MANGMT 3540 1st Edition Lecture 9Outline of Last Lecture I. Substantive Criminal LawII. Crimes related to BusinessIII. Defenses to CrimesOutline of Current Lecture IV. Mutual Manifestation of AssentV. Offer Defined and Four Non-OffersVI. Three Requirements for Valid OfferVII. When does offer terminate?VIII. Requirements for Valid AcceptanceIX. Acceptance and Unilateral ContractsX. Introduction to Uniform Commercial CodeXI. Variations under the UCCCurrent LectureI. Mutual Manifestation of AssentA. Offer and Acceptance i. Both offer and acceptance are viewed objectivelyB. Standard of Objectivity i. Look at words spoken or written and conduct and what they would mean to a reasonable personII. Offer Defined and Four Non-OffersA. Definition of a valid offer:i. A serious specific offer and a specific demand in a contract settingB. Four Non-Offersi. Expressions of opinion1. A statement as to general quality or a prediction2. E.g. contractor’s estimate vs. bid; My car’s worth $10,000; Surgeon: your boy’s leg will heal in a few daysThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.ii. Statements of Intention1. A statement of what one may do in the future. I plan…2. E.g. I plan on selling my son’s car for $1,000; I may, I’m going to; I’m consideringiii. Preliminary Negotiations1. Inquiries or general discussions of potential contract terms2. E.g. Are you interested in…; would you take $1,000 for your son’s car? Would you consider $750 for the car?iv. Certain Advertisements and Auctions1. With Ads, the danger is multiple acceptances2. Ads are not offers unless they are: very specific, eliminating multiple acceptances: Fur buyer example3. E.g. Catalogs, Craig’s list4. Auctions are not offers unless they are: advertised without reserve(opposite of eBay)III. Three Requirements for Valid OfferA. Intentioni. Serious and objective intention by offeror to be boundii. Offers made in obvious anger, jest or excitement are not bindingiii. E.g. an offer made while drunk is not validB. Definitenessi. An offer definite enough to ascertain terms of contractii. Including: names, description of goods or services, quantity, price, and important delivery termsC. Communicationi. Offer must be communicated to the offeree1. Communication by the offeror2. Receipt by the offereeIV. When does offer terminate?A. By Reovcation by the Offeror:i. Revocation is typically possible any time up to acceptance, even if the offeror said he would keep it open for a certain period of time1. E.g. Garage sale offer for lawn mower – seller promises it will be openii. Exceptions: options contracts (where money is paid to keep the offer open); a merchant’s firm offer under the UCC (see below)B. By lapse of time:i. Stated time: this offer is open for 3 daysii. Reasonable time: if a time is not stated, the offeree has a reasonable timeto accept1. The amount of time which is reasonable will vary with the situation, for example, it will be a short time if it is an offer to buy commodities (like bananas) whose value will decline rapidlyC. By Rejection or counteroffer:i. Any manifestation of rejection, or a counter-offer terminates the offerii. Mirror image rule: an acceptance that contains new or varying terms is considered a rejection and counter-offer. (The acceptance must be a mirror image of offer or it is invalid)D. By Operation of Law:i. Death or incompetence of either partyii. Intervening illegality (performance becomes after the offer but before acceptance); illegal e.g. zoning chargeiii. Destruction of the subject matter of the contractE. By terms of the offer:i. E.g. this loan commitment shall be binding upon the bank until the prime interest rate rises by ¼ of 1% or moreTrue or False: A. An estimate is an offer to perform for the estimated price (FALSE)B. In a land sale contract, the offer must contain the price (TRUE)C. At a garage sale an offer that simply states, “I’ll buy that mower from you for $100 is sufficient.” (TRUE, this is enough)D. Once an auctioneer begins to solicit bids on an item, normally the seller has made an irrevocable offer to sell to the highest bidder. (FALSE)E. If I tell you I’ll hold an offer open, I typically can’t revoke it until the time I gave you passes. (False, can revoke because you didn’t give me anything to keep the offer open)F. I am entitled to a reward offered to return a diamond ring only if I saw the reward offer beforeI returned it. (TRUE, offer must be received before I can accept it AND must see it to receive it)G. “Will you take $100 for that bike?” is a valid offer. (FALSE, it’s an inquiry/negotiation)H. If I’ve received an offer for my land, and the house on it burns down, the offer is terminated. (TRUE)I. If I give you $10 for you to hold an offer open for 30 days, you still don’t have to hold it open. (FALSE)J. If I tell you I’ll hold a valid offer open, and you accept before I revoke, we have a contract. (TRUE)V. Requirements for Valid AcceptanceA. Acceptance by Whomi. Must be made by offeree (not) another personB. Terms of Acceptance-3 requirementsi. Must be unconditional, unequivocal and under the same termsii. Unconditional: absoluteiii. Unequivocal: decisiveiv. Same terms: must be the mirror image of the offer or it’s rejectionC. Must be Communicatedi. Silence is not acceptance absent prior agreementii. Timely acceptance: must accept before offer terminates by any means1. Acceptance is effective when correctly mailed (or sent by similar means) – even if never received, according to the mailbox rule. The mailbox rule has no application in email or internet acceptances2. Remember: offers and revocations must be received to be validiii. Acceptance must be sent by reasonable means for the mailbox rule to applyiv. An offeror may negate the mailbox rule and specify exactly how acceptance is to be made and when it is effective1. Example: Fred says to Tom, I’d like to hire you to build my chimney.Will you keep your $1,500 offer open for 5 days? Tom says, “sure. Just send me a letter if you want to accept.” --- Tom mails a revocation on 2nd day. --- Fred mails an acceptance on 4th day --- Fred receives Tom’s revocation on 5th day --- Tom received Fred’s acceptance the 6th day. (Revocation is invalid on 5th