Contract Law Basics: The Business Forum Show, June 6, 2014
On the June 6, 2014 edition of The Business Forum Show, Kevin Hunter and I discussed a basic building block of business law: contracts.
Here’s a bit more of the technical details of Minnesota contract law:
A contract is defined as “a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.” Baehr v. Penn-O-Tex Oil Corp., 258 Minn. 533, 104 N.W.2d 661, 664 (1960).
Both an offer and an acceptance are essential to form an enforceable contract. An offer is a commitment by one party to certain definite terms, provided the other party involved in the bargaining transaction will likewise express his or her assent to the identical terms.
Acceptance of an offer must be unqualified and unconditional. Podany v. Erickson, 235 Minn. 36, 49 N.W.2d 193, 194 (1951) (dicta). Acceptance is not valid if it deviates from the terms of the offer. Minar v. Skoog, 235 Minn. 262, 50 N.W.2d 300, 302 (1951).
A purported acceptance on terms that deviate from the offer is a rejection of the offer. If the response is a counteroffer rather than an acceptance, then it must be accepted by the original offeror to create a valid contract. Minar v. Skoog, 50 N.W.2d at 302. After rejecting an offer by making a counteroffer, the offeree may not accept the original offer unless it is revived by the offeror. The Lake Co. v. Molan, 269 Minn. 490, 131 N.W.2d 734,739 (1964). Requesting modifications of an offer does not preclude formation of a contract where it clearly appears that the offer is positively accepted, regardless of whether the requests are granted. Podany v. Erickson, 49 N.W.2d at 194.
The mutual promises of the parties provide sufficient consideration for the contract.
Archived segments are available by visiting the Business Law Audio page of Jeffrey O’Brien Today.