Chapter 10 The Agreement Offer Requirements for an Offer Offer first step in the contract formation process o Offer says this is it if you agree to these terms we have a contract Offeror person who makes an offer Offeree person to whom an offer is made 3 requirements to make it an offer o Some objection indication of a present intent to contract on the part of the offeror o Specificity or definiteness in the terms of the alleged offer o Whether the alleged offer has been communicated to the offeree Intent to Contract to contract For a proposal to be considered an offer the offeror must indicate present intent o Present intent the intent to enter the contract upon acceptance o Signifies that the offeror is not joking haggling or equivocating The Objective Standard of Intent Following the object theory of contracts an offeror s intent will be judged by an objective standard what his words acts and the circumstances signify about his intent o If a reasonable person familiar with all the circumstances would be justified in believing that the offeror intended to contract a court would find that the intent requirement of an offer was satisfied Definiteness of Terms One reason for the requirement of definiteness is that definiteness and specificity in an offer tend to indicate an intent to contract Another reason is that courts need to know the terms on which the parties agreed in order to determine if a breach of contract has occurred and calculate a remedy if it has Definiteness Standards under the Common Law Traditionally contract law required a relatively high standard of definiteness for offers requiring that all the essential terms of a proposed contract be stated in the offer Definiteness Standers under the UCC An important difference between Code and common law is that under the Code the fact that the parties left open one or more terms of their agreement does not necessarily mean that their agreement is too indefinite to enforce Code has gap filling rules which allow them to fill contract terms left open on matters of price quantity delivery and time for payment Intention is still at the heart of these modern contract rules but the Code also seeks to further parties underlying intent to contract even though the parties have failed to express their intention about specific aspects of their agreement Communication to Offeree When an offeror communicates the terms of an offer to an offeree he objectively indicates an intent to be bound by those terms The fact that an offer has not been communicated on the other hand may be evidence that the offeror has not yet decided to enter into a binding agreement Special Offer Problem Areas Advertisements Advertisements for the sale of goods at specified prices are not considered to be offers they are treated as being invitations to offer or negotiate o Includes signs handbills catalogs price lists and price quotations Advertisements offering rewards for lost property for information or for the capture of criminals are generally treated as offers for unilateral contracts Rewards Auctions Sellers at auctions are generally treated as making an invitation to offer those who bid are treated as making offers that the owner of the goods may accept or reject Acceptance occurs only when the auctioneer strikes the goods off to the highest bidder the auctioneer may withdraw the goods at any time before acceptance Auctions advertised as without reserve have made an offer to sell the goods to the highest bidder and the goods cannot be withdrawn after a call for bids has been made Termination of Offers After a court has determined the existence and content of an offer it must determine the duration If the offer was not still in existence when the offeree attempted to accept it no contract was created Terms of the Offer Offerors have the power to determine the terms and conditions under which they are bound to a contract o Ex must accept within 5 days Lapse of Time time Revocation General Rule Offers Are Revocable Offers that fail to provide a specific time for acceptance are valid for a reasonable o Reasonable time depends on the circumstances surrounding the offer General common law rule on revocations is that offerors may revoke their offers at any time prior to acceptance even if they have promised to hold the offer open for a state period of time Exceptions to the General Rule 1 Options a Option a separate contract in which an offeror agrees not to revoke her offer for a stated time in exchange for some valuable consideration 2 Offers for unilateral contracts a To prevent injustice to offerees who rely on such offers by beginning performance 2 approaches are available to modern courts i Once the offeree has begun to perform the offeror s power to revoke is suspended for the amount of time reasonably necessary for the offeree to complete performance ii Another approach is to hold that a bilateral contract is created once the offeree begins performance 3 Promissory estoppel a Cases in which the offeree relies on the offer being kept open the doctrine of promissory estoppel can operate to prevent offerors from revoking their offers prior to acceptance 4 Firm offers for the sale of goods a applies to offers for the sale of goods ONLY b Like an option a firm offer is irrevocable for a period of time i In contrast to an option a firm offer does not require consideration to be given in exchange for the offeror s promise to keep the offer open c To be a firm offer and offer must i Be made by an offeror who is a merchant ii Be contained in a signed writing iii Give assurances that the offer will be kept open d Outer limits on a firm offer s irrevocability is 3 months Time of Effectiveness of Revocations General rule is that revocations are effective only when they are actually received by the offeree public Major exception on effectiveness of revocations concerns offers to the general o Because its impossible to reach every offeree with a revocation it is held that a revocation is made in the same manner as the offer is effect when published without proof of communication to the offeree An offeree may expressly reject an offer by indicating that he is unwilling to Can impliedly reject it by making a counteroffer Time of Effectiveness of Rejections Rejections like revocations are effective only when actually received by the Rejection accept it offeror The death or insanity of either party to an offer automatically terminates the offer Death or Insanity of
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