Contracts

Offer

"Offer" Defined

An offer is a manifestation of willingness to enter into a bargain, which creates in the offeree the power of acceptance. (Rest.2d §24.)

An offer may look towards the formation of either a unilateral or bilateral contract.

Revocation of an Offer

The person making the offer may revoke the offer at any time before the communication of acceptance by the person to whom the offer is made. Except in the case of an option contract, the offeror retains the power to revoke even though the offer is stated to be good or irrevocable for a specified period of time.

An offer is revoked: 1) By the person who made the offer, giving notice of revocation to the person to whom the offer has been made; 2) By the lapse of time set forth in the offer for the acceptance, or if no time is set forth, the lapse of a reasonable time without communication of the acceptance; 3) By the death or insanity of the person making the offer.

FAQ's "OFFER"

Q. Suppose someone, as a joke, proposes an offer. Can acceptance of an offer made in jest result in a binding contract?

A. Proposals obviously made in jest which a reasonable person would not be justified in treating as offers to enter into contracts, do not, upon acceptance, give rise to binding agreements. However, if the speaker intends to create in the listener the perception that the speaker is committing himself to a particular proposal and a reasonable person in the position of the offeree would so believe, an offer has been made. (Lucy v. Zehmer (1954 Sup.Ct. VA) 84 S.E.2d 516)

Q. Can an advertisement constitute an offer?

A. In the absence of special circumstances an advertisement is not an offer but rather only an invitation to deal. (Craft v. Elder & Johnston Co. (1941 Ct. Appeal, OH) 38 N.E.2d 416). However, where the offer is clear, definite and explicit and leaves nothing open for negotiation, it constitutes an offer acceptance of which will complete the contract. (Lefkowitz v. Great Minneapolis Surplus Store, 86 N.W.2d 689 (Minn.1957).)

Q. Can one "accept" an offer he or she knows to have been the result of a mistake?

A. The general rule is that "one cannot snap up an offer or bid knowing that it was made in error." Relief from mistaken bids is allowed where one party knows or has reason to know of the other partys error and the other party can be placed in the status quo. (Elsinore Union Elementary School Dist. v. Kastorff (1960) 54 Cal.2d 380, 353 P.2d 713.)

Q. If an advertiser promises to pay money to anyone who contracts the flu after using a certain medicine, has an offer been made which can be accepted?

A. In Carlill v. Carbolic Smoke Ball Co. (1893) 1 Q.B. 256, defendant published the following advertisement: "£100 reward will be paid by the Carbolic Smoke Ball company to any person who contracts the increasing epidemic influenza, colds or any disease caused by taking cold, after having used the ball three times daily for two weeks according to the printed directions supplied with each ball. £1000 is deposited with the Alliance Bank, Regent Street shewing our sincerity in the matter. In response to this advertisement plaintiff used one of the balls as directed. When she caught the flu, she sued and was awarded £100 damages. The court held the advertisement was not "a mere puff" but an offer under which "the reward is offered to any person who contracts the epidemic or other disease within a reasonable time after having used the smoke ball." (See also, unilateral and bilateral contracts.)

For plain English explanations of contract law, The Essential Contract Law Casebook
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