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This week covers the law of offers — what constitutes a valid offer, the difference between offers and preliminary negotiations, advertisements, and the requirements of definiteness and communication. Students will learn to distinguish offers from invitations to deal and understand when an offer creates the power of acceptance.
An offer is a communication by one party (the offeror) to another (the offeree) that creates the power of acceptance in the offeree. Once an offer is made, the offeree can form a contract simply by accepting.
The critical question is always: Did the offeror's words or conduct create a reasonable belief in the offeree that acceptance would close the deal?
Courts apply the objective theory of contracts: intent is measured by what a reasonable person in the offeree's position would understand from the offeror's words and conduct, not by the offeror's secret intentions.
Offers vs. Non-Offers: - Statements made in jest: Not offers if a reasonable person would know it's a joke. But see Lucy v. Zehmer: if the words and conduct appear serious, it's an offer even if the offeror claims to be joking. - Expressions of opinion: "I wouldn't sell for less than $50,000" → not an offer (statement of minimum) - Statements of intention: "I'm thinking about selling my car" → not an offer - Inquiries: "Would you consider selling for $50,000?" → not an offer
Common Law (strict): The offer must include all essential terms: - Identity of the parties - Subject matter - Price - Quantity - Time of performance
Missing an essential term = too indefinite to be an offer.
UCC Article 2 (flexible): For goods, only quantity is required. All other terms can be supplied by gap-fillers: - Price: reasonable price at time of delivery (§ 2-305) - Place of delivery: seller's place of business (§ 2-308) - Time of performance: reasonable time (§ 2-309) - Payment: due at time of delivery (§ 2-310)
The offer must be communicated to the specific offeree (or the public, in the case of a general offer). An offeree cannot accept an offer they don't know about.
Advertisements are typically invitations to deal (invitations to make offers), not offers themselves. The customer who responds to an ad is the offeror; the merchant is the offeree who can accept or reject.
Exception (Lefkowitz rule): An advertisement IS an offer if it is: 1. Clear, definite, and explicit 2. Leaves nothing open for negotiation 3. Limits quantity or specifies who can accept
Example (Offer): "1 fur coat, worth $139.50, first come first served, $1" → This is an offer because it specifies the item, the price, and who can accept (first person to arrive).
Example (Not an offer): "50% off all winter coats this weekend!" → Invitation to deal; the store can refuse to sell.
An offer can be terminated before acceptance by:
| Method | Rule | Key Detail | |--------|------|------------| | Revocation | Offeror can revoke at any time before acceptance | Effective when RECEIVED by offeree (not when sent) | | Rejection | Offeree can reject | Effective when received by offeror | | Counteroffer | A response that changes terms | Acts as both rejection of original offer AND a new offer | | Lapse | After stated time or reasonable time | What is "reasonable" depends on circumstances | | Death/Incapacity | Of either party | Automatic termination (no notice required) | | Destruction | Of subject matter | Automatic termination | | Illegality | Supervening law makes performance illegal | Automatic termination |
1. Option contract: Offeree gives consideration to keep the offer open for a stated period 2. UCC Firm Offer (§ 2-205): A merchant's signed, written offer to buy or sell goods, stating it will be held open, is irrevocable for the stated period (max 3 months) — no consideration needed 3. Detrimental reliance: If the offeree reasonably and foreseeably relies on the offer, the offeror may be estopped from revoking (Restatement § 87(2)) 4. Beginning performance on a unilateral contract: Once the offeree begins performance, the offer becomes irrevocable for a reasonable time to complete
The statutes SofAI ties to this topic. Use them as your IRAC rule block, then verify the current text on the official leginfo link.
A valid contract requires four things: parties capable of contracting, their consent, a lawful object, and sufficient consideration.
Exam hook: Use the four §1550 elements as the checklist for issue-spotting formation defects.
Consent must be free, mutual, and communicated by each party to the other.
Offer analysis is the starting point of every Contracts essay. The Baby Bar expects you to identify whether a valid offer was made, apply the objective test, and determine if the offer was still open when acceptance occurred. Missing this threshold analysis means missing the entire contract formation issue.