What Elements Must Be Present? When Is an Apparent Offer Not an Offer
In an earlier blog, we looked at the requirements of a valid and enforceable contract, noting that the first thing that must be shown is the existence of a mutual agreement—an offer followed by an acceptance. In the business world, though, communications (both oral and written) regularly go back and forth. How can you know if a particular communication constitutes an offer that can be accepted? When might an apparent offer fail to qualify as such?
The Requirements of an Offer
To qualify as an offer, a statement must meet three specific tests:
- The statement of offer must show intent—The statement must reasonably be interpreted to indicate an intention to enter into a binding agreement. Accordingly, statements made in jest, or that would not be considered reasonable, typically don’t qualify. For example, offering to pay “a billion dollars” for some trivial object would lack intent. Furthermore, a statement reasonably considered part of the bargaining process, such as “I would probably be willing to pay $100 per item,” does not evidence intent to enter into a binding agreement.
- The offer must be communicated to the other party—An agreement cannot exist unless the offer is communicated. If you write a letter to a vendor offering to purchase a quantity of goods, but you forget to mail it, no offer is made. If the other party contacts you and offers to pay the same amount for the same goods, it’s not an acceptance—it’s a new offer.
- The offer must be definite—The parties to an agreement must know, by the terms of the agreement, their respective rights and obligations.
Contact Attorney Howard N. Sobel
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