*Discussion Post*

Professor Question: Reasonably Definite Term & Contract Offer, Termination of an Offer, Who May Accept an Offer (PLEASE READ)

Based on the "Professor Analysis" Questions and Answers below,do you agree with this legal concept? Why or why not? Why is this legal concept or principle important to the world of Business Law in your opinion?

How can an understanding of this legal issue help a business professional understand how to function more productively and successfully in a business workplace or community organization where specific state and federal law, or corporate policy may apply? Discuss.

Can you provide a real world example case involving this legal issue?. What was the Issue, Rule, Analysis and Conclusion (IRAC) by the court in that case? Do you agree with the decision by the court in that case? Why or why not?

Can you provide a statute in your state that deals with this legal issue? What is its website and some of the legal language pertaining to the statute?

NOTE: Some of your responses must be based upon research from the course textbook and other official academic sources. Please feel free to include the page #'s referenced in the course textbook. (include websites as a supplement to these other sources). This information is designed to increase and expand your understanding of this subject matter.

Enjoy,

Prof. Elliott

Professor Analysis: Reasonably Definite Terms & Contract Offer, Termination of an Offer, Who May Accept an Offer PLEASE READ)

1. Why must a contract have "reasonably definite terms" and how "definite" must the terms be?A contract must have reasonably definite terms so that a court can determine if a breach has occurred and can give an appropriate remedy. Courts may supply a missing term when the parties have clearly manifested an intent to form a contract, but they will not do so if the parties' expression of intent is too vague or uncertain (an employer's promise that an employee will "share in the profits of the business"). An offer may invite an acceptance to be worded in specific terms so that the contract is made definite. If the acceptance is not so specifically worded, there may be no enforceable contract. The UCC requires less specificity in a contract for the sale of goods. Specificity is more important in an international sales contract.

1. How do the parties terminate an offer?The parties can terminate an offer by: (1) revocation, (2) rejection, or (3) a counteroffer.Revocationis withdrawal of the offer by the offeror. Generally, an offer may be revoked any time before acceptance, even if the offeror agreed to hold it open, but revocation is effective only on receipt (thus a letter of revocation is not effective until the offeree receives it). Revocation can be express ("I withdraw my offer") or implied by conduct inconsistent with the offer (property that would be the subject of the contract is sold to a third party). Revocation of an offer made to the general public must be communicated in the same manner in which the offer was communicated. An offeree mayrejectan offer, expressly ("I don't need what you're selling") or impliedly (by conduct showing an intent not to accept). Rejection is effective only on receipt. Asking about an offer ("Is that your best offer?") is not rejection, but an ambiguous response may be construed as a rejection ("The price seems low. I'll bet you can do better than that."). A subsequent attempt to accept will be construed as a new offer. Acounterofferis a rejection and a simultaneous making of a new offer. The mirror image rule requires that the acceptance match the offerany material change in the terms automatically terminates the offer and substitutes a counteroffer. An offeree may make an offer without rejecting the original offer, in which case two offers exist, each capable of acceptance ("I don't have the price that you ask but will try to raise it. I will offer to buy your goods for the amount that I do have.").
2. Who may accept an offer?Only the person to whom the offer is made can accept it unless: (1) the offer is an option contract (in which case the right to exercise the option is generally considered a contract right and is assignable or transferable, with exceptions) or (2) the offeree is an agent (in which case the principal may accept, and a contract will be formed between the principal and the offeror). If an offer is made to two or more persons, it must be accepted by all of them. (If individual offers are made to two or more persons individually, contracts are formed only with those persons who accept the offer.)
3. What is unequivocal acceptance?Unequivocal acceptance is acceptance that adds no new terms or terms that materially change the offer ("I accept the offer, but only if I can pay on ninety days' credit"). Under the mirror image rule, an acceptance subject to new conditions or with terms that materially change the offer may be considered a counteroffer. An acceptance may be unequivocal even though the offeree expresses dissatisfaction ("I accept the offer, but I wish I'd gotten a better deal"). An acceptance that is made conditional is a rejection ("I accept if you send a written contract"). Under the UCC, acceptance is valid even if terms are added.

1. Termination of the Offer

An offeree can transform an offer into a contract by acceptance. This power of acceptance can be terminated, however, by action of the parties or operation of law.

1. Termination by Action of the Parties
2. Revocation

• An offer may be revoked any time before acceptance, even if the offeror agreed to hold it open. Revocation can be by express repudiation or implied by conduct inconsistent with the offer.
• Revocation is effective only on receipt.
• Revocation of an offer made to the general public must be communicated in the same manner in which the offer was communicated.

1. Irrevocable Offers

• Detrimental reliance on an offer by the offeree can make the offer irrevocable (Chapter 13). A merchant's firm offer may be irrevocable (Chapter 20).
• Another form of irrevocable offer is anoption contract, which is created when an offeror promises to hold an offer open for a specified period of time in exchange for a payment by the offeree.

1. Rejection

• An offeree may reject an offer. A subsequent attempt to accept constitutes a new offer.
• Rejection is effective only on receipt. Asking about an offer is not rejection.

1. Counteroffer

A counteroffer is a rejection and a simultaneous making of a new offer. Themirror image rulerequires that the offeree's acceptance match the offeror's offerany material change in the terms automatically terminates the offer and substitutes a counteroffer.

1. Termination by Operation of Law
2. Lapse of Time

• An offer terminates automatically when the time specified in the offer has passed. The specified time begins to run when the offeree receives the offer, not when it is sent. If the offer is delayed, the period begins to run from the date the offeree would have received it, but only if the offeree knows or should know of the delay.
• If no time is specified, the offer terminates at the end of a reasonable period, as determined by the subject matter of the contract, business and market conditions, and other relevant circumstances.

1. Destruction of the Subject Matter

An offer terminates if the subject matter is destroyed before the offer is accepted.

1. Death or Incompetence of the Offeror or Offeree

An offer terminates if the offeror or offeree dies or becomes incompetent. This rule applies whether or not the other party had notice of the death or incompetence.

1. d. Supervening Illegality of the Proposed Contract

A statute or court decision that makes an offer illegal automatically terminates the offer.

Additional Background

Restatement (Second) of Contracts,Section 49

49. Effect of Delay in Communication of Offer

If communication of an offer to the offeree is delayed, the period within which a contract can be created by acceptance is not thereby extended if the offeree knows or has reason to know of the delay, though it is due to the fault of the offeror; but if the delay is due to the fault of the offeror or to the means of transmission adopted by him, and the offeree neither knows nor has reason to know that there has been delay, a contract can be created by acceptance within the period which would have been permissible if the offer had been dispatched at the time that its arrival seems to indicate.

1. Acceptance

Acceptance is a voluntary act (either words or conduct) by the offeree that shows assent to the terms of an offer. Except in special circumstances, only the person to whom the offer is made can accept.

1. Unequivocal Acceptance

• Unequivocal acceptance is required by the mirror image rule. An acceptance subject to new conditions or with terms that materially change the offer may be considered a counteroffer.
• An acceptance may be unequivocal even though the offeree expresses dissatisfaction. Conditions that add no new terms do not turn an acceptance into a rejection unless the acceptance is made conditional.

1. Silence as Acceptance

Ordinarily, silence cannot be acceptance. Silence can operate as acceptance when

• An offeree takes the benefit of offered goods or services even though he or she had an opportunity to reject and knew that they were offered with the expectation of compensation.
• The parties have had prior dealings in which the offeree has led the offeror reasonably to understand that the offeree will accept all offers unless the offeree sends notice to the contrary.

1. Communication of Acceptance

• Bilateral contractcommunication of acceptance is necessary because acceptance is in the form of a promise, and the contract is formed when the promise is made. Communication is not necessary if the offer dispenses with it or the offer can be accepted by silence.
• Unilateral contractno communication of acceptance is generally necessary, because acceptance is evident. Notice is necessary if the offeror requests it or has no adequate means of determining whether there has been performance.

1. Mode and Timeliness of Acceptance

An acceptance is timely if it is made before the offer is terminated.

1. The Mailbox Rule

Acceptance is effective when it is sent by whatever means is authorized by the offeror. This is themailbox rule.

1. Authorized Means of Acceptance

• Specific means can be stated in the offer or authorized by facts or by law. If an offeror specifies an exclusive means, the contract is not formed unless the offeree uses it.
• If the offeror does not specify a certain means, the offeree can accept by any medium reasonable under the circumstances. A medium is reasonable if it is the same means as the offeror used to communicate the offer or a faster means.

1. Substitute Method of Acceptance

An acceptance sent by unauthorizedmeans is effective on receipt.