Offer and Acceptance

1
Chapter 10

• Offer and Acceptance

2
What is a Contract?

• Contract - an agreement that is enforceable by
  law
• Offeror - the person who makes an offer
• Offeree - person to whom the offer is made

3
Who may enter into contracts?

• Capacity - the ability to understand ones
  actions and the effects of those actions
• Legally competent - persons with the capacity to
  contract

• Minors, intoxicated persons, and insane persons
  lack capacity, at least to some degree.

4
What are the requirements of an offer?

• Offer - a proposal by an offeror to do or not to
  do some specified thing in the future
• the offeror must intend to create a legal
  obligation
• the terms must be definite and complete
• the offer must be communicated to the offeree

5
How is an offer ended?

• An offer ends at the time stated in the offer
• An offer not stating how long it will remain open
  terminates after a reasonable length of time
• An offer ends if it is rejected by the offeree
• An offer ends if the offeree makes a counteroffer
• An offer usually ends if it is revoked or
  modified by the offeror before the offeree has
  accepted
• An offer is terminated by death or insanity of
  either the offeror of offeree

6
How can an offer be kept open?

• Option - underlying contract to keep an offer
  open
• Firm offer - a binding offer stating in writing
  how long it is to be held open

7
What is required for acceptance?

• Acceptance - occurs when a party to whom an offer
  has been made agrees to the proposal or does what
  is proposed
• Acceptance must be by the person(s) to whom the
  offer was made
• Acceptance must be unconditional and must match
  the offer

8
More requirements for acceptance

• Acceptance must be communicated to the offeror
• Unilateral contract - only one of the parties
  makes a promise
• bilateral contract - both parties make promises

9
What is the effect of acceptance?

• Valid contract - one that is legally effective
  and enforceable in court
• Void agreement - cannot be enforced in court by
  either party
• Voidable contract - if a party chooses to
  withdraw from a transaction
• Unenforceable contract - valid contracts time
  has expired