Chapter 12 - Agreement

Elements for Offer to be Effective

1. INTENT - Offeror must have a serious intention to become bound by the offer 2. DEFINITENESS - 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. COMMUNICATION - Offer must be communicated to the offeree

Situations in which Intent may be lacking

1. Expressions of opinion 2. Statements of future intent 3. Preliminary negotiations 4. Invitations to bid 5. Advertisements and price lists 6. Live and online auctions

Mirror image rule

Requires that the terms of the offeree's acceptance adhere exactly to the terms of the offeror's offer for a valid contract to be formed.

Silence as Acceptance

Silence cannot be considered as acceptance, even if offeror says "By your silence/inaction you are deemed to have accepted this offer." HOWEVER, if the two parties have had prior dealings, silence may be counted as acceptance.

Agreement

Not always in writing, but has to be assented to by both parties in order to have a contract

Counteroffer

Rejecting original offer and making a new offer.

Determination of Intent

intent is determined by what a reasonable person in the offeree's position would conclude that the offeror's words and actions meant.

Definiteness of terms of an offer

1. Identification of the parties 2. Identification of the object or subject matter of the contract, e.g. work to be performed, specific identification of goods, services or land 3. Consideration to be paid 4. Time of payment, delivery or performance

Termination of Offer by Law

1. Lapse of time 2. Destruction of Specific Subject Matter of the offer 3. Death or incompetence of either party 4. Supervening illegality of the proposed contract.

Ways to terminate an Offer

1. Revocation 2. Rejection 3. Counteroffer

Substituted method of acceptance

Acceptance can still be effective if a substituted method of acceptance serves the same purpose as an authorized method of acceptance. HOWEVER, the substituted method of acceptance is not effective upon dispatch; rather the contract is not formed until the offeror physically receives the acceptance.

Mailbox Rule

Acceptance is in effect WHEN the offeror sends or delivers the communication via the mode authorized by the offeror. Rule does not apply to instantaneous forms of communication (email, text, fax, face to face)

Agreements to Agree

Agreements to agree to the material terms of a contract at some future date; these are enforceable if it is clear both parties intend to be bound by the agreement.

Unequivocal acceptance

An acceptance cannot impose new conditions or change the terms of the original offer (which would constitute a counteroffer). See mirror image rule.

Irrevocable Offers

Cannot be revoked. Options Contracts take away the offeror's power to revoke the offer for the period of time specified in the option

Timeliness of Acceptance

Generally, acceptance in a bilateral contract is timely if it is made before the offer is terminated.

Lapse of Time (termination)

If offer includes clause such as "This offer expires at midnight on October 17," offer is terminated if the offeree has not yet accepted. If offer doesn't specify a time for acceptance, the offer terminates at the end of a REASONABLE amount of time - reasonability is dependent on circumstances of the subject matter, et. al.

Supervening Illegality (termination)

If there is a statue that renders terms or subject matter of the offer illegal, the offer is automatically terminated.

Death, Destruction or Incompetence (termination)

Offer automatically terminates if the subject matter of the offer is destroyed before the offer is accepted, or when the offeror or offeree dies (unless the offer is irrevocable, in which case a party can obtain the subject matter from the deceased's estate)

Rejection

Offeree rejects offer by words or conduct. Rejection is effective ONLY when actually received by the offeror or the offeror's agent

Authorized Means of Acceptance

Offeror specifies how acceptance is communicated. An acceptance sent by means NOT authorized normally is not effective until it is received by the offeror. If offeror does not specify, acceptance can be made by any reasonable means

Revocation

Offeror's withdrawing of an offer before it is accepted. Can be done one of two ways IF THE OFFER IS REVOCABLE: 1. Express repudiation of the offer ("I withdraw my previous offer") 2. Performance of acts inconsistent with the existence of the offer. Must make this known to offeree ("I've sold the house to Jane instead of you")

Acceptance of offer

acceptance by offeree must be voluntary, unequivocal and communicated to the offeror.

Authorized modes of communication

necessary channel of communication when parties are not dealing face to face.