Contracts: QuickStudy Laminated Reference Guide

The Agreement Process

OFFER

Offeror: Person who makes the offer and now has the power to control the offer

Offeree: Person to whom the offer is made and whom now has the power of acceptance

Offers must:

Be communicated

Indicate a desire to enter into a contract

Be directed at a person or group

Invite acceptance

Create understanding that if accepted, a contract now arises

INTENT TO CONTRACT

Expression of present intent to enter into a contract

Intent to be legally bound to the contract

Must be an objectively reasonable manifestation of intent to contract

Use a reasonable standard unless one party has specific knowledge to which they can be held

Restatement 2nd Contracts §24: Manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it

Actual knowledge of Offeree

Communication of offer by Offeror to Offeree

Creates power of acceptance in Offeree

INDEFINITENESS OF THE CONTRACT

Even though parties have reached an agreement so that there is mutual assent, the agreement may be void if the content of the agreement is unduly uncertain

Offer must be so definite as to its material terms, or require such definite terms in the acceptance, that the promises and the performances to be rendered are reasonably certain

Material terms may include subject matter, price, payment terms, quantity, duration, and work to be done

Under UCC, the only term required to be definite is quantity

OFFERS DISTINGUISHED FROM NON-OFFERS

Opinions

Expressions of opinion and words of reassurance are not promises and are therefore not offers

Reasonable person test used to distinguish opinions from offers, using circumstances and language expressed

Advertising

Generally, an invitation to receive offers from the public where the advertiser has an option to accept, negotiate, or reject the public’s offer to buy

Obvious jokes in communication are not offers

However, if language is specific enough as to price and quantity, then it could be an offer

Inquiries and quotes

Generally considered as invitations for an offer

To determine if it is an inquiry or offer, examine whether there is language of commitment and whether the terms, especially quantity, are sufficiently definite

Auctions

Default: The item up for auction is treated as an invitation for offers to buy, which may be rejected by the seller. Thus, bidders at an auction are treated as offerors

Exception: If the auction is without reserve, meaning the seller is making an offer to sell for any price, which can then be accepted by the buyer when presented for auction. Thus, bidders here