BLaw280 Ch10: The Agreement - Offer ✭✭

Words: Offer v. Preliminary negotiations

"I will sell my iPhone 6 to you for $200" vs. "I am thinking about selling my iPhone 6 for $200" *Surrounding circumstances* - "Suuuuure, I want to offer you this new gold iPhone 6 Plus for $50" sarcastically to a friend vs. a retail store at going out of business sale. - "You want to buy my BMW for $1?!" (after your car breaks down) - Bar patron screams out, "I'll give you $1 million if you tell me the name of this song!"

Termination of Offers

(1) Lapse of Time (2) Revocation (3) Rejection (4) Death or Insanity of Either Party (5) Destruction of Subject Matter (6) Intervening Illegality

E-systems, Inc., a manufacturer of computer chips, offers to sell 1,000 chips to Swell Computers for $2,000 in a signed memo that states the offer is good for one year. Four months later, E-systems revokes the offer, having never received an acceptance from Swell. After receiving the revocation, Swell wants to accept E-Systems's offer. What is the result?

(CH10 - The Agreement) --> E-systems offer was a firm offer under Article 2 of the UCC because it is a merchant, and the offer was held open for a certain period of time in writing. A firm offer does not require consideration. However, a firm offer is irrevocable for three months at most. Therefore, although E-systems offered to hold its offer open for a year, it is not obligated to do so beyond three months. Having not received an acceptance from Swell before that time, Esystems was free to revoke its offer to Swell.

A firm offer for the sale of goods requires consideration to be given in exchange for the offeror's promise to keep the offer open. TRUE OR FALSE?

(CH10 - The Agreement) *False* --> A firm offer for the sale of goods needs to be made by an offeror who is a merchant, be contained in a signed writing, and give assurance that the offer will be kept open.

A revocation is effective at the time it is dispatched by the offeror. TRUE OR FALSE?

(CH10 - The Agreement) *False* --> The general rule of revocation is that it is effective when it is actually received by the OFFEREE.

Which of the following conditions characterizes a firm offer regarding the sale of goods?

(CH10 - The Agreement) a. It must be verbally communicated. b. It can be revoked by the offeror prior to acceptance. c. t must be made in the presence of a government official. *d. It must be made by an offeror who is a merchant.* --> In order to qualify as a firm offer, it must be (a) made by an offeror who is a merchant (b) be contained in a signed writing (c) give assurance that the offer will be kept open.

When can the offeror effectively revoke his/her offer?

(CH10 - The Agreement) a. Only after an effective acceptance. *b. Only before an effective acceptance.* c. Only before payment for goods or services has been made. d. Only before the parties have completed their obligations under the contract. --> The general common law rule on revocations is that offerors may revoke their offers at any time prior to acceptance.

Advertisements for the sale of goods at specific prices are considered to be:

(CH10 - The Agreement) a. bids. b. unenforceable contracts. *c. invitations to deal.* d. unilateral contracts. --> A proposal that fails to state specifically what the offeror is willing to do and what he asks in return for his performance lacks specificity and is unlikely to be considered an offer.

Ashley says to Ford, "I'd like to buy your house," and Ford responds, "You've got a deal". This exchange lacks _____

(CH10 - The Agreement) a. partners b. communication c. object *d. definiteness* --> A proposal that fails to state specifically what the offeror is willing to do and what he asks in return for his performance lacks specificity and is unlikely to be considered an offer.

Bilateral v. Unilateral

*BILATERAL* - each side makes a promise to one another - offeror's promise and offeree's return promise - *a promise for a promise*) *UNILATERAL* - Unilateral contracts: only one party makes a promise and demands a performance, not a return promise - offeror's promise and promisee's performance - *a promise for an act*) - "I will loan you $1,000,0000 if you agree to pay me back in equal monthly payments over 30 years with 5% interest." - If the K isn't clearly unilateral, it IS bilateral. - Exam Hint: Unilateral K offer can *only* be accepted by *performance* • Unilateral Ks are, in reality, rare.

(2) Definiteness of Terms

*Definiteness* shows *intent to contract* and gives the court the ability to calculate a remedy; indefiniteness shows parties still negotiating. - traditional common law - restatement - UCC

Offeror v. Offeree

*OFFERROR* one who makes an offer to another (A unilateral contract consists of a promise on the part of the offeror and performance of the requisite terms by the offeree.) *OFFEREE* person or entity to whom an offer to enter into a contract is made by another

(1) Objective present *intent* to contract

*Objective* standard: Would TARP (in the position of the offeree) believe that the offeror intended to contract? Look at *words, acts and circumstances*

How definite must terms be?

*Traditional Common Law* All essential terms must be stated in offer (parties, price, description of subject matter, quantity, time for performance) *Restatement* Terms must be "reasonably certain." *UCC* "Gap fillers" fill in open terms (including price, quantity, delivery, and time for payment)

Terms of Offer

- If there is an offer, what are its terms? - Offerees bound to terms of offer of which they had *actual or reasonable notice.*

1. Lapse of Time (termination of offer)

- Time Stated in Offer - No Time Stated = RX Time

2. Revocation (termination of offer)

- ✭✭✭ Generally, offers are revocable at any time prior to acceptance (even if offeree promises to hold offer open) - *revocations only effective when they are RECEIVED BY OFFEREE* EXCEPTIONS TO REVOCATION *Option K* (1) offeror promises to keep offer open for stated time (2) in exchange for some valuable consideration *Offer for unilateral K* Once offeree begins performance, offeror cannot revoke for time RX necessary for offeror to complete *Firm offer for sale of goods* (1) Offer by merchant (2) contained in signed writing (3) giving assurances that offer will be kept open - no consideration needed - cannot exceed 3 months *Promissory estoppel* circumstances

Rewards

> Advertisements *offering rewards* for lost property, information, or capture of criminals are *offers for unilateral Ks.* - To accept offer and receive the reward, offeree must perform the requested act

3. Rejection (termination of offer)

> Express > Implied ✭✭✭ (counteroffer) - *Rejection only effective when RECEIEVED BY OFFEROR*

Advertisements

Generally, *advertisements are not offers, but merely invitations to deal.* Exception: Highly specific ad = (1) particular *quantity* of goods offered at advertised price; and (2) *specific steps needed* for offeree to accept.

(3) Communication of Offer

Offeror must communicate terms of offer to offeree

3 requirements for an offer:✭✭✭

To establish a offer, offeree must prove: (1) Objective present *intent* to contract; (2) *Definiteness* of the terms; and (3) *Communication* of offer to offeree.