Chuckpopeye3

Monte Kunkel

Bus 670: Legal Environment

Elements of a Contract

Prof. Brandy Kreisler

May 14, 2012

A contract is formed when an offer by one party is accepted by the other party. According to our authors, “The elements of a contract can be found in all kinds of settings, from commercial dealings between strangers to agreements between family members.” (Mallor, J.P., Barnes, A.J., Bowers, T., & Langvardt, 2010, p. 292). An offer must be distinguished from mere willingness to deal or negotiate. For example, John offers to make and sell to Jason calendars featuring American paintings. Before any agreement is reached on size, quality, style or price, Jason decides not to continue. At this stage, there is no legally binding contract between John and Jason because there is no definite offer for Jason to accept until the essential terms of the bargain have been decided. An offer does not need to be made to a specific person. It may be made to a person, a class of people, or the whole world. An offer is a definite promise to be bound, providing the terms of the offer are accepted. This means that there must be acceptance of precisely what has been offered. For example, a used car dealer offers to sell Patricia a hood on a Toyota Camry for $500, without a roadworthy certificate. If Patricia decides to buy the hood, but insists on a roadworthy certificate being provided, then Patricia is not accepting the used car dealer’s offer. Instead, Patricia is making a counter offer. It is up to the used car dealer to accept or reject the counter offer.

A person can withdraw the offer that has been proposed before that offer is accepted. For withdrawal to be effective, the person who has proposed the offer must communicate to the other party that the offer has been withdrawn. In the above example, the used car dealer may say to Patricia that he’ll check with his supervisor and maybe a roadworthy certificate can be provided. If, while waiting for a reply, Patricia decides...