Hypothetical scenarios

Agreement

For an offer to exist, the offeror must show a definite intention to make and be bound by the offer. Invitations to trade or negotiate or mere statements of intentions to enter into a contract upon further bargaining do not constitute offers but are instead preliminary negotiations. Thus, any attempted acceptance would not bind the parties to a contract as there is no offer in existence to be accepted. Sullivan stated only a price from which to bargain further, not an intention of a definite commitment to sell at $60,000. There is no contract between Sullivan and Ball.

Offer And Acceptance

Agreement is one of the requirements of a valid contract. To determine if this requirement has been met, courts usually divide agreement into two events: offer and acceptance. Here, Carrie's oral offer to sell her set of legal encyclopedias to Antonio met the elements of a valid offer. She seriously intended to sell the books, the terms of the offer were definite, and the offer was communicated to the offeree—Antonio. Carrie could revoke her offer (even though she had promised to hold it open until the next day), as long as she communicated her revocation to Antonio (the offeree) prior to Antonio's acceptance. Because she did not revoke the offer prior to Antonio's acceptance and because Antonio apparently had no knowledge of Carrie's sale of the books to Norvel, a valid contract was formed on Antonio's acceptance of the offer. Thus, Carrie, by selling the books to Norvel, is in breach of contract.

Consideration

Past consideration is no consideration; therefore, a promise to pay for an event that has already taken place is not enforceable. There is nothing to bargain for. Also, there is no consideration if the promise is based on a moral duty (obligation) to pay. Because Daniel is presumed to be an adult responsible for his own care, Fred has no legal duty of care to Daniel. Thus, Fred's promise cannot be enforced by the elderly couple, because Fred had at best only a moral obligation to reimburse them for the care rendered, and the promise to pay was for an event already performed. Because of the harshness of this rule, a few states have passed statutes enforcing such agreements (usually only up to the value of care received), or a court will enforce such a promise if the promisor received a substantial valuable benefit (such as being saved from physical harm or financial disaster). In the case of Fred and the elderly couple, it is unlikely that the court would hold for the elderly couple, as Daniel was the recipient of the substantial valuable benefit, not the promisor, Fred.

Case Problems

Intention

The court granted Horipro's motion for summary judgment. The court reiterated Cusano's argument that he did not intend to sell to Horipro his writer's share of the mechanical royalties to the songs. The court pointed out, however, that “as Horipro argues, Cusano has provided no evidence at all to support this assertion. The Agreement of Sale is clear and unambiguous in its identification of the rights that Horipro acquired. When the terms of a contract are clear, the secret or subjective intent of the parties is irrelevant. If Cusano truly intended a different result, he should have made certain that his [contract reflected] his intentions, and not have abided with the effects of the allegedly erroneous interpretation for many years and only then suddenly awaken to the contract ambiguity he now asserts.”