[MUSIC PLAYING]

Now for something completely different.

Well, maybe not that different.
We've been talking about the move from promises, to bargains, to contracts.
The basis of contract is mutual promises.
But not every promise leads to a contract.
For instance, promises in which the person
who makes the promise, what, in law, is called the promisor,
doesn't expect to find himself in court.
And in this situation, like invitation to dinner, shouldn't end up in court.
And you remember Leonard against Pepsico with a harrier jet.
That's another example.
By and large, and later on, we'll see some very important exceptions to this.
By and large, the class of promises, serious promises-- if you like,
let's call them public promises, not private promises, or joke promises,
or gift promises.
The law goes further in that class and says, in order to be sure,
this is serious business, that the parties are serious about it,
and that it's worth our taking our time in court, and judges, and so on.
It's best that the promise be part of a bargain.
That is a promise given for something.
Here are two straightforward examples.
I go into a store and pick up some goods.
And I promise to pay for them.
They've given me the goods.
And I've given them my promise to pay.
Fine-- a contract.
Or I go into an antique shop and see an old desk I like.
I promise to buy it, to pay for it.
And the shop owner promises to deliver it to my house next week.
He's got to polish it up, and he doesn't have a delivery truck
just now, and so on.
For there to be a bargain, there has to be
something exchanged, something given on each side.
In the first case, the goods in the store paid for at the checkout counter.
In that case, it's a promise for a performance.
I take the goods then and there.
Or it's a promise for a promise.
Promise to pay for the desk and the promise to deliver the desk.
Either way, there's an exchange.
Now, the person who initiates the exchange
can set the terms of the exchange.
That's what makes him the offeror.
I offer the exchange.
And the other side, who sometimes in law is called the offeree, he accepts.
And he accepts either by accepting through making a promise of his own,
or maybe by an actual performance.
Now, when he says a promise of his own, for him to say, ah, yes.
That counts as a promise.
Will you promise to do this?
Yes.
By the way, it could be a performance in return for a promise.
So I can give the antique dealer the $500.
That's the performance.
And he can promise to deliver.
That's a performance for a promise.
Either way, it's bilateral.
And the contract is formed when the offer is accepted.
What happens if I offer to buy this desk, this beautiful old desk?
And I say, I'll buy this desk for $500.
The antique dealer says, I'll be glad to sell it to you for $750.
Is that a bargain?
Well, it obviously isn't.
Imagine if the buyer was somehow compelled now to pay $750
and get the desk.
That wouldn't be right at all, because the buyer, the offeror,
has stated his terms.
I will promise to pay $500 for the desk.
But I haven't offered to pay whatever you charge.
That would be a ridiculous thing to do.
And that illustrates that in order for the antique dealer
to accept the promise, he's got to accept the offer I made.
He can't accept some other offer that he might wish I had made.
And the way that the law of contracts puts it is the offeror
is the master of the bargain.
That sounds rather dramatic, but it's only common sense.
How could it be otherwise?
How could it be otherwise then that the bargain
is whatever the person who initiates it proposes
and what the person to whom it is proposed accepts?
If the person accepts something else, then obviously, there's no bargain.
And the idea that I would be bound just by walking into the store
and offering something to then have to pay a great deal more
is not the model of an exchange that we've been talking about.