Chapter 14 Agreement

formation of the agreement begins when the party initiating the contract, called the _______, makes an offer to another party, called the _______

offeror, offeree

what are some different types of offers?

preliminary negotiations, advertisements, and auctions

if nothing is stated to the contrary in the terms of the auction, an auction is presumed to be with reserve, which means what?

that the seller is merely expressing intent to receive offers (the auctioneer may refuse to sell the item if he or she is not satisfied with the size of the highest bid)

when a bilateral contract is being formed under the common law, the mirror-image rule applies to the acceptance. the Mirror-image rule says what?

that the terms of the acceptance must mirror the terms of the offer. if they do not, no contract is formed. instead, the attempted acceptance is a counteroffer

The courts settled on the mailbox rule, which provides that an acceptance is valid when _________

the offeree places it in the mailbox, whereas a revocation is effective only when the offeree receives it. the mailbox rule is not applicable when there is instantaneous communication, such as over the phone, in person, or by telex

The offeror is said to be the "master of the offer", which means they can do what?

they can revoke the offer at any time, even if the offer states it will be open for a specific period of time

the first element of the offer is intent. the offeror must do what?

they must show intent to be bound by the offeree's acceptance

Define Unauthorized Means of Acceptance

when an offer specifies that acceptance must be communicated by a particular mode, no other form of acceptance is valid. Note: for a unilateral contract, only performance by the offeree constitutes a valid acceptance

as a general rule, a revocation is effective when what?

when the offeree receives it

Termination of an offer can occur in one of five ways, list them

1) revocation by the offerer 2) rejection or counteroffer by the offeree 3) death or incapacity of the offeror 4) destruction or subsequent illegality of the subject matter of the offer 5) lapse of time or failure of other conditions stated in the offer

what are the three elements of an offer

1) serious intent by the offeror to be bound to an agreement 2) reasonably definite terms 3) communication to the offeree

Silence, as a general rule, cannot be used to form a contract. however, there are a few situations in which silence can mean acceptance. Name them (3 examples)

1) the parties have established a pattern of behavior whereby it is reasonable to assume silence communicated acceptance 2) when the offeree receives the benefits of the offered services with reasonable opportunity to reject them & knowledge that some form of compensation is expected yet remains silent 3) when the parties agree that silence will be accepted

define the acceptance of an offer

an acceptance is valid when a manifestation of intent to be bound to the terms of the offer is communicated to the offer by the offeree

a counteroffer is defined by the Restatement as what?

an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer"

if an auction without reserve, the seller is treated as making what?

an offer to accept the highest bid and therefor must accept it (very few authors are without reserve)

the means by which the offeree can communicate acceptance to the offeror may either be ________ or ________

be expressly stated in the offer, which is called express authorization, or be implied from the facts and circumstances surrounding the communication of the offer to the offeree

in general, there are two ways an offeree can manifest intent to enter into the contract: name them

by performance or by a return promise. the offer must either do or say something to form the contract

the third element of the offer is communication, which is when the offer must be _________

communicated to the offeree or the offeree's agent. only the offeree (or his agent on his behalf) can accept the offer

the material terms allow a court to determine what?

damages in the event that one of the parties breaches the contract. they include the subject matter, price, quantity, quality, and parties

under common law, the terms of the offer must be __________ and _________. in other words, all the material terms must be included

definite and certain

(destruction of subsequent illegality of the subject matter) if the subject matter of the offer is ___________ or becomes ________ , the offer immediately terminates

destroyed or becomes illegals

the first element of a contract is the ________, which is made up of what?

first element is the agreement, made up of an offer and an acceptance

the second means by which an offer can be terminated is rejection by the offeree. once the offeree rejects it, it is terminated, regardless of what?

how long the offer was stated to be open

Define Authorized Means of Acceptance

if the offer specifies that acceptance must be communicated by a specific mode, that mode is the only means for accepting the offer. If no mode of communication is specified in the offer, any reasonable means of acceptance is valid

define lapse of time or failure of another condition specified in the offer as one of the terminations

if the offer states that it will be held open for only a certain amount of time, it terminates when that time expires. also, the offer will expire after the lapse of a reasonable amount of time