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
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
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
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
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
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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