ES 2.00 UNDERSTAND CONTRACT LAW

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ES 2.00 UNDERSTAND
CONTRACT LAW
OBJ. 2.01 UNDERSTAND THE ELEMENTS AND CHARACTERISTICS OF A
CONTRACT
Elements of a Contract

Offer

Acceptance

Genuine Agreement/Assent

Consideration

Capacity

Legality
All elements MUST be present to be an enforceable contract.
OFFER
Proposal by one party to another with intent to create a legal binding agreement

Offeror


Makes the offer
Offeree

Offer made to this person
Requirements of an Offer


Serious Intent

Must intend to make the offer

Advertisements?
No serious intent

Known as an invitation to negotiate
Definite and Certain



Must use definite words
Communicated to the Offeree

Phone, fax, Internet, letter, etc
Termination of Offer

Revocation – Taking back of an offer by offeror

Rejection – Refusal by the offeree

Counteroffer – Any change in the terms of the offer

Death – Offeror dies

Insanity – Offeror is declared insane
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Expiration of Time – If the offeror puts a time limit on the offer and it has
passed
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Destruction of the subject matter
Options & Firm Offers

Option – the offeree gives the offeror something of value in return for a
promise to keep the offer open for a set period of time
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Firm Offer – a written offer for goods that states the period of time during
which the offer will stay open

No additional consideration is required

Maximum period of time set by the UCC – 3 months

Offeror must be a merchant who deals in related goods on a daily basis
ACCEPTANCE
UNQUALIFIED WILLINGNESS BY THE OFFEREE TO GO ALONG WITH
THE OFFER
•
MIRROR IMAGE RULE
•
Terms of the acceptance must match exactly (mirror) the terms
of the offer
•
Any change means there is no acceptance (counteroffer)
Methods of Acceptance


Bilateral Acceptance

Offer is accepted by offeree through communication of the promise to the offeror

Only requires giving a promise to perform, not performance itself

Most offers are bilateral
Unilateral Acceptance


Offeror promises something in return for offeree’s performance and indicates that
performance represents acceptance
Silence as Acceptance

Does not represent acceptance

Offeror cannot word offer in a way that silence would be considered acceptance

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