Chapter 12 - Offers and Acceptances

Offer

Bargaining begins with an _________________.

It is possible for a letter of intent to bind the parties if its language indicates that the parties INTENDED to be bound.

Generally, letters of intent do not create any legal obligation, but instead merely states what they parties are considering and not what they have actually agreed to. What is the exception?

Yes

If an offer demands acceptance in a particular method or manner, must the offeree follow those requirements?

Consumer Protection Statute

Laws protecting consumers from fraud (outlaws false advertising)

Acceptance

Manifestation of assent (approval/agreement) to the offer

Lack of clarity

Most litigation concerning offer and acceptance come from _______________________________ on the part of the people negotiating.

True

T/F: An offer proposes definite terms, and an acceptance unconditionally agrees to them

method, manner, and time

The offeree must communicate his acceptance for it to be effective. The questions that typically arise concern what 3 things?

3 months

The open period on a firm offer may not exceed what time frame?

Offeree

The person to whom an offer is presented

Offeror

The person who makes an offer

Gap-filler provisions

UCC rules for supplying missing terms in a contract

1. Open Price 2. Output Contract 3. Requirements Contract

What are the 3 gap-filler provisions for the UCC?

The letter might help distinguish a serious party from one with a casual interest, summarize the progress made thus far, and assist the parties in securing necessary financing.

Why might one draft a letter of intent?

When the subject matter is for single or limited acceptance that has been communicated to the public at large. This is when a company proposes to take an action (i.e. pay $100) to customers who take certain, specific actions. The acceptance of this offer (completing the action) makes it a unilateral contract.

A "normal" ad - describing a product, its features, and its price - does NOT amount to an offer but is instead an invitation to bargain. Except, when does an advertisement count as an offer?

Mirror Image Rule

A common-law practice that requires that acceptance be on precisely the same terms as the offer (if the offeree seeks to vary the offer by addition, deletion, or substitution of even the smallest change, then there is no acceptance but instead a counteroffer/rejection)

Counteroffer

A different proposal made in response to an original offer

Letter of Intent

A letter that summarizes negotiating progress

Invitation to Bargain

A person making an _______________________________________ does not intend to be bound as soon as it is accepted by the person to whom the statement is addressed.

Firm Offer

A rain check for a retail store is an example of what type of irrevocable offer?

proposals ; become a part of the contract

Additional terms in the acceptance of an offer under the UCC between two non-merchants are considered ____________________ to add to the contract. Assuming that both parties are merchants, the additional terms will generally _________________________________________________________.

Offer

An act or statement that proposes definite terms and permits the other party to create a contract by accepting those terms

A Solicitation of Offers

An invitation to bargain is also called what?

revoked (revocation)

An offer is __________________ when the offeror "takes it back" before the offeree accepts.

Yes

Are advertisements that are open to the public at large that state a first-come, first-serve basis typically construed as offers?

Knockout Rule (AKA Battle of the Forms)

Contradictory terms will cancel each other out and the UCC would fill in the gaps

objective

Courts will makes ____________________ assessments when evaluating offers and acceptances; they will not try to get inside the parties head to decide what they were thinking. (They focus on how a reasonable person would interpret words and conduct)

An offer was made to someone and later on, another offer by a different person was made and accepted without telling the original offeror

Explain Revocation by Indirect Communication

With Reserve Auction - the items for sale have a minimum price (most auctions are with reserve and the law assumes that an auction is with reserve unless otherwise communicated by the auctioneer) Without Reserve - The items for sale have no minimum price and once the first bid is received, the auctioneer must sell to the highest bidder

Explain the difference between with and without reserve in auctions.

Firm

For UCC contracts, if a promise made in writing is signed by a merchant, and if it agrees to hold open an offer for a stated period, then an offer may not be revoked. This is a ______________ offer.

Counteroffer (and therefore a rejection)

For common-law, if an acceptance does not follow the exact terms of the original offer, and therefore violates the mirror image rule, then courts will consider this a _______________________.

Terms of Use

For social media sites, you can delete info from these sites, but most ___________________________ state that if you shared/posted info is saved by another, you lose the right to such info.

The customer who orders the corks is making the offer

If a company who sells corks sends out a catalog of specialty corks and corresponding quoted prices to their customers, and a customer orders 5,000 corks at the quoted price in the catalog, who is making the offer?

Valid contract

If an offer is accepted, and if there are no problems with any of the 5 remaining elements (offer and acceptance are already checked off) on the Contract Checklist, then a _____________________________ is created.

accepted

If an offer is terminated, it can never be ______________________.

Terminates

If an offeree rejects an offer, the rejection immediately _____________________ the offer.

No. The offeror's decision does NOT control whether or not a contract exists. There is a contract between the offeree has made a definite statement of acceptance of the original offer.

If an offeror makes an offer (between non-merchants under UCC), and the offeree accepts the original offer but throws in an additional term, does the offeror's acceptance/rejection of this additional term affect whether or not a contract exists?

The offeree may accept in any reasonable manner and method (generally for a manner, this is done via performance or by a promise. For method, this could be done by mail, fax, etc.)

If the offer does not specify a type of acceptance, how does the offeree accept?

No, your rejection terminated the offer and ended your power to accept.

If you initially reject an offer, but then later realize you want to accept, can you accept?

Communicated

In addition to Intent and define terms, an offer must also be _____________________________, which means it cannot be overheard, or other scenarios insinuating you were not in the direct path of an offer.

The bids

In an auction, what are the offers?

At the fall of the gavel (or when auctioneer says "Sold!")

In an auction, when does acceptance happen?

Present Bargain

In order for an offer to be considered an offer, it must enter into a _____________________________, even though the duties of performance may be performed in the future.

Reasonable Efforts

In order for someone to revoke an offer that was extended to the public, _________________________________ must be present in attempting to communicate to the same audience that the offer is no longer present.

1. Option Contracts (all contracts when offeror is a non-merchant) 2. Firm Contracts (UCC only)

In what two ways can one make a contract temporarily irrevocable?

No

Is an invitation to bargain an offer?

No

Is silence acceptance? (i.e. If I do not hear from you by tomorrow, I will assume you accepted my offer)

binding

Many courts have analyzed these issues and have ruled that clickwrap and shrinkwrap agreements are indeed ___________________, even against consumers (while there are exceptions, this is generally the case).

Requirements Contract

Obligates a buyer to obtain all of his needed goods from the seller

Output Contract

Obligates the seller to sell all of his output to the buyer, who agrees to accept it

1. Terminated 2. Accepted

Once an offer has been made, it faces only two possible fates:

UCC contracts only

Option Contracts are enforceable on ALL types of contracts (common-law and UCC), while Firm Offers are limited to what type of contracts?

In good faith (neither party may suddenly demand, or offer, a quantity of goods that is disproportionate to their past dealings or their reasonable estimates)

Output and requirement contracts (under UCC) are by definition incomplete, since exact quantities of goods are unspecified, and so, the Code requires that in carrying out such contracts, both parties act ______________________________________.

Meeting of the Minds

Parties form a contract only if they have a __________________________________________; one side must make an offer and the other must make an acceptance

True

T/F: An option contract is looked at as a second contract

True

T/F: If someone is not aware of an offer, then there is nothing to accept (if someone returns a missing dog, but doesn't see the return reward poster until after she's turned the dog back in. She can't go back and collect the reward)

True

T/F: The offeror may revoke the offer any time before it has been accepted

False, updates have to be agreed to

T/F: Websites are constantly changing their terms of use and theses changes can be made unilaterally (w/o letting user know)

If the parties do not settle on a price, the Code establishes that the goods will be sold for a reasonable price (this is usually the market value or a price established by a neutral expert or agency)

The Open Price provision for gap-filling missing terms in a contract under the UCC states what?

Battle of Forms

The UCC treats the offeree's additional terms to an offer differently than how it treats an offeree's terms that contradict the offeror's offer. This is referred to as the _________________________________________.

Dispatch

The mailbox rule states that an acceptance is generally effective upon ____________________, meaning the moment it is out of the offeree's control.

method

The term _________________ refers to whether acceptance is done in person or by mail, telephone, email, or fax.

manner

The term _________________ refers to whether the offeree accepts by promising, by making a down payment, by performing, and so forth.

Clickwraps and Shrinkwraps

These often include arbitration clauses and frequently limit the seller's liability if anything goes wrong, saying that the manufacturer's maximum responsibility is to refund the purchase price.

Common-Law ; UCC

Under ____________________, the terms of an offer must be definite for the contract to stand. Under _______________________, a contract may not fail for indefiniteness if one or more terms are left "open"

definite

Under common law, the terms of the offer must also be __________________ - if terms are vague (and even if the offeree accepts), a court does not have enough info to enforce it and so there is no contract.

YES, but the counteroffer creates a new offer, which then the other party must accept.

Under common-law, is a counteroffer a rejection?

conditioned on the offeror's assent

Under the UCC's alteration of the mirror image rule, if the offeree states that her acceptance is _________________________________________ to the new terms, then there is no contract, but instead a counteroffer that now must be accepted by the other party before a contract is created.

Intended

Under the UCC, even though one or more terms are left open, a contract does not fail for indefiniteness if the parties have _____________________ to make a contract and there is a reasonably certain basis for giving an appropriate remedy

Under the UCC, a change in the definite terms of an offer may not be a rejection by an offeree (this is called battle of the forms)

Under the UCC, is a counteroffer a rejection?

1. If the offeror's offer limits its acceptance to the terms in the offer and essentially insisting on their own terms. 2. If the additional terms materially alter the original offer (changes quantity, dates, etc.) 3. If the offeror receives the additional terms and promptly objects to them. (objects within a reasonable time)

Under what three circumstances do the additional terms added into the acceptance of an offer under the UCC between merchants NOT become a part of the contract?

received

Unlike the Mailbox Rule stating acceptance is effective upon dispatch, terminations (revocations) are effective when ____________________.

1) Offeror must INTEND to enter into a bargain (the offeror's words must be enough to convince a reasonable person that an offer to enter the present contract had been extended) 2) Definite Terms of the offer must be communicated to the offeree

What are the 2 elements of an Offer?

1. Objective Standard (looks at contract from standpoint of a reasonable person) 2. Understanding (Are the terms understandable? Would a reasonable person understand the terms agreed to?) 3. Intent (How would a reasonable person interpret the words and conduct of each party? Would a reasonable person conclude that both parties intended to enter a contract)

What are the 3 elements of Meeting of the Minds?

1. Knockout rule 2. Offeror's terms govern 3. Offeree's terms govern

What are the 3 ways in which the UCC may treat an acceptance with contradictory terms between merchants?

1. Revocation 2. Rejection 3. Expiration 4. Operation of Law

What are the 4 ways in which an offer can be terminated?

1. Invitation to Bargain (not an offer) 2. Price Quote (generally not an offer) 3. Letters of Intent 4. Advertisements (generally not an offer) 5. Auctions (placing an item up for auction is not an offer)

What are the 5 statements that usually do not amount to offers?

-If an offeror dies or becomes mentally incapacitate, then he offer terminates automatically and immediately (the offeree does not not have to know of the death or incapacity for the offer to terminate) -Destruction of the subject matter terminates the offer (i.e. if the item like gets destroyed somehow)

What are the ways in which the law itself terminates an offer (operation of law)?

The offeree has a reasonable period in which to accept. (this reasonable term will vary based on the subject matter of the contract)

What happens if the offer specifies no time limit?

When rejection is sent before an Acceptance (So, if someone send 2 letters, one accepting and one rejecting an offer, what counts is whichever the offeror receives first)

What is the one exception to the mailbox rule?

If an option contract was created by the offeror and the offeror dies, the offeree can still accept the offer within the time frame if they want. This offer must then be fulfilled by the offeror's estate.

What is the one exception to the termination of an offer if the offeror dies or becomes mentally incapacitated?

Part of

When a contract is facilitated between merchants under the UCC, additional terms (not different terms) become ___________________ the contract (with 3 exceptions that are in another flashcard)

Proposals

When a contract is facilitated between non-merchants under the UCC, additional terms become _______________________ for inclusion into the contract.

binding

When an offer specifies a time limit for acceptance, that period is ___________________.

Once the offeree receives it or is published

When is revocation effective?

new

When it comes to added terms in a contract under the UCC, additional terms are those that bring up ________________ issues that are not addressed in the original offer.

different

When it comes to adding/changing terms in a contract under the UCC, ____________________ terms are those that contradict terms in the original offer.

Quantity of Goods

When it comes to gap-filler provisions (UCC), price, place of delivery, time of delivery, and time of payment are handled by the Code, but ____________________________________ is not automatically covered.

The consumer (and the seller is free to reject the offer)

When it comes to price quotes and normal advertisements, who makes the offer?

An Invitation to Bargain (A solicitation of offers)

When it comes to price quotes, advertisements, and auctions, the law usually regards these as a what? (and not an offer)

option contract

With an _____________________________ contract, an interested purchaser buys the right to have the offer held open, and so the offeror (a non-merchant) may NOT revoke an offer during the option period.

Option, Firm

___________________ (option/firm) contracts typically require consideration (i.e. payment) for the offer being held open, while _________________ (option/firm) do not require consideration but instead a promise made in writing signed by the merchant.

Legal Policy

___________________________ aims to ensure that no party is held to a contract that they did not know, or should not have reasonably known, existed.

Shrink-wrap License

an end user agreement whereby the licensure conditions and terms (for use of license) are deemed accepted by the consumer opens the package. Advisable that consumer should be allowed to see these conditions and terms before purchasing; otherwise may be deemed unenforceable.

Browse-wrap license

appears on website without requiring consumer to take an affirmative action like clicking "Agree." To be enforceable, must be conspicuous

Click-wrap license

presents the consumer with the terms and conditions for use of the license on their computer screen and requires the consumer to click "Agree" before such software can be used. Generally enforceable.