Chapter 10 Mutual Assent Flashcards

Chapter 10 Mutual Assent Flashcards The Code provides that a merchant is bound to keep an offer to buy or sell goods open for a stated period (or, if no time is stated, for a reasonable time) not exceeding three months if the merchant gives assurance in a signed writing that the offer will be held open. Section 2-205. The Code, therefore, makes a merchant's written promise not to revoke an offer for a stated period enforceable even though no consideration is given to the offeror for that promise.What is a merchant defined as?What is an offer and agreement?The manner in which parties usually show mutual assent is by offer and acceptance. One party makes a proposal (offer) by words or conduct to the other party, who agrees by words or conduct to the proposal (acceptance). A con- tractual agreement always involves either a promise exchanged for a promise (bilateral contract) or a promise exchanged for an act or forbearance to act (unilateral con- tract), as manifested by what the parties communicate to each other. An implied contract may be formed by conduct.Thus, though there may be no definite offer and acceptance, or definite acceptance of an offer, a contract exists if both par- ties have acted in a manner that manifests (indicates) a recognition by each of them of the existence of a contract. It may be impossible to determine the exact moment at which a contract was made.The ways in which an offer may be terminated, other than by acceptance, are through (1) lapse of time, (2) revocation, (3) rejection, (4) counteroffer, (5) death or incompetency of the offeror or offeree, (6) destruction of the subject matter to which the offer relates, and (7) subsequent illegality of the type of contract the offer

proposes.3 - Rejection: refusal to accept an offer

terminates the power of acceptance.4 - Counteroffer:

counterproposal to an offer that generally terminates the original offer.5 - Death or Incompetency of either the offeror or the offeree terminates the offer.6 - Destruction of Subject Matter of an offer terminates the offer.7 - Subsequent Illegality of the purpose or subject matter of the offer terminates the offer.What is lapse of time in relation to offers?A buyer's agreement to purchase the entire output of a seller's factory for a stated period or a seller's agreement to supply a buyer with all his requirements for certain goods may appear to lackdefiniteness and mutuality of obligation.

Such an agreement does not specify the exact quantity of goods; moreover, the seller may have some control over her output and the buyer over his requirements.Nonetheless, under the Code and the Restatement, such agreements are enforceable by the application of an objective standard based upon the good faith of both parties. Thus, a seller who operated her factory for eight hours a day before entering an output agreement cannot operate her factory twenty-four hours a day and insist that the buyer take all of the output. Nor can the buyer expand his business abnormally and insist that the seller still supply all of his requirements.What are the 7 ways to kill an offer?Historically, an authorized means of communication was the means the offeror expressly authorized in the offer, or, if none was authorized, it was the means the offeror

used.--For example, if in reply to an offer by mail, the offeree places in the mail a letter of acceptance properly stamped and addressed to the offeror, a contract is formed at the time and place that the offeree mails the letter. This assumes, of course, that the offer at that time was open and had not been terminated by any of the methods previously discussed. The reason for this rule is that the offeror, by using the mail, impliedly authorized the offeree to use the same method of communication. It is immaterial if the letter of acceptance goes astray in the mail and is never received. The Restatement, Section 30, and the Code, Section 2- 206(1)(a), both now provide that where the language in the offer or the circumstances do not otherwise indicate, an offer to make a contract shall be construed as authorizing acceptance in any reasonable manner. These provisions are intended to allow flexibility of response and the ability to keep pace with new modes of communication.What are unauthorized means in an offer and acceptance?To have legal effect, an offer must manifest an intent to enter into a contract. The intent of an offer is determined

objectively from the words or conduct of the parties. The meaning of either party's manifestation is based upon what a reasonable person in the other party's position would have believed. The courts sometimes consider subjective intention in inter- preting the parties' communications.How does humor relate to intent?