Draw the Law: What is an Offer?

Thank you for the great response from photographers and models to last week’s Draw the Law on Rights of Publicity and Copyright. Today we will return back to basic contract issues and we will begin the discussion of Offer and Acceptance. You can kind of think of offer and acceptance as giving birth to a contract baby. Without either you do not get a contract. With that being said, as with many things with the law, is not that simple. So, I will discuss offer today, options next week, acceptance the following, and wrap-up with rejection and counter-offer the first full week of March.

What is an Offer?

Operationally, an offer is made by an offeror to the offeree. The definition of an offer is: "an expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed", which is the offeree. As many of you retailers, small business owners, and the like there are no magic words to an offer. It can be as simple as, “you will pay me $6.00 for each of these slippers.” There is no invitation to bargain or negotiate in that statement, only that if you want the slippers you must pay $6.00 for each one.

What are Requirements of a Valid Offer?

In order for the offer to be effective the offeree must receive it. In addition, it must be clear (1) who is making the offer; (2) what the subject matter is for the offer; (3) if it is related to good, what is the amount to be sold; and (4) what is the price of the offer.

Example in detail: Going back to the slippers offer. First, who are the parties? In an oral contract, where the two parties may be face-to-face that might be clear. However, if written many times the document will state the full name of the parties, and if they are a part of an organization its proper legal name and address.

The subject matter is the slippers. However, what if there were tons of slippers? Thus short descriptions, SKUs, and similar identifiers are used in a written contract to ensure that both sides know what is being talked about, which is easier for goods than services.

Let’s say when the offeror said “these slippers” he waved his arm at boxes of slippers, but really was thinking 1 crate. Thus, it would be good to state that it is for 1 box of slippers containing thirty slippers.

Finally, if it were the case it was 1 box of slippers at $6.00 each slipper, the final price would be $180.00. Once again, if this is a written, these are all things that should be spelled out for the offer to be valid.

How Long if an Offer Valid?

Not indefinitely, unless the offeree has an irrevocable option. The offeror is the master of the offer, they can leave the offer open as long or as short as they want. It can be a day or a year.  Unless, there is an option an offer expires when:

  1. the time to accept is over – which is either stated in the offer or a “reasonable” amount of time has passed; or
  2. the offeror cancels the offer; or
  3. the offeree rejects it; or
  4. the offeree makes a counteroffer; or
  5. the offeror dies or becomes incapacitated; or
  6. there is a change of law that makes the contract illegal or something destroys the subject matter.

Last Word: The Offer is only the Beginning

Generally, as most savvy businesspeople know, the offer is only the beginning before we even get to a contract. In terms of offers, while the offeror can revoke (cancel) the offer ay anytime before acceptance, the reality is that there are exceptions to any rule, which I will get to next week with options and an exception that applies to merchants.

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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.