Ch. 12 Agreement in Traditional and E-Contracts


the parties must agree on the terms of the contract and manifest to each other their mutual assent (agreement) to the same bargain (offer and acceptance)

objective theory of contracts

a party's words and conduct are held to mean whatever a reasonable person in the offeree's position would think they mean


promise or commitment to do or refrain from doing something specified action in the future

Elements of effective offer

1. The offeror must have a serious intention to become bound by the offer
2. The terms of the offer must be reasonably certain, or definite, so that the parties and the court can ascertain the terms of the contract
3. The offer must by communicated to the offeree


-determined by what a reasonable person in the offeree's position would conclude that the offeror's words and actions meant
-serious and objective intent

Situations lacking in intent of offer

-expressions of opinons
-statement of intention to do somethin in the future
-request or invitation to negotiate
-advertisements are treated not as offers to contract but as invitations to negotiate
-Online auctions: "offers" to sell an item on these sites are generally treated as invitations to negotiate
-Live auctions: invitation asking bidders to submit offers
-Auctions with and without reserves: in an auction with reserve, the seller may withdraw the goods at any time before the auctioneer closes the sale by announce or by fall of the happer; without reserve, the goods cannot be withdrawn by the seller
-Agreements to agree: agreements to agree to the material terms of a contract at some future date, not enforceable agreements (contracts) if it is clear that the parties intended to be bound by the agreements
-Preliminary Agreements: constitutes a binding contract if the parties have agreed on all essential terms and no disputed issues remain to be resolved

Definiteness of Terms of offer

1. The identification of the parties
2. The identification of the object or subject matter of the contract including the work to be performed, with specific identification of such items as goods, services, and land
3. The consideration to be paid
4. The time of payment, delivery, or performance

Communication of offer

The offer must be communicated to the offeree

Termination of the Offer by action of the parties

1. revocation
2. Rejection
3. Counteroffer


the offeror's act of withdrawing an offer can be done before any offeree accepts
1. express repudiation
2. performance of acts that are inconsistent with existence of the offer and are made know to the offeree
effective when the offeree or the offeree's agent receives it

Irrevocable Offers

courts refuse to allow an offeror to revoke an offer when the offeree has changed position because of justifiable reliance on the offer
-option contract: when offeror promises to hold an offer open for a specified period of time in return for a payment (consideration) given by the offeree


the offeree rejects the offer by words or conduct, the offer is termintated
-when the offeree merely inquires as to the "firmness" of the offer, there is no reason to presume that he or she intends to reject it


a rejection of the original offer and the simultaneous making of a new offer
-mirror image rule requires the offeree's acceptance to match the offeror's offer exactly to mirror the offer

Termination by Operation of Law

1. Lapse of Time
2. Destruction of the specific subject matter of the offer
3. Death or incompetence of the offeror or the offeree
4. Supervening illegality of the proposed contract

Lapse of Time

An offer terminates automatically by law when the period of time specified in the offer has passed

Destruction of the Subject Matter

an offer is automatically terminated f the specific subject matter of the offer is destroyed before the offer is accepted

Death or Incompetence of the Offeror or Offeree

An offeree's power of acceptance is terminated when the offeror or offeree dies or is legally incapacitated-- unless the offer is irrevocable
-revocable offer cannot pass to the heirs, guardian, or estate of either party

Supervening Illegality of the Proposed Contract

a statute or court decision that makes an offer illegal automatically terminates that offer


voluntary act by the offeree that shows the assent (agreement) to the terms of an offer

Unquivocal acceptance

mirror image rule
-cannot impose new terms of the orginal offer
-requesting a written contract, but not making it a condition for acceptance makes it already accepted

Silence as Acceptance

An offeree should not be obligated to act affimatively to reject an offer when no consideration (nothing of value) has passed to the offeree to impose such a duty
1. when an offeree takes the benefit of offered services even thought he or she had an opportunity to reject them and knew that they were offered with the expectation of compensation
2. WHen the offeree has had prior dealings with the offeror

Communication of Acceptance

in a bilateral contract is formed when promise is made
-unilateral contract calls for the full perfomance of act and acceptance is usually evidnet and notification is unnecessary

Mode and Timeliness of acceptance

in bitaleral, must be timely

Mailbox Rule

acceptance takes effect at the time the offeree sends or delivers the communcation via mode expressly or implied authorized by the offeror
aka deposited acceptance rule

Authorized Means of Acceptance

when offeror specifies how acceptance should be made express authorization is said to exist, otherwise any reasonable means is okay

subsitute method of acceptance

offeror authorizes a particular method of acceptance but hte offeree accepts by a different means


must meet same basic requirements as paper contracts

E-contract legal liabilties

1. display the offer
2. providions to include -acceptance of terms - payment -return policy
- disclaimer -limitation on remedies
-privacy policy -dispute resolution
3. dispute settlement provision (forum or location, jurisdication)

Online Acceptances

1. click-on agreements
2. shrink-wrap agreements
-not enforceable if the buyer discovers the clauses after the parties entered into a contract
3. Browse-wrap terms are often unenforceable beacuse the do not satisfy the agreement requirement of contract information


an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record

E-SIGN act

no contract, record, or signature may be denied legal effect solely because it is in electronic form
-exempt: court papers, divorce decrees, evicctions, foreclosures, health-insurance terminations, prenuptial agreements, and wills

Partnering agreements

a seller and a buyer who frequently do business with each other agree in advance on the terms and condtions that will apply to all transactions subsequently conducted electronically


information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form

UETA meaning

Uniform electronic transactions act



UETA enacted without modification

state law governs

UETA is enacted with modications

STATE law governs
-if the state's procedures or requirement are consistent with Esign act
-the state does not give priority to one tupe of tech
-the sate law was enacted after the esign act and refers to it
the ESIGN act governs if the modifications are inconsistent with the ESIGN act

electronic record Timing

an electronic is considered sent when it is properly directed to the intended recipient in a form readable by the recipients computers system
an electronic record is considered received when it enters the recipients processing system n a readable form-even if no individual is award of its receipt

International Treaties affecting econtracts

UN Conventions on the use of electronic communications in international contracts improves commercial certainty by determining an internet users location for legal purposes
-also establishes standards for creating functional equivalence between electronic communications and paper documents