Draw the Law: Rejection and Counteroffer

Last week I talked about what happens when you accept, but as we all know in negotiations that is not how it works.  Sometimes you just don’t think the deal is good enough, so what do you do?

Reject the Offer

In this case we finally arrived at a concept in contract law that I think makes sense to the layperson as it does to the attorney. Rejection equals “no.” When the offeree rejects the offer it is dead.  The offeree cannot accept the offer once the rejection is made.

Timing, Strikes Back

A rejection is effective when it is receive by the offeror.  Why does that matter?  Remember the mailbox rule from last week?   So acceptance is valid when sent.  Well, notice that rejection is by receipt and acceptance is by sending.  Therefore, what typically happens is that an offeree rejects by mail, has a second mind, and then calls or emails their acceptance.   This is a valid way to form a contract so long as the acceptance was received prior to the rejection.

Counteroffer the Offer

If an offer is “no” then a counteroffer is “no, but”.  How does contracts law perceive this interaction?  Basically, what happens is a rejection is packaged with a new offer, and now the roles have reversed between the original offeror and offeree:  when making a counteroffer the offeree becomes the offeror, and the offeror becomes the offeree.  The same rules still apply, even though the roles have reversed.  There are no new rules that apply in this reversed situation, it is treated as a new iteration of offer and acceptance.

When a Question is Just a Question: Inquiries are Not a Rejection or Counteroffer

Sometimes in the bargaining process, the offeree is not rejecting the offer, nor are they counter offering.  They are in limbo land.  They are trying to gather more information.   This typically comes in the form of a simple question: “are you flexible on the price?”

Example:  Counteroffer

Seller: I will sell you these jars of crack seed for $20.00 a jar. Buyer: No, how about I buy them for $15.00 a jar.

Example: Inquiry

Seller: I will sell you these jars of crack seed for $20.00 a jar. Buyer: That is kind of steep, are you willing to be flexible on that price?

Thanks for reading today’s Draw the Law, check out my talk tomorrow night (Wed. March 7, 2012) at The Greenhouse Innovation Hub if you are curious about Social Media and the Law.  It is great for small business owners, startups, social media marketers, and those just curious about how the law affects our usage of social media.  It starts at 6:00 p.m. and costs $20.00 (materials included).  For more information click here.

Thanks and see you next week where we talk about conditions placed in a contract.

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*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.