Saif Alqaderi
Business Law 1
M6 Assignment: Creating a Contract
22nd May, 2025
Prof. Karen Vitori
1. What is an offer? What are the 3 conditions necessary for the creation of an offer?
An offer is a clear proposal made by one party (the offeror) to another (the offeree) with
the intention that, if accepted, it will create a binding legal agreement. It's the starting point of a
contract and must be communicated clearly and intentionally.
The three essential conditions for an offer to be legally valid are:
i. Intent – The offeror must show serious intent to be bound by the offer (not just a
casual comment or negotiation).
ii. Definiteness – The terms of the offer must be clear and specific enough that a court
could enforce them if needed.
iii. Communication – The offer must be communicated to the offeree, who then has the
power to accept it (Miller, 2023).
Without these elements, what may seem like an offer could actually be considered an
invitation to negotiate rather than a binding proposal.
2. Johnson v. Smith: Was the matter settled?
No, the matter was not settled. For a settlement (or contract) to be valid, there must be
mutual agreement on all essential terms. Johnson and AAA agreed on all conditions except one
the compensation for car use. AAA’s proposal of $10/day instead of Johnson’s $20/day is
considered a counteroffer, not acceptance. Under contract law, a counteroffer rejects the
original offer and puts a new one on the table (Miller, 2023).
Since Johnson rejected AAA's counteroffer and proceeded with legal action, there was no
“meeting of the minds”, meaning no contract was finalized. Therefore, Smith’s claim that the
matter had been settled is incorrect.
3. Stan and the Jackpot Advertisement
In general, advertisements are considered invitations to negotiate, not offers. However,
in cases involving rewards, courts sometimes treat advertisements as unilateral offers, the offers
that can be accepted by performing a specific act (like winning a contest).
But here's the twist: The newspaper made a mistake, and the real jackpot was $25,000,
not $825,000. Courts typically do not enforce mistaken advertisements where the error is
obvious or unreasonable. Since $825,000 is an extreme amount for a dog race jackpot and is
drastically different from the actual amount, a court would likely view this as a clerical error,
not a binding offer (Miller, 2023).
So, Stan probably cannot collect the $825,000, because the ad did not create a
legitimate offer and the mistake was too significant to enforce.
4. Thorne and the Change of Beneficiary Form
Thorne’s argument hinges on what’s known as the “mailbox rule”, which states that
when a document is properly addressed and mailed, it is presumed to have been received. This
rule typically applies to acceptance of contracts, but can also be extended to insurance
paperwork, depending on company policy and legal precedent.
If Thorne properly mailed the form and followed all instructions given by Providian, he
could reasonably argue that the presumption of receipt applies. Courts have sometimes ruled in
favor of beneficiaries in such situations, especially when no evidence suggests the form wasn’t
mailed (Beatty, Samuelson & Bredeson, 2021).
However, insurance companies often require actual receipt of forms before changes take
effect. If Providian’s policy explicitly states that changes must be received and acknowledged,
Thorne may not succeed without proof of delivery. His best argument lies in the presumption of
receipt, but it may not override the insurer’s documentation requirements.
References
Beatty, J. F., Samuelson, S. S., & Bredeson, D. (2021). Business Law and the Regulation
of Business (13th ed.). Cengage Learning.
Miller, R. L. (2023). Business Law Today: The Essentials (13th ed.). Cengage Learning.
