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Flashcards in Contracts Offer & Acceptance Deck (42):

What constitutes an offer?

A party's communication must be:

  1. An outward manifestation AND
    • oral, written or or via conduct
    • inward thoughts or subjective thoughts are irrelevant
  2. That signals accapetance will conclude the deal


What communications are not offers?

Preliminary Negotiations

Invitations for an Offers


When does a sitiuation of multiple offerees occur?

  • CAR
    • Commercial Advertisements
    • Auctioons
    • Reward Offers


How are commercial advertisments treated?

Under the American Advertising Rule, ads, catalogs & price lists are treated as invitations to offers

EXCEPTION - Language that identifies who gets the limited supply of goods even if there is an excess of demand

  • i.e. - "first come, first served"
  • "first 10 customers only"


How are auctions treated?

They are generally treated as invitation for an offer:

  • the auctioneer is inviting offers
  • the resoonding bids are the offers

EXCEPTION - When the auction is w/o reserve then the auctioneer is making an offer to sell to the highest bidder


How are rewards treated?

Generally treated as offers b/c they're communications that promise a bounty in exchange for the performance of a specialized task


What are the different types of reward offers?

  1. Self-limiting rewards
    • offers that indicate the task to be performed can only be performed once
    • i.e. - "Will pay $1K for find my dog."
  2. Open-field rewards
    • offers that indicate the tasks to be performed can potentially be performed by multiple parties
    • EXCEPTION - Languagein the offer that specifies a limitation on how many can accept the offer.


What is the legal effect of an offer?

It creates the power of acceptance in the offeree


How can an offer be terminated?

  1. Lapse of Time
  2. Death or Incapacity of either party
  3. Revocation by the offeror
  4. Rejection by the Offeree


How is an offer terminated by lapse of time?

An offer terminates after:

  • the time indicated in the offer
  • if no indication then at a reasonable time


What is the reasonable time determination for a lapsed offer?

Factors to consider:

  • subject matter & market conditions
  • degree of urgency & means of transmission


What is the Face-to-Face Conversation Rule?

An offer generally lapses at the end of the conversation unless specified otherwise


How is an offer terminated by the death or incapacity of either party?


  • Dead men cannot make contracts
  • it terminates the power of acceptance


  • if either becomes mentally incompetent & power of acceptance is terminated


What is the American Rule to revoke an offer?

An offeror may revoke an offer at any time and for any reason so long as two requirements are met:

  1. Must be revoked before the offer is accepted AND
  2. The revocation must be effectively communicated to the offeree


How is a revocation of an offer effectively communicated?


  • When the offeror directly communicate his intent to the offeree to withdraw the offer


  1. Offeror takes some action inconsistent w/the intent to go through with the offer AND
  2. Offereelearns of such action from a reliable source


How do you revoke an offer made to multiple offerees?

Apply the functional equivalent rule in which the offeror  revokes by communicating the revocation in a functionally equivalent manner in which the offer was made

This terminates the power of acceptance even if the offeree is unaware of the revocation


In what way can you prevent revocation of an offer?

  1. Under the common law option contract
  2. Under the UCC firm offer


What is an option contract?


What elements are neede to prevent revocation of an offer under the common law option contract?

  1. An underlying offer
  2. A subsidary promise to keep the offer open
    • "sell by" date may not a subsidary promise to keep offer open but just a sell by date
  3. Some valid mechanism for enforcing the subsidary promise 
    • i.e. - consideration


What are some issues with option contracts?

  • Signed writing with false recital of consideration
    • Majority rule is that it is rebuttal
    • Minority rule  will enforce the option contract even if recital for (consideration) the option is false
  • Promissory Estoppel
    • courts will sometimes enforce a subsidary promise to keep the offer open if there is detrimental reliance


What is the special rule for construction contracts?


What is a firm offer?


In what way do you prevent revocation of an offer under the UCC firm offer?

An irrevocable offer made by a merchant to buy/sell goods that meets the following conditions:

  1. The offer to buy/sell is made by a merchant
  2. the offer is made in writing signed by the merchant AND
  3. The offer expressly by its terms state that it will be held open


How long does a firm offer stay open?

For the time stated in the offer or for a reasonable time

The UCC shelf life is no more than 3 months


What is the 3 Month Ruel for Firm Offers?

If an offer is more than 3 months, it is only irrevocable for those first 3 months

If longer than 3 months, need consideration to be binding as an option contract under common law


How does an offeree reject an offer?

  1. Outright rejection
  2. Counteroffer
    • this in essences rejects the current offer and the offeree now becomes the offeror making a new offer
    • NOTE - mere inquires do not constitute a counteroffer and does not terminate the offer
  3. Rejection via non-conforming acceptance


How can an offer be revived?

After Rejection or Lapse, an offer c-an be revived by:

  1. offeror can via language or conduct restating the offer OR
  2. giving more time to decide


What is a unilateral contract?

A promise in exchange for performance



When is an offeror bound in a unilateral contract?

The offeror is bound once the offeree's performance is completed.

(the offeree is never bound)


What is a bilateral contract?

It is a promise for in exchange for a promise

(Once a promise is exchanged, both are bound)


What are examples of unilateral contracts?

  • reward offers
  • REBA - real estate brokage agreements


How to revoke an offer under a unilateral contract?

Common law - revoke up until the moment the before the offereee actually completes performance

Modern rule - once the offeree begins performance, an option contract is created thus cannot revoke, give time to finish


What is the difference between beginning performance & mere preparation?


How is an offer accepted under the common law?

Effective acceptance requires:

  1. Mirror Image Rule  AND
  2. Acceptance must be communicated to the offeror


How is acceptance communicated to the offeror?

by the means stipulated or

by any reasonable means of transmission if not stipulated


What means of transmission are reasonable for acceptance?

Unless otherwise indicated:

  1. the same means udes by the offeror
  2. means customarily used in similar transactions
  3. means that is equivalent to the speed & reliability to the means used by the offeror


What are the exceptions that acceptance be communicated?

  1. Silence
  2. Unilateral contract
  3. Mailbox Rule


What is the rule for acceptance by silence?

Default - silene does not constitute acceptance


  1. When offeree takes the benefit of the offeror's services with
    • resaonable opportunity to reject
    • reason to know compensation was expected
  2. When the offeror have given the offeree reason to believe that acceptance may be communicated by silence
    • the offeree's silence will constitute acceptance if they intend as such
  3. When b/c of previous dealings/circumstances it is reasonable to believe that the offeree should notify the offeror if he does not intend to accept


What is the Mailbox Rule for acceptance?

Common Law - acceptance is made upon dispatch so long as properly posted

  • applies only to acceptance
  • offeror cannot revoke once acceptance has been dispatched
  • dispatch creates binding contract
  • rule applies unless the offer states otherwise


What happens when parties simultaneously dispatch offers?

Meeting of the minds does not count. Offers have to be received in order to create power of acceptance


Does the Milbox Rule apply to option contracts?

Majority rule - No does not apply & acceptance is only effective upon receipt