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The Proposal

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What is a Proposal
An act of putting forward something for
consideration. (Webster)

An offer to purchase, sell, lease or otherwise
enter into a business relationship
pertaining to a specific good or goods
where sufficient information is provided to
establish a basis for performance of an
anticipated agreement.
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Elements of a Business Proposal
1. Parties proper legal names, addresses, contacts,
positions
2. Clear and accurate description of the subject goods or
services
3. Delivery dates and conditions of availability
4. The basic price, any possible adjustments thereto for
additional things such as special features, escalation
due to inflation, changes required to meet certain
added requirements, etc.
5. How the price is expected to be paid
6. Conditions for financing or government approvals
7. Expectation for completion of a contract by a given
date
8. Ability to cancel the proposal
9. Acceptance or termination of the offer 3
1. Parties proper legal names,
addresses, contacts, positions

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2. Clear and accurate description of
the subject goods or services

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3. Delivery dates and conditions of
availability

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4. The basic price, any possible adjustments thereto for
additional things such as special features, escalation due to
inflation, changes required to meet certain added
requirements, etc.

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5. How the price is expected to be
paid

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6. Conditions for financing or
government approvals

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7. Expectation for completion of a
contract by a given date

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8. Ability to cancel the proposal

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9. Acceptance or termination of the
offer

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Law
Rather than worry about what legal system
will look at your proposal and when, or if,
you will be bound, if you include all of the
above elements in your proposal, you are
very unlikely to run into significant trouble.
If any significant elements are left out
different jurisdictions and choices of law
can have profound effects

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Acceptance
• Acceptance is demonstrated by signing as indicated or
otherwise signifying agreement in writing.
• The deposit is “earnest” money, showing a desire and
willingness to enter into an agreement for the sale or
purchase contemplated.
• Acceptance of the proposal and payment of the
consideration creates, at the very least, an option period
where the two parties have a commitment to attempt to
enter into a purchase agreement based on the terms of
the proposal, although all elements are open for
discussion.

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Valid Acceptance
CISG:- either unqualified or even if acceptance
contains minor changes to terms, changes
added to contract, if not rejected by offeror - but,
invalid if major changes (price, payment, quality,
delivery, dispute settlement etc.)
Common Law: - acceptance must be
unconditional and unqualified
UCC: - same as CISG except changes not
added to contract

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So…
• Do not leave proposals open for long
• Condition delivery positions so as to not
tie up your entire production while your
customer tries to make up their mind to
accept, or not, your proposal (STPS,
STAP)
• Err on the side of providing more
information than less
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The proposal is an important tool of
business.
• Get it right
• Be prepared
• Give yourself flexibility
• Here is where some legal advise will help
• Getting it wrong can have serious
consequences
– Financial
– Legal
– Business
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Exercise
You are the business manager of the Canadian
Widget Manufacturing Company. Your sales
people have indicated that European Widget
Sales Pty. (Mr. John Smith, President) wishes to
purchase 100,000 customized widgets for
delivery immediately at $2 per widget. Your
factory can turn out widgets at a rate of 100,000
per month with one month of lead time required
for set up.
Take appropriate action!
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