25-1 Chapter 10 Agreement

Introduction  Contracts are voluntary agreements between the parties  One party makes an offer that is accepted by the other party  Without mutual assent, there is no contract 10-2 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Agreement  Agreement: Manifestation by two or more persons of the substance of a contract  Requires mutual assent to perform current or future contractual duties 10-3 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Case 10.1: Contract  Case  The Facebook, Inc. v. Winklevoss  Web 2011 U.S. App. Lexis 7430 (2011)  United States Court of Appeals for the Ninth Circuit  Issue  Is the settlement agreement enforceable? 10-4 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Offer  Offer: The manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it  Offeror: The party who makes an offer  Offeree: The party to whom an offer has been made 10-5 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Offer  Requirements for an effective offer  The offeror must objectively intend to be bound by the offer  The terms of the offer must be definite or reasonably certain  The offer must be communicated to the offeree 10-6 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Offer  Objective theory of contracts  Intent to contract is judged by the reasonable person standard and not by the subjective intent of the parties  Express Terms  The terms of an offer must be clear enough to the offeree to be able to decide whether to accept or reject the terms of the offer  Terms must be definite 10-7 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Offer  An offer must contain the following terms  Identification of the parties  Identification of the subject matter and quantity  Consideration to be paid  Time of performance 10-8 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Offer  Implied Terms  The court can supply a missing term if a reasonable term can be implied  Terms supplied in this way called implied terms 10-9 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Case 10.2: Contract  Case  Marder v. Lopez  450 F.3d 445, Web 2006 U.S. App. Lexis (2006)  United States Court of Appeals for the Ninth Circuit  Issue  Is the general release Marder signed an enforceable contract? Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Offer Advertisements Rewards Auctions  Special Offers Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Termination of an Offer by Act of the Parties  Revocation: Withdrawal of an offer by the offeror that terminates the offer  Rejection: Express words or conduct by the offeree to reject an offer  Counteroffer: A response by an offeree that contains terms and conditions different from or in addition to those of the offer Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Termination of Offer by Operation of Law  Destruction of the subject matter  Death or incompetency of offeror or offeree  Supervening illegality  Lapse of time Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Acceptance  Acceptance: A manifestation of assent by the offeree to the terms of the offer in a manner invited or required by the offer as measured by the objective theory of contracts Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Acceptance  Unequivocal acceptance  Clear and unambiguous acceptance  Only one possible meaning  must not contain conditions or exceptions Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Acceptance  Mirror Image Rule: for an acceptance to exist, the offeree must accept the terms as stated in the offer  Any attempt to accept the offer on different terms constitutes a counteroffer Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Acceptance  Silence as Acceptance  Offeree indicates that silence means assent  Offeree signed agreement indicating continuing acceptance until further notification  Prior dealings indicate that silence means assent Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Acceptance  Time of acceptance  Mailbox rule: an acceptance is effective when it is dispatched, even if it is lost in transmission  Does not apply if an offeree first dispatches a rejection and then sends an acceptance Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Acceptance  Mode of acceptance  Proper dispatch  Authorized means of communication  Implied authorization  Express authorization Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

10-20 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.