Chapter 11 Business Outline

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  • Topic: Contract, Offer and acceptance, Option contract
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Chapter 11

Agreement in Traditional and E-Contracts

I. Agreement- the parties must agree on the terms of the contract and manifest to each other their mutual assent to the same bargain. Evidenced by an offer and acceptance.

a. Requirements of the Offer –an offer is a promise or commitment to do or refrain from doing some specified action in the future.

i. Three elements are required: offeror must have serious intention to become bound by offer, the term of the offer must be reasonably certain or definite, and the offer must be communicated to the offeree.

ii. Intentions – excludes offers made in obvious anger/jest/excitement. Other examples that don’t count as intention are:

1. Expressions of Opionion- such as a doctor describing healing time

2. Statements of Future Intent – such as saying “I plan to…”

3. Preliminary Negotiations- a request to negotiate such as “will you sell Blythe estate?” or a contract bid

4. Advertisments- ads and price lists don’t count with the exception of a reward for the return of lost property

5. Auctions

a. With Reserve- seller may withdraw the goods at any time before the auctioneer closes the sale. Typical auction

b. Without Reserve-the goods cannot be withdrawn by the seller and must be sold to the highest bidder.

6. Agreements to Agree- agree to agree to the material terms of a contract at a future date. They can be enforceable contracts if it is clear that the parties intended to be bound and no disputed issues remain to be resolved.

iii. Definiteness of Term – identification of the parties, identification of the object or subject matter of the contract, consideration to be paid, time of payment/delivery/performance

iv. Communication-the offer must be communicated. This is important when returning a lost dog without bringing proof of the reward sign.

b. Termination of the Offer – can occur by action of the parties or operation of law

i. Revocation- offeror’s act of withdrawing an offer. It can be revoked as long as the offeree hasn’t accepted it yet. Effective when the offeree receives it.

1. Irrevocable Offers include a merchant’s firm offer, and an option contract (offer promises to hold an offer for a specified period of time in return for a payment)

ii. Rejection of the Offer by the Offeree – expressed through words or conduct

iii. Counteroffer by the Offeree- rejection of original offer and simultaneous making of a new offer.

1. Mirror Image Rule requires the offeree’s acceptance to match the offeror’s offer exactly.

iv. Termination by Operation of Law

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.

c. Acceptance- voluntary act by the offeree that shows assent to the terms of an offer. It must be an unequivocal acceptance, which is about the mirror image rule.

i. Silence is not acceptance unless the offeree has a duty to speak or both parties are working from a prior dealing and routine.

ii. Communication of Acceptance is required for a bilateral contract, but not a unilateral contract. A bilateral contract acceptance must be timely, which is before the offer is terminated.

iii. Mailbox Rule- acceptance begins when the the offere sends or delivers communication via the mode expressly or impliedly authorized by the offeror. It does not apply for instantaneous forms of contact such as face-to-face.

iv. Substitute Method of Acceptance-a substituted form of acceptance may be effective if it serves the same purpose as the authorized means. However, the contract won’t be formed until the acceptance is received by the offeror.

II. Agreements in E-Contracts

a. Online Offers

i. Displaying the Offer- seller’s websiete should include a link to the page containing the full...
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