Slide 1 : 1 Contracts: Agreement and Consideration Chapter9 BUSINESS LAW TODAY Standard 8th Ed.Roger LeRoy Miller - Institute for University Studies, Arlington, TexasGaylord A. Jentz - University of Texas at Austin, Emeritus
Learning Objectives : 2 Learning Objectives What elements are necessary for an effective offer? What are some examples of nonoffers?
In what circumstances will an offer be irrevocable?
What are the elements that are necessary for an effective acceptance?
What is consideration? What is required for consideration to be legally sufficient?
Under what circumstances may a promise be enforced without consideration?
Requirements of an Offer : 3 Requirements of an Offer An agreement consists of a valid offer and acceptance.
An offer is the Offeror’s promise to perform.
Requirements of an Offer : 4 Requirements of an Offer An offer requires serious, objection intention.
CASE 9.1 Lucy v. Zehmer (1954).
Opinions are not offers.
Good Intentions are not offers.
Preliminary Negotiations are not offers.
Agreements to Agree are not offers.
Reasonably definite terms.
Communication to Offeree.
Termination of the Offer : 5 Termination of the Offer Termination of the Offer.
By Act of the Parties.
Revocation by the Offeror (unless irrevocable).
Rejection by the Offeree (or counteroffer).
Operation of Law: lapse of time, destruction, death or incompetence, supervening illegality.
Acceptance : 6 Acceptance Voluntary act by Offeree that shows assent to terms of original offer.
Mirror Image Rule.
Offeree must unequivocally accept offer.
Additional terms may be considered a counteroffer.
Acceptance by Silence.
Authorized Means of Communication is either express or implied by form of offer (e.g., U.S. mail, fax, email).
“Mailbox Rule” : 7 “Mailbox Rule” “Offeree accepts offer when the acceptance is dispatched to Offeror in the form it was received, unless offer requires a different method (e.g., Fed-Ex, or receipt by Offeror).
Exceptions:
Acceptance is not properly dispatched.
Offer stipulates not accepted until received.
Offeree rejects then accepts. First communication received determines whether contract is formed.
Consideration : 8 Consideration Consideration is value given in return for a promise.
Elements:
Something of legally sufficient value given in exchange for a promise and
That is bargained for between the parties.
Contracts That Lack Consideration : 9 Contracts That Lack Consideration Pre-Existing Duty.
Unforeseen Difficulties.
Rescission and New Contract.
Past Consideration.
CASE 9.2 Blackmon v. Iverson (2003).
Illusory Promises.
Settlement of Claims : 10 Settlement of Claims Accord and Satisfaction.
Release.
CASE 9.3 BP Products North America, Inc. v. Oakridge at Winegard, Inc. (2007).
Covenant Not to Sue.
Promissory Estoppel : 11 Promissory Estoppel Promissory Estoppel (“detrimental reliance”) doctrine applies when a person relies on the promise of another to her legal detriment.
Promisor is “estopped” (precluded) from revoking the promise. There must be:
Clear and definite promise with substantial reliance.
Justice is served by enforcement of the promise.