contract law chapter1-4

contract law chapter1-4 - Chapter 2 Formation of a...

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Chapter 2 Formation of a contract: offer and acceptance Offer must have intent - whether the offeror has serious intent r is simply testing the waters from preliminary negotiation. Preliminary negotiation- are considered a form of solicitation ad normally wil not constitute an offer. Lacking is the commitment of a promise b the offeror to be bound to an offer. Common law rules suggest that an offeror must intent to be bound o the contract. If the intent of the offeror is lacking, the assumption is that an offer did not exist. Test on whether the offer is valid is based on a reasonable person test- would a reasonable person in the offeree’s position believe that the offeror intended to be bound to a contract? Terms of offer must be definite - not only must an offeror have intent but also the terms of the offer must be sufficiently certain and definite so that the offeree knows what to accept. The more specific the terms, the higher the likelihood that an offer will exist. If terms are left out of the parties are stil haggling over terms, the transaction will probably constitute a preliminary negotionation rather then offer. An offer should specify at minimum the materian terms which are considered to be o The parties- the persons intending to be bound to a contract should be clearly identified, important to know who the offeror and the offeree are. Failure to identify the parties are fatal in the process o Price- the specific price the parties intend to pay for the subject matter of the contract is important. Under common law of contracts the law does not permit the price term to be uncertain and negotiated at a later date. The offer must containt the specific price or the ofer will be considered merely an invitation to negotiatie or a preliminary negotation but not an offer. o Subject matter- certainty of the subject matter is a requirement for an effective offer. The subject matter must be easily identifiable and not subject to question. Real estate= substantial detail while CD player= much less o Time of performance- when the parties perform their obligations is critical such as contractor- real estate transaction. If a time period is not established under common law it will be a reasonable time period implied. Offeror must communicate offer - an offer cannot be valid unless it is communicated to the offeree. The offeree must know of the offer in order for there to ber a power of acceptance. Advertisements and solicitations- some offers appear to be offers, but are treated as invitations to make offers. An advertisement is a preliminary negotiation. Not
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an offer because it lacks specifity and definiteness on terms. It is a mere solicitation - invitation of a business transaction Bait and switch - a form of fraud in which a merchant advertises an iterm at a low price to entice costumers into the sotre and then, claiming that the advertised article is no longer in stock, attempts to persuade the customer to purchase a higher
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contract law chapter1-4 - Chapter 2 Formation of a...

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