1. Business Law: Ch 6
Offer and Acceptance

2. What Must Be in a Contract
Contract – agreement between two or more parties that creates obligations
Six requirements to a contract
Offer and Acceptance
Offeror – person making offer
Offeree – person offer made too
Terms must be definite and accepted without change by the party to whom it is intended to be offered

3. Six Requirements for a Contract
Genuine Assent – Agreement must not be based on one party’s deceiving another, on an important mistake, or on the use of unfair pressure exerted to obtain the offer or acceptance
Legality – What the parties agree to must be legal

4. Six Requirements for a Contract
Consideration – Agreement must involve both sides receiving what the law considers value in some form as a result of the transaction
Capacity – Person must have legal ability to contract for themselves
Writing – Some agreements must be placed in writing to be fully enforceable in court

5. Requirements for an Offer
Offer – Proposal by an offeror to do something, providing the offeree does or refrains from doing something in return.
Requirements
Contractual Intent must be present
The offer must be communicated to the offeree
The essential terms of the offer must be complete and definite

6. Contractual Intent
Jest – Words that take the form of offers but which are spoken as a joke
Law is not concerned with what is actually in the mind of a person making what might be considered an offer
If your joke is considered an offer by a reasonable person, then you have made an offer
If you are serious about your offer, but a reasonable person interprets it as a joke, then we have no legally enforceable offer

7. Offer Must Be Communicated
Person who is not the intended offeree cannot accept the offer
Person cannot accept an offer without knowing it has been made

8. Essential Terms Must Be Complete and Definite
Sale of Real Estate
Proper legal description of the real estate
Price
Full term for payment
Date for delivery
Date for delivery of the deed
Essential terms must be definite

9. 6-1 Assessment
Turn to page 113 and complete the assessment

10. 6-1 Assessment
True
B (Genuine dissent)
False

11. 6-1 Assessment
No contract because the offer was not communicated to the bystander. Bystanders statement is an offer.
No, social engagement not a contract
No, the credit union is not liable because of no contract. The agreement was missing essential detail.
The ad was not an offer because it did not address the problem of a limited quantitu.

12. How can offers be ended? Revocation by the offeror
The right to withdraw an offer before it is accepted
At any time before it is accepted by the offeree, the offer can be revoked
Revocation is not effective until it is communicated to the offeree

13. How can offers be ended? Time stated in the offer
The offeror may state how and when the offer must be accepted
Example: On October 10, the Mercantile Bank sent a letter to Jimmy, who had applied for a loan. In the letter, Mercantile offered to lend $50,000 on specified terms and stated that the acceptance had to be in writing and received no later than October 18. Jimmy mailed his acceptance on October 17 which was not received until October 20. There is no contract

14. How can offers be ended? Reasonable length of time
If no time is stated, the offer will end after a reasonable length of time, which depends on the circumstances
Example: different length of time for produce and a bulldozer

15. How can offers be ended? Rejection by the Offeree
Offeree clearly reject the offer, the offer is terminated

16. How can offers be ended? Counteroffer
Offeree changes the offeror’s terms in important ways and sends it back to the offeror.
The counteroffer becomes the new offer.
Death or Insanity of either offeree or offeror
Destruction of the specific subject matter

17. How can an offer be kept open
Option – offeree give something of value in return for a promise to keep the offer open
Firm Offer – Same as option that applies to merchants (individuals who regularly deal in the goods being bought or sold)
The UCC (Uniform Commercial Code) makes firm offers binding for the time stated, but not for more than three months

18. 6-2 Assessment
Turn to page 117 and complete the assessment

19. What is Required of an Acceptance
Acceptance – When a party to whom an offer has been made agrees to the proposal.
Acceptance must:
Come from the person or persons to whom the offer was made
Match the terms in the offer
Be communicated to the offeror

20. Acceptance Communicated
Unilateral Acceptance – Offeror promises something in return for the offereee’s performance
Example: The offeror publicly promises to pay a $100 reward.
Bilateral Acceptance – Both parties promise to do something

21. 6-3 Assessment
Turn to page 121 and complete the assessment