Chapter 7OFFER AND ACCEPTANCE

Chapter Outcomes:
1. Identify the three requirements of a valid
offer and judge whether those
requirements are present in any particular
offer.
2. Differentiate between a public offer and an
invitation to trade.
 Chapter OFFER
7 AND ACCEPTANCE

Chapter Outcomes (continued):

3. Explain acceptance of an offer in the case of
a unilateral contract and a bilateral contract.

4. Outline the proper procedure for accepting an

offer that has been made face-to-face, by
telephone, or over long distance.

5. Discuss the mirror image rule and explain its

status under the Uniform Commercial Code.
 Chapter OFFER
7 AND ACCEPTANCE

Chapter Outcomes (continued):

6. Relate the various means by which an offer

can be revoked.

7. Explain what is meant by a firm offer.

8. Defend the proposition that an option is both

a contract and an offer, and distinguish an
option from a simple offer.
7-1

Requirements of an Offer

• Serious Intent
• Clarity and Definiteness of Terms
• Communication to the Offeree
Chapter 7

LawLINKS

The Cornell University Legal Information

Institute maintains a website containing
the Uniform Commercial Code at
http://www.law.cornell.edu/ucc/ucc.table.h
tml
 7-1
Topic Quiz
Answer the following true/false questions:

1. Serious intent is determined by the

offeree’s words, but not by his or
her actions.

FALSE

Words and actions.

 7-1
Topic Quiz
Answer the following true/false questions:

2. A cost-plus contract will always include

a final price.

FALSE

Does not include.

 7-1
Topic Quiz
Answer the following true/false questions:

3. Neither a public offer nor an invitation

to trade can be considered an offer.

FALSE

Both are legal offers.

7-2

Acceptance of an Offer
• Communication of Acceptance
• Unequivocal Acceptance
• Implied Acceptance
• Silence as Acceptance
• Rejection of an Offer
 7-1
A Question of Ethics

Suppose, after conducting a survey which

revealed that most people did not know about
their rights under the Postal Reorganization
Act, a company began a mailing campaign
that sent unordered merchandise to certain
targeted groups. Would such a move be
ethical? Explain.
Chapter 7

LawLINKS
As a federal law, the Postal Reorganization
Act is a part of the United States Code. The
United States Code can be researched by
subject at
http://www.law.cornell.edu/uscode/updsubj.
html
 7-2
Topic Quiz
Answer the following true/false questions:

1. Unilateral contracts do not

usually require oral or written
communication of an
acceptance. TRUE
 7-2
Topic Quiz
Answer the following true/false questions:

2. The mirror image rule applies only to

sale of goods contracts.

FALSE

All offers.
 7-2
Topic Quiz
Answer the following true/false questions:

3. Silence on the part of the offeree can

never be considered as an acceptance.

FALSE

It can if both parties agree.

7-3

Revocation of an Offer
• Revocation by Communication
• Automatic Revocation
• Revocation by Passing of Time
• Revocation by Death or
Insanity
• Revocation by Destruction
• Revocation by Subsequent
Illegality
 7-3
Topic Quiz
Answer the following true/false questions:

1. A revocation is the calling back

of an offer by the offeror.

TRUE
 7-3
Topic Quiz
Answer the following true/false questions:

2. When no time limit is set an offer

remains open indefinitely.

FALSE

It revokes automatically after the passing

of reasonable length of time!
 7-3
Topic Quiz
Answer the following true/false questions:

3. The destruction of the subject

matter of an offer automatically
revokes the offer.
TRUE
 7-4

Option Contracts and

Firm Offers
An option contract is an agreement
that binds an offeror to a promise to
hold open an offer for a predetermined
or reasonable length of time.
 7-4
Topic Quiz
Answer the following true/false questions:

1. An option contract is an
agreement that binds an
offeror to a promise to hold an
offer open for a predetermined
or a reasonable length of time. TRUE
 7-4
Topic Quiz
Answer the following true/false questions:
2. An option contract does not remove the
possibility of revocation due to the
insanity of the offerer.
FALSE

Yes, it does.
 7-4
Topic Quiz
Answer the following true/false questions:

3. Firm offers have been eliminated under

provisions of the Uniform Commercial
Code.
FALSE

Developed as a special rule.

 SUMMARY
7-1 An agreement is reached when an offer made
by one party is accepted by another party.

7-2 The second major part of mutual assent is the

acceptance of the offer .

7-3 A rejection comes about when an offeree

expresses or implies refusal to accept an offer.
 SUMMARY (continued)
7-4 Some types of offers cannot be revoked by the
offeror.
 Chapter 7
Key Terms
acceptance cost-plus contract
counteroffer firm offer current market
price contract mirror image rule
invitation to trade offer
offeree offeror
option contract output contract
public offer rejection
requirements contract revocation
Chapter 7

Investigating on the Internet

Access the website sponsored by

QuickForm Contracts at
http://www.quickforms.com
and write a report on how to use the
QuickForm website.
End of Presentation