Advertisement vs an Offer Discussion

1. Generally, how do we distinguish an advertisement from an offer?

2. Why do you think the distinction between an offer and an advertisement is significant?

3. Please share a case decision from the textbook (Chapter 10)  that examines whether a sufficient offer has been made.

PART
BUSINESS LAW:
THE ETHICAL, GLOBAL, AND E-COMMERCE ENVIRONMENT,
LANGVARDT, BARNES, PRENKERT, MCCRORY, AND PERRY 1
3
Contracts
• Chapter 9 Introduction to Contracts
• Chapter 10 The Agreement: Offer→
• Chapter 11 The Agreement: Acceptance
• Chapter 12 Consideration
• Chapter 13 Reality of Consent
© 2019 McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted
without the prior written consent of McGraw-Hill Education.
1
PART
BUSINESS LAW:
THE ETHICAL, GLOBAL, AND E-COMMERCE ENVIRONMENT,
LANGVARDT, BARNES, PRENKERT, MCCRORY, AND PERRY 2
3
Contracts
• Chapter 14 Capacity to Contract
• Chapter 15 Illegality
• Chapter 16 Writing
• Chapter 17 Rights of Third Parties
• Chapter 18 Performance and Remedies
© 2019 McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted
without the prior written consent of McGraw-Hill Education.
2
Contracts: The Offer
CHAPTER
10
“There is nothing more likely to start disagreement
among people or countries than an agreement.”
E.B. White
© 2019 McGraw-Hill Education.
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Learning Objectives
10-1 Explain the elements of an offer under both the
Uniform Commercial Code (UCC) and common law.
10-2 Determine whether a given proposal is likely to be
considered to be an offer.
10-3 Distinguish advertisements that are considered to
be offers from those that are merely invitations to
negotiate.
10-4 Describe the circumstances that terminate an offer
and determine whether a given offer remains “on the
table.”
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Requirements for an Offer
An offer is a promise conditional on an act,
return promise, or forbearance (refraining from
doing something).
Parties to a contract must have intent to enter
binding agreement, terms must be definite, and
the offer must be communicated to the offeree
by the offeror.
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Intent to Contract
An offeror must indicate present intent to
contract, or the intent to meet the contract
obligation upon acceptance.
Courts use the objective theory of contracts:
• Would a reasonable person judge the offeror’s
words and acts in the context of the circumstances
to signify intent?
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Definiteness of Terms
Offer and resulting contract must be definite
and certain.
• Offer cannot be vague about major points.
• The trend is to tolerate a lower degree of specificity
in agreements than classical contract law would
have tolerated
• But if important aspects of a contract are left out,
under the common law the transaction may not be
enforced.
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Definiteness: Domingo v Mitchell
Did Mitchell and Domingo enter into an enforceable
contract?
Mitchell alleges she did not make an offer to Domingo,
but even if she did, the price was lacking making the
contract invalid.
However, there were previous dealings: the parties
participated in lottery pools with co-workers and
‘covered’ for each other.
Domingo presented sufficient evidence to deny
Mitchell’s motion for summary judgment.
© 2019 McGraw-Hill Education.
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Definiteness under the UCC
UCC often creates contractual liability where no
contract would result under common law.
Article 2 sales contracts can be created “in any
manner sufficient to show agreement, including
conduct…” [2–204(1)].
A price, quantity, delivery, and time for payment
term left open in a contract can be filled by
inserting a presumption found in the Code’s rules.
© 2019 McGraw-Hill Education.
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Definiteness: J.D. Fields v
United States Steel Int’l
A valid contract for the sale of goods may be based
on a valid detailed price quotation.
Two different POs/Emails:
• For PO#45850: the emails only establish Fields was
“looking into” increasing its order to reach the 100ton minimum but never actually did so. No contract.
• For PO#46110: this particular price quote contained
enough detailed information to be considered a
valid contract under Texas law.
© 2019 McGraw-Hill Education.
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Communication to Offeree
If an offeror communicates the terms of an offer
to an offeree, he objectively indicates an intent
to be bound by those terms.
If an offeror does not communicate the offer to
the offeree, this may indicate the offeror has
not yet decided to enter into a binding
agreement.
Clearly unless an offer is communicated there
can be no acceptance, and no agreement.
© 2019 McGraw-Hill Education.
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Advertisements
Advertisements for a sale of goods at specified
prices generally are not considered offers, but
are invitations to offer or negotiate.
• Examples: flyers, handbills, catalogs, “for sale” ads
in newspaper or yard.
• Sales puffery is not an offer.
© 2019 McGraw-Hill Education.
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Rewards
Advertisements offering rewards for lost
property, information, or capture of animals are
treated as offers for unilateral contracts.
• To accept the offer and receive the reward, an
offeree must perform the requested act (such as
returning a lost dog to its owner).
© 2019 McGraw-Hill Education.
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Rewards: Kolodziej v Mason
Mason’s challenge in the unedited interview was
unambiguously directed to the prosecution only.
Since Kolodziej was neither a prosecutor nor
aware of the unedited Mason interview at the
time he performed, he could not have accepted
Mason’s offer.
No contract. Mason manifested no willingness to
contract and no effort by Kolodziej could turn his
statements into a offer.
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Bids
Advertisements for bids and sellers at auctions
generally are treated as making an invitation to
offer, so those who bid are making an offer that
the seller may accept or reject.
• In Gleason v. Freeman, the court held that an online
real estate auction is not a binding contract, but a
non-binding advertisement.
© 2019 McGraw-Hill Education.
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Which Terms are
Included in the Offer?
After determining an offer exists, a court must
determine which terms are included.
The modern trend is that offerees are bound
only by terms of which they had actual or
reasonable notice.
• Would a fine-print provision on the back of a theater
ticket be binding on a theater patron?
• Would the terms printed on a multipage airline
ticket be considered binding on the purchaser?
© 2019 McGraw-Hill Education.
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Included Terms:
Cordas v Uber Technologies
Does the creation of a Uber account create a binding
‘clickwrap’ contract for arbitration?
A clickwrap contract gives notice and requires assent to
the terms and conditions of the contract before
proceeding by clicking “DONE.”
The agreement is a clickwrap agreement because a
Uber user must assent to terms and conditions to
create an account.
As a result, Cordas assented to a Uber account and
agreed to arbitration.
© 2019 McGraw-Hill Education.
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Termination of Offers
1
An offer may be terminated by revocation if
revoked & communicated to offeree before the
offer is accepted.
Terms of the Offer.
• An offeror has the power to determine the terms
and conditions under which they are bound to a
contract, including terms in the offer that limit its
effective life.
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Termination of Offers
2
Lapse of Time.
• Offers that fail to provide a specific time for
acceptance are valid for a reasonable amount of
time depending on the circumstances, the
medium of communication (face-to-face, email,
phone, previous dealings, etc).
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Revocation
An offer may be terminated by revocation if it is
communicated to offeree before the offer is
accepted.
Exceptions:
• Option is a separate contract in which an offeror
agrees not to revoke the offer for a stated time in
exchange for some valuable consideration.
• Offers for unilateral contracts (e.g., rewards).
• Promissory estoppel.
• Firm offers for sale of goods only!
© 2019 McGraw-Hill Education.
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Rejection
Rejection: an offeree expressly rejects (unwilling to
accept) offer or impliedly rejects the offer by making a
counteroffer.
• An offer to contract on terms materially different from terms
of the original offer.
Lapse of time and expiration of offer.
Death or disability of either party.
Destruction of subject matter.
Intervening Illegality.
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Rejection: D’Agostino v
Federal Insurance Co.
In order to form a contract, an offer must be matched by
a ‘mirror image’ of an acceptance.
A counteroffer proposes a term that is materially
different from the original offer and is a rejection of the
offer and negates any agreement.
Federal’s Release was a counteroffer rather than an
acceptance because it contained additional terms
beyond those set forth in the proposal.
For D’Agostino. No settlement contract was formed.
© 2019 McGraw-Hill Education.
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Test Your Knowledge
1
True = A, False = B
• Courts apply the subjective theory of contracts when
determining whether intent to contract existed.
• The UCC often creates contractual liability where no
contract would result under common law.
• Sales puffery may be deemed to be a valid offer.
© 2019 McGraw-Hill Education.
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Test Your Knowledge
2
Multiple Choice
• An offer requires:
a)
b)
c)
d)
e)
Intent and communication to offeree.
Motive.
Definiteness of terms.
All of the above.
All of the above except (b).
© 2019 McGraw-Hill Education.
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Test Your Knowledge
3
Multiple Choice
• Which is not an invitation to negotiate:
a) Advertisement of sale.
b) Offer of Reward.
c) Auction.
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Thought Questions
When you go to a department store and
purchase an item, what have you done
according to contract law?
Is the law sensible about these contracts?
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