Chapter 10

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  1. Mutual Assent
    Usually evidenced by offer & acceptance. Both must show a seious intent by the parties to be bound to a leagally-binding agreement.
  2. Objective Theory of Contracts
    Used to determine the intent of both parties. (e.g. words, actions, and circumstances [prior dealings] of one party mean whatever a reasonable person in the other party's position would think they mean. The ACTUAL [or "inner-heart"] intent of the parties is irrelevant.)
  3. Offer
    A proposal to enter into a bargain
  4. 3 Elements needed for Offer to be effective
    • 1.) Serious and objective intent (if offer made in anger or jest, or is a request or invitation to negotiate, or an advertisement, it is NOT a valid offer)
    • 2.) Offer's terms must be reasonably definite or ascertainable from the offer itself or from the circumstances in which the offer is made.
    • 3.) Offer must be communicated to the offeree.
  5. Effect of valid Offer
    Once made, for as long as the offer is alive, the offeree has the power to accept it and form a contract.
  6. Termination of Offer by Action of the Parties
    • 1.) Revocation of offer by offeror
    • 2.) Rejection of offer by offeree
    • 3.) Counteroffer by the Offeree
  7. Revocation of Offer
    Done by offeror. Effective if an when the offeree receives it at any time prior to acceptance. Effective even if the offeror has promised to keep the offer open (unless offer is irrevocable). Ex of irrevocable offers: option contracts (CL and UCC) and firm offers (UCC Only)
  8. Rejection of Offer
    Done by offeree. Words or conduct showing a clear intent not to accept an offer.
  9. Counteroffer
    Done by offeree. Rejection of original offer and simultaneous making of a new offer. CL uses mirror image rule.
  10. Termination of the offer by Operation of Law (automatic)
    • Terminated by:
    • - lapse of time
    • - destruction of the specific subject matter of the bargain stated in the offer
    • - death or incompetency of offeror or offeree
    • - illegality
  11. Acceptance of an Offer
    Voluntary act (words or conduct) by offeree showing a serious intent to be bound to the terms of the bargain proposed in the offer.
  12. Requirements for valid acceptance:
    • - must be timely (communicated to the offeror)
    • - must be accepted by person to whom offer was made
    • - must be unequivocal (w/out condition or exception)
    • *Under CL "mirror image rule", a conditional acceptance would be a counter-offer.
  13. Silence of Acceptance
    • Ordinarily, for reasons of fairness, the offeree's silence does not constitute acceptance of an offer.
    • *exception: if previous agreement between parites in which offeree has agreed that his silence would constitute acceptance.
  14. Communication of Acceptance
    General rule: an acceptance takes effect when sent, if the offeree uses authorized means to send the acceptance (the "mail box rule").
  15. Authorized Means of Acceptance
    • Can be expressly authorized in the offer or implied under the circumstances.
    • *CL: offeree is impliedly authorized to use the same or faster means to accept as the offeror used to make the offer.
    • *UCC: offeree is implied authorized to use any means reasonable under the cercumstances.
  16. Late or Defective Acceptance
    Does NOT create a contract but serves as a new offer.
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Chapter 10
2012-05-23 19:56:31
Chapter 10

Chapter 10
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