Ch. 11 Irrevocable Offers

Part performance of a unilateral contract

Restatement (Second) of Contracts §45 (1) Where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance, an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it. (2) The offeror's duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer.

Definition of Merchant UCC § 2-104

(1) "Merchant" means a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill.

exercised the option

(in option contracts) if the offeree/optionee chooses to accept the offer within the stated time periosd, he has exercised the option

Promissory Estoppel

A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.

Merchant's Firm Offer

An offer by a merchant to buy or sell goods in a signed writing which by its terms give assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.

option contract

An option is a contract that holds an offer open for a specified period of time. An option must be supported by consideration; otherwise, the offeror may revoke the offer. Option contracts involve 2 different contracts: (1) the option contract (promising to hold the offer open); and (2) the underlying contract (refers to the offer being made irrevocable)

conditional contract

one where the duties arise by the occurrence (or non-occurrence) of some event.

Irrevocable offer

the offeror may not revoke during the irrevocability period; any attempted revocation is ineffective and the offeree retains the power of acceptance during this period of time.