Offers

 

By Albert Kelley
There are two parts to an agreement: an offer and acceptance. It starts with an offer. There must be an intention to make an offer. If a person makes an offer in jest, it is not a valid offer. The determining factor is whether a reasonable person would think that a valid offer had been made.
The first statement is not necessarily an offer. It could merely be an invitation to start negotiations. An example is when retail stores put ads in the newspaper. They are not making an offer, but inviting you to come to their store to negotiate. You do not have to pay the price the store is asking. You are free to offer a lower price. While this is common in many countries where they expect you to negotiate, it is not common in the United States.
Contracts are only acceptable while they are valid. That is, once terminated, a contract cannot be accepted. Most contracts are revocable at any time before acceptance. Any action or words sufficient to put the other on notice that the offer is revoked is sufficient. Thus, if I offer to sell my car by putting a “For Sale” sign in the window, the removal of the For Sale sign is an indication that the offer has been revoked. It is crucial that the revocation be communicated to the buyer, just as it was crucial that the offer was communicated. The revocation is not valid unless the buyer knows about it. Once I have communicated the revocation, the buyer cannot hold me to the contract.

 
Here’s a question for you. Last week, Bob offered to sell me his Mercedes. I thought about it for a few days and on Monday sent him a letter accepting the offer. Unbeknownst to me, on Saturday, Bob had sent me a letter revoking the offer. Is there a contract? This is an example of the mailbox rule. It says that an acceptance of an offer is valid upon mailing, but a revocation is valid only on receipt. Therefore, Bob would be required to sell the car.
There are exceptions to the policy that a contract can be revoked at any time before acceptance. An Option Contract is an agreement to keep a contract open for a specified period of time. The option itself is a valid contract that can be enforced. Similar is a firm contract. This is an agreement that the offer will be irrevocable for a period of time. Finally, if the offeree would be harmed if the offer were allowed to be withdrawn, the Courts will often require the offer to remain open.

 
If the person accepting the offer changes the terms of the offer, there is a “counter-offer” which nullifies the original offer. If I offer to sell my car for $100 and Sue says she’ll give me $50 for it we do not have a contract. Sue has made a counter-offer which I would then have to accept. Sue’s counteroffer terminated the original offer; therefore she cannot then accept my prior offer and force me to sell the car for $100. Likewise, if you reject an offer, it cannot later be accepted.

 
If an offer contains a time element, such as “If you buy my car by next week, I’ll sell it for $100,” and the time period passes without acceptance, the offer is dead. If the offer does not contain a time period, then the Court will imply a reasonable time. After the lapse of a reasonable time, the contract is dead. What is a reasonable time? That depends on the contract. If I offer to sell a bushel of apples, a reasonable time may be a couple of days or hours. If I offer to sell my car, a reasonable time will probably be a couple of weeks. If I offer to sell a business, a reasonable time may be a couple of months.
If the offeror or offeree dies or becomes incapacitated, the offer is terminated. Likewise if the offer becomes illegal, the offer is terminated. Examples might be the sale of a designer drug. If the drug is not illegal, I can make a contract to sell it. But if Congress then makes it illegal, my contract will be terminated.

 

 

Al Kelley is a Florida business law attorney located in Key West and previously taught business law, personnel law and labor law at St. Leo University. He is so the author of “Basics of Business Law” (Absolutely Amazing e-Books). This article is being offered as a public service and is not intended to provide specific legal advice. If you have any questions about legal issues, you should confer with a licensed Florida attorney.

 

 

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