Offer
An offer is the spark that starts almost every contract, and the law has a precise idea of what counts.
2. Offer
Most contracts originate from an offer.
- Under the common law, an offer is a proposal that communicates to the offeree an intent to enter a contract if the offer is accepted, and that is sufficiently definite so that an agreement could be enforced if the other party responds simply “I accept.”
- The person making an offer is called the “offeror.” The person receiving the offer is called the “offeree.”
- The existence of an offer is judged by an objective standard. An offer exists only if a reasonable person in the offeree’s position would understand the offeror’s language as showing commitment to enter a contract.
- If one or more terms of a proposed bargain are left open or uncertain, that fact may contribute to showing that the communication is not an offer.
- The objective standard takes into account the existing relationship between the offeror and offeree, the prior communications between them, and the context of the alleged offer.
- Advertisements, price lists, and catalogs do not usually constitute offers because of the risk of “over-acceptance.” In other words, the audience for the offer is sufficiently large that a reasonable person would not be justified in thinking that their assent would conclude the deal.
- But advertisements, price lists and catalogs that request specific action, limit the offeror’s potential obligation, and do not ask for communication of commitment by the offeree are likely to be treated as offers.
- [An offer lapses at the time specified in the offer or, if no time is specified, at the end of a reasonable time. ]
- [A counteroffer from the offeree terminates the original offer, unless the offeree specifies otherwise.]
An offer is a proposal that shows a commitment to be bound on acceptance and is definite enough that "I accept" would close the deal. Its existence is judged by an objective standard from the offeree's position, not by anyone's secret intent.
An offer is the spark that starts almost every contract, and the law has a precise idea of what counts. An offer is a proposal that communicates to the listener an intent to enter a contract if the proposal is accepted, and it has to be definite enough that the agreement could be enforced if the other party did nothing more than say "I accept." The person who makes the offer is the offeror; the person who receives it is the offeree.
The first big idea is that whether an offer exists is measured by an objective standard, not by what was going on inside anyone's head. An offer exists only if a reasonable person standing in the offeree's position would understand the offeror's words as showing a commitment to enter a contract. The offeror's secret, unexpressed intentions do not control. If the words look like a commitment to a reasonable listener, there is an offer, even if the offeror privately meant something else. And if the words would not signal commitment to a reasonable listener, there is no offer, even if the speaker privately hoped to be bound. The objective standard is not read in a vacuum; it takes into account the existing relationship between the parties, their prior communications, and the surrounding context. Terms left open or uncertain can cut against finding an offer, because vagueness undercuts the sense that the speaker was ready to be bound.
The second big idea is that advertisements, price lists, and catalogs usually are not offers. The reason is the risk of over-acceptance. The audience is so large that a reasonable person would not be justified in thinking that simply saying yes would close the deal. That said, the rule is usually-not, not never.
- 1It requests a specific action.
- 2It limits the offeror's potential obligation.
- 3It does not ask the offeree to communicate a commitment back.
All three features point toward a genuine commitment rather than an invitation to bargain. Two timing and termination points round this out. An offer lapses, meaning it simply expires, at the time stated in the offer; and if no time is stated, it lapses at the end of a reasonable time, which depends on the circumstances. And a counteroffer made by the offeree terminates the original offer, unless the offeree says otherwise. Once the offeree counters, the original offer is gone and can no longer be accepted.
Offer = commitment + definite.
A proposal is an offer only if it signals a commitment to be bound on acceptance and is definite enough that "I accept" would close the deal.
Read it through the offeree's eyes, not the offeror's mind.
The test is objective: would a reasonable person in the offeree's shoes hear a commitment?
Secret intent, either way, is irrelevant.
Ads are usually-not, never never and never always.
Advertisements, price lists, and catalogs usually are not offers (over-acceptance), but flip to an offer when all three appear: requests a specific action, limits the obligation, and asks for no commitment back.
Two clocks: an offer lapses at the stated time, or if none is stated, after a reasonable time.
And a counteroffer by the offeree terminates the original offer unless the offeree says otherwise.
A coin collector, frustrated after a long day, tells a fellow dealer, "Fine, I'll sell you this rare dollar for fifty bucks," and slides it across the table. Privately the collector is just venting and does not really mean to sell at that price.
If the collector had said, "Someday I might let this go for the right price," no reasonable listener would hear a present commitment, so there is no offer no matter how sincerely the collector hoped to sell.
A hardware store mails a general catalog listing hundreds of items at set prices to its entire mailing list. That catalog is not an offer; the audience is so large that a reasonable person would not think saying "I accept" closes any deal, and the store would be exposed to over-acceptance. Now change one to a tightly drawn notice: "To the first 3 customers who bring this card to our counter on Saturday, we will sell a generator for 200 dollars; supplies limited to 3 units." That notice requests a specific action (bring the card on Saturday), limits the store's obligation (first 3, 3 units), and asks for no commitment back from the buyer. With all three features present, it is likely to be treated as an offer, and the early arrivals can accept by performing.
An option that decides whether an offer exists by reference to the offeror's actual or secret intent, or that applies the objective test from the wrong vantage point (the offeror's or a bystander's rather than the offeree's).
The standard is objective and uses the offeree's position: an offer exists only if a reasonable person in the offeree's position would understand the offeror's words as a commitment. Unexpressed intent does not control.An absolute about advertisements, price lists, or catalogs: that they are NEVER offers, or ALWAYS offers, or that any priced posting is automatically an offer.
The rule is usually-not, because of over-acceptance, but an ad becomes an offer when it requests specific action, limits the obligation, and asks for no commitment back. Distrust never/always.An option that mis-times a lapse (an open-ended offer that never expires, expires on receipt, or stays open until expressly revoked) or that lets an offer survive a counteroffer.
With no time stated, an offer lapses after a reasonable time; and a counteroffer by the offeree terminates the original offer unless the offeree specifies otherwise.An option that leans on a sympathetic but immaterial fact, such as the offeror privately not meaning it, the buyer's eagerness, or which party benefits from the characterization.
The existence of an offer turns on the objective reasonable-person understanding from the offeree's position, not on either party's private wishes or who gains.An option that reaches a defensible outcome but supports it with the wrong reason, for example crediting the speaker for naming a price first, or treating bare words of acceptance as decisive.
Name the operative rule: the objective commitment standard for whether an offer exists, and the requirement that an offer exist before any acceptance can matter.the stem hands you a proposal and asks whether it is an offer, or what happened to an offer over time.
Two cue patterns dominate.
a speaker whose words look like a commitment but who secretly meant something else (or vice versa): that is the objective-standard cue, and the move is to ask only what a reasonable person in the offeree's position would understand from the words, conduct, relationship, prior dealings, and context, ignoring private intent.
a mass communication, an advertisement, price list, or catalog, sent to a large audience: presume it is not an offer because of over-acceptance, then check the three-feature escape hatch (requests a specific action, limits the obligation, asks for no commitment back); if all three are present, it is likely an offer.
If the question is about time, an offer lapses at any stated time or, absent one, after a reasonable time; and if the offeree responds with a counteroffer, the original offer is terminated unless the offeree said otherwise.
The instant you see secret intent, a broadcast ad, an open deadline, or a counter, run the matching rule and eliminate options that turn on private intent, treat ads as absolutes, or let a lapsed or countered offer survive.
A jeweler, worn out at the end of a long day and irritated by a regular customer's haggling, said to the customer, "Look, you can have this antique brooch for two hundred dollars," and set the brooch on the counter in front of her. The jeweler did not actually want to part with the brooch at that price and was only blowing off steam, but said nothing to suggest he was joking, and a reasonable customer in the buyer's position would have understood the words as a serious proposal to sell. The customer immediately said she would take it.
Did the jeweler's statement constitute an offer?
An appliance retailer posted a notice in its store window reading: "To the first 5 shoppers who present this exact notice at our service desk this Saturday morning, we will sell a stand mixer for fifty dollars; we have 5 mixers and not one more." A shopper saw the notice, was among the first to arrive Saturday morning, and presented the notice at the service desk. The retailer refused to sell at that price, insisting that a store notice is merely an invitation to come in and bargain.
Was the retailer's notice an offer that the shopper could accept?
A garden-supply wholesaler mailed its annual catalog, listing hundreds of products at set prices, to its entire mailing list of several thousand landscapers. The catalog described each item and gave a price but said nothing about quantities available, deadlines, or how a recipient should respond. One landscaper mailed back a note stating, "I accept your catalog prices and want to buy fifty of every item listed." The wholesaler, which had only modest stock, declined to fill the order.
Did the catalog constitute an offer that the landscaper accepted by mailing the note?
A landowner sent a neighboring farmer a signed letter offering to sell a specific parcel of farmland for a stated price. The letter set out all the terms a reasonable person would expect but said nothing about how long the offer would remain open and gave no deadline for a response. Several months passed with no communication from either side before the farmer tried to accept. By that time, market conditions had shifted and the landowner argued that the offer was no longer available.
When did the landowner's offer lapse?
A car dealer offered in writing to sell a used pickup truck to a retiree for twelve thousand dollars. Before saying anything about accepting, the retiree wrote back, "I will not pay twelve thousand, but I will give you ten thousand for the truck." The retiree said nothing to indicate she wished to keep the original price open while she proposed the lower one. The dealer rejected the ten-thousand-dollar proposal, and the retiree then told the dealer she would, after all, pay the original twelve thousand dollars.
What was the effect of the retiree's response on the dealer's original offer?