Offer and Acceptance

When is a counter-offer effective?

A counter-offer is effective when it is made and the offeree understands that his assent to that bargain is invited and will conclude it.

Counter-offer defined

A counter-offer is made by offeree to offeror relating to the same matter as the original offer and proposing a substituted bargain that is different from that proposed by the original offer.

Option

A promise is to keep an offer open for a stated period of time. It is a binding commitment not to revoke an offer for a specified time period.

Acceptance Defined

Acceptance is the manifestation of assent to the terms thereof made by the offeree in the manner invited or required by the offer.

Legal effect of acceptance

An acceptance completes the manifestation of mutual assent as soon as it is put out of the offeree's possession, without regard to whether it ever reaches the offeror.

Legal effect of offer

An offer gives the power of acceptance to the offeree, which if accepted, concludes the bargaining process and a contract is formed.

When is an offer effective?

An offer is effective when it is made and another understands that his assent to that bargain is invited and will conclude it.

Offer Defined

An offer is the manifestation of willingness to enter into a bargain so that another is justified in understanding that his assent to that bargain is invited and will conclude it.

What makes an option valid?

An option must have its own consideration.

What is consideration in the context of an option?

In exchange for the option, the offeree gives up something to the offeror.

Three elements of an offer

It is addressed to one offeree (some exceptions). It contains reasonably certain terms, though not necessarily all terms. It manifests an intent to be bound without any further assent required by the Offeror.

Day 1: Offer received. Day 3: Rejection mailed. Day 5: Acceptance mailed. Day 7: Rejection Received. Day 8: Acceptance received. Is there a contract?

No, because the offeree mailed the rejection prior to mailing the acceptance. When the rejection is mailed prior to the acceptance, the acceptance is no longer effective upon dispatch and only effective upon receipt.

Day 1: Offer received. Day 3: Rejection mailed. Day 5: Rejection received. Day 7: Acceptance mailed. Is there a contract?

No, there is not a contract. The rejection terminated the offeree's power of acceptance when it was received by the offeror.

When is rejection effective?

Rejection is effective when the offeree fails to respond to offer before it expires or when offeree communicates rejection of offer before it expires. Offerees cannot recant rejection of an offer.

Rejection defined

Rejection is the manifestation of intention not to accept an offer, except when the offeree manifests an intention to take it under further advisement.

Legal effect of rejection

Rejection terminates the offeree's power of acceptance, unless the offeror has manifested a contrary intention.

When is revocation effective?

Revocation is effective when the offeree receives notice of the revocation either directly or indirectly. Under the objective theory, the offeree wouldn't know of the revocation until it reached her.

Revocation defined

Revocation is the withdrawal of the manifestation of contractual intent created by the offeror.

Legal effect of revocation

Revocation means the offer is no longer available to the offeree.

When is acceptance effective?

The acceptance is effective upon receipt, except when the Mailbox Rule is applicable. Acceptance under an option contract is never operative until received by the offeror.

A sends acceptance letter to B. A then sends rejection letter to B. Which is effective, the acceptance or the rejection?

The acceptance is effective. Due to the mailbox rule, an acceptance takes effect as soon as it is put out of the offeree's possession as long as the acceptance is made in the manner and medium expressly or impliedly authorized by the offer.

A sends rejection letter to B. A then sends acceptance letter to B. B receives the acceptance letter the next day. One day later, B receives the rejection letter. Which is effective, the acceptance or rejection?

The acceptance is effective. However, the Mailbox Rule does not apply here. The acceptance is effective because when acceptances are sent after rejections, acceptances are only effective upon receipt. In this case, the acceptance was sent after the rejection.

What is the legal effect of a counter-offer?

The offeree's power of acceptance is terminated when she makes a counter-offer. Unless, the original offeror has manifested a contrary intention or unless the counter-offer manifests a contrary intention of the offeree.

A sends rejection letter to B. A then sends acceptance letter to B. B receives the rejection letter. B then receives the acceptance letter. Which is effective, the acceptance or rejection?

The rejection is effective. The Mailbox Rule does not apply here because when an acceptance is mailed after a rejection, the acceptance is only effective upon receipt.

A offers to sell Bleackacre farm for $2M and stipulates that B can only accept by waving his hands wildly in the air at 2:00pm the following afternoon.

This is an example of a bilateral contract. Despite the fact that acceptance is done via performance, the performance itself does not initiate or complete B's promise of paying A $2M for the farm.

A offers to sell Bleakacre farm for $2M and B replies by expressing acceptance.

This is an example of a bilateral contract because at the time of the contract formation, both the offeror and the offeree have outstanding promises to be performed in the future.

A offers to sell B Bleakacre farm for $2M. A stipulates that in order to accept the offer, B must go to A's office at 2:00pm that day and pay the $2M in cash.

This is an example of a unilateral contract because the acceptance is also the complete performance. B has no duty to A; only a right to demand that A fulfills his promise - to transfer title and possession of Bleackacre farm.

What is the purpose of an option contract?

To give the offeree assured time to consider and respond to the proposal without the risk of its being withdrawn before the expiry date.

Unilateral contract

Upon formation, only one of the parties has an outstanding promise.

When is a communication an offer?

When it manifests the maker's intent to invite acceptance and conveys the reasonable understanding to the addressee that, upon acceptnace, the bargain is concluded.

Day 1: Offer received. Day 3: Acceptance mailed. Day 5: Revocation received. Day 7: Acceptance mailed. Is there a contract?

Yes, because the acceptance is legally effective when it is dispatched by the offeree, barring improper mailing.

Day 1: Offer received. Day 3: Acceptance mailed. Day 5: Offeree calls offeror and rejects. Day 7: Acceptance received. Is there a contract?

Yes, there is a contract because the acceptance is legally effective upon dispatch, even though the offeree rejected the offer after mailing.

Day 1: Offer received. Day 3: Rejection mailed. Day 5: Acceptance mailed. Day 7: Acceptance received. Day 8: Rejection received. Is there a contract?

Yes, there is a contract, but not because of the Mailbox Rule. There is a contract because of R2d 40, which is the exception to the mailbox rule. When an acceptance is mailed after a rejection, the acceptance is only valid upon receipt.

Manifestation of Mutual Assent in the Absence of an Offer, followed by Acceptance (R2d 22(2))

You are presented with a written agreement, signed by buyer and by seller, for the sale of a house, with house, sales price, and sales terms set out in the agreement. OR, On the first of every month for several months, Joe mowed Mary's lawn. Within two weeks, Mary has always paid Joe $50 for mowing her lawn.