Contracts agreement ppt business law

1. 1
Contracts: Agreement

2. 2
Introduction
 Agreement = offer and acceptance.
 Parties must show mutual assent to terms of
contract.
 Once an agreement is reached, if the other
elements of a contract are present, a valid
contract is formed.

3. 3
§1: Requirements of the Offer
 Offeror’s serious intention.
 Definiteness of terms.
 Communication to Offeree.

4. 4
Offeror’s Serious Intention
 Contract is judged by what a reasonable person in
the Offeree’s position would conclude about the
offer.
 Case 10.1: Lucy v. Zehmer (1954).
 Offers made in anger, jest, or undue excitement are
usually not offers.
 Expressions of opinion are not offers.
 Statements of Intention or preliminary negotiations
are are not offers.
 Advertisements, Catalogues, Price Lists, and
Circular are treated as Invitations to negotiate and

5. 5
Offer-Definiteness of Terms
 Terms (Expressed or Implied).
 Identification of the parties.
 Object or subject matter of the contract.
 Consideration to be paid.
 Time of payment, Delivery, or Performance.
 Case 10.2: Satellite Entertainment Center v.
Keaton (1997).

6. 6
Offer-Communication
Offeree’s knowledge of the offer:
 Directly by the Offeror.
 Use of Agents.

7. 7
§2: Termination of the Offer
 An offer may be terminated prior to
acceptance by either:
 Action of the Parties; or by
 Operation of Law.

8. 8
Termination by
Action of the Parties [1]
 Revocation of the offer by the Offeror:
 Offer can be withdrawn anytime before Offeree
accepts the offer.
 Effective when the Offeree or Offeree’s agent
receive it.
 Exceptions:
 Irrevocable Offers.
 Option Contract: Promise to hold an offer open for a
specified period of time in return of consideration.

9. 9
 Exceptions (Cont’d):
 Detrimental Reliance or Promissory Estoppel where
Offeree relies on offer to his or her detriment, thus
Offeror is barred from revoking the offer.
 Rejection of the offer by the Offeree:
 Rejection by the Offeree (expressed or implied)
terminates the offer.
 Effective only when it is received by the Offeror
or Offeror’s agent.
Termination by
Action of the Parties [2]

10. 10
Termination by
Action of the Parties [3]
 Rejection by Offeree (Cont’d).
 A counteroffer by the Offeree is a rejection of the
original offer and making of a new offer.
 Mirror Image Rule.
 Offeree’s acceptance to match the the Offeror’s
offer exactly.

11. 11
Termination by
Operation of Law
 Lapse of Time.
 Offer terminates by law when the period of time
specified in the offer has passed.
 If no time period for acceptance is specified, the
offer terminates at the end of a reasonable period
of time.
 Destruction of the Subject Matter.

12. 12
Termination by
Operation of Law [2]
 Death or Incompetence of the Offeror or
Offeree.
 Supervening Illegality of the Proposed
Contract.

13. 13
§3: Acceptance
 Acceptance is the
 Voluntary act (expressed or implied),
 by the Offeree that,
 shows assent (agreement),
 to the terms of an offer.
 “Mirror Image” Rule.

14. 14
Silence as Acceptance
 Acceptance of Services by Silence.
 Sometimes Offeree has a duty to speak.
 Prior Dealings and Acceptance.
 Silence can be acceptance if there are prior
dealings.
 Solicited Offers.
 Offeree has a duty to reject.

15. 15
Mode and
Timeliness of Acceptance
 Mail Box Rule - Acceptance becomes
effective on dispatch, providing that
authorized means of communication is used.
Offeree accepts by using the stipulated means
of acceptance.
 Offeror specifies (expressly or impliedly) how
acceptance should be made.
 Effective when dispatched (mailed, shipped).

16. 16
Means of Acceptance
 Exceptions:
 If acceptance is not properly dispatched by the Offeree.
 If Offeror specifies that acceptance will not be effective
until it is received.
 If acceptance is sent after rejection, whichever is received
first is given effect.
 Unauthorized Means of Acceptance.
 Not effective until it is received by the Offeror. If timely
sent and dispatched it is considered to have been effective
on its dispatch.
 Case 10.3: Osprey LLC v. Kelly-Moore Paint
Company (1999).

17. 17
§ 4: Technology and Acceptance
 Traditional rules provide framework for
digital age.
 But traditional rules may not apply to
acceptances via Fed Ex, email, or fax.
 Generally, ‘mailbox rule’ does not apply to
online offers.