Chapter 13 Formation of Contracts Offer and Acceptance Used to be called The Agreement An agreement needs both offer and acceptance Not all agreements are contracts but all contracts need an You don t need words to create a binding agreement Either the offer acceptance or both may be implied i e actions agreement circumstances Offer 1 The Offeror makes the offer must show intent to enter a legally binding agreement contract 2 What is offered must be reasonably definite 3 The offer must be communicated to the Offeree the one to whom the offer is made Communicated The offer must leave the control of the Offeror and come within the control of the Offeree If sent by mail it leaves the Offeror but if not received by the Offeree then it has not come within the control of the Offeree Situation Offeror mails an offer to Offeree it is in the mail and on the way It goes to the Offeror s local post office and is then sent to the post office of the Offeree The Offeree is on vacation the day the mail arrives at her house and is placed in the mail slot the mail is now inside of the house Do we have an effective offer Yes because it has come in to the control the property of the house of the Offeree The Offeree does not have to know or see the offer If the neighbor picks it up it is not under your control If you lose it drop it no longer have control it does not matter you once had control If it s a mailbox outside of your house then its not within your control the postal service technically owns it If you are told what the letter looks like and that you are to be receiving the letter you see it in you mailbox and do not take it its still in your control Advertisements are deemed to be an initiation to negotiate or an invitation to make an offer it is not considered to be an offer Offers that are terminated through Rejection Revocation and By Operation of Law 1 Rejection to reject an offer will terminate it Any language from the Offeree to the Offeror that says the Offeree does not accept counts as rejection Any actions that are shown from the Offeree to the Offeror that show the Offeree does not accept counts as rejection To say no I don t want it Rejections like offers are only effective when they are received o If a rejection is given through voicemail it is received it is rejection rejection o If the voicemail box is broken it is not received it is not Counter Offer where the Offeree in trying to accept changes the terms of the offer in anyway and is not accepted o The effect of the counter offer is to be a rejection of the original offer and a new offer o It is affective when it is received o Example I will sell you ten pink cups for 10 and the Offeree says I will buy ten blue cups for 10 This is a rejection o Example I will sell you ten pink cups for 99 cents each and Offeree says I will buy the ten pink cups for 69 cents each This is a rejection o Change in the price change in the place of performance the time of performance change in quality next best change in color change in quantity 2 Revocation the Offeror taking back the offer Are only effective when they are received An Offeror can hire someone as an agent to make the offer for the Offeror its like you are doing it even through the agent Where the Offeree learns from a reliable third party facts that indicate that the offer is no longer open to the Offeree the learning of those facts acts as a revocation even if it does not come from Offeror 3 By Operation of Law An offer has a life of two days and you call the second day and say I accept but the Offeror has already offered to someone else and that Offeree accepted Now the Offeror is entered into two contracts The law says that under certain circumstances a law is terminated Terminated automatically o The death of the Offeror or Offeree terminates the offer o The loss or destruction of the subject matter of the offer will terminate the offer If you are being offered grain before the offer is revoked or rejected the place that the grain is being stored in catches fire the offer is terminated o Intervening illegality When the offer is offered is legal but after some time a law is passed that makes that offer illegal the offer is terminated due to Intervening illegality o Based upon time sometimes offers say in the offer how long they will be open Where no time is stated we have to figure out when will the offer terminate Where no time is stated an offer will terminate by lapse of time a reasonable time Sometimes a business exists that in that business the offer lasts a particular amount of time As long as the offer is open the Offeror has the right to revoke the offer Contract law is state by state and is governed by what cases say the law should be precedent Courts will use precedent of past cases to decide current cases not through Statute Law The Uniform Commercial Code The Code The UCC Covers the buying and selling of goods Goods moveable tangible personal property Does not affect the law with employment real estate services or anything intangible A Firm Offer is affected by the code and the Offeror cannot revoke 5 elements 1 An offer to buy or sell goods 2 Has to be in writing 3 Offeror has to be a merchant one who deals in goods OF THE KIND Offeree 4 The offer must give assurance that it will be held open for the 5 The offer will be irrevocable for the time stated in the offer An Option if the Offeror makes an option the Offeror cannot revoke the offer during the period of the option The second way that offers become irrevocable Example I will sell you my bike for 400 If you bake me 5lbs of chocolate chip cookies I will hold the offer to you until noon tomorrow Acceptance Only the Offeree has the power to accept an offer An acceptance is effective upon dispatch sent by any means reasonable under the circumstances it has to be properly addressed and paid for To leave the control of the Offeree and come within the control of a means of transmittal The Dispatch Rule The Clang Rule Let s assume the Offeree is accepting by mail what is the means of transmittal The United States Postal Service Example Leah sends you an offer by mail and the offer is now effective you decide to accept it so you put it in an envelope address it post it go to the US Postal service you put it in the …