2. Termination of an Offer Revocation Rejection Counteroffer Expiration of Time Death or Insanity Section Outline

3. Pre-Learning Question What do you think the requirements of an offer are?

4. The person who makes an offer is the offeror. The person who receives the offer is the offeree. Requirements of an Offer

5. 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

6. 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

7. Sometimes an invitation to negotiate can be confused with an offer. Serious Intent

8. Advertisements in newspapers, magazines, and catalogs are examples of invitations to negotiate, which are invitations to make an offer. Serious Intent

9. 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

10. Offers may be made by any method that communicates the offer to the offeree, including Communication to the Offeree telephonelettertelegram fax machine e-mailtext

11. Who or what is an offeree? Who or what is an offeror?

12. ANSWER The offeree is the person making the offer. The offeror is the person receiving the offer.

13. Pre-Learning Question Is a counteroffer the same thing as an acceptance? Why or why not?

14. 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

15. The acceptance must not change the terms of the original offer in any way. This principle is called the mirror image rule. Unconditional Acceptance

16. 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

17. 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

18. 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

19. The time at which an acceptance takes place is important because that is when the contract comes into existence. Methods of Acceptance

20. 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

21. According to common law, an acceptance that must be sent over long distances is effective when it is sent. Methods of Acceptance

22. An acceptance is implied when the offeree accepts by the same or a faster means than that used by the offeror. Methods of Acceptance

23. 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

24. Pre-Learning Question What is one way an offer is terminated?

25. 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

26. Revocation is the taking back of an offer by the offeror. Revocation

27. Rejection, or refusal, of an offer by the offeree brings the offer to an end. Rejection

28. A counteroffer ends the first offer. The offeree creates a new offer, which the original offeror may accept or reject. Counteroffer

29. If the offeror sets a time limit for the acceptance of the offer, it must be honored. Expiration of Time

30. If the offeror dies or becomes insane before the offer is accepted, the offer comes to an end. Death or Insanity