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Summary Commercial Law
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Commercial lawChapter 2; negotations
Summary:
An agreement becomes final when the offer of one party is accepted by
the other party. An agreement is thus an acceptance of that offer.
An offer;
- must be distinguished form an invitation to enter into negotiations
- becomes a valid offer the moment the offer reaches the offeree
- can be withdrawn up to and including the moment the offer reaches the
offeree
- can be revoked up to the moment the offeree sends his acceptance to
the offerer
- can be revoked by the offerer even after the offer was accepted by the
offeree in cases where the offer made under a reservation such as ‘prices
not binding’
An acceptance is valid the moment it reaches the offerer. At this moment
the agreement becomes final.
The period of time up to the moment the agreement becomes final, i.e.
the period of negotiations between the parties, is referred to as the
preliminary stage.
The preliminary stage is governed by the rules of good faith. The
negotiating parties enter into a situation where one has to take the other
party’s interests into consideration.
As a result, breaking off negotiations can conflict with the rules of good
faith. Thus breaking off negotiations by one party can lead to a claim for
compensation for damages by the other party. This claim must be based
on either a breach of contract or tort applies. And in a case of tort, the
stage negotiations were at when they were broken off is relevant in
deciding the level of compensation for.
Glossary:
Acceptance = giving word either orally or in writing, that one agrees to the
offer that one has received.
Agreement = becomes final when an offer made by one party is accepted
by the other party and the acceptance reaches the offerer.
Breach of contract = one party to a contract doesn’t meet the obligations
imposed by the contract, thus resulting in damages to the other party.
Contract = an agreement put in writing.
Damages = costs and extra expenses one suffers as a result of a breach of
contract or a tort committed by another party.
Good faith = generally accepted and morally justifiable behavior
depending on the situation.
Invitation to enter into negotiations = a proposal to come to an agreement
that lacks some of the elements of an offer; an invitation the make an
offer.
Irrevocable offer = an offer that has become valid can’t be cancelled by
the offerer, due to the content of the offer. The offer remains valid and
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