Chapter 10 – Mutual Assent
Offeror: the person which makes the offer
Offeree: to whom the offer is made to; recipient of the offer
Essentials of an Offer:
1. Communication; be communicated to the offeree
2. Intent (objective); manifest an intent to enter into a contract
3. Definiteness; sufficiently definite and certain
a. Good faith: honesty in fact and the observance of reasonable commercial standards of fair dealing; cannot try to trick someone
Output and requirement contracts
a. Output contract: the entire output;
EXAMPLE: professor has a peanut butter factory, on average he
produces 1 million jars of pb each year – sells them in the southeast. One day Publix samples the PB and wants to sell professors PB in Publix We also discuss several other topics like How do we use the 45.2 million acres in nebraska?
stores, he says “how much per jar.” Professor says $1 per jar. Publix says he’ll take a million jars of PB to be sold them for 90 cents each jar (10% discount). That’s a good deal for Professor because he is certain he will
sell his whole supply without any marketing.
b. Requirements contract: (same example w PB and Publix) – Publix says he will only stock PB in Publix if he agrees to sell all that Publix needs, Professor has to promise he will produce the requirements of PB (even if it is more than a million) If you want to learn more check out How good am i at getting to know other people?
Example of NOT a requirement contact: Publix states he’s going to buy all the PB that he wants
ex: newspaper, radio, television
appear to be offers but are actually NOT!
considered as an invitation to negotiate; the store just wants you to come in/go online
Without reserve: auctioneer may not withdraw the goods from an auction The auctioneer at an auction does NOT make offers to sell the property that is being auctioned but invites offers to buy If you want to learn more check out What are the biogeochemical cycles and why are they important?
The people in the crowd make the offer
Reserve: a minimum price below which the auctioneer cannot sell the item
Duration (Ways They End) of Offers:
1. Lapse of time:
The offeror may specify the time within which the offer is to be accepted, just as he may specify any other term or condition in the offer If you want to learn more check out What is syndication?
We also discuss several other topics like What is the national integrated ballistic information network nibin database used for?
a. Specified period: ex: a week, or ten days; upon the expiration of that time, the offer no longer exists and cannot be accepted We also discuss several other topics like How did the movie and tv industry work before netflix?
b. Reasonable time: if the offer states no time within which the offeree must accept, the offer will terminate after a reasonable time
Taking back the offer; changing your mind
The word “no”
The refusal to accept an offer; manifestation of an unwillingness to accept the goods (sales)
Person 1:“I’ll give you $10,000 offer for your car” … Person 2: “No, I want 10,500” One person makes an offer, the other person DECLINES it, and creates a new offer. The original $10,000 offer is done, and gone forever because of the counteroffer. 5. Death or Incompetency:
If the offeror, or offeree, dies after making the offer, prior to the time the offer has been completed
Neither can accept the offer at this point, and the offer disappears
6. Destruction of Subject Matter:
You & I are discussing an offer of selling the car, then the car suddenly gets destroyed – the offer is terminated
7. Subsequent Illegality:
The offer that was made
Ex: cigarettes are legal in the state of FL, and I sell you 10,000 cartons of cigarettes supposed to be delivered the next day – the next day cigarettes become illegal, the offer becomes terminated
Objective Statement: external standards; not an opinion
ex: professor asks the class what the temperature is in in the room; one person says that it is “cool”, but you walk over to a thermostat and say the exact temperature that is stated – you are correct not the person who stated “cool.”
Subjective Statement: internal standard; how you feel about something (opinion) ex: professor asks the class what the temperature is in the room, and each person says a different answer such as “feels perfect”, “it is cool”, “too hot.” Everyone would be right in this situation
Pulmonary Negotiations: how much you would charge for this/that
Information Seeking: does not always lead to a contract
Important to Contracts:
1. Quantity of Goods:
2. Open term:
Option Contract: when one person exchanges time for money; a contract by which the offeror is bound to hold open an offer for a specified period of time
Ex: I have a house for sale, professor comes by and sees/wants the house. I offer $250,000, and professor wants to buy it & says “but, I do not have the money – how about you give me 30 days and I’ll give you $500”
Professor is buying time – nothing legal about 30 days, the time period is negotiable between the buyer and the seller. As well as the money (could be 100 days, for $1000)
*you can revoke an offer any time prior to the acceptance (because then there is a contract if there is acceptance)*
Merchant: defined as a person…
1. Who is a dealer in goods of a given kind
2. Who by his occupation holds himself out as having knowledge or skill peculiar to the goods or practices involved, or
3. Who employs an agent or broke whom he holds out as having such knowledge or skill
Goods: A term of variable content and meaning. It may include every species of personal property, or it may be given a very restricted meaning. Sometimes the meaning of “goods” is extended to include all tangible items, as in the phrase “goods and services.”
TYPES OF OPINION CONTRACTS:
1. Firm Offer (Read Article 2 Section 205):
Can only be made by a merchant
If these three things are done, the offer CANNOT be revoked…
1. Offer must be written
2. Writing must be signed by the merchant
3. There has to be a time period (between 0 days and 90 days) (no more than 90)
2. Statutory Irrevocability:
When you turn in a bid, you are unable to revoke it.
3. Irrevocable Offers of Unilateral Contract:
Some payoff for an act
When you make a unilateral offer, and the person has substantially complied (not completed) then you cannot revoke the offer to that individual, but can revoke it to any one has not made substantial compliance.
Example: professor tells class that anyone who eats 72 oysters will win $100, so three people start to try and have eaten about 60 oysters. Professor can no longer revoke the offer of his $100 to those three people. BUT if Professor decides he does not want to have the offer open for just anyone anymore, he can close the offer to the rest of the class from trying – but cannot revoke the offer to the three people who have begun ACCEPTANCE OF AN OFFER:
** General Rule: acceptance is accepted as soon as it is sent/mailed out **
1. Communication of Acceptance: Because acceptance manifests the offeree's assent to the offer, the offeree must communicate this acceptance to the offeror; you can change the general rule of acceptance as long as it is communicated
(ex: I am in an offer with you and I state that my acceptance is not completed until I actually RECEIVE it)
2. Silence as Acceptance:
General Rule silence is NOT accepted – but if you set it up as a custom practice, you must notify the people on the other end when you want to END the contract Silence or inaction, therefore, does not indicate acceptance of the offer Ex. If Professor owns a donut shop, and Mr. Publix walks over and asks him to deliver donuts every Monday for him, silence is not accepted when Professor wants it to end. So next Monday he must tell Mr. Publix he does not want to deliver anymore.
3. Conditions in Offer:
4. Authorized Means:
5. Acceptance Following Rejection:
** POTENTIAL TEST QUESTIONS**
1. When does an offer become effective LEGALLY? When professor makes me an offer when does it legally become an offer?
when I receive it
2. If I mail an offer, when does it become effective?
Whenever the offeree receives it (could be a week later)
3. What happens if it gets lost in the mail? Has the offer been made?
No, because the offeree never received it – no offer has been made.
4. If you see something on the test that says ALWAYS, or NEVER, unless you are 100% sure that is the right answer, most likely the answer is FALSE. Most things in law, are never “always” or “never.”
GENERAL RULES FOR QUESTION 5
***QUESTION 5 (WILL BE ON THE TEST – SEVERAL PROBLEMS)****** Offeror Offeree
Day 1) Offer – Sent *Day 3) Offer – Received*
Day 5) Sends the Rejection of the offer
Day 6) Accepts the Offer now and sends it
Day 8) Acceptance is Received
Day 9) Rejection is Received
Contract is Made: DAY 8