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Offer and Acceptance
Exercise 1.Read the text and answer the following questions:
1. When does a contract exist?
2. What does an offer indicate?
3. Are offers made to a particular individual?
4. What is a distinction between an offer and an invitation?
5. What are the terms of an offer?
6. What does an acceptance mean?
The average non-lawyer is unlikely to be aware that offer and acceptance are essential every time a contract is made, but lawyers have found it necessary to break down transactions in this way in order to establish firstly whether an agreement has been reached between the parties and secondly the time at which the agreement was made. A contract will not exist unless an «offer» was made by one party which was accepted by the other. Offers must be distinguished from invitations to negotiate or to treat. An offer indicates willingness to enter into a contract there and then; whereas an invitation to treat merely invites offers, or further negotiations before the contract is finalized:
a) advertisements in newspapers are usually invitations to treat;
b) auction catalogues are invitations to treat;
c) mail order catalogues are invitations to treat;
d) passengers boarding a bus are accepting the offer made when the bus stops for them to board;
e) occasionally advertisements can amount to offers but only if the required consideration is to form part of the acceptance, as in the case of rewards;
f) on the same basis as reward-offers, vending machines which require a customer to insert a coin to signify acceptance are probably offers and not invitations to treat.
An offer may be made to a particular individual or to the world at large.
The offer must be communicated to the other party, and this can usually be done verbally or in writing or in a mixture of both methods.
The terms of the offer must be certain. If they are vague, there is no offer in existence.
An offer may be revoked at any time before acceptance. An offer may cease to operate if some time has passed and it has not been accepted. What is a reasonable time upon the circumstances.
Acceptance means unconditional assent to all the terms of the offer and the moment acceptance is complete, the contract is made. Acceptance must be communicated.
Acceptance is effective the moment the letter containing it is posted. It follows that a letter of acceptance which is lost in the post may still be valid acceptance. In the case of telex acceptance is valid when received, not when sent.
Text 3
Consideration
Exercise 1.Read the text and answer the following questions:
1. What is the third element of the agreement?
2. What types of consideration do you know?
3. What are the three rules about consideration?
Consideration in a contract is the third element of the agreement, and indicates the underlying assumption that a contract must be a bargain. The basic idea is that in the English law of contract no one can get anything for nothing. The consideration is what the bargain is all about, it is the price in a bargain. Sometimes it is explained in terms of a benefit gained by one party or detriment suffered by the other. Some people may explain consideration as the «price» given for a promise. A promise alone is not enforceable (unless it is in a deed). It must be supported by something - either another promise or something more tangible like money or goods.
Consideration may be:
a) executed, i.e., a promise in exchange for an act or for an act or forbearance - one party carries out one side of the agreement at once; or
b) executory, i.e., a promise in exchange for a promise.
This means the contract itself may well still need to be performed, even though the agreement in the form of the offer and acceptance is complete.
Thrее rules about consideration:
a) «past consideration is no consideration» is the basic rule. It means that the law does not regard consideration in the past as sufficient to support a contract in the present;
b) performance of an existing duty is no consideration. Merely doing what you are already bound by law to do does not amount to sufficient consideration in the eyes of the law to support a new promise to pay;
с) сonsideration must move from the promise, In order to succeed in an action for breach of contract, the plaintiff must usually prove that the consideration was provided by him or her. This is closely related to the question of «privity of contract» under which only parties to an agreement can sue on it or be sued on it.