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Business Law_ Ch 6 - sheffield.k12.oh.us

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Business Law: Ch 6
Offer and Acceptance
What MustBe in a Contract
Contract – agreement between two or more parties that creates obligationsSix requirements to a contractOffer and AcceptanceOfferor– person making offerOfferee– person offer made tooTerms must be definite and accepted without change by the party to whom it is intended to be offered
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 acceptanceLegality– What the parties agree to must be legal
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 transactionCapacity– Person must have legal ability to contract for themselvesWriting– Some agreements must be placed in writing to be fully enforceable in court
Requirements for an Offer
Offer – Proposal by anofferorto do something, providing theoffereedoes or refrains from doing something in return.RequirementsContractual Intent must be presentThe offer must be communicated to theoffereeThe essential terms of the offer must be complete and definite
Contractual Intent
Jest– Words that take the form of offers but which are spoken as a jokeLaw is not concerned with what is actually in the mind of a person making what might be considered an offerIf your joke is considered an offer by a reasonable person, then you have made an offerIf you are serious about your offer, but a reasonable person interprets it as a joke, then we have no legally enforceable offer
Offer Must Be Communicated
Person who is not the intendedoffereecannot accept the offerPerson cannot accept an offer without knowing it has been made
Essential Terms Must Be Complete and Definite
Sale of Real EstateProper legal description of the real estatePriceFull term for paymentDate for deliveryDate for delivery of the deedEssential terms must be definite
6-1 Assessment
Turn to page 113 and complete the assessment
6-1 Assessment
TrueB (Genuine dissent)TrueFalseFalse
6-1 Assessment
No contract because the offer was not communicated to the bystander. Bystanders statement is an offer.No, social engagement not a contractNo, 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 quantity.
How can offers be ended?
Revocation by theofferorThe right to withdraw an offer before it is acceptedAt any time before it is accepted by theofferee, the offer can be revokedRevocation is not effective until it is communicated to theofferee
How can offers be ended?
Time stated in the offerTheofferormay state how and when the offer must be acceptedExample: 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
How can offers be ended?
Reasonable length of timeIf no time is stated, the offer will end after a reasonable length of time, which depends on the circumstancesExample: different length of time for produce and a bulldozer
How can offers be ended?
Rejection by theOffereeOffereeclearly reject the offer, the offer is terminated
How can offers be ended?
CounterofferOffereechanges theofferor’sterms in important ways and sends it back to theofferor.The counteroffer becomes the new offer.Death or Insanity of eitheroffereeorofferorDestruction of the specific subject matter
How can an offer be kept open
Option –offereegive something of value in return for a promise to keep the offer openFirm 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
6-2 Assessment
Turn to page 117 and complete the assessment
6-2 Assessment
TrueD (terminated)CounterofferB (purchase of an option by theofferee)FalseOptionBNoFirmYes
6-2 Assessment
Yes, Wood can still withdraw her offer even when she promised to leave it open. A firm offer or option is required to bind anofferorto the promise to leave an offer open.No. The price in the ad was merely an invitation to negotiate. Tom is legally free to reject any and all offers.This is a firm offer and therefore binding.Opiehas not been sold because Phil did not accept the offer without alterations.
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 madeMatch the terms in the offerBe communicated to theofferor
Acceptance Communicated
Unilateral Acceptance –Offerorpromises something in return for theoffereee’sperformanceExample: Theofferorpublicly promises to pay a $100 reward.Bilateral Acceptance – Both parties promise to do something
When Acceptances are Effective
Theofferormay require theoffereeto use a certain communication method to accept.If a different method is used, then this is treated as a modification of the offer.Most courts say that acceptance is effective when sent by the same means used for the offer or by faster means
When Acceptances are Effective
Under UCC, the acceptance of an offer for the sale or purchase of goods is by a reasonable means, it is effective when sent.Oral acceptance are effective at the moment the words are spoken directly to theofferor.Acceptance sent by mail takes effect when properly posted.
When Acceptances are Effective
A telegram takes effect when handed to the clerkA fax transmission is instantaneous when the transmission lines are open and equipment is working properlyTheofferormay specify that an acceptance will not be binding until it is actually received.
6-3 Assessment
Turn to page 121 and completethe assessment
6-3 Assessment
AcceptanceTrueFalseB (bilateral)True
6-3 Assessment
No. The $2,000 was merely an invitation to negotiate.No, there was not an acceptance because the mirror image rule is applied in the are of real estate contacts. Smith varies the terms contained in the original offer.This is a contract for the sale of goods between merchants. No objection was made, so the contract is valid and enforceable with thenew terms

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Business Law_ Ch 6 - sheffield.k12.oh.us