Form of Offer

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An offer is an invitation to enter into a relationship or transaction of some kind.

• person who makes an offer is an offeror
• other party is an offeree

Requirements of a Valid Offer

• Specificity: The offer must clearly state the essential terms and details of the proposed agreement (material terms)
  • ensures the offeree understands what they are agreeing to
• Communication: The offer must be communicated effectively to the offeree

Duration of an Offer

• offer is valid as soon as the offeree receives it
• offer remains open until it is accepted, rejected, or retracted
• If an offer does not include a time period, then it expires after a reasonable period of time
  • Courts determine what a reasonable period of time is

Responding to an Offer

• Acceptance
  • The offeree agrees to all the terms of the offer, creating a binding contract
• Rejection
  • offeree does not agree to the terms of the offer
• Counteroffer
  • If offeree proposes new terms, the original offer is rejected
  • cannot go back to original offer unless proposed again
• original offeror can revoke an initial offer
• offer can be canceled before acceptance

Form of Acceptance

• offer is accepted when the offeree agrees to the terms of the offeror’s bargain
  • offeree must clearly communicate acceptance:
    • “Yes” or “I accept”
    • can be communicated through actions
      • paying money

Mirror image rule means that even a small change in terms or language between the offer and an acceptance served as a rejection of the original offer.

• new terms in the acceptance then become a counteroffer
• less emphasis on the mirror image rule today
  • acceptance does not have to be identical to an offer to be enforceable
  • acceptance is viewed as a counteroffer only if the terms of the acceptance change a material term in the offer
• UCC follows the relaxed mirror image rule

Timing of Acceptance

• timing of the acceptance is an important consideration under the common law of contracts
  • A contract is automatically formed when the offeror receives the acceptance
  • for delayed communications,
    • mailbox rule means that an offer is deemed accepted for legal purposes as soon as an offeree puts a written acceptance into the mailbox
    • acceptance is valid as soon as it is dispatched or sent
    • applies to electronic communications such as email
    • unless offeror specifies a specific way to accept