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Chapter 08 - Offer, Acceptance, and Mutual Assent
Chapter 8
Offer, Acceptance, and Mutual Assent
I. Key Terms
Acceptance (p. 198) Invitation to trade (p. 197)
Active fraud (p. 209) Lease option (p. 203)
Auction (p. 197) List price (p. 197)
Auction with reserve (p. 197) Material fact (p. 208)
Auction without reserve (p. 198) Mirror image rule (p. 201)
Bait-and-switch confidence game (p. 198) Misrepresentation (p. 210)
Bilateral mistake (p. 211) Mutual assent (p. 193)
Business compulsion (p. 212) Mutual mistake (p. 211)
Click-on acceptance or agreement (p. 205) Nondisclosure (p. 209)
Cloud storage (p. 206) Offer (p. 194)
Concealment (p. 209) Offeree (p. 194)
Condition concurrent (p. 199) Offeror (p. 194)
Condition precedent (p. 198) Option contract (p. 203)
Condition subsequent (p. 199) Output contract (p. 197)
Contract (p. 193) Passive fraud (p. 209)
Cost-plus contract (p. 197) Physical duress (p. 212)
Counteroffer (p. 201) Public offer (p. 197)
Current market price contract (p. 197) Reasonable time (p. 196)
Cyber-contract (p. 204) Rejection (p. 203)
Duress (p. 211) Requirements contract (p. 197)
Economic duress (p. 212) Rescission (p. 210)
Electronic contracts or e-contracts (p. 204) Revocation (p. 203)
Emotional duress (p. 212) Sales puffery (p. 209)
Fiduciary relationship (p. 210) Sock puppetry (p. 206)
Firm offer (p. 203) Time is of the essence (p. 196)
Fraud (p. 208) Undue influence (p. 213)
Fraud in the inception (p. 208) Unilateral mistake (p. 211)
Fraud in the inducement (p. 208)
II. Learning Objectives
1. Define mutual assent.
2. Identify the elements of an offer.
3. Explain the UCC’s concept of offer in contract law.
4. Explain the nature of acceptance.
5. Define the mirror image rule.
6. Explain the process of revocation.
7. Identify those statutes that affect mutual assent in cyberspace.
8. Explain the elements of fraud and misrepresentation.
9. Identify the effects of mistake on mutual assent.
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distribution without the prior written consent of McGraw-Hill Education.
Chapter 08 - Offer, Acceptance, and Mutual Assent
10. Describe duress and undue influence.
III. Major Concepts
8-1 Mutual Assent and the Offer
If certain requirements are met, the court will conclude that the parties intended to make
and accept an offer. Mutual assent is created when an offer is made by one party and
accepted by the other party. An offer is valid if it is made with serious intent, displays
clear and definite terms, and is communicated to the offeree.
8-2 Acceptance of an Offer
The second major part of mutual assent is the acceptance of the offer. Communication of
the acceptance may be either express or implied. Under the mirror image rule, an
acceptance must not change any of the terms of the offer. The UCC has altered the mirror
image rule. At any time prior to acceptance, the offeror can withdraw the offer. Still,
some types of offers cannot be revoked by the offeror. These involve option contracts,
firm offers, and lease option contracts.
8-3 Mutual Assent in Cyberspace
The principal rules concerning the interpretation of the enforcement of cyber-contracts
are found in the E-Sign Act, the Uniform Electronic Transactions Act (UETA), and the
Uniform Computer Information Transactions Act (UCITA).
8-4 The Destruction of Mutual Assent
Fraud involves deliberate deception about some material fact that leads a party into an
agreement that is damaging to that party. Misrepresentation is a false statement
innocently made with no intent to deceive. A mutual mistake may allow for rescission by
either party. Duress and undue influence rob a person of the ability to make an
independent, well-reasoned decision to enter freely into a contract.
IV. Outline
I. Mutual Assent and the Offer (8-1)
A. The Nature of Mutual Assent
1. A contract is an agreement between two or more competent parties based on mutual
promises and an exchange of things of value, to do or refrain from doing some
particular thing that is neither illegal nor impossible.
2. The power of the courts to enforce contractual duties comes from the fact that both
parties have agreed to accept those duties, which is referred to as mutual assent.
3. Mutual assent is the first of the four elements of a valid contract.
B. Requirements of an Offer
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distribution without the prior written consent of McGraw-Hill Education.
Chapter 08 - Offer, Acceptance, and Mutual Assent
1. An offer is a proposal freely made by one party to another indicating a willingness to
enter a contract.
2. The person who makes the offer is the offeror and the person to whom it is made is
the offeree.
3. In the case of an open offer, the courts have established three elements that must
exist: (1) serious intent; (2) clear and reasonably definite terms; and (3)
communication to the offeree.
4. The Statute of Frauds outlines those contracts that must be in writing to be
enforceable.
5. The standard construction rule tells judges that their primary objective in the
interpretation of a written contract is to uncover the parties’ goals.
6. Offers will be upheld so long as the language is reasonably definite enough to enable
the court to establish what the parties intended.
7. When the time for performance is not stated in the offer or in the final contract, then
the contract must be performed within a reasonable time.
8. When the phrase “time is of the essence” is included among the terms of a written
contract, the time period will be enforced.
9. Under the UCC, cost-plus contracts, output contracts, requirement contracts, and
current market price contracts are enforceable even though they are not complete in
certain matters.
C. Communication to the Offeree
1. An offer must be freely communicated to the offeree.
2. A public offer is one made through the public media but is intended for only one
person whose identity or address is unknown to the offeror.
3. An invitation to trade is an announcement published for the purpose of creating
interest and attracting responses.
a. Newspaper and magazine advertisements come within this definition.
b. No binding agreement develops until a responding party makes an offer which the
advertiser accepts.
c. Advertisements containing very particular promises may be held to be offers.
4. An auction is a sale that is open to the public during which potential buyers compete
for the right to purchase certain items by placing higher and higher bids.
a. An auction may be held without reserve or with reserve.
b. In an auction that is held with reserve, the seller is the offeree and can set the
lowest acceptable bid.
5. Sellers cannot engage in bait-and-switch tactics.
a. A bait-and-switch confidence game is a deliberately deceptive practice that
entices buyers into a place of business when the seller has no intention of selling
the item at the price stated in an advertisement.
b. The bait-and-switch practice has been outlawed by the Federal Trade
Commission.
II. Acceptance of an Offer (8-2)
A. Unilateral and Bilateral Contracts
1. In a unilateral contract communication of an acceptance is usually not required
because the offeror expects an action, not another promise in return.
2. In a bilateral contract, the offeree must communicate acceptance to the offeror.
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distribution without the prior written consent of McGraw-Hill Education.
Chapter 08 - Offer, Acceptance, and Mutual Assent
B. Conditions of Performance
1. A condition precedent is a condition that requires the performance of certain acts or
promises before the other party is obligated to pay money or provide any other agreed
to consideration.
2. A condition that requires both parties to perform at the same time is a condition
concurrent.
3. A condition subsequent is one in which the parties agree that the contract will be
terminated when a prescribed event occurs or does not occur.
C. Communication of Acceptance
1. Communication of acceptance may be either express or implied.
2. Acceptance is effective when the offeror hears the acceptance if the acceptance is
done in face-to-face or telephone communication.
3. Under traditional common law rules, an authorization of an acceptance is implied
when the offeree accepts by the same means or by a means that is faster than that used
to make the offer.
4. An acceptance that is improperly dispatched is complete and effective when it
actually reaches the offeror.
5. Text messaging is not the usual way to communicate in the business world; but if an
offeror asks for a text message acceptance, the offeree should respond as requested.
6. The Uniform Commercial Code asserts that a contract comes into existence if any
reasonable means is used to communicate the acceptance.
D. Unequivocal Acceptance
1. Under the mirror image rule, the terms stated in the acceptance must exactly “mirror”
the terms of the offer or it is not an acceptance.
2. At common law, a qualified acceptance is a counteroffer.
3. Under the UCC there can be a valid acceptance even if the acceptance contains
different or additional terms.
E. Implied Acceptance
1. Acceptance may be implied from the conduct of the offeree.
2. According to the Postal Reorganization Act, delivery of unordered merchandise
through the mail is considered an offer to sell, and the merchandise may be
considered a gift.
3. When unordered merchandise is delivered by agencies other than the post office, the
recipients’ duties, if any, vary from state to state with some states following the
common law rule that the recipient must retain the good and exert reasonable care
until sufficient time has passed to determine that the sender no longer claims the
goods.
F. Silence as Acceptance
1. The general rule is that silence is not an acceptance.
2. The parties can agree that silence will constitute acceptance.
3. Silence may operate as an acceptance when the offeree has allowed it to do so.
G. Rejection and Revocation
1. A rejection occurs when an offeree expresses or implies a refusal to accept an offer.
2. Rejection terminates an offer.
3. A revocation is the calling back of the offer by the offeror.
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Chapter 08 - Offer, Acceptance, and Mutual Assent
4. With the exception of an option contract and a firm offer, an offer may be revoked
any time before it is accepted.
5. An offer may be revoked by the following methods and circumstances:
communication, death or insanity of the offeror, automatic revocation, destruction of
the subject matter, passage of time, and the subsequent illegality of the contract.
H. Option Contracts
1. Option contracts are agreements that bind the offeror to a promise to hold open an
offer for a predetermined or reasonable length of time.
2. The offeror receives something of value in exchange for the agreement to hold the
offer open.
3. An option contract removes the possibility of revocation through death or insanity of
the offeror.
4. Under the UCC a firm offer is created when a merchant agrees in writing to hold an
offer open for a specified period of time or for a reasonable time, but no longer than
three months.
5. No consideration is required for a firm offer.
6. A lease option is a contract that permits a party to lease real property while at the
same time holding an option to purchase that property.
I. Lease Options and Real Property Contracts
1. A lease option is a contract that permits a party to lease real property while at the
same time holding an option to purchase that property.
2. A lease option involves two separate contracts, the lease contract and the option
contract.
III. Mutual Assent in Cyberspace (8-3)
A. Cyber-law or E-law
1. Cyber-law helps integrate the use of computers with the orthodox operation of the
legal complex adaptive system.
2. In many situations, the courts and legislatures have proactively integrated the
orthodox legal system with cyber-contracts, electronic contracts, or e-contracts.
3. The proactive process is seen in several new laws found in the federal Electronic
Signatures in Global and National Commerce Act (E-Sign Act), the Uniform
Electronic Transactions Act, and the Uniform Computer Information Transactions
Act.
4. At times the law has passively reacted to cyber breakthroughs.
B. The E-Sign Act
1. The E-Sign Act was passed by Congress to make certain that commercial
e-documents are given the same credence as their paper counterparts.
2. E-contracts will be valid provided the parties to the contract have agreed that
electronic signatures will be used.
3. If the contract can be duplicated and stored, it will have the same validity as a paper
contract.
C. The Uniform Electronic Transactions Act
1. The UETA was written by the National Conference of Commissioners on Uniform
State Laws (NCCUSL) to ensure that e-contracts are given the same legal effect as
their paper equivalents.
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Chapter 08 - Offer, Acceptance, and Mutual Assent
2. The participants must concur on the use of an electronic medium to create their
contractual relationship.
3. After parties concur on the use of an electronic medium, the electronic record has the
same weight as a paper document.
4. An electronic signature is just as effective as a written signature.
D. The Uniform Computer Information Transactions Act
1. The UCITA was written by the NCCUSL.
2. An issue was that many contracts entered into in cyberspace are more akin to
licensing agreements than sale-of-good contracts.
3. The UCITA covers diverse areas such as database contracts, software licensing
agreements, customized software formulation, and the rights to multimedia
commodities.
4. The UCITA has been controversial because many groups see it as increasing rights of
software manufacturers rather than the rights of consumers.
E. Offer and Acceptance in Cyberspace
1. In addition to terms included in most other offers, an electronic offer should include:
a. Payment criteria
b. Remedies that can be used by the offeree
c. Refund policies
d. Return procedures
e. Dispute settlement instructions
f. The applicability of cyber-signatures
g. Liability disclaimers if needed
h. Provisions relating to the offeree’s manner of acceptance
2. The process of acceptance is often referred to as a “click-on” acceptance or a
“click-on” agreement.
3. When the agreement deals with goods, the provisions of Article 2 of the UCC will
apply.
F. Social Media, Offers, and Advertising
1. Businesspeople must be especially careful about their use of social media.
2. Attorneys must pay special attention to that the Model Rules of Professional Conduct
say about advertising and soliciting business.
3. Commercial speech is constitutionally protected, but only when it is truthful.
4. Creating a false identity when blogging or when offering testimonials, known as sock
puppetry, is not a good idea.
G. Managing “The Cloud” when Making and Accepting Offers
1. Cloud storage preserves electronic data through transferring the data to a data center
that stores the data on a remote database.
2. Efforts should be taken to preserve the confidentiality of confidential data when it is
kept within the cloud.
3. Often data can be kept secure by using encryption measures, a list of sanctioned
users, and a verification process.
IV. The Destruction of Mutual Assent (8-4)
A. Fraud and Misrepresentation
1. Fraud
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Chapter 08 - Offer, Acceptance, and Mutual Assent
a. To destroy mutual assent through a claim of fraud, the complaining party must
prove the existence of five elements: A false representation about a material fact
is, knowingly made, with the intent that it be relied upon, reliance by the
complaining party, and loss.
b. Fraud in the inception occurs when one party tricks another party into a contract
by lying to the innocent party about the actual nature of the contract.
c. Fraud in the inducement occurs when one party tricks another party into a
contract by lying about the terms of the agreement to get the innocent party to
enter the contract under false pretenses.
d. Statements must involve facts, not opinions and sales puffery.
e. Active fraud occurs when one party actually makes a false statement intended to
deceive the other party in a contract.
f. Passive fraud, which is generally called concealment or nondisclosure, occurs
when one party does not say something about certain facts that he or she is under
an obligation to reveal.
g. If one party is in a fiduciary relationship with another party, then an obligation
arises to reveal what otherwise might be withheld when the two parties enter an
agreement.
2. Misrepresentation
a. Misrepresentation is a false statement made innocently with no intent to deceive.
b. Innocent representation makes an agreement voidable, and the complaining party
may demand rescission meaning that both parties are returned to their original
positions.
c. Cases based on innocent misrepresentation allow only rescission, not monetary
damages.
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Chapter 08 - Offer, Acceptance, and Mutual Assent
d. An innocent misrepresentation becomes fraud if a party to an agreement discovers
that an innocent misrepresentation was actually false and fails to reveal the truth.
B. Mistake, Duress and Undue Influence
1. Unilateral and Bilateral Mistakes
a. A mistake made by only one of the contracting parties is a unilateral mistake and
is not sufficient grounds for rescission or renegotiation.
b. A bilateral mistake, also called a mutual mistake, may permit rescission by either
the offeror or the offeree depending on the type of mistake involved.
c. When both parties are mistaken in the identification and description of subject
matter, rescission will be granted.
d. Proof that the subject matter was destroyed before the agreement was made gives
grounds for rescission.
2. The Nature of Duress
V. Duress and Undue Influence (9-4)
1. Duress
a. Physical duress involves violence or threats of violence against a person’t family,
household, or property.
b. If only threats are used, they must be so intense and serious that a person of
ordinary prudence would be forced into a contract without real consent.
c. Emotional duress arises from acts or threats that would create emotional distress
in the one on whom they are inflicted, and it is generally necessary that the action
threatened be either illegal or illicit.
d. Economic duress, also know as business compulsion, consists of threats of a
business nature that force another party without real consent to enter into a
commercial agreement.
e. To establish economic duress, three elements must be shown: The plaintiff must
prove that the other party wrongfully placed the plaintiff in a precarious economic
situation; that he or she had no alternative other than to submit to the contractual
demands of the wrongful party; and that he or she acted reasonably in entering the
contract.
2. The Nature of Undue Influence
a. Undue influence occurs when the dominant party in a special relationship uses
excessive pressure to convince the weaker party to enter a contract that greatly
benefits the dominant party.
b. To establish undue influence, two elements must be shown: The plaintiff must
show that a special relationship existed between the parties such as a fiduciary
one or one involving domination; and the plaintiff must show that the other party
used excessive pressure to take advantage of him or her to enter a contract greatly
benefiting the party applying the pressure.
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distribution without the prior written consent of McGraw-Hill Education.
Chapter 08 - Offer, Acceptance, and Mutual Assent
V. Background Information
A. Cross-Cultural Notes
1. Chinese law in relation to contracts has imposed price controls. Some of these,
however, may be lessening. For example, in an article from Reuters dated
November 26, 2014 titled “China to Scrap Drug Price Caps Next Year – State
Newspaper,” available at
http://www.reuters.com/article/2014/11/26/china-pharmaceuticals-idUSL3N0TG2
LU20141126, it is reported that China plans to end retail price caps on all drugs.
Some drug price caps had already been removed.
2. Many nations have adopted in whole or in part the United Nations Convention on
Contracts for the International Sale of Goods (CISG). Additional information can
be found on the website of the United Nations Commission on International Trade
Law (UNCITRAL) at
http://www.uncitral.org/uncitral/en/uncitral_texts/sale_goods/1980CISG.html.
B. Historical Notes
1. The website of the British Museum, at
http://www.britishmuseum.org/explore/highlights/highlight_objects/cm/t/three_gol
d_coins.aspx, has photographs of early coins used in trade including the gold florin
from Florence used in the 13th century.
2. An interesting article titled “The History of Money: From Barter to Banknotes” is
available from the website of Investopedia at
http://www.investopedia.com/articles/07/roots_of_money.asp. The article discusses
historical developments leading to the use of money. In 600 B.C., the Chinese
moved from coins to paper money. The site reports that in the place of where
American bills say, “In God We Trust,” an early Chinese inscription warned, “All
counterfeiters will be decapitated.”
C. State Variations
1. Instead of being based on English common law, Louisiana law is based on the
French and Spanish civil law tradition which has its root in earlier Roman law.
2. In Childress ex rel. Childress v. Madison Co., 777 S.W.2d 1 (Tenn. Ct. App. 1989),
the Tennessee Court of Appeals ruled that a parent may not through an exculpatory
clause waive a minor’s right to sue.
D. Quotations
1. Agree, for the law is costly.
—British proverb (1674)
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distribution without the prior written consent of McGraw-Hill Education.
Chapter 08 - Offer, Acceptance, and Mutual Assent
2. The history of what the law has been is necessary to the knowledge of what the
law is.
— Oliver Wendell Holmes (1841–1935), Associate Justice, U.S. Supreme Court
VI. Terms
1. The word revoke comes from the Latin revocare, meaning “to call again.”
2. Interesting information regarding the history of notaries can be found on the
website of the National Notary Association at
http://www.nationalnotary.org/knowledge-center/about-notaries/notary-history.
Many believe history’s first notary was a Roman slave named Tiro who developed
a shorthand system he called “notae” for taking down speeches of Cicero. Other
stenographers came to be known as notarii and scribae. Literacy was not
widespread and the notaries served to prepare contracts and other important
documents. Interestingly, notaries accompanied Columbus on his voyages to
ensure to King Ferdinand and Queen Isabella that all discovered treasures were
reported.
3. Some people mistakenly assume that an option contract necessarily involves a
down payment. The term down payment dates from 1926 when buying on credit
was at its peak. It is defined as a part of the full price that is paid at the time of
purchase or delivery, with the balance promised later. An option contract, which
requires consideration, is a binding promise to hold an offer open. The offeree has
the choice to create a new contract by exercising the option during a specified
time period.
4. “Chicanery” is a word that means “trickery.” In terms of law, it usually involves
artful or clever practice aiming to deceive.
5. “Fiduciary” is from the Latin fiduciarius, meaning confidence and trust, and the
French fidere, “to trust.” Fidere is also the origin of the pet’s name Fido, which
reflects the quality of loyalty associated with dogs.
6. “Mistake,” when used in the law of contracts, refers to a belief that is not in
accord with the facts.
7. Extortion is an illegal means of forcing a person into a contract. The term
extortion comes from the Latin extorquere, meaning “to wrench out.”
VII. Related Cases
1. A 1952 Virginia case arose from a conversation between two friends. Mr. Lucy
offered his friend Mr. Zehmer $50,000 in cash for Zehmer’s farm. Zehmer
thought Lucy was joking, so he wrote up a note for the sale, saying he would
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Chapter 08 - Offer, Acceptance, and Mutual Assent
accept the offer. Lucy raised the money the next day, and when Zehmer refused to
sell, Lucy brought suit. Zehmer claimed he “was high as a Georgia pine” on
liquor and that the agreement was “just a bunch of two doggoned drunks bluffing
to see who could talk the biggest and say the most.” The court concluded that
Zehmer’s offer and actions would cause a reasonable person to assume he was
serious and ruled that the contract was valid. Lucy v. Zehmer, 84 S.E.2d 516 (Va.
1954).
2. In O’Keefe v. Lee Calan Inports, Inc., 128 Ill. App. 2d 410, 262 N.E.2d 758
(1970), the plaintiff sued for alleged breach of contract for the refusal to sell a
vehicle at a price quoted improperly in a newspaper advertisement. The court
held that the erroneous advertisement, printed through no fault of the advertiser,
was only an invitation to make an offer, not an offer itself.
3. One of the most famous cases in contract law involves the sale of a cow in 1887.
The parties agreed to the sale of the cow, both thinking that the animal was unable
to produce any offspring. The price was for a fraction of that of a fertile cow.
When it was discovered that the cow was, in fact, with calf, the seller refused to
deliver as agreed. The court rescinded the contract, noting that the mutual mistake
affected the substance of the whole consideration. Sherwood v. Walker, 33 N.W.
918 (Mich. 1887).
VIII. Teaching Tips and Additional Resources
1. An article from the Baltimore Sun addressing Federal Reserve rules intended to
protect mortgage borrowers can be found at
http://articles.baltimoresun.com/2011-03-21/business/bs-bz-ambrose-fed-rules-20
110322_1_loan-originators-mortgage-brokers-brokers-and-loan-officers.
2. The homepage for the National Auctioneer’s Association providing information
on matters such as news and licensing can be found at
http://www.auctioneers.org/.
3. Information regarding the Federal Trade Commission’s Division of Advertising
Practices can be found at http://www.ftc.gov/bcp/bcpap.shtm.
4. Further information regarding the receipt of unsolicited merchandise can be found
on the web site of the U.S. Postal Service at
http://about.usps.com/publications/pub300a/pub300a_tech_021.htm.
5. On the Web site of the American Institute of Certified Public Accountants an
article titled “Managing the Business Risk of Fraud: A Practical Guide,” is
located at
http://www.aicpa.org/forthepublic/auditcommitteeeffectiveness/guidanceandresou
rces/downloadabledocuments/managing_the_business_risk_of_fraud.pdf.
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distribution without the prior written consent of McGraw-Hill Education.
Chapter 08 - Offer, Acceptance, and Mutual Assent
6. On the Web site of the American Institute of Certified Public Accountants links to
information on preventing identity theft is located at
http://www.aicpa.org/interestareas/informationtechnology/resources/privacy/page
s/identitytheft.aspx.
7. In regard to the text referencing emotional duress and undue influence,
information regarding elderly abuse can be found on the web site of the American
Psychological Association at
http://www.apa.org/pi/aging/resources/guides/elder-abuse.aspx.
8. Britain’s Serious Fraud Office (SFO) handles large, complex cases of fraud. The
Web site of Britain’s Serious Fraud Office can be found at http://www.sfo.gov.uk/.
It has been criticized for its handling of some prominent cases and for failing to
bring significant convictions after the financial crisis. An article referencing that
criticism and discussing its investigation into accounting irregularities at Tesco, a
grocery and general merchandise retailer, is available at the website of The New
York Times at
http://www.nytimes.com/2014/10/30/business/international/another-british-watch
dog-opens-inquiry-into-tesco-accounting-scandal.html?_r=0.
9. Inform students about the Consumer Price Index (CPI), which is a measure of
average price changes of consumer goods and services over time. Information on
the Consumer Price Index is available through the Bureau of Labor Statistics at
http://www.bls.gov/cpi/cpifaq.htm.
10. Dow Corning Corporation, the manufacturer of silicone breast implants, was the
victim of thousands of lawsuits when a jury determined that the company was
guilty of fraud and malice because of nondisclosure of hazards. One woman was
awarded $7.34 million. Dow Corning filed for bankruptcy in 1995 due to the
overwhelming number of lawsuits resulting from the case.
11. Ask students to bring in samples of several commercial advisements from
magazines, newspapers, and direct mailings. Then have students work in pairs or
small groups to determine whether the advertisements are offers or invitations to
trade.
12. Beyond the simple and obvious economic benefit that the law of contracts lends
to society, the legal ability to make contracts and the social need to make certain
that those contracts are enforced are essential elements in human relationships. In
fact, although we generally think of contracts as being between individuals, there
are also contracts that are made and enforced between sovereign nations. These
contracts are called treaties and they are just as important, perhaps even more
important, than contracts between individuals. Tony Honre of Oxford University
may have said it best when he wrote, “Agreements are important for more than
one reason, in many areas of life coming to an agreement with your opponent is
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Chapter 08 - Offer, Acceptance, and Mutual Assent
the only practical alternative to coming to blows.” See Tony Honoré, About Law,
Oxford: Clarendon Press, 1995, p. 45.
13. Demonstrate counteroffers with a student volunteer. Make an offer, have the
student make a counteroffer, and then respond with another counteroffer. Ask the
class if, at this point, a contract exists. Explain that an important attribute of a
successful businessperson is the ability to negotiate by making counteroffers.
Encourage students to negotiate for a lower price on a purchase within the next
week. Then have students share their experiences with the class.
14. Discuss actions or gestures that might lead an offeror to believe an offeree has
accepted an offer. Remind the students that courts often use the standard of how a
reasonable person might interpret someone’s actions.
15. Have students suggest how a contract could be worded to avoid a situation in
which a revocation of an offer crosses in the mail with an acceptance of an offer.
16. Have students make lists of examples of sales puffery that they see daily in media
advertising. Then have them explain why it is merely sales puffery and not a
fraudulent statement.
17. Direct groups of students to create lists of relevant questions about types of goods
that are likely to have hidden problems, such as used items. The list of questions
should be designed to help students avoid being the victims of fraud in future
transactions.
18. Have students consider and discuss how misrepresentations could be unfair or
possibly tragic even when the false statement was made with no intention to
deceive.
19. Students may not understand that value is relative. Discuss how disagreements
over the monetary value of an item could be influenced by opinions on its artistic
or sentimental value, for example, in contracts involving art or heirlooms. In such
cases, a legally authorized and independent party, such as an assessor or appraiser,
could set a price for the contested items based on their fair market value.
20. The history of labor unions in the United States includes some rocky
confrontations over employment contracts. Suggest that students work together in
pairs to create scenarios in which a striking union member could claim economic
duress in signing a labor contract.
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