LSB 3213 Lecture 15: Chapter 12

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Legal Studies in Business
LSB 3213
William Michael Schuster

Chapter 12 Notes A. Agreements a. An agreement is necessary to form a contract i. The parties must agree in the terms of a contract ii. Containing an offer and acceptance iii. The agreement does not necessarily have to be in writing b. The law follows the "objective theory of contracts" B. Offer a. An offer is a promise or commitment to do or refrain from doing some specified action in the future i. The offeror must have a serious intention to become bound by the offer ii. The terms of the offer must be reasonably certain or definite, so that the parties and the court can ascertain the terms of the contract iii. The test of the offer: when the offeree may agree to the offeror's terms and a contract is formed b. Not offers i. Expression of Opinion ii. Statements of Future Intent iii. Preliminary negotiation iv. Advertisements c. Offers? i. Agreements or agree? ii. Preliminary agreements? d. An offer must have reasonably definite terms so that a court can determine if a breach has occurred and give an appropriate remedy i. The specific terms needed depend upon the nature of the contract e. Generally required i. ID of the parties ii. ID of the object or subject matter, and quantity iii. The consideration paid (not always) f. Lonergan v. Scoinick (Ca. App. 1954) g. Leonard v. PepsiCo (S.D.N.Y 1999) i. "Reasonable Person" Rule C. Termination of an Offer a. An offer can be terminated in any of three ways i. Revocation by offeror 1. Express repudiation of the offer 2. Performance of acts that are inconsistent with the existence of the offer and are made known to the offeree ii. Rejection by offeree 1. Once rejected, an offeree may NOT accept the offer. Any attempt to accept a rejected offer is treated like a counteroffer b. Counteroffer by offeree i. An counteroffer is a REHECTION of the original offer and the simultaneous making of a new offer ii. Mirror Image Rule- An acceptance must be a MIRROR image, varying no terms, of the original offer to accept it. Chapter 12 Notes c. Irrevocable offers i. Option Contract: when a person pays a value to keep a contract open (consideration) D. Gyabaah v. Rivlab Transportation E. Acceptance a. Acceptance is the voluntary assent (agreement) to the terms of the offer. Generally only the person who receives the offer may accept it b. Mirror Image Rule i. An acceptance cannot impose new conditions ii. Clear, explicit acceptance c. Performance of an offer IS ALWAYS an acceptance d. Silence is generally not an acceptance e. Cons
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