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Termination of an Offer RevocationRejectionCounterofferExpiration of TimeDeath or Insanity
Section Outline
The person who makes an offer is the offeror.The person who receives the offer is the offeree.
Requirements of an Offer
An offer has three basic requirements. It must be:
Requirements of an Offer
1. made seriously2. definite and certain3. communicated to the offeree
An offer must be made with the intention of entering into a legal obligation. An offer made in the heat of anger or as a joke would not meet this requirement.
Serious Intent
Advertisements in newspapers, magazines, and catalogs are examples of invitations to negotiate, which are invitations to make an offer.
Serious Intent
An offer must be definite and certain to be enforceable.Offers that use vague words or terms that cannot be quantified lack definiteness and certainty.
Definiteness and Certainty
Offers may be made by any method that communicates the offer to the offeree, including
Communication to the Offeree
telephonelettertelegram
fax machinee-mailtext
To be legally binding, the acceptance must meet certain basic requirements.
Requirements of an Acceptance
the acceptance must be unconditionalthe acceptance must follow the rules regarding the method of acceptance
The acceptance must not change the terms of the original offer in any way. This principle is called the mirror image rule.
Unconditional Acceptance
Any change in the terms of the offer means the offeree has not really accepted the offer.The offeree has made a counteroffer.
Unconditional Acceptance
If a counteroffer is made, the original offeror is not obligated to go along and no contract exists.The offeror becomes an offeree and may accept or reject the counteroffer.
Unconditional Acceptance
Contracts for the sale of goods are exceptions to the mirror image rule.These exceptions include contracts for personal property such as clothing, furniture, food, motor vehicles, and appliances.
Unconditional Acceptance
The time at which an acceptance takes place is important because that is when the contract comes into existence.
Methods of Acceptance
Special rules govern acceptances that take place when the parties are separated by a distance and must be communicated by letters, telegrams, or fax.
Methods of Acceptance
According to common law, an acceptance that must be sent over long distances is effective when it is sent.
Methods of Acceptance
An acceptance is implied when the offeree accepts by the same or a faster means than that used by the offeror.
Methods of Acceptance
The authorization of an acceptance can also be implied by any reasonable means, including
Methods of Acceptance
past practices between the partiesthe usual method in the tradecustomary means in comparable transactions
Termination of an offer may occur in any of the following five ways.
Termination of an Offer
1. revocation2. rejection3. counteroffer4. expiration of time5. death or insanity
A counteroffer ends the first offer. The offeree creates a new offer, which the original offeror may accept or reject.
Counteroffer
If the offeror sets a time limit for the acceptance of the offer, it must be honored.
Expiration of Time