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Contracts • Contract Formation
K#035
Legal Definition
The offeror controls the method of acceptance and whether the offeree must give notice that they have accepted via performance. Generally, an offer may only be accepted by (1) a person who knows about the offer at the time they accept, or (2) the person to whom the offer was made.
Plain English Explanation
The offeror is the master of the offer. They have full control of not only who can accept their offer, but how they can or must accept their offer. They can generally be as reasonable, or unreasonable, or silly as they want with how they construct their offer and who they limit acceptance to.
Generally, an offer can only be accepted by someone who was aware an offer existed. For example, a unilateral contract involving a reward for whoever finds someone's dog is only binding on the offeror if the person who returns the dog was first aware that such an offer existed. Additionally, just because an offer has been made doesn't mean anyone who is aware of the offer can accept. In many cases, an offer is made to a specific party or group of people, and only they have the power to accept and bind the offeror.
Generally, an offer can only be accepted by someone who was aware an offer existed. For example, a unilateral contract involving a reward for whoever finds someone's dog is only binding on the offeror if the person who returns the dog was first aware that such an offer existed. Additionally, just because an offer has been made doesn't mean anyone who is aware of the offer can accept. In many cases, an offer is made to a specific party or group of people, and only they have the power to accept and bind the offeror.
Hypothetical
Hypo 1: Bob lost his dog, Scrambles. He hangs signs around the neighborhood offering a reward of $1,000 for anyone who returns Scrambles. A few miles away, Sam is walking to the store and sees a dog walk by. He recognizes it as Scrambles because Sam sees Bob post a lot of pictures on Instagram. Sam realizes that Scrambles must have run away, so Sam picks the dog up, puts it in his car, and drives over to Bob's house. At no point did Sam see a reward sign. Bob is so happy to Scrambles and, since Sam never asks for money, he says "Thank you!" and slams the door in Sam's face. While walking back to his car, Sam sees a reward poster offering $1,000 for Scrambles' return. He walks back to Bob's house and demands the money. Result: Even though Sam performed an act that Bob was willing to pay someone to do, Sam has no right to be compensated because he was never aware of the offer prior to his performance. Because he never accepted the offer, he can't now try to force Bob to pay him.
Hypo 2: Bob is outside standing next to his car. Sam walks by and says, "Gee, I really like your car." Bob says, "I'll sell it to you for $500." Amy overhears this offer and runs up to Bob and says, "Sold!" and tries to shove the money into his pocket. Result: Amy has no power of acceptance because she was not the recipient of the offer. Only Sam may accept Bob's offer. This being said, if Bob wants to accept Amy's offer, he is free to do so because his immediate acceptance of Amy's offer will be sufficient to signal to Sam that his offer has been terminated (after all, how can Sam expect Bob's offer to still be good when he just saw him sell it to Amy).
Hypo 2: Bob is outside standing next to his car. Sam walks by and says, "Gee, I really like your car." Bob says, "I'll sell it to you for $500." Amy overhears this offer and runs up to Bob and says, "Sold!" and tries to shove the money into his pocket. Result: Amy has no power of acceptance because she was not the recipient of the offer. Only Sam may accept Bob's offer. This being said, if Bob wants to accept Amy's offer, he is free to do so because his immediate acceptance of Amy's offer will be sufficient to signal to Sam that his offer has been terminated (after all, how can Sam expect Bob's offer to still be good when he just saw him sell it to Amy).
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 requirements of 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?
