Chapter 8 Offer, Acceptance, And Mutual Assent

BUL4310: Legal EnvironmentChapter 8: Offer, Acceptance and Mutual AssentMutual AssentBoth parties know what the terms are, and both have willingly agreed to be bound bythose termsEmerges when the parties to a contract have a "meeting of the minds"Requirements of an OfferOfferA proposal freely made by one party to another indicating a willingness to enter acontractOfferorThe person who makes the offerOffereeThe person to whom the offer is madeSerious intentClear and reasonably definitetermsCommunication to the offereeSerious Intent - The offeror's words must give the offeror assurance that a binding agreement isintended.Clarity and reasonably - The terms of an offer must be sufficiently clear to remove any doubtabout the contractual intentions of the offeror. Most courts require reasonable rather thanabsolute definiteness.Communication to the offeree - The proposed offer must be communicated to the offeree bywhatever means are convenient and desirable. The communication of the offer can be express orimplied. Public offers are made through the media but are intended for one party who identity oraddress is unknown. Invitations to trade are not offers.Statute of FraudsOutlines contracts that must be in writing to be enforceable in courtAn effective legal tool for determining intentOne of its goals BUL4310: Legal EnvironmentChapter 8: Offer, Acceptance, and Mutual AssentTo provide detailed information about the terms of an agreementDegree of DefinitenessOffer should identify:The parties involved in the contractThe goods and services that will be the subject matter of the contractThe price of the offeror is willing to pay or receiveThe time required for the performance of the contractTime for PerformanceReasonable time: Time that may fairly, properly, and conveniently be required to do thetask that is to be done, considering attending circumstancesWhether a task is performed within a reasonable time is a question of fact to bedecided by the jury in a jury trial or the judge in a nonjury trialWhen the phrase time is of the essence is included among the terms of a written contract,the time period will be enforcedOffers and the UCCCost-plusRequirementscontractcontractCurrentOutputmarket pricecontractcontractCommunication to be the OffereeTo be valid, an offer must be freely communicated to the offereeThe offeror's intent may be communicated by whatever means are convenient anddesirablePublic OfferOne that Is made through the public media but is intended for only one person whoidentity or address is unknown to the offeror BUL4310: Legal EnvironmentChapter 8: Offer, Acceptance and Mutual AssentInvitation to TradeAn announcement published to reach many persons for the purpose of creating interestand attracting responsesList price for a propertyA common invitation to tradePrice that the seller asks initially when the property is placed on the marketAuctionA sale that is open to the public, during which potential buyers compete for the right topurchase certain items by placing higher and higher bids until the highest bid is reachedand the auctioneer accepts on behalf of the sellerTypesAuction with reserveAuction without reserveBait-and-Switch Confidence GameA deliberately deceptive practice that entices buyers into a place of business when theseller actually has no intention of selling the item at the price stated in the advertisementAcceptance of an OfferThe offeree agrees to be bound by the terms set up by the offereeConditions of PerformanceCondition precedentRequires the performance of certain acts or promises before the other party isobligated to pay money or provide any other agreed to considerationCondition concurrentRequires both parties to perform at the same timeCondition subsequentParties agree that the contract will be terminated when a prescribed event occursor does not occur BUL4310: Legal EnvironmentChapter 8: Offer, Acceptance and Mutual AssentCommunication of AcceptanceFace-to-face communication Acceptance is complete and effective when offeror hearsthe words of acceptanceTelephone communication Acceptance is complete and effective when offeror hears thewords of acceptanceText messages: Acceptance is complete and effective when text message is sent, if offerorhas asked for a text response. If not, the acceptance is complete when sent, only if a textmessage is faster than the requested methodAuthorized means of communication: Acceptance is complete and effective when givenby that same medium (e.g., mailed offer is accepted when acceptance is dropped in themail.)Acceptance improperly dispatched: Acceptance is complete and effective when it actuallyreaches offeror.Communication and the Uniform Commercial Code (UCC)Uniform Commercial CodeAsserts that a contract comes into existence if any reasonable means is used tocommunicate the acceptanceAcceptance of an OfferUnequivocal acceptanceThe mirror image ruleCounteroffers under the UCCImplied acceptanceMailing of Unordered MerchandiseSilence as acceptanceUnequivocal AcceptanceMirror image ruleThe terms as stated in the acceptance must exactly "mirror" the terms in the offerCounterofferA response to an offer in which the terms of the original offer are changedCounteroffers under the UCC BUL4310: Legal EnvironmentChapter 8: Offer, Acceptance, and Mutual AssentAs long as there is a definite expression of acceptance, a contract will come intoexistence, even if an acceptance has different or additional termsImplied AcceptanceActions and gestures may indicate an offeree's willingness to enter into a bindingagreementUnordered merchandiseThe receiver has no obligation to pay for or return the goods or to communicatewith the sender in any waySilence as AcceptanceAs a general rule, in most situations, the offeror cannot bind the offeree just be declaringthat the offeree's silence will signal an acceptanceHowever, there are exceptionsRejectionRejectionComes about when an offeree expresses or implies a refusal to accept an offerRevocationRevocationThe calling back of the offer by the offerorAn offer may be revoked any time before it is acceptedOption ContractAn agreement that binds an offeror to a promise to hold open an offer for a predeterminedor a reasonable length of timeFirm OfferCreated when a merchant agrees in writing to hold an offer openUnder this condition, no consideration is needed to hold that offer openMay be made for a specified period of time BUL4310: Legal EnvironmentChapter 8: Offer, Acceptance, and Mutual AssentLease Options and Real PropertyLease OptionA contract that permits a party to lease real property while at the same time hold anoption to purchase that propertyMutual Assent in CyberspaceCyber-law helps integrate the use of computers with the orthodox operation of the legalcomplex adaptive system (CAS)Cyber-contracts or Contracts (e-contracts)Contracts that are made with computers or that involve computer-related productsMutual Assent in CyberspaceThe E-sign ActThe Fair and Accurate Credit Transactions ActThe Uniform Electronic Transactions ActThe Uniform Computer Information Transactions ActOffer and Acceptance in CyberspaceA cyber-offeror should insert the following terms in his/her offer:Payment criteriaRemedies that can be used by the offereeRefund policiesReturn proceduresDispute settlement instructionsThe applicability of cyber-signaturesLiability disclaimers, if neededProvisions relating to the offeree's manner of acceptanceTypes of cybercontractsBrowsewrap contractsClickwrap agreements or shrinkwrap agreementsCommon clauses in clickwrap agreementsArbitration clauseForum selection clause 1BUL4310 Legal EnvironmentChapter 8: Offer, Acceptance, and Mutual AssentDestruction of Mutual Assent: FraudTo destroy mutual assent through a claim of fraud the complaining or innocent partymust prove the existence of five elements:The complaining party will have to prove that the other party made falserepresentations about some material fact involved in the contractThe plaintiff must demonstrate convincingly that the other party made therepresentations knowing that they were falseThe plaintiff must show that the false representations were made with the intentthat they be relied upon by the innocent partyThe complaining party must establish that there was a reasonable reliance on thefalse representationsThe plaintiff must verify that he or she actually suffered some loss by relying onthe false representation after entering the contractTypes of FraudFraud in the inceptionOccurs when one party tricks another party into a contract by lying to the innocentparty about the actual nature of the contractFraud in the inducementOccurs when one party tricks another party into a contract by lying about theterms of the agreement to get the innocent party to enter the contract under falsepretensesActive FraudOccurs when one party makes a false statement intended to deceive the otherparty in a contractPassive FraudOccurs when one party does not say something about certain facts that he or she isunder an obligation to revealAlso called concealment or nondisclosureFiduciary RelationshipFiduciary relationshipA relationship based on trustExists between attorneys and clients, guardians and wards, trustees andbeneficiaries, and boards of directors and corporations BUL4310: Legal EnvironmentChapter 8: Offer, Acceptance, and Mutual AssentCatfishingInvolves the creation of an entirely new online identity, a cyber-ghost who then snags agullible victim who becomes involved with the cyber-ghost and is then conned out oflarge amounts of moneyAgreements Made Defective by FalsehoodActive Fraud: Active fraud occurs when one party to a contract makes a false statementintended to deceive the other party and thus leads that party into a deceptively basedagreement (Damages and rescission)Passive Fraud: Passive fraud occurs when one party does not say something about certainfacts that he or she is obligated to reveal. Obligations arise in situations involving hiddenproblems and fiduciary relationships. (Damages and rescission)Misrepresentation: Misrepresentation occurs when a false statement is innocently made.(Recission)MisrepresentationA false statement made incorrectly with no intent to deceiveInnocent misrepresentation makes an existing agreement voidable, and the complainingparty may demand rescissionRescission: Both parties are returned to their original positions, before theyentered into the contractMistakeUnilateral mistakeMistake made by only one of the contracting partiesDoes not offer sufficient grounds for rescission or renegotiationBilateral mistakeAlso called a mutual mistakeBoth parties are mistakenMay permit a rescission by either the offeror or the offereeAgreements Made Defective by Mutual MistakeMistake as to description: Rescission will be grantedMistake as to existence: Proof that subject matter was destroyed before the agreementwas made gives grounds for rescission. BUL4310: Legal EnvironmentChapter 8: Offer, Acceptance, and Mutual AssentMistake as to value: Rescission will not be granted since value is a matter of opinion, notfact.DuressAn action by one party that forces another party to do what need not otherwise be doneForces a person into a contract through the use of physical, emotional, or economicthreatsPhysical and Emotional DuressPhysical duressInvolves either violence or the threat of violence against an individual or againstthat person's family, household, or propertyEmotional duressArises from acts or threats that would create emotional distress in the one onwhom they are inflictedEconomic DuressEconomic duressConsists of threats of a business nature that force another party without realconsent to enter a commercial agreementAlso known as business compulsionUndue InfluenceOccurs when the dominant party in a special relationship uses excessive pressure toconvince the weaker party to enter a contract that greatly benefits the dominant party