Week 5 - AEM 3200 Week 5 Termination of Offer, Effects of...

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AEM 3200 Week 5 – Termination of Offer, Effects of Technology, Consideration Termination of an offer I. By action of the parties A. Revocation (E ) - General rule: Any offer can be revoked. You may revoke up until the time when the other party has accepted. There are two times when an offer is irrevocable: 1. An option is an irrevocable offer. This is a separate contract saying that you will leave the offer open for a stated period of time or until a specified point in time. This offer is supported by consideration; making it a separate agreement in itself. An example is an option to renew a lease or a payment for someone not to sell a house to anyone else for a stated period of time. 2. A firm offer is one that is irrevocable under the UCC. UCC 2-205 defines and explains a firm offer. It must be written, signed and made by a merchant and give assurances that it will be open for a stated or reasonable period of time, but for no longer than three months. B. Rejection 1. An offer is rejected when the party says that they are not interested. Once rejected, the party committing to rejection cannot later accept even if an option or firm offers are otherwise still open. Once the offer is rejected it is terminated. C. Counteroffer ( E ) 1. Essentially a rejection of the original offer, the counteroffer is made by the offeree. 2. It is important to consider, when a person is asking if you would take a lower price than you originally offered, whether they are proposing a true counteroffer (and thus rejecting your offer) or merely seeing if you are willing to negotiate. If the offeree says "would you consider taking less?" Whether that's a rejection or just an inquiry becomes a factual question. II. Counteroffer A. The common law used a " mirror image rule ". B. Acceptance must be in the same form of the offer (i.e., if offer is mailed, acceptance must also be mailed and in same written form). C. If it is a complex transaction, it is more difficult to have every offer identical. III. Acceptance A. Silence as Acceptance 1. A general rule is that we can't assume acceptance from silence. 2. Mailbox Rule: once it is put in the mail it is considered an offer for acceptance. Exceptions: a) Statute or public policy says otherwise [life insurance policies] a. A customer writes a check for a life insurance premium, goes to get a medical exam, and subsequently dies in the hospital before the complete results of the exam are revealed. b) Agreement or prior dealing establishes silence as forming an agreement [book or CD club].
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AEM 3200 Week 5 – Termination of Offer, Effects of Technology, Consideration c) Shipping non-conforming goods [UCC 2-206] Customer wants to buy 100 green widgets at a specific price. The supplier checks inventory and discovers that inventory is out of green widgets, but stocked with many blue widgets. The supplier sends blue widgets instead of green widgets. If the supplier notifies the buyer that this is only an accommodation, the supplier will not be deemed to have accepted and
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This note was uploaded on 03/03/2009 for the course AEM 3200 taught by Professor Grossman,d. during the Fall '07 term at Cornell University (Engineering School).

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Week 5 - AEM 3200 Week 5 Termination of Offer, Effects of...

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