2. P A R T P A R T Contracts Introduction to Contracts The Agreement: Offer The Agreement: Acceptance Consideration Reality of Consent 3 McGraw-Hill/Irwin Business Law, 13/e © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

3. P A R T P A R T Contracts Capacity to Contract Illegality Writing Rights of Third Parties Performance & Remedies 3 McGraw-Hill/Irwin Business Law, 13/e © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

4. The Agreement: Acceptance PA E TR HC 9 “Make your bargain before beginning to plow.” Arab proverb

5. Learning Objectives  Basics of Acceptance  Intent  Communication  Special Problems 11 - 5

6.  Acceptance must be by clear expression by offeree of intent to be bound by terms of offer and communicated to offeror  Only offeree may accept offer  If offer calls for performance, then performance is acceptance  Offeror may specify manner of acceptance  Silence may be acceptance Requirements for Acceptance 11 - 6

7.  Traditional contract law rule required acceptance to be a mirror image of the offer  UCC 2–207 allows contract formation even when there is some variance between terms of offer and terms of the acceptance  Mailbox rule makes acceptance effective upon dispatch when the offeree used a manner of communication expressly or impliedly authorized (invited) by the offeror Mirror Image & Mailbox Rules 11 - 7

8. OFFER + ACCEPTANCE AGREEMENT Effect of Acceptance 11 - 8

9. Test Your Knowledge  True=A, False = B  Silence may never indicate acceptance  Offeror may specify manner of acceptance  O nly material variances between an offer and an alleged acceptance result in an implied rejection of the offer  UCC 2–207 does not allow contract formation if there is some variance between terms of offer and terms of the acceptance 11 - 9

10. Test Your Knowledge  Multiple Choice  The effect of offer plus acceptance is:  (a) negligible  (b) an agreement  (c) the mirror image rule  (d) none of the above 11 - 10

11. Thought Questions  Do you read shrink-wrap and browse-wrap license agreements? Do you agree you should be bound by “click” agreements if purchasing through the internet? 11 - 11