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Business Law-10
Chapter 10
29
Accounting
Undergraduate 2
11/02/2010

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Term
Agreement
Definition
The manifestation by two or more persons of the substance of a contract
1) Only the offeree can legally accept an offer and create a contract.
2) The offeree's acceptance must be unequivocal.
3)Silence is not considered acceptance even if the offeror states that it is.
Term
Offeror
Definition
Person who makes an offer
Term
Offeree
Definition
Person to whom an offer has been made
Term
Offer
Definition
"the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that he assent to that bargain is invited and will conclude it" [Section 24 of the Restatent (second) of COntracts]
Term
Requirements of an offer
Definition
For an offer to be effective:
1)The offeror must objectively intend to be bound by the offer.
2)The terms of the offer must be definite or reasonably certain.
3) The offer must be communicated to the offeree.
Term
Objective Theory of Contacts
Definition
A theory that says the intent to contract is judged by the reasonable person standard and not by the subjective intent of the parties.
Term
No Valid contract results from:
Definition
1) Preliminary negotiations
2)Offer that are made in jest, anger, or undue excitement
Term
Definiteness of Terms
Definition
1)The terms of an offer must be clear enough to the offeree to be able to decided whether to accept or reject the terms of the offer.
2) if the terms are indefinite, the courts cannot enforce the contract or determine an appropriate remedy for its breach.
Term
An offer (and contract) must contain the following terms:
Definition
1)identification of the parties
2)identification of the subject matter and quantity
3)Consideration to be paid
4) time of performance
Term
Implied terms
Definition
1)the court can supply a missing term if a reasonable term can be implied.
2)Terms that are supplied in the way are called ____.
Term
Communication
Definition
An offer cannot be accepted if it is not communicated to the offeree by the offeror or a representative or agent of the offeror
Term
Advertisements
Definition
1)A general ______is an invitation to make an offer.
2)A specific _____is an offer.
Term
Reward
Definition
1)An offer to pay a ____is an offer to form a unilateral contract.
2)To collect a _____, the offeree must...1) Have knowledge of the ____offer prior to completing the requested act. 2) Perform the requested act.
Term
Auction with reserve
Definition
Unless expressly stated otherwise, an auction is an ___________, i.e., the seller retains the right to refuse the highest bid and withdraw the goods from auction
Term
Auction without Reserve
Definition
An auction in which the seller expressly gives up his or her right to withdraw the goods from sale and must accept the highest bid
Term
Revocation
Definition
1)Withdrawal of an offer by the offeror terminates the offer.
2) An offer can revoke an offer at any time period to its acceptance by the offeree.
Term
Rejection
Definition
1) express words or conduct by the offeree that rejects an offer.
2) _____terminates the offer.
Term
Counteroffer
Definition
1) A response by an offeree that contains terms and conditions different from or in addition to those of the offer
2) A _____ terminates an offer
Term
Destruction of the subject matter
Definition
the offer terminates if the subject matter of the offer is destroyed through no fault of either party prior to its accetance
Term
Death or incompetency of the offeror or offeree
Definition
the death or incompetency of either party terminates the offer
Term
Supervening illegality
Definition
1)the enactment of a statute, regulation, or court decision that makes the object of an offer illegal
2) this action terminates the offer
Term
Lapse of time
Definition
an offer terminates when a stated time period expires
Term
Acceptance
Definition
a manifestation of assent by the offeree to the terms of the offer in a manner invited or required by the offer as measured by the objective theory of contracts. [Section 50 of the Restatement (second) of Contracts]
Term
Mirror image rule
Definition
requires the offeree to accept the offeror's terms
Term
Contract Law
Definition
establishes the following rules concerning time and mode of acceptance
1) mailbox rule
2)proper dispatch rule
3)mode of acceptance
-express authorization
-implied authorization
Term
Mailbox rule
Definition
1)a rule that states that an acceptance is effective when it is dispatched, even if it is lost in transmission.
2) If an offeree first dispatches a rejection and then sends an acceptance, the mailbox rule does not apply to the acceptance.
Term
Proper dispatch rule
Definition
1) the acceptance must be properly dispatched.
2)the acceptance must be properly addressed, packaged, and posted to fall within the mailbox rule.
3) under common law, if an acceptance is not properly dispatched, it is not effective until it is actually recieved by the offeror.
Term
Express Authorization
Definition
1)a stipulation in the offer that says the acceptance must be by an specified means of communication.
2)Use of an unauthorized means of communication makes acceptance not effective.
Term
Implied authorization
Definition
mode of acceptance that is implied from what is customary in similar transactions, usage of trade, or prior dealings between the parties
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