Transcript Business Law and the Regulation of Business Chapter 10: Mutual Assent By Richard A.

Business Law and the
Regulation of Business
Chapter 10: Mutual Assent
By
Richard A. Mann
&
Barry S. Roberts
Topics Covered in this Chapter
I. Offer
A. Essentials of an Offer
B. Duration of Offers
II. Acceptance of Offer
A. Communication of Acceptance
B. Variant Acceptances
Essentials of an Offer



Communication – offeree must have
knowledge of the offer and the offer must be
made by the offeror to the offeree.
Intent – determined by an objective
standard of what a reasonable offeree
would have believed.
Definiteness – offer's terms must be clear
enough to provide a court with a basis for
giving an appropriate remedy.
Duration of Offers

Lapse of Time – offer remains open for
the time period specified or, if no time is
stated, for a reasonable period of time.
 Revocation – generally, an offer may be
terminated at any time before it is accepted,
subject to the following exceptions.
 Rejection – refusal to accept an offer
terminates the power of acceptance.
 Counteroffer – counterproposal to an
offer that generally terminates the original
offer.
Duration of Offers
 Death
or Incompetency – of either
the offeror or the offeree terminates the
offer.
 Destruction
of Subject Matter –
of an offer terminates the offer.
 Subsequent
Illegality – of the
purpose or subject matter of the offer
terminates the offer.
Duration of Revocable Offers
Offer Effective
Communicated Intent
Definite and certain
No Offer
OFFER
OPEN
Offer Terminated
Lapse of time
Revocation
Rejection
Counteroffer
Death
Incompetency
Destruction of subject matter
Subsequent illegality
No Offer
Revocation
 Option
Contract – contract that
binds offeror to keep an offer open for a
specified time.
 Firm Offer – a merchant's irrevocable
offer to sell or buy goods in a signed
writing ensures that the offer will not be
terminated for up to three months.
 Statutory Irrevocability – offer
made irrevocable by statute.
Revocation

Irrevocable Offer of Unilateral
Contract – a unilateral offer may not be
revoked for a reasonable time after
performance is begun.

Promissory Estoppel – noncontractual
promise that binds the promisor because she
should reasonably expect that the promise
will induce the promisee (offeree) to take
action in reliance on it.
Acceptance of Offer
Definition – positive and unequivocal
expression of a willingness to enter into
a contract on the terms of the offer.
 Mirror Image Rule – except as
modified by the Code, an acceptance
cannot deviate from the terms of the
offer.

Communication of Acceptance

General Rule – acceptance effective upon
dispatch unless the offer specifically provides
otherwise or the offeree uses an unauthorized
means of communication.
 Stipulated Provisions in the Offer –
the communication of acceptance must
conform to the specification in the offer.

Acceptance Following a Prior
Rejection – first communication received by
the offeror is effective.
Communication of Acceptance

Authorized Means – the Restatement
and the Code provide that unless the offer
provides otherwise, acceptance is authorized
to be in any reasonable manner.
 Unauthorized Means – acceptance
effective when received, provided that it is
received within the time within which the
authorized means would have arrived.
 Defective Acceptance – does not create
a contract but serves as a new offer.
Offer and Acceptance
Communications by
Offeror
Time Effective
Effect
Offer
Received by offeree
Creates power to form a
contract
Revocation
Received by offeree
Terminates power to form a
contract
Rejection
Received by offeror
Terminates offer
Counteroffer
Received by offeror
Terminates offer
Acceptance
Sent by offeree
Forms a contract
Acceptance after prior
rejection
Received by offeror
If received before rejection,
forms a contract
Communication by Offeree
Mutual Assent
Has a definite and certain offer been communicated?
No
No offer
Yes
Has the offer been revoked by the offeror?
Yes
No
Has the offeror received a rejection or counteroffer?
No
Has lapse of time, death, incompetency, destruction of
subject matter, or subsequent illegality occurred?
No
Yes
Offer
terminated
Yes
No
No contract
Yes
Contract
formed
Is acceptance effective?