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modification. [ See D. Whaley, S. McJohn, Problems and Materials on Commercial Law p. 53 (11th ed. 2016).]
The Basics of Offer, Acceptance, and Consideration There are three essential ingredients to contract formation: offer, acceptance, and consideration. An offer is an offeror’s manifestation of willingness to enter a bargain, which justifies the offeree’s acceptance. Assuming adequate consideration, the offeree’s acceptance creates a binding contract. The offeree’s power to form a contract by accepting the offer is called, aptly enough, the power of acceptance. However, contract formation also requires that the offer’s terms be both reasonably certain and communicated to the offeree, and the offer must not have terminated prior to acceptance. Accepting a terminated offer cannot form a contract. [Restatement (Second) of Contracts §§ 1, 17, 21, 24, 33 with comments.] Note : This outline covers the basics of offer, acceptance, and consideration as background context to understand the doctrines peculiar to UCC Article 2. For more detailed coverage of offer, acceptance, and consideration generally, please see Quimbee’s Contracts Outline. 1. Reasonably Certain Offer Generally, an offer is reasonably certain if a reasonable person in the offeree’s position would conclude (1) that an offer was made and (2) that acceptance is all that is necessary to form a binding contract. To that end, at common law, the offer must identify the parties, describe the nascent contract’s subject matter, and include some sort of price term, if applicable. In a contract for the sale of goods, a price term is not always necessary, but a quantity term is. Three types of communications that are generally not deemed to be offers are jokes, preliminary negotiations, and advertisements. [ See Restatement (Second) of Contracts § 33.] 2. Termination of an Offer Once an offer terminates, so too does the offeree’s power of acceptance. In general, there are five ways for an offer to terminate:
rejection or counteroffer, lapse of time, revocation, death or incapacity, or destruction of the contract’s subject matter.
[Restatement (Second) of Contracts § 36.]
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