Quiz 9: Agreement and Consideration

Business

An offer is a conditional commitment or promise to perform or restrain from performing a particular action in future. There are three elements necessary for an effective offer. a) Intention : A serious objective intention of the offeror is essential for an offer to become effective. b) Definiteness : The terms of an offer must be defined substantially. The definite and reasonable terms of the contract ensures that the parties and the court would be able to ascertain the contract terms easily. c) Communication : The offeror must communicate the offer to the offeree. Following are a few examples of nonoffers. a) A mere expression of opinion is not an offer. b) Any intent to perform an act sometime in future is not an offer. c) A request for negotiation is not an offer. Statement such as "Will you send your villa?" is not an offer. d) Auction is an invitation to submit offers, and is not an offer itself.

No , Mr. B cannot hold Mr. S to a contract for sale of the land. The statement "I will not take less than $60,000 for the forty-acre tract as specified." by Mr. S was merely an invitation to negotiate, not an offer exactly. It only represents Mr. S was willing to consider the possibility of entering into a contract. There was no intention of a definite promise to sell at $60,000. Mr. B's attempt to acceptance would not bind the parties to a contract since there does not exist any offer to be accepted, and thus there is no contract between Mr. S and Mr. B.

(a)There are three requirements necessary for an effective offer. • Intention : A serious, objective intention of the offeror is essential for an offer to become effective. • Definiteness : The terms of an offer must be defined substantially. The definite and reasonable terms of the contract ensures that the parties and the court would be able to ascertain the contract terms easily. • Communication : The offeror must communicate the offer to the offeree. No , Mr. A's bid did not meet the requirements of an offer. Mr. D did not communicate any formal intent to offer the contract to Mr. A. Mr. D's discussion with Mr. A over price and material to be used was merely a negotiation and an opinion expressing intent to enter a binding contract. It was not a definite offer. Moreover, a discussion about a possible date to start construction was a statement to begin something in future. It cannot be concluded as a clear offer. (b)No , there was no acceptance. Since there was no offer, an acceptance cannot take place. Moreover, the parties did not agree on terms relating to price. Thus, no contract was formed between them. (c)Mr. A may attempt to recover costs under the doctrine of Promissory Estoppel. He may argue that Mr. D clearly promised him the contract to construct the studio as he offered the lowest bid. He justifiably relied on the promise and purchased the material required for construction. Moreover, he refused to take up any other job apart for Mr. D's project. Thus, Mr. A might be able to enforce Mr. D's promise under the theory of promissory estoppel. (d)No , Mr. A cannot sue Mr. D for price differential. This is because a valid contract existed between the two. Thus, both the parties assented to the bargain, and a sufficient consideration was there. Mr. A's consideration for the contract was the legal detriment he incurred. This legal detriment was initiated by Mr. D's promise to pay for the tiles intended to be used at the time of bid. Further, D's promise was, in turn, induced by A's promise. Thus, Mr. A cannot pursue his legal right to sue Mr. D for unpaid price differential.

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