1. Contracts
Business Law

2. Contract page 110
An agreement that courts will enforce, the bases for all economic activity.

3. There are six major requirements:
Offer and Acceptance
Genuine Assent
Legality
Consideration
Capacity
Writing
(Pg.111)

4. Offer
a proposal by an offeror to do something, provided the offeree does something in return. If the offeree accepts a contract arises.

5. A valid offer must:
1. The offeror must appear to intend to create a legal obligation
2. The terms must be definite and complete
3. The offer must be communicated to the offeree

6. The offeror must appear to intend to create a legal obligation
1. Test of the reasonable person – if you are only joking but a reasonable person would interpret your conduct as indicating you intend to form a contract.
It is an objective legal test used by juries and judges.
Facts and circumstances – if a reasonable person would know the words which may appear serious, are said in obvious jest, frenzied terror, or anger

7. The terms must be definite and complete
2. Complete – if a purported offer is missing any essential information it is considered incomplete and legally ineffective, the amount of information that must be included is determined by the complexity of the transaction.
Clear – each essential term must be identified clearly not “one lot” but “lot 3245”.
Implied Terms – implied by law or common business practices
Advertisements - In papers on radio or television or indirect mailings are not offers, but rather are considered invitations.
Can become offers by using clearly worded ads. Need to be complete or clear, saying things like the first 5 people or limited to stock on hand or if it asks the offeree to perform a specific act in way of accepting.

8. The offer must be communicated to the offeree
A person who is not the intended offeree cannot accept the offer and you must have knowledge of the offer in order to accept it.

9. 7-2 Termination of the Offer
ONCE MADE THE OFFER DOES NOT LAST FOREVER.

10. Revocation by the Offerer
can be removed anytime before it is accepted by the offeree. Called the right of revocation can be made if if promise to remain open forever, must be communicated to the oferee to be effective. Time stated in the offer- a specific ending time in the offer itself
Reasonable length of time – depends on the surrounding circumstances, perishable goods terminate quickly, durable goods last a lot longer.
Rejection by the offeree – when the offeree clearly rejects the offer.
Counter offer – the change of the offerers term in important ways. This terminates the original offer. Death or insanity of either the offeree or the offeror contracts are agreements voluntarily entered into by the parties and subject to their control
can be removed anytime before it is accepted by the offeree. Called the right of revocation can be made if if promise to remain open forever, must be communicated to the oferee to be effective. Time stated in the offer- a specific ending time in the offer itself
Reasonable length of time – depends on the surrounding circumstances, perishable goods terminate quickly, durable goods last a lot longer.
Rejection by the offeree – when the offeree clearly rejects the offer.
Counter offer – the change of the offerers term in important ways. This terminates the original offer. Death or insanity of either the offeree or the offeror contracts are agreements voluntarily entered into by the parties and subject to their control

11. Keeping an Offer Open
An offer can be kept open by – Options – the offeree gives the offeror something of value for a promise to keep the offer open.
Firm offers – an offer by a merchant for the sale or purchase of goods stating in a signed writing.
An offer can be kept open by – Options – the offeree gives the offeror something of value for a promise to keep the offer open.
Firm offers – an offer by a merchant for the sale or purchase of goods stating in a signed writing.

12. 7-3 Acceptance
Occurs when a party to whom an offer has been made agrees to the proposal.
An offer made to one person cannot be accepted by another
If the offer is made to the public or a group of people, anyone who knows of the offer may accept it
The offer may specify term of acceptance such as when and where the acceptance must be made
Mirror Image Rule – the terms in the acceptance must exactly match the terms contained in the offer
ANY change in the conditions constitutes a counteroffer
Acceptance must be more than a mental decision. It must be communicated to he offeror
Any attempt to make silence an acceptance will not work, unless the parties have agreed in advance
Unilateral Contract – the offeree indicates acceptance by performing his or her obligations under the contract. The offeror promises something in return for the offeree’s performance
Bilateral Acceptance – Most offers are this. The offer implies that it can be accepted by giving a promise instead of actually performing the contracted for act. I promise to do this if you promise to do that.
Contractual Communications can be communicated orally, in person or by phone, in writing, and sent by mail or fax
All but one form of offers take effect only when actually received by the offeree. The exception to this is the acceptance which is often effective when sent.

13. An offer made to one person cannot be accepted by another
If the offer is made to the public or a group of people, anyone who knows of the offer may accept it
The offer may specify term of acceptance such as when and where the acceptance must be made
Mirror Image Rule – the terms in the acceptance must exactly match the terms contained in the offer
ANY change in the conditions constitutes a counteroffer
Acceptance must be more than a mental decision. It must be communicated to he offeror
Any attempt to make silence an acceptance will not work, unless the parties have agreed in advance
Unilateral Contract – the offeree indicates acceptance by performing his or her obligations under the contract. The offeror promises something in return for the offeree’s performance
Bilateral Acceptance – Most offers are this. The offer implies that it can be accepted by giving a promise instead of actually performing the contracted for act. I promise to do this if you promise to do that.
Contractual Communications can be communicated orally, in person or by phone, in writing, and sent by mail or fax
All but one form of offers take effect only when actually received by the offeree. The exception to this is the acceptance which is often effective when sent.