Offer and acceptance Study Guide

📖 Core Concepts Offer – A clear, serious expression of willingness to contract on specified terms; the offeree must understand that assent will create a binding contract. Objective Test – Courts ask how a reasonable person would interpret the communication, not the parties’ hidden intentions. Mirror‑Image Rule – Acceptance must match the offer exactly; any change = counter‑offer. Invitation to Treat – Preliminary invitation to negotiate (e.g., shop window display); not an offer. Counter‑Offer – A proposal that changes the original terms; it terminates the original offer. Unilateral Contract – Offer promises a reward for performance; acceptance occurs by completing the act. Revocation – Offeror may withdraw an offer before acceptance, provided the revocation is communicated. Postal Rule – Acceptance is effective when posted (not when received) if parties contemplated postal mail. Termination of Offer – Occurs by revocation, rejection, lapse of time, death/incapacity, or a counter‑offer. --- 📌 Must Remember Seriousness: Jokes are not offers unless a reasonable person would deem them serious (e.g., Lucy v. Zehmer). Essential Terms: Missing price, delivery date, or description → invitation to treat. Counter‑Offer Effect: Terminates the original offer instantaneously. Unilateral Offer: Once performance begins, the offer generally becomes irrevocable. UCC 2‑207: Acceptance with additional terms can still be valid; added terms are proposals unless the offer limits acceptance or the other party objects. Firm Offer (UCC): Irrevocable for the time stated even without consideration. Postal Rule Limits: Not for land contracts, misaddressed mail, or instantaneous communications (email/fax). --- 🔄 Key Processes Determine Whether a Communication Is an Offer Check for seriousness, specificity of terms, and intention to be bound → objective test. Assess Acceptance Verify method (express, conduct, prescribed means). Apply mirror‑image rule (common law) or UCC 2‑207 (goods). Handle Counter‑Offers Identify any alteration → treat as new offer; original offer dies. Revocation Sequence Offeror → communicates revocation → offeree must receive before acceptance. Apply Postal Rule Offeree posts acceptance → contract formed at posting (if mail contemplated). --- 🔍 Key Comparisons Offer vs. Invitation to Treat Offer: definite terms, intent to be bound. Invitation: merely invites negotiations; no binding intent. Counter‑Offer vs. Acceptance Counter‑Offer: changes terms → kills original offer. Acceptance: agrees to all terms exactly. Unilateral vs. Bilateral Contract Unilateral: promise for performance; acceptance = performance. Bilateral: promise for promise; acceptance = promise. Common Law Mirror‑Image vs. UCC 2‑207 Common Law: any variance = counter‑offer. UCC: variance may be tolerated; “battle of the forms” rules apply. --- ⚠️ Common Misunderstandings Ads are offers – Most advertisements are invitations to treat, not offers. Silence equals acceptance – Only works if the offeree has previously promised to accept by silence. Any “acceptance” word creates a contract – Must be communicated and meet the mirror‑image requirement (or UCC exception). Postal acceptance is always effective – Not for land contracts or when parties choose a faster method. --- 🧠 Mental Models / Intuition “Reasonable Person Lens” – Always filter every communication through what a reasonable third party would conclude. “Offer Life Cycle” – Create → Remain → Terminate → Visualize offers as living entities that die the moment a counter‑offer, revocation, or lapse occurs. “Form vs. Substance” – The form (written, email) matters only if it conveys the substantive intent to be bound. --- 🚩 Exceptions & Edge Cases Option Contracts – Keep offers alive despite revocation or death of offeror. Auction Without Reserve – Auctioneer has a collateral contract to accept the highest bid, even if low. Performance Started on Unilateral Offer – Offer becomes irrevocable once the offeree begins performance. UCC “Last Shot” – The last form exchanged may control if both parties continue performance. --- 📍 When to Use Which Objective Test – Use for all contract formation queries unless a jurisdiction still follows the subjective rule. Mirror‑Image Rule – Apply in common‑law contracts for goods and services. UCC 2‑207 – Apply only for contracts for the sale of goods under the UCC. Postal Rule – Use when acceptance is sent by regular mail and the parties anticipated postal communication. Firm Offer Rule (UCC) – Use when the offeror is a merchant and the offer is signed, specifying a time period. --- 👀 Patterns to Recognize “Provided that…” or “subject to” → likely a condition; may create a counter‑offer if it changes the offer. “May be prepared to sell” → classic invitation to treat language. “Acceptance must be mailed via registered post” → enforceable specified method requirement. “We will pay $X to anyone who…” → signals a unilateral contract offer. --- 🗂️ Exam Traps Distractor: “The advertisement is an offer because it states a price.” – Wrong; ads are invitations to treat. Distractor: “Silence after receiving an offer equals acceptance.” – Wrong unless prior agreement exists. Distractor: “A counter‑offer does not affect the original offer.” – Wrong; it terminates the original offer. Distractor: “The postal rule applies to email acceptances.” – Wrong; email is instantaneous, not covered by the rule. Distractor: “Any additional term in an acceptance creates a new contract under the UCC.” – Wrong; added terms are proposals and may be excluded if they materially alter the contract.