Deck 6: Offer and Acceptance

Question 1

Larry Horton negotiated with Commercial Recovery Systems Inc. to settle a debt. Commercial sent Horton a letter saying that $1,000 would be accepted as full and final settlement of the $25,038 owed. The letter continued, "This offer will be extended through June 30... after which time the full balance will be due. In addition, all derogatory credit information regarding the account to be settled.... Terms: $500.00 due 6/15... $500 due 6/30.... " On June 18, Commercial received a $500 check from Horton dated June 14. On July 2, it received a second $500 check dated July 27. Two years later, Horton learned that his credit report still contained adverse information concerning the account. Horton sued, saying that Commercial had not complied with its contract. Commercial argued that its letter offer had not been accepted because the only way Horton could have accepted was by making full payment on or before June 30. Had Horton accepted the letter offer?

Answer 1

Scenario:
Mr. H has negotiated with CR in settlement of debt later CR had sent a letter stating that $1000 would be accepted as full and final settlement of the amount owned. The offer extended through June 30 after that specified time the full amount will be considered as due.CR received checks from H on different dates $500 each. CR received the check on July second dated 27 th July. The credit report of Mr. H showed the due and it sued against CR for not compiling the contract.
Yes, Mr H had accepted the offer as he made the first payment of $500, which means that, agreed by the offer made by Mr C, one fact arises here is that there was no acceptance in writing by Mr H for the offer made by Mr C. The offer can be accepted in any manner that is reasonable under the circumstances.
Usually the mode of expressing the assent is not important if it successfully makes the offer known to the offeror that his offer has been accepted. It is agreeable that the acceptance may be shown by the conduct.
Here in this case Mr. has accepted the offer by paying the first check but he did not pay the second check of $500 in the time specified by the CR in the offer letter. CR has compiled the contract clearly by stating the offer with required information, but H did not bind with the offer. Hence it can be considered that H has accepted the offer.

Question 2

What is the "mailbox rule"?

Answer 2

Contract law doesn't specify any particular manner in which the offer has to be accepted by the offeree. Offeror may stipulate the reasonable manner in which consent to acceptance of offer might be given by offeree. Offer may be accepted in written form, posted through mail or fax.
Mail-box rule: Sometimes offeror wants that offeree consent should be in written form and should be received by mail to be effective. Acceptance through mail is effective, when the mail is posted, provided delivery is not required. This rule is known as Mail-box rule.

Question 3

What does it mean for parties to have "a meeting of the minds"?

Answer 3

Meeting of the minds is the intention and common understanding of parties entering a contract. Parties may express their intentions orally or in writing.
" Meeting of the minds" is an agreement between the parties to create a valid contract, where agreement takes place when one party makes offer and other party accepts it. Agreement between the parties is an essential condition for the valid contract.
For example, "A" offers "B" to purchase a property at $10,000 and B accepts it, thus "Meeting of minds takes place". Agreement to offer may be expressly stated "either orally or in writing by parties involved.

Question 4

A group of plaintiffs alleged that a gas station ran a promotion with an advertisement stating that if individuals purchased ten gallons of gas, they would get a free ski lift ticket voucher upon presentation of their gas receipt. However, when individuals attempted to obtain their ski lift ticket vouchers, the gas station gave them a "buy one get one free" coupon that required them to purchase one lift ticket at full price from the ski lodge in order to get a free ski lift ticket. The individuals who purchased ten gallons of gas alleged that a contract existed between the gas station and themselves, because the gas station's advertisement was an offer that they had accepted. Were they correct?

Question 5

Explain the two essential elements of a contract.

Question 6

After the borrower defaulted on a $16.8 million note, Principal Life Insurance Co. (Principal), who owned the note, asked its employee, Michael Logsdon, to sell it. Paul Cheng agreed to buy the note for $14.3 million. Logsdon sent Cheng a blank purchase and sale agreement (PSA). Logsdon phoned Cheng and told him that Principal's Investment Committee had approved the sale and asked for a written PSA. Cheng said, "I agree to it.... I accept it." He sent Logsdon a PSA with changes, including altering: the buyer from Cheng to Revalen Development, the price from $14.3 million to $14.299 million, and the earnest money from $71,500 to $100. The defaulting borrower and Principal agreed to refinance the note so it was no longer for sale. Revalen sued, alleging breach of an oral contract. Principal claimed there had been no offer. Had there been an offer?

Question 7

List the three requirements for a valid offer.

Question 8

Zalman Silber, an insurance agent for New York Life Insurance Co. (NY), had another business that the company prohibited its agents from undertaking. NY's senior vice president wrote Silber, "... you agreed... [to] resign as an agent of New York Life and that once your... business was sold you would apply for reinstatement.... I agreed that we would review your application for reinstatement... and so long as... your other outside business activities were acceptable to the Company, and there were no intervening compliance issues, we would reinstate your contract.... If you are in agreement... sign below and return a copy of this letter." Silber did not sign the letter, return, it or resign. NY then sent Silber a letter saying that since he had not responded and could not be reached, he was suspended, and that unless it heard from him by June 16, it would terminate his agency. Silber wrote there would be no point in "moving forward" unless one term were resolved and that they should discuss credit of his service time upon reinstatement, the sale of his prohibited business, and other matters. NY terminated him. He later applied for reinstatement, but NY denied his application. Silber sued, claiming he had an oral agreement confirmed by the letter from the senior vice president. Did he have a contract with NY?

Question 9

What are common types of invitations to make an offer?

Question 10

Cherokee Rose Design Build LLC hired Muilenburg Inc. to install underground utilities in a subdivision. After the work was done, Muilenburg sued Cherokee, alleging it had not been paid. Cherokee's lawyer sent a proposed settlement to Muilenburg. It stated: Cherokee would sell three lots to Muilenburg for $75,000; the parties would fully release each other; Muilenburg would dismiss the lawsuit; each party would bear its own costs. Muilenburg's lawyer responded, writing, "My client has authorized me to convey its acceptance of the settlement offer," but Cherokee would have to "convey marketable title by way of a warranty deed," and Muilenburg would like Cherokee to provide a title insurance commitment. After Rose's lawyer prepared releases, Muilenburg realized it had to pay $75,000 for the lots and alleged it had not made an unconditional acceptance because of the requirement of marketable title and request for a title insurance commitment. Was Muilenburg's response a counteroffer?

Question 11

When may an offeree accept an offer?

Question 12

MLS Construction LLC asked MD Drilling and Blasting Inc. to do rock drilling and blasting work required for an excavation project. MD had previously done work for MLS but had not been fully paid. MD agreed to do the new work if MLS madea significant payment on the balance due. MLS agreed and gave MD a check for $15,000. MD began work and the same day faxed an unsigned written agreement to MLS. Two weeks later, MD learned that MLS had stopped payment on the check. MD stopped work on the project and sued MLS for breach of contract. MLS argued that the unsigned agreement that MD faxed revoked the original offer, and therefore there was no contract. Did it?

Question 13

When may an offer be revoked?
b. What is the effect of death or insanity of the offeror on an offer?

Question 14

Yolanda Mulato had a mortgage on her home through Wells Fargo Bank and made timely mortgage payments for several years. After retiring from her job, Mulato's monthly income fell, and she began to experience financial difficulty. Mulatto sought to reduce her monthly mortgage payment by requesting a loan modification from Wells Fargo. The bank's home preservation specialist acknowledged Mulato's request and sent her a stack of forms to complete. Upon returning the completed forms to the bank, Mulato received a letter from the Wells Fargo stating, in part: "Now that we've received your documents (applying for mortgage assistance), our home preservation team will carefully review what you've submitted to determine if you are eligible for mortgage assistance.... If you are eligible and your modification does not require a trial period plan, you will receive a final loan modification agreement adjusting the terms of your mortgage." Sometime later, the bank notified Mulato that she was ineligible for mortgage assistance, because she had other assets that could be used to pay the mortgage. Mulato claimed that the italicized language of the bank's letter constituted a promise to provide a loan modification plan and that a contract had been formed. Was she correct?

Question 15

How long is an offer open for acceptance?

Question 16

Does a mere inquiry about the terms of an offer cause the offer to be rejected? Why or why not?

Question 17

Explain the consequences when an intended acceptance varies or qualifies the offer.