Offer and Acceptance

Is there an offer?

An offer is an objective manifestation of willingness to enter a bargain, made so that the recipient reasonably understands that acceptance will conclude it. The terms need enough certainty for a court to identify a breach and provide a remedy. Advertisements and preliminary negotiations usually invite offers rather than create them, unless their language is definite and leaves nothing material open.

Ask what a reasonable recipient would understand from the words and conduct. A statement such as ‘I might sell my car for around $5,000’ sounds exploratory. ‘I will sell you my identified car for $5,000; tell me by Friday’ is more likely an offer. Context can change the result.

Termination before acceptance

An offer ends through revocation, rejection, counteroffer, lapse of time, death or incapacity of a party, or destruction of the subject matter, subject to rules that preserve particular options. Revocation is effective when received, not simply when sent. A reliable indirect revocation requires the offeree to learn reliable information that the offeror has taken definite action inconsistent with the offer.

A rejection terminates the offeree's power to accept. A counteroffer generally rejects the original offer and proposes a new bargain under common law. A mere inquiry about whether the price is negotiable does not necessarily reject the offer. If the offer states a deadline, acceptance after that deadline is usually ineffective unless the offeror renews it.

Acceptance at common law

Acceptance must manifest assent to the offer's terms and follow any required method. The offeror may invite acceptance by promise, performance or either. If the offer calls for a promise, beginning performance may not be enough unless the offer or a governing rule makes it an acceptance. If it invites performance, completing the requested act generally accepts; beginning may create an option-like protection while performance continues.

The common-law mirror-image rule generally requires an acceptance to match the offer. A purported acceptance that changes a material term is a counteroffer. A conditional response such as ‘I accept only if you add delivery’ is not an unconditional acceptance. Distinguish a true condition from a request that does not make assent contingent.

Acceptance by mail

Under the mailbox rule, a properly dispatched acceptance is generally effective on dispatch when the offeree is authorized to accept by mail and the offer does not require receipt. An offer can override this default by stating that acceptance is effective only when received. Revocations and rejections generally operate when received. An acceptance sent after an earlier rejection can create a race-of-the-mail problem, with different consequences depending on which communication arrives first and the parties' reasonable reliance.

The rule does not apply if the offeree uses an unauthorized or unreasonable method, or when an option contract requires acceptance to be received by the deadline. Read the offer's method and timing language before applying the default.

UCC acceptance and forms

For a sale of goods, Article 2 permits acceptance in any reasonable manner and medium unless the offer unambiguously requires a particular method. A prompt promise to ship or shipment of conforming goods can accept. Shipment of nonconforming goods can be acceptance and breach, unless the seller seasonably notifies the buyer that the shipment is offered only as an accommodation.

The UCC's battle-of-the-forms rule may treat a definite and seasonable expression of acceptance as effective even though it includes additional or different terms, unless acceptance is expressly conditional on assent to those terms. Between merchants, additional terms may become part of the contract unless the offer limits acceptance, the terms materially alter it, or timely objection is made. Do not import the common-law mirror-image rule without checking Article 2.

Options and irrevocable offers

An option supported by consideration keeps an offer open for the option period. A unilateral offer may become temporarily irrevocable once the offeree begins the invited performance. A merchant's signed written firm offer for goods may be irrevocable without consideration for the statutory period. Reliance can also make an offer temporarily irrevocable where the offeror should reasonably expect substantial action before acceptance.

Formation checklist

1. Classify the transaction as goods, services, land or another subject.
2. Find the offer and identify its essential terms, audience and expiration.
3. Check whether the offer terminated before the response.
4. Identify the invited method of acceptance and the offeree's conduct.
5. Apply mirror-image or UCC form rules as appropriate.
6. Resolve timing and communication rules, then consider consideration and defenses separately.

Offer and acceptance questions often hide a timeline. Write each event in order: offer sent, revocation received, acceptance dispatched, acceptance received. Then apply the rule to the relevant event. This avoids treating the date a party wrote a letter as the date it legally took effect.

An offer creates a power of acceptance

An offer is an objectively manifested willingness to bargain that invites acceptance and would lead a reasonable recipient to understand that assent will conclude the deal. Advertisements, catalogs and price quotes usually invite offers rather than make them, unless their terms are definite and leave nothing material open for negotiation. Words such as “first come, first served” or a specified quantity and method of acceptance can make an advertisement sufficiently definite.

A seller emails, “I may sell my piano for around $2,000; let me know if interested.” That language signals negotiation, not a commitment to sell to the first person who replies. “I will sell you my piano for $2,000; reply yes by Friday” is much more likely an offer. Objective manifestations control, even if the speaker privately intended to keep negotiating.

Acceptance must match the offer under the right rule

At common law, acceptance generally must be unequivocal and mirror the offer. A purported acceptance that adds a material condition is a counteroffer, though a request for information or a proposal that does not condition assent may leave the original offer open. For a sale of goods, UCC Article 2 permits a definite expression of acceptance despite additional or different terms, with the effect of those terms determined separately.

A homeowner offers to sell land for $300,000, closing on June 1. The recipient says, “I accept, provided you replace the roof.” This is ordinarily a counteroffer because the new condition changes the bargain. By contrast, “I accept; would you consider replacing the roof?” can be an acceptance followed by a request if the wording does not make replacement a condition.

In a goods transaction between merchants, a seller's form may accept while adding an arbitration term. The first question is whether the response is a definite and seasonable expression of acceptance or expressly conditional on assent to the new term. If it is an acceptance, the additional term's incorporation depends on merchant status, material alteration, objection and offer language. Do not treat every new form term as automatically defeating contract formation.

Communication, silence and performance

Acceptance usually must be communicated in a manner invited or reasonable under the circumstances. An offeror can specify a method, but a stated method may be exclusive or merely suggested depending on the language. Silence ordinarily is not acceptance because the offeree has not objectively manifested assent. Exceptions can arise from prior dealings, knowing acceptance of offered services with a reasonable chance to reject, or an agreement that silence will count.

If an offer requests a promise, beginning performance may not accept unless the offer invites that method. If the offer invites performance, completing the requested act can accept. For a unilateral contract, beginning invited performance can make the offer temporarily irrevocable for a reasonable time to complete, even though completion is still required for the return promise to become due.

An offer asks a student to deliver a signed report by Friday for a stated fee. The student emails, “I promise to deliver it Friday.” That can accept a promise-based offer. If the offer instead says “I will pay for the first person who delivers the report by Friday,” a promise alone may not accept; performance is invited. Identify the requested mode before deciding when the contract formed.

When an offer ends

An offer can terminate through lapse, revocation, rejection or counteroffer, death or incapacity, or destruction of a necessary subject matter, subject to exceptions. Revocation generally is effective when received, not merely dispatched. A rejection or counteroffer generally terminates the offeree's power of acceptance, but the original offeror can renew it.

An option contract supported by consideration can make an offer irrevocable for its stated period. A firm offer by a merchant to buy or sell goods, signed and assuring it will be held open, can be irrevocable without consideration for the statutory period, subject to the UCC limit. Beginning invited performance on a unilateral offer and reasonable detrimental reliance can also prevent revocation in appropriate circumstances.

A buyer mails acceptance on Monday, but the seller's revocation reaches the buyer on Tuesday and the acceptance reaches the seller on Wednesday. The mailbox rule may make the acceptance effective when dispatched, unless an exception applies. An option acceptance, for example, is effective on receipt. Always compare the communication type and governing rule before arranging events by arrival date alone.

Use a timeline for formation problems

Write the timeline: offer, any option or reliance, attempted revocation, rejection or counteroffer, acceptance, and receipt. For each event, record who sent it, who received it and whether dispatch or receipt controls. Then identify whether the transaction is common law or goods. A timeline prevents a classic error: treating an offer as open merely because the stated deadline has not passed, even though the offeree already rejected it or the offeror effectively revoked it.

Finally check definiteness and intent. Open terms do not necessarily defeat a goods contract if the parties intended to contract and there is a reasonably certain basis for a remedy. Under common law, a material term left for future agreement may show that negotiations never ripened into an offer. Avoid importing the UCC's flexibility into a land or services contract without reason.