SECTION OPENER / CLOSER: INSERT BOOK COVER ART Offer and Acceptance Section 5.2

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise What You’ll Learn How to recognize the requirements of an offer (p. 114) How to distinguish between an offer and an invitation to negotiate (p. 114)

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise What You’ll Learn How to recognize the requirements of an acceptance (p. 116) How to distinguish between an acceptance and a counteroffer (p. 117)

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise What You’ll Learn How to recognize when an offer has terminated (p. 119)

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Why It’s Important You need to know when an offer has been made and when an acceptance goes into effect to make sound contracts.

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Legal Terms invitations to negotiate (p. 114) mirror image rule (p. 117) counteroffer (p. 117) revocation (p. 120) rejection (p. 120)

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Requirements of an Offer Serious Intent Definiteness and Certainty Communication to the Offeree Section Outline Requirements of an Acceptance Unconditional Acceptance Methods of Acceptance

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Termination of an Offer Revocation Rejection Counteroffer Expiration of Time Death or Insanity Section Outline

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Pre-Learning Question What do you think the requirements of an offer are?

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise The person who makes an offer is the offeror. The person who receives the offer is the offeree. Requirements of an Offer

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise An offer has three basic requirements. It must be: Requirements of an Offer 1.Made seriously 2.Definite and certain 3.Communicated to the offeree

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise An offer must be made with the intention of entering into a legal obligation. An offer made in the heat of anger or as a joke would not meet this requirement. Serious Intent

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Sometimes an invitation to negotiate can be confused with an offer. Serious Intent

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Advertisements in newspapers, magazines, and catalogs are examples of invitations to negotiate, which are invitations to make an offer. Serious Intent

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise An offer must be definite and certain to be enforceable. Offers that use vague words or terms that cannot be quantified lack definiteness and certainty. Definiteness and Certainty

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Offers may be made by any method that communicates the offer to the offeree, including: Communication to the Offeree TelephoneLetterTelegram Fax machine

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Who or what is an offeree? Who or what is an offeror?

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise ANSWER The offeree is the person making the offer. The offeror is the person receiving the offer.

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Pre-Learning Question Is a counteroffer the same thing as an acceptance? Why or why not?

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise To be legally binding, the acceptance must meet certain basic requirements. Requirements of an Acceptance The acceptance must be unconditional. The acceptance must follow the rules regarding the method of acceptance.

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise The acceptance must not change the terms of the original offer in any way. This principle is called the mirror image rule. Unconditional Acceptance

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Any change in the terms of the offer means the offeree has not really accepted the offer. The offeree has made a counteroffer. Unconditional Acceptance

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise If a counteroffer is made, the original offeror is not obligated to go along and no contract exists. The offeror becomes an offeree and may accept or reject the counteroffer. Unconditional Acceptance

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Contracts for the sale of goods are exceptions to the mirror image rule. These exceptions include contracts for personal property such as clothing, furniture, food, motor vehicles, and appliances. Unconditional Acceptance

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise The time at which an acceptance takes place is important because that is when the contract comes into existence. Methods of Acceptance

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Special rules govern acceptances that take place when the parties are separated by a distance and must be communicated by letters, telegrams, or fax. Methods of Acceptance

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise According to common law, an acceptance that must be sent over long distances is effective when it is sent. Methods of Acceptance

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise An acceptance is implied when the offeree accepts by the same or a faster means than that used by the offeror. Methods of Acceptance

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise The authorization of an acceptance can also be implied by any reasonable means, including: Methods of Acceptance Past practices between the parties The usual method in the trade Customary means in comparable transactions

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Pre-Learning Question What is one way an offer is terminated?

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Termination of an offer may occur in any of the following five ways: Termination of an Offer 1.Revocation 2.Rejection 3.Counteroffer 4.Expiration of time 5.Death or insanity

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Revocation is the taking back of an offer by the offeror. Revocation

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Rejection, or refusal, of an offer by the offeree brings the offer to an end. Rejection

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise A counteroffer ends the first offer. The offeree creates a new offer, which the original offeror may accept or reject. Counteroffer

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise If the offeror sets a time limit for the acceptance of the offer, it must be honored. Expiration of Time

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise If the offeror dies or becomes insane before the offer is accepted, the offer comes to an end. Death or Insanity

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Reviewing What You Learned 1. 1.What are the requirements of an offer? Section 5.2 Assessment

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Reviewing What You Learned Serious intent, clear and definite terms, and communication to the offeree. Section 5.2 Assessment Answer

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Reviewing What You Learned 2. 2.What is the difference between an offer and an invitation to negotiate? Section 5.2 Assessment

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Reviewing What You Learned An offer empowers the offeree to accept its terms and create a contract. An invitation to negotiate is an invitation to the other party to make an offer. Section 5.2 Assessment Answer

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Reviewing What You Learned 3. 3.What are the requirements of an acceptance? Section 5.2 Assessment

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Reviewing What You Learned Must be unconditional and must follow the rules regarding the method of acceptance. Section 5.2 Assessment Answer

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Reviewing What You Learned 4. 4.What is the difference between an acceptance and a counteroffer? Section 5.2 Assessment

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Reviewing What You Learned An acceptance creates a contract. A counteroffer means that the original offer has not been accepted. The offeree has made a new offer, which the original offeror may accept or reject. Section 5.2 Assessment Answer

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Reviewing What You Learned 5. 5.When is an offer terminated? Section 5.2 Assessment

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Reviewing What You Learned Upon revocation by the offeror, on rejection by the offeree, when a counteroffer is made, after the expiration of a set period of time, and/or the death or insanity of the offeror. Section 5.2 Assessment Answer

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Section 5.2 Assessment Critical Thinking Activity Identifying an Offer Why is it important to be able to distinguish between an offer and an invitation to negotiate?

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Section 5.2 Assessment Answers will vary, but should recognize that by understanding the difference between the two; a buyer won’t confuse an advertisement with an offer. Critical Thinking Activity Answer Identifying an Offer

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Section 5.2 Assessment Legal Skills in Action Invitations to Negotiate Tina believes that she can compel a used car dealership to sell her a car that was advertised in the newspaper. She believes the advertisement is an offer that she intends to accept tomorrow.

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Section 5.2 Assessment Legal Skills in Action Invitations to Negotiate Write a paragraph that explains why advertisements in a newspaper are considered invitations to negotiate rather than offers.

Understanding Business and Personal Law Offer and Acceptance Section 5.2 How Contracts Arise Section 5.2 Assessment Legal Skills in Action Answer Invitations to Negotiate Answers will vary, but should explain that sellers usually have limited merchandise to sell and cannot possibly sell an advertised product to everyone who sees an ad.

SECTION OPENER / CLOSER: INSERT BOOK COVER ART Offer and Acceptance End of Section 5.2