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Contracts • Contract Formation
K#010
Legal Definition
An offer requires: (1) the expression of a promise, undertaking, or commitment to enter into a contract; (2) definitive and certain terms; and (3) is communicated to the offeree.
Plain English Explanation
When you find yourself trying to decide whether or not an offer has occurred, you'll need to look for three important factors that create an offer:
First, at the heart of an offer, is some sort of promise or action. It's the first step. It may be someone creating an ad on Craigslist that says "For Sale," or it may be a discussion with someone about your willingness to do something (like work for them, or pay them) if they agree to certain terms.
Second, the terms of a contract need to be clear enough that a third party (like a judge in a courtroom) could be able to understand who agreed to what, and what the consequences are if someone doesn't do what they are supposed to. If someone offers to sell their car for $100, you have a clear offer and clear terms for how to accept that offer (Paying $100 results in getting the car). However, if someone posts an ad for a car that says, "I want to sell my car for a decent amount of money," then there are not enough terms to create a contract. What is a "decent amount of money?" How would a judge know if someone didn't pay a "decent amount"?
Third, an offer is only effective if it is communicated to the offeree (the person receiving the offer). After all, if the offeree isn't made aware that an offer has been made, how can they possibly accept it?
First, at the heart of an offer, is some sort of promise or action. It's the first step. It may be someone creating an ad on Craigslist that says "For Sale," or it may be a discussion with someone about your willingness to do something (like work for them, or pay them) if they agree to certain terms.
Second, the terms of a contract need to be clear enough that a third party (like a judge in a courtroom) could be able to understand who agreed to what, and what the consequences are if someone doesn't do what they are supposed to. If someone offers to sell their car for $100, you have a clear offer and clear terms for how to accept that offer (Paying $100 results in getting the car). However, if someone posts an ad for a car that says, "I want to sell my car for a decent amount of money," then there are not enough terms to create a contract. What is a "decent amount of money?" How would a judge know if someone didn't pay a "decent amount"?
Third, an offer is only effective if it is communicated to the offeree (the person receiving the offer). After all, if the offeree isn't made aware that an offer has been made, how can they possibly accept it?
Visual Aids
Related Concepts
Are offers assignable?
Are pre-existing duties valid consideration?
Can partial payment of a debt be consideration for release of that debt?
How can an offeree reject an offer?
How do courts assess the adequacy of consideration?
How may an offer be revoked?
Though offers can generally be freely revoked, what are the 4 exceptions?
Under battle of the forms, what happens to additional or different terms in an acceptance when at least one of the parties is a non-merchant?
Under battle of the forms, what happens to additional terms in an acceptance between two merchants?
Under battle of the forms, what happens to different terms in an acceptance between two merchants?
What are consideration substitutes?
What are illusory promises and how do they affect a contract?
What are requirement and output contracts?
What are the methods of terminating an offer?
What are the UCC Gap Fillers?
What is acceptance?
What is a contract?
What is a merchant's firm offer?
What is an option contract?
What is consideration?
What is detrimental reliance?
What is promissory estoppel?
What is required to form a valid, binding contract?
What is the effect of a conditional acceptance on an offer?
What is the effect of a contract that contains vague or ambiguous terms?
What is the effect of a contract that is missing price terms?
What is the effect of a contract that is missing quantity terms?
What is the effect of a counteroffer on an offer?
What is the effect of a lapse of time on an offer?
What is the effect of an offeree beginning to perform in response to an offer?
What is the effect of a seller sending non-conforming goods?
What is the effect of including additional or different terms to an offer?
What is the effect of part performance of a unilateral contract?
What is the effect of the death of a party prior to acceptance of an offer?
What is the Mailbox Rule and when does it apply?
When are advertisements valid offers?
When are price quotes valid offers?
When is past or moral consideration valid?
Who controls the method of acceptance, and what are the typical ways that an offer is accepted?
