Business Law - Ch. 14 - Outline PDF

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This document includes an outline of the information provided in chapter 14 of "Dynamic Business Law" 5th Edition....

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Business Law 1 – Chapter 14 – Outline The Agreement Disclaimer: The following content is MY personal interpretation of the content provided in the textbook or lecture, it is NOT the exact information given in the textbook or lecture. This document does not contain any exam/quiz content for the course, it is only composed of the information I found most important in the section. Although I try my best to include as much accurate information as possible, it is advised that you study your own materials and gather your own interpretations.

1st element of a contract. Agreement process begins when the offeror makes an offer to the offeree. Elements of the Offer An offer has 3 elements: 1. Intent 2. Definite + Certain Terms 3. Communication to the Offeree Intent Intent: the intended purpose or goal of an action, especially in a contract. Offeror must manifest an intent to be bound by the offeree’s acceptance. Contracts are interpreted using an objective standard. - Court is only concerned with the party’s outward manifestations of their intent, not what they’re thinking. - They interpret words/actions however a reasonable person would. Offeror may try to avoid contract by claiming that they were only joking, but courts aren’t interested in one’s hidden intent. Case 9-2: “if you joke too well, you may find yourself in an unwanted contract”. Preliminary Negotiations An invitation to negotiate or an expression of possible interest is NOT an offer. -Example: a firm is requesting bids for a construction project. Their request is just an invitation for contractors to make offers. Thus, request for bids = invitation and the bids = offers. Advertisements Ads are another illustration of an invitation to make an offer. Ads aren’t offers but can be treated as offers under certain circumstances. - If an ad specifies a limited quantity and provides the specific means by which the offer can be accepted, the courts will treat it as an offer. To prevent possible bait-and-switch ads, some states have consumer protection laws requiring advertisers to specify that quantities are limited or that rain checks will be available if the item sells out.

Auctions Auction WITH Reserve: the seller is merely expressing an intent to receive offers. Auction WITHOUT Reserve: the seller is making an offer to accept the highest bid. - Very few auctions are WITHOUT reserve. Definite and Certain Terms Under common law, terms of an offer must be definite and certain. -must contain all material term. Material Terms: terms that allow a court to determine what the damages are in the event of a breach. The question of whether or not the terms of an offer were certain enough for the formation of a valid contract often arises when one party believes a contract had been formed and the other party believes there was no contract formed because the terms were not definite enough. Communication to the Offeree Offer must be communicated to the offeree or the offeree’s agent. ONLY the offeree can accept the offer. Termination of the Offer Offers terminate at some point and once the do, they can no longer be accepted to form a binding contract. There are 5 ways to terminate an offer: 1. Revocation by the Offeror 2. Rejection by the Offeree 3. Death or Incapacity of the Offeror 4. Destruction or Subsequent Illegality of the Subject Matter 5. Lapse of Time or Failure of Another Condition Specified in the Offer. Elements of the Acceptance Under common law, the requirements for a valid acceptance parallel those for a valid offer. 1. Manifestation of Intent to be Bound to the Contract. 2. Agreement to the Definite and Certain Terms of the Offer. 3. Communication to the Offeror. Manifestation to be Bound to the Contract There are 2 ways an offeree can manifest their intent to enter into a contract: 1. By performance. 2. By a return promise. As a general rule, silence can NOT be used to form a contract 3 circumstances where silence CAN be used: 1. Offeree receives the benefits of the offered services with reasonable opportunity to reject them and knowledge that some form of compensation is expected, yet the offeree remains silent.

2. Offeror tells offeree that silence or inaction will constitute an acceptance, and the offeree, by remaining silent, intends to accept. 3. The parties, by their previous course of dealing with each other, have established a pattern of behavior whereby it would be reasonable to assume that silence was intended to communicate acceptance. Acceptance of Definite and Certain Terms: The Mirror-Image Rule The mirror-image rule applies to the acceptance when a bilateral contract is being formed under common law. Mirror-Image Rule: the terms of the acceptance must mirror the terms of the offer. -if they do not, no contract is formed. -caused issues for businesses because it didn’t allow acceptances with additions. Modified by UCC Section 2-207 to allow additions under certain circumstances ONLY applicable if the parties are merchants. - If the parties are NOT merchants, any additions are merely proposals to the contract and must be accepted by the offeror. If the acceptance terms differ from the offer’s terms, various states treat the terms differently. Communication to the Offeror The offeror can control the means by which the acceptance is communicated. If no means of communicating the acceptance is specified, any reasonable means is generally acceptable. Acceptance must be received before a revocation is received (if any revocation exists) in order for a contract to form....