejection by offeree.
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.
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.
Termination by Death or Incapacity of Either Party
Death terminates power of acceptance and so does either party becoming mentally incompetent.
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.
(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.
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.
Preventing Revocation - Common Law
The offeror could revoke even if he expressly promised the offeree that he would hold the offer open.
Common Law Option Contract
(2) Subsidiary promise to keep that offer open. Sell by/lapse date doesn't count.
(3) Consideration for subsidiary promise.
Option Contract - False Recital
Majority, recital of consideration is rebuttable. Minority, it's ok to be false.
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.
Promissory estoppel applies when a general contractor relies on bid of subcontract to formulate his own bid.
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.
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.
Rejection via Counteroffer
Is a rejection, while also creating a new offer. However a mere inquiry is not a counteroffer.
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.
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.
Exchange promise for a promise. Once promises are exchanged, both parties are bound.
A promise in exchange for performance. The offeror is bound only when performance is completed, offeree is never bound.
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.