Transcript Chapter 4-2
Chapter 4-2 How a Contract Begins Bell Ringer #2 / Read the case study on page 84. Write down who you think should win this case and why. Bell Ringer #3 An advertisement in the newspaper read: “Lava Lamps, $49.98” James went to the store and said “I want to buy a lava lamp”. The salesperson apologized and said the lamps had been sold out within an hour after the store opened. Is this an offer or an invitation to negotiate….explain your answer Element #1 OFFERS Vocab to Know Offer - a proposal by one party to another party to enter into a legally binding agreement. Offeror - Person making the offer Offeree - Person receiving the offer 3 Basic Requirements of Offers 1. Serious Intent- 2. Definiteness and Certainty - 3. Communicated to the Offeree - about the offer. Must be serious parts of the offer have to be defined, you can’t guess what they mean. has to be communicated to the offeree Invitations vs. Offers Invitations to negotiate - invitations to deal, trade or make an offer. Ads are ITN - can’t sell items to everyone - wait for customer to buy the item (make an offer) storeowner can accept/reject. Exceptions to the Rule Ads are considered OFFERS if they: contain specific promises Use phrases like “first come-first serve” Limit the number of items that will be sold Page 88 - is that ad an invitation to negotiate or a contract? Why? Exercise: • Write down an offer that does not meet all three requirements. • Switch papers with someone. • Write down what requirement has not been met. • Come up with some way to change the scenario to make the offer valid. Termination of an Offer (5 Ways) Revocation - take back the offer 1. • • 2. 3. Before it was accepted Becomes effective when it is received/communicated to the offeree Rejection - offeree refuses the offer Counteroffer - refusing the initial offer and making your own offer. Termination of an Offer (5 Ways) 4. 5. Expiration of Time - contract not made in time specified or in a reasonable time period if no time was specified Death/Insanity - if the offeror dies or becomes insane before the offer is accepted - death ends an offer but it doesn’t end a contract - except contracts that deal with personal service. Element #2 Acceptance Requirements of Acceptance 1. Acceptance must be unconditional. 2. Must follow the rules of the methods of acceptance. 1. Unconditional Acceptance must not change the terms of the original offer in any way. Mirror Image Rule - terms stated in the acceptance must exactly match (mirror) the terms of the offer. Counteroffers Offeror does NOT have to go along with the change, therefore NO contract exists! Roles are switched, the new offeree may accept/reject the change. Exceptions to the Mirror Image Rule: Primary exceptions are made by the UCC. Contracts for the sales of goods, personal property (clothing, furniture, food, cars, appliances, etc…) 2. Methods of Acceptance: The contract comes into existence at the TIME an acceptance takes place. when the parties are separated by DISTANCE the acceptance then occurs when the message is sent. PAST PRACTICES - Authorization of an acceptance can also be implied by any reasonable means Contract can SPECIFY a time it must be accepted by, or an action must occur. Element #3 Genuine Agreement Genuine Agreement agreement is true and genuine Valid offer met by a valid acceptance Termination of Gen. Agreement Fraud Misrepresentation Mistake Undue Influence Economic Duress Homework: Questions on page 93 #1-3 Questions on page 95 #2-9