Offer

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All the rules for Offer in one place

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Offer Defined: Restatement (Second) of Contracts § 24 (1981)
An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.

An offer must be clear, definite and made in a manner which invites another to be part of a deal

Unilateral Contract (option contract): one promise in exchange for some performance. A contract formed by a promise from one party and performance from the other. The contract is formed only after the performance is completed, unless legally excused. The beginning of the performance is the acceptance of and consideration for the implied promise not to revoke and an option contract is created under which the offeree has the option of completing and forming the contract or ceasing to perform and allowing the offer to lapse. Ex. I will you $500.00 to paint my house.

Bilateral contract-two promises being exchanged; each promisor is also a promisee. Ex. I promise to pay you $500 tomorrow if you promise to sell me your car next Tuesday.

If it isn't clear if the offer is unilateral or bilateral, the assumption is for bilateral (because a return promise may bind the offeror) with the caveat that the offeree gets to choose the manner of acceptance. Restatement (Second) of Contracts § 32 (1981)

To make an offer irrevocable, an offeree needs to create an option. An option contract is a promise which meets the requirements for the formation of a contract and limits the promisor's power to revoke an offer (Restatement 2d § 25).

Options may be made in a variety of ways, including, but not limited to the offeree paying the offeror for the opportunity to hold the offer open (Dickenson v. Dodds).

The power of acceptance under an option contract is not terminated by rejection or counter-offer, by revocation, or death or incapacity of the offeror, unless the requirements are met for the discharge of the contractual duty (Restatement 2d § 37).

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What is an offer?

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Offer Defined: Restatement (Second) of Contracts § 24 (1981)
An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.

An offer must be clear, definite and made in a manner which invites another to be part of a deal

Cases

Lonergan v. Scolnick (LA newspaper add) –Continuing negotiations do not rise to the level of an offer.

Maryland Supreme Corp. v. Blake Co. (Concrete) - An offer must be definite and certain. The facts and circumstances along with prior dealings between the parties and industry custom and usage determine if there is an offer.

Leonard v. Pepsico, Inc. (Harrier Jet) - A joke or zany humor contained in a commercial is not an offer. Advertisements are not considered offers; they are invitations to offer: unless the advertisement is clear, definite, and explicit and leaves nothing open for negotiation (advertisements are mere requests to offer).

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How to destroy an offer

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Express Rejection: the offeree (to whom an offer is made) terminates an offer which cannot be revived if the offeree changes his mind and tries to accept it.

Implied Rejection: An offer is rejected when the offeror is justified in inferring from the words or conduct of offeree that the offeree doesn’t not intend to accept the offer nor take it under advisement

Implied Rejection Counter-offer: a rejection of the offer by the offeree; A counter-offer is an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer. Restatement § 39.

Direct Revocation: The offeror (the party making the offer) retains full control and mastery over his offer including the right to modify or terminate the offer until the offer is accepted by the offeree (objective theory); an affirmative statement to the offeree expressly withdrawing the offer.

Exceptions to Direct Revocation: 1) if there is a detrimental reliance by the offeree upon a promise not to revoke the offer or reliance upon the offer itself, 2) in the case of an offer for a unilateral contract when the offeree has begun to perform the requested act, 3) or if a statute precludes revocation.

Indirect Revocation: The offeror is the master of the offer. An offeree's power of acceptance is terminated when the offeror 1. takes definite action inconsistent with an offer to enter into the proposed contract and 2. the offeree acquires reliable information to that effect. (§ 43; Dickinson v. Dodds).

Lapse-time runs out: Terminating an offer because of inaction; time runs out; the offeror has complete control about how much time there is to make the offer.

How much time do you allow between offer an acceptance? Minnesota Linseed Oil Co. v. Collier White Bread Co. “the law will decide this to be that time which as rational men they ought to have understood each other to have had in mind.” The intention or understanding of the parties is to govern…The controlling question is what are the offeree’s reasonable expectations arising from the offeror’s communication. This becomes a question of fact.

Death or Incapacity: if the offeror dies before acceptance is made by the offeree. The offer dies with the person. Notice to the offeree is not necessary to terminate the offer. And vice a versa.

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Making the offer irrevocable

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Board of Control of Eastern Michigan University v. Burgess:
Restatement (Second) of Contracts § 87 (1981): (1) An offer is binding as an option contract if it (a) is in writing and signed by the offeror, recites a purported consideration for the making of the offer, and proposes an exchange on fair terms within a reasonable time; Minority View Only

Held: a dollar is valid consideration for options for the purchase of a home. However, no consideration was received because the dollar/nominal fee was never paid, so there was no option, but simply an offer by Δ to sell, which is revocable. Pay the fee or there is no consideration: Majority View

Option Contracts: An option contract (an irrevocable offer) must be supported by consideration; consideration requires actual payment, may be a peppercorn, may be non-monetary, acceptance is made once performance beings and firm offer under the UCC rules counts.

Termination of Power of Acceptance under Option Contract: the power of acceptance under an option contract is not terminated by rejection or counter-offer, by revocation, or death or incapacity of the offeror, unless the requirements are met for the discharge of the contractual duty. §37

Unilateral Contract (option contract): one promise in exchange for some performance. A contract formed by a promise from one party and performance from the other. The contract is formed only after the performance is completed, unless legally excused. The beginning of the performance is the acceptance of and consideration for the implied promise not to revoke and an option contract is created under which the offeree has the option of completing and forming the contract or ceasing to perform and allowing the offer to lapse. Ex. I will you $500.00 to paint my house.

Unilateral Contract-a contract formed by a promise from one party and performance from the other. The contract is formed only after the performance is completed, unless legally excused.

Bilateral contract-two promises being exchanged; each promisor is also a promisee. Ex. I promise to pay you $500 tomorrow if you promise to sell me your car next Tuesday.

Does the offeror want a promise to accept the offer or an actual performance to accept the offer? Performance is unilateral and a promise is bilateral.

If either performance or promise will work, even though the Restatement doesn't focus on the distinction, you still essentially have a bilateral contract (because a return promise may bind the offeror), with the caveat that the offeree may choose the manner of acceptance. Restatement (Second) of Contracts § 32 (1981)

In case of doubt an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering the performance, as the offeree chooses. Restatement (Second) of Contracts § 32 (1981)