48. Which of the following statements best supports the lender's position?

The mutual assent necessary for the formation of a valid contract generally takes place through an offer and an acceptance. An offer is a statement or act that creates a power of acceptance. When a person makes an offer, he is indicating that he is willing to be immediately bound by the other person's acceptance without further negotiation. An acceptance is a statement or act that indicates the offeree's immediate intent to enter into the deal proposed by the offer.

An offer creates a power of acceptance in the offeree. An acceptance is the offeree's manifestation of assent to the terms of the offer, made in a matter invited or required by the offer. The offeror is the master of his offer, which means he may prescribe the method by which it may be accepted.

The offeree's power of acceptance ends when the offer is terminated. The mutual assent requirement obviously cannot be met where the termination occurs before acceptance is effective. One type of offer termination is revocation, which is the retraction of an offer by the offeror. A revocation terminates the offeree's power of acceptance if it is communicated to her BEFORE she accepts. Revocation directly communicated to the offeree by the offeror terminates the offer. A revocation is generally effective when received by the offeree.

An accord, also known as an «executory accord,» is when parties agree to allow for one of the parties who has a duty to perform to promise a different, substitute performance from what they originally promised, which would discharge their existing duty.

A is correct. On January 10, when the lender said he would discharge the debt in exchange for the borrower's promise to pay $45,000 by January 15, he was making an offer. By its terms, this offer sought a return promise from the borrower as the proper form of acceptance. However, the borrower's response did not manifest assent to the terms of the offer because he merely said, «I will attempt to get the money together» (emphasis added). This is plainly not a return promise to pay the $45,000 by January 15, but a vague intention to follow through. As such, the lender's subsequent revocation of the offer on January 11 would leave the original agreement intact, and the borrower would owe the full $50,000 by March 1.

B is incorrect. To be enforceable, an executory accord requires an affirmative, mutual agreement between the parties to allow one to give a different performance in substitution for an existing duty. Here, there was not sufficient mutual assent during the January 10 conversation to create an executory accord, and the lender's subsequent revocation will be effective.

C is incorrect. A promise to give a gift is when one party offers a benefit to another without asking for anything in return. Thus, an offer to give a gift outright is not supported by consideration because there is no bargained-for exchange. However, when a creditor offers to discharge an existing debt for less than the amount owed prior to the due date, this IS supported by consideration. The creditor benefits from a faster return payment, although he sacrifices some percentage of the debt owed, and the debtor discharges his debt for less, although it is due sooner than originally agreed. Thus, this is not a situation involving a gift promise, but an offer that was not accepted and subsequently revoked.

D is incorrect. The purported contract between the lender and the borrower was not a transaction that would fall within the suretyship provision of the Statute of Frauds. That scenario arises when one party promises to pay the debt of another.