Chapter 8

counteroffer

is a rejection of the original offer and the simultaneous making of a new offer.

acceptance

is a voluntary act by the offeree that shows assent or agreement to the terms of an offer.

option contract

is created when an offeror promises to hold an offer open for a specified period of time in return for a payment given by the offeree. An option contract takes away the offeror's power to revoke an offer for the period of time specified in the option.

unequivocal acceptance of an offfer

is the mirror image rule. If the acceptance is subject to new conditions or if the terms of the acceptance materially change the original offer, the acceptance may be deemed a counteroffer that implicitly rejects the original offer.

Termination by action of the parties can happen in any of the following three ways

revocation, by rejection, or by counteroffer.

mailbox rule

-also called the deposited acceptance rule. Acceptance becomes valid when it is dispatched not when it is received by the offeror.

bilateral contract acceptance

-communication of acceptance is necessary because acceptance is in the form a promise and the contract is formed when the promise is made. Acceptance must be timely. Acceptance is timely if it is made before the offer is terminated.

Auction with reserve

-the seller may withdraw the goods at any time before the auctioneer closes the sale by announcement or by the fall of the hammer.

Three elements of an offer

1. There must be a serious objective intention by the Offeror 2. The terms of the offer must be reasonably certain or definite so that the parties and the court can ascertain the terms of the contract. 3. The offer must be communicated to the offeree

The power of the offeree to transform the offer into a binding, legal obligation can be terminated by operation of law through the occurrence of any of the following events:

1. lapse of time. 2. destruction of the specific subject matter of the offer 3. death or incompetence of the offeror or the offeree. 4. Supervening illegality of the proposed contract.

Intention

Intent is not determined by the subjective intentions, beliefs, or assumptions of the offeror. Rather, it is determined by what a reasonable person in the offeree's position would conclude the offerors words and actions meant.

Offer

Is a promise or commitment to perform or refrain from performing some specified act in the future

Agreement

Isn't essential element for contract formation the parties must agree on the terms of the contract. Ordinarily agreement is evidenced by two events an offer and acceptance

definiteness

a contract must include the following terms 1. The identification of the parties 2. The identification of the object or subject matter of the contract, including the work to be performed, with specific identification of such items as goods, services, and land. 3. The consideration to be paid. 4. The time of payment, delivery, or performance

An offer can be terminated by either

action of the parties or by operations of law

the general rule followed by most states is that revocation ....

becomes effective when the offeree or the offeree's agent actually receives it.

mirror image rule

common law requires that the offeree's acceptance match the offeror's offer exactly.

Who can accept an offer?

except in special circumstances only the person to whom the offer is made can accept the offer and create a binding contract.

An offer terminates automatically by law when the period of time ...

specified in the offer has passed. If the offer does not specify a time for acceptance, the offer terminates at the end of a reasonable period of time.

revocation

the offeror's act of withdrawing an offer

An offeree's power of acceptance is terminated when the offeror or offeree dies or is deprived of legal capacity to enter into the proposed contract ....

unless the offer is irrevocable.