Offer and Acceptance
Rule
A contract requires a valid offer and a valid acceptance. An offer is a manifestation of willingness to enter into a bargain such that a reasonable person would believe the offeror is willing to be bound upon acceptance. Acceptance must be definite, unequivocal, and in the manner prescribed by the offer. (Objective theory of contract: Embry v. Hargadine)
Elements
Offer:
- Clear, definite, and explicit terms — “leaving nothing open for negotiation” (Lefkowitz)
- Reasonable person in the position of the offeree would believe the offeror intended to be bound
- Communicated to the offeree
Acceptance:
- Unequivocal assent to the offer’s terms (conditional acceptance = counteroffer)
- By the offeree (power of acceptance is personal)
- In the manner prescribed by the offer, or any reasonable manner if not prescribed (UCC § 2-206)
- Before the offer expires (lapse, revocation, rejection, death of offeror)
Exceptions
- Advertisements: Generally invitations to deal, not offers, unless clear, definite, and leaving nothing open (Lefkowitz)
- Mailbox rule: Acceptance effective upon dispatch; revocation effective only upon receipt by offeree (Caldwell v. Cline)
- Silence: Not acceptance unless offeree takes benefit of offered services with opportunity to reject (Rest. 2d § 69)
- Unilateral contracts: Offeree accepts by completing performance; offer becomes irrevocable option contract upon beginning performance (Rest. 2d § 45; Drennan v. Star Paving)
- UCC firm offers: Merchant’s signed written offer to hold open is irrevocable for up to 3 months without consideration (UCC § 2-205)
- Revocation of public offers: Effective when revocation is publicized in same manner as offer
Policy
The objective theory prevents parties from escaping contracts based on secret subjective intent. The offeror-as-master-of-the-offer rule preserves autonomy and predictability. Asymmetric mailbox rule protects offerees because offerors set the terms.
Key Cases
- Lefkowitz v. Great Minneapolis Surplus Store — clear, definite ad for fur coats is an enforceable offer; loss leaders and vague value ads are not
- Ardente v. Horan — conditional acceptance (“concerned about furnishings”) is a counteroffer, not acceptance
- Drennan v. Star Paving Co. — subcontractor’s bid is an irrevocable offer once general contractor foreseeably relies on it
- Davis v. Jacoby — ambiguous offer presumed to be for bilateral contract (return promise), not unilateral (performance only)