Business Law

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BBA 3210-12H-1A12-S1, Business Law
Unit IV Mini Project
Dustin Brown / ID# 202011
August 7, 2012

Case Analysis

A bank advertises home loans at low interest rates for its account holders for three months. Toward the end of the second month, the bank withdraws the offer. Sam opens an account with the bank because of the offer. He is, however, a little late applying for the loan and the offer is withdrawn before his application is processed. Sam sues the bank.

In this case, the Bank advertises home loans at a low interest rate for its account holders. The general rule is an advertisement is an invitation to offer or negotiate, not a contract since no terms have been negotiated, and it is reliant on the consumer to make the offer (Mallor, Barnes, Bowers & Langvardt, 2007, pg. 296-298). The bank terminates the advertisement prior to the three month term outlined in the advertisment. This was a general public offer and the bank could not have possibly contacted all of the general public to rescind the offer. This falls to “Time of Effectiveness of Revocations” (Mallor, Barnes, Bowers & Langvardt, 2007, pg. 302). Also, no specified option was implied by the bank (Mallor, Barnes, Bowers & Langvardt, 2007, pg. 300). The bank made no specific option to maintain the low interest rates.

Sam opens an account under the premise of the advertised offer, but has still not attempted to negotiate the terms of a loan. Although the account was opened by Sam, Sam would have still needed to apply for the loan and the bank would have needed to accept the application or taken some action towards the loan for Sam to confirm a contract. This did not happen and in fact, no application was made by Sam to initiate the negotiation of the loan. The bank withdrew the loan offer prior to the advertised allotted time and prior to Sam applying for the loan. Again this is a general public offer to negotiate for terms of a loan. The bank withdrew the offer to negotiate...
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