Business Law

Chapter 2: Offers

Introduction to Offers

• How definite must an offer be?

• What does the law require for a valid offer?

Defining an Offer

• An offer is an expression by one person of his willingness to enter into a bargain with another person.

Proving an Offer

• The actual determination about whether specific words created a contract is left to the jury.

General offers vs. general invitations to make an offer

• A general offer is made to a non-specific person.

The intent to contract

• The offeror’s intent is absolutely essential to the transaction, but the court is in no better position to read the offeror’s mind than anyone else.

Language Used to Make an Offer

• There must be some specific statement or act that will qualify as an offer.

Mutual assent

• The courts will ask, “Was there a valid offer and, if so, was there a valid acceptance?”

Advertisements

• In most situations, advertisements are not offers.

• They are usually interpreted by the courts as invitations to make an offer.

Stating a price in an advertisement

• Advertisements, even those that contain price quotations are still considered to be invitations to make an offer, not actual offers in themselves.

Mistakes in Advertisements do not create offers

• Even when the advertisement specifies a sale price, it still does not create an offer.

When Does an Advertisement Become an Offer?

• An advertisement may be considered an offer when the words used, express some intent on the part of the merchant to assume legal liability.

Rejecting an offer

• As far as the law is concerned, a rejected offer is legally invalid and once gone, it cannot return unless a new offer is made.

Proving rejection

• The rejection must be proven in the civil case.

Counteroffers

• A rejection of an offer and a new offer made back.

The Validity of a Counteroffer

• A counteroffer must meet the same requirements as an offer.

• A counteroffer must also give the other person the right to accept.

Knowledge of the Offer

• The offer must be communicated.

Terminating the offer

• An offer can terminate in any of a number of ways.

• The offer may contain language stating that it will expire within a given period, or by a specific date.

• The offeror is usually permitted to withdraw his offer at any time prior to acceptance.

Revoking an offer

• An offeror can revoke his offer any time before it is accepted.

• However, there are exceptions to this rule.

• An offer that is validly withdrawn cannot create any power of acceptance in any other party.

• When the offeror decides to revoke the offer, he must communicate this intention to the offeree before the offeree accepts.

Revoking a unilateral contract offer

• An offer for a unilateral contract can be revoked at any time prior to someone taking action

• When an offer for a unilateral contract is made to the public at large, it must be revoked in the same manner as it was first made.

Time limits on offers

• An offer must be accepted within the prescribed time limit.

• Failure to do so renders the offer revoked.

Revoking an irrevocable offer

• An offer can be revoked even when the revocation apparently violates the terms of the offer.

Options

• An option gives another the right, for a stated period, to purchase an item for a specific amount.

Revoking an option

• An option that has been accepted cannot be revoked before the time limit stated in the option agreement.