Question

In Chapter 12, we focus on learning about the first element, which is "The Agreement." An agreement must have an offer and acceptance. Assuming the other 5 elements of a contract are satisfied, a binding contract is formed as soon as an offer is accepted.

Counteroffers are a common occurrence in attempting to get to an agreement. Any change to an offer, even with words of acceptance, is a counteroffer. A counteroffer, or any change to the terms of the original offer, is also a rejection of the original offer even without specific words of rejection. This means that the offeree cannot go back and accept the first offer after making any offer changing the terms of the deal. Any new or different term added into the discussion "kills" the preceding offer.

Look at the following exchange:

Leah: “Hey Karli, I hear you are looking for a used laptop. I will sell you mine for $400.”  (This is an offer.)

Karli: “Great, your computer is exactly what I am looking for! I accept your offer, but you need to throw in the laptop case.”  (This is a counteroffer and rejection of original offer. The original offer from Leah is now dead and unable to be accepted.)

Leah: “Wonderful, I will sell the case, too, but the price for both the computer and case would be $425.”  (This is another counteroffer and rejection of Karli's offer. Karli's counteroffer is now dead and unable to be accepted.)

Karlie: “Oh, that is over my budget. I will accept your original offer of $400 for the laptop alone.”  (This is another counteroffer and rejection of Leah's 2nd offer.)

Leah: “Never mind, I don't think I'm interested in selling it anymore.”  (This is rejection of Karli's 2nd offer.)

Karli: “Too late, I accepted your offer so we have a contract for you to sell me the laptop for $400.”   (This is not correct as there has not been an offer or counter offer that has been accepted. There is no contract here, even though we have words of acceptance.)

Chapter 12 - Funny Farm Case

Now we are going to test our understanding of offers, acceptances, revocations, rejections, counteroffers, and bilateral and unilateral contracts.

The following is from the movie "Funny Farm" with Chevy Chase (1988). In the classroom, we watch the last 20 minutes of this movie and pick out offers, acceptances, revocations, rejections, counteroffers, and bilateral and unilateral contracts. Because of copyright laws, I can't post the clip here. So I will do it in writing. You can watch this movie on your own if you'd like -- it's quite funny.

Answer 1

OFFER:

The nature of an offer

An offer is an expression of willingness to contract on certain terms, made with the the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed, the “offeree”

ACCEPTANCE:

An acceptance is “a manifestation of assent to the terms [of the offer] made by the offeree in the manner invited or required by the offer.” In determining if an offeree accepted an offer and created a contract, a court will look for evidence of three factors: (1) the offeree intended to enter the contract, (2) the offeree accepted on the terms proposed by the offeror, and (3) the offeree communicated his acceptance to the offeror.

In determining whether an offeree accepted an offer, the court is looking for the same present intent to contract on the part of the offeree that it found on the part of the offeror. And, as is true to intent to make an offer, intent to accept is judged by an objective standard. The difference is that the offeree must objectively indicate a present intent to contract on the terms of the offer for a contract to result. As the master of the offer, the offeror may specify in detail what behavior is required of the offeree to bind him to a contract. If the offeror does so, the offeree must ordinarily comply with all the terms of the offer before a contract results.

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Communication of Acceptance: To accept an offer for a bilateral contract, the offeree must make the promise requested by the offer. An offeror must communicate the terms of his proposal to the offeree before an offer results. This is so because communication is a necessary component of the present intent to contract required for the creation of an offer. For similar reasons, it is
generally held that an offeree must communicate his intent to be bound by the offer before a contract can be created. To accept an offer for a unilateral contract, however, the offeree must perform the requested act. The traditional contract law rule on this point assumes that the offeror will learn of the offeree’s performance and holds that no further notice from the offeree is necessary to create a contact unless the offeror specifically requests notice.

REVOCATION:

The Revocation of Power of Attorney in real estate is a legal document used by the signatory of the Power of Attorney to cancel the powers granted to the agent

Revocation is the act of terminating, reversing, or overriding something. It can be deliberate, as in cases where people chose to revoke powers or withdraw actions, and it can also happen as a matter of law, as when a newly passed law acts to revoke an older one because it conflicts. There are a number of settings where this legal concept can arise and it is important for people to be aware of their rights and responsibilities with respect to revocation.

One example of revocation is the termination of authority. This commonly occurs in legal relationships like attorney-client relationships or appointment of executors. The authority one person has to act on behalf of the other can be revoked with a legal document or a change of circumstances, as when someone dies and a person appointed to act with power of attorney no longer has that power, since dead people do not require legal representatives.

Revocation can also be seen in the context of situations where legal powers are taken away. The powers of government representatives can be revoked, and other individuals in positions of power can also have their powers revoked if they are no longer fulfilling their duties or they wish to step down. People can also voluntarily surrender legal rights and powers, as for example when people renounce their citizenship in one nation to take up citizenship in another.

REJECTION:

Rejection can be defined as the act of pushing someone or something away. One may experience rejection from one's family of origin, a friend, or a romantic partner, and the resulting emotions can often be painful.

Any other industry, you will also require to write an offer rejection letter in the real estate industry in case you don’t want to purchase that particular property.

Rejection can be experienced on a large scale or in small ways in everyday life. While rejection is typically a part of life, some types of rejection may be more difficult to cope with than others.

Rejection can occur in a variety of circumstances. Typically, rejection describes an instance of a person or entity pushing something or someone away or out.

COUNTER OFFER:

A counter-offer is an offer that your current employer may present to you to rival your new job offer as an incentive to try and persuade you to stay with the company. This may be anything from a salary or benefits increase, promotion, an option to work from home or a combination of any of the above. Counter-offers can leave you confused or in doubt about your decisions, so it is important to be prepared for a counter-offer prior to handing in your notice so you know how to handle it.

an offer or proposal made to offset or substitute for an earlier offer made by another.

a response to a bid in which a seller amends his original offer, making it more favourable to the buyer.

Just as a seller can submit a counteroffer to a buyer, a buyer can counter the seller's counter, which then becomes a counter-counteroffer or Buyer Counteroffer No. 1. There is no limit to the number of counteroffers that can go back and forth.

How Is a Counteroffer Accepted?

The buyer can simply accept the counteroffer and deliver it back signed to the sellers and their agent. Time is of the essence, though, as all counteroffers include an expiration date.

It’s also important to note that the seller can accept another offer while the buyer is deciding whether to move forward—another reason to act quickly when a counteroffer is on the table.

If the seller does get a more favorable offer while the buyer is deciding, the seller will typically withdraw the counteroffer, effectively removing the first buyer from the situation.

Bilateral Contract:

A bilateral contract is an agreement between two or more parties. Most business and personal contracts fall into this category.Traditionally, when people discuss contracts they are talking about bilateral contracts. Someone promises a certain action to another party in response to another party’s action. It’s a two way street.

Unilateral Contract:

A unilateral contract is a contract in which only one party makes a promise to perform an action.

Example: An insurance contract or a reward contract are both examples of unilateral contracts.

Unilateral contracts appear more often than you may think; one of the most common instances is a reward contract. Imagine you’ve lost your cat, Coco. You place an advertisement online offering a $250 reward to the person who returns Coco. By providing a reward, you’re offering a unilateral contract.

Your promise to pay for anyone returning your cat is a single promise. You’re the only person who has taken any action in this contract because no one is specifically responsible for finding your cat, it’s completely optional.

Both bilateral and unilateral contracts have some similarities. First and foremost, both contracts are enforceable in court. The other similarity is both contracts can be broken, also known as a breach of contract.

The breach of a contract happens when a failure to fulfill any term of a contract without a legal excuse occurs.

Breach of contracts are pretty self-explanatory in bilateral contracts.