Offers and the power of acceptance

Offers and the power of acceptance

Offers and the power of acceptance

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Assent in Context: The Outward Signal of Commitment

A manifestation of assent exists when a person’s words or conduct, viewed objectively in context, communicate present commitment rather than a private thought, joke, or invitation to keep negotiating. The controlling question is what a reasonable person in the recipient’s position would understand-not what the actor secretly intended.

Run two questions:

  1. Was there an outward signal? Words, writing, signing, clicking, handing over an item, or conduct can communicate assent. Silence ordinarily supplies no manifestation because it communicates nothing, although the acceptance rules covered in the sibling chapter recognize limited circumstances in which silence can operate differently.

  2. Did the signal show present commitment? “I will sell it for $500” can show commitment. “I might sell it,” “I am considering selling it,” or “I will ask my partner” ordinarily reserves a decision and signals negotiation, not assent. A statement made in obvious jest is not assent when a reasonable listener would understand the joke.

An undisclosed intent not to be bound usually does not defeat a manifestation that reasonably appears serious. Conversely, an undisclosed intent to be bound cannot turn an objectively tentative statement into an offer. Context matters: surrounding negotiations, customary business language, the parties’ relationship, the setting, and whether the speaker retained approval authority can all change what the words reasonably communicate.

An offer is a particularly important manifestation of assent: it shows willingness to enter a bargain so that the reasonable offeree understands that assent is invited and will conclude the bargain. Identifying an offer therefore requires more than finding definite words. Ask whether the communication is directed to an identifiable person or class, expresses present commitment, and supplies enough certainty that the offeree knows what assent would accept. A communication can manifest seriousness without being an offer-for example, a firm price quote that still says “subject to management approval.”

This chapter is closed-book-you must be able to state these triggers and consequences from memory.

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Offers at the Boundary: Advertisements Rewards and Precision

The ordinary advertisement is an invitation for customers to make offers, not an offer itself. The usual reasons are that the advertisement is directed to the public generally, leaves quantity or allocation uncertain, and does not show that the advertiser will be bound to every customer who responds. “Laptops starting at $400; visit our store for details” invites further interaction.

An advertisement becomes an offer when its language is clear, definite, and explicit, leaves nothing material open for negotiation, and indicates that acceptance will conclude the bargain. A stated quantity, a definite price or formula, a specified class of recipients, and a first-come or time-limited commitment can supply that indication. “One television, $200, first customer at the door Saturday at 9 a.m.; no rain checks” is much closer to an offer than “great televisions at low prices.”

A reward announcement is the principal near miss. A reward offer is ordinarily an offer to the public because it specifies the requested performance and promises payment upon completion. “$1,000 to the first person who returns our missing dog to the listed shelter by Friday” shows present commitment even though no individual offeree is named. The performer must generally know of the offer before performing and must complete the requested act under its stated conditions. A person who returns the dog without knowing about the reward has not acted in response to the offer and ordinarily cannot accept it afterward. A reward announcement asking people to submit ideas for possible consideration, by contrast, may be only an invitation to negotiate.

The distinction is not whether the communication reaches many people. It is whether the speaker has committed to a specified exchange with whoever satisfies the stated condition. A public sale advertisement usually asks customers to make offers; a definite reward announcement promises payment for the specified performance.

Goods transactions receive a further precision adjustment. Under UCC Article 2, an offer to buy or sell goods need not state every term that common law would expect. UCC 2-204 permits formation despite open terms when the parties intended to contract and there is a reasonably certain basis for giving an appropriate remedy. Price may be left open more readily than under common law, but the communication must still show present commitment rather than mere price discussion, and the quantity or scope of the undertaking generally must be ascertainable. Do not treat every incomplete goods advertisement as an offer; classify the communication first, then apply the Article 2 standard.

The UCC also treats a definite expression of acceptance differently from a conditional response when differing terms appear. Under UCC 2-207, “We accept your offer and suggest delivery on Tuesday” is not automatically a counteroffer merely because it proposes an added term. “We accept only if you agree to our delivery term” makes assent expressly conditional and operates as a counteroffer. The sibling chapter owns the broader acceptance mechanics; this distinction matters here because it determines whether the original power of acceptance survives.

CommunicationCommitment questionWho may respondWhat defeats the classification
Preliminary negotiationIs approval or bargaining still reserved?No defined accepting classTentative language or material terms left for discussion
Ordinary offerWould assent conclude the bargain?Identified person or defined classMere quote, information, or “subject to approval”
Sales advertisementHas the seller committed to a specified allocation?Public or stated customer groupIndefinite quantity, lack of definite commitment, or invitation to visit
Reward announcementIs payment promised for specified performance?Anyone who knows and performsDiscretionary language, failure to specify the requested performance or compensation, or other lack of definite commitment

Acceptance Power Ends in Different Ways: Trigger First, Consequence Second

After finding an offer, ask whether the power of acceptance was still alive when the offeree attempted to accept. Do not collapse all ending events into “revocation.” Each has a different trigger and sometimes a different requirement of communication.

Revocation by the offeror. Unless an applicable irrevocable-offer doctrine applies, the offeror may revoke before acceptance. A direct revocation requires communication to the offeree and is effective when received, not when the offeror privately decides to revoke or sends the message. An offeror’s statement to a reliable intermediary can suffice if the offeree receives it.

Indirect revocation requires both of these facts: the offeree obtains reliable information that the offeror took definite action inconsistent with the offer, and the action is sufficiently definite-for example, selling the subject matter to someone else. Mere preparation to sell, a secret change of mind, or an unverified rumor does not terminate the power. The offeror’s action must reach the offeree through a reliable source before acceptance.

Lapse. The power ends when the stated acceptance period expires. If no period is stated, it lasts only for a reasonable time, measured from the circumstances when the offer was made. The nature of the transaction, market fluctuation, the parties’ communications, and the method of response matter. A volatile commodity offer may lapse quickly; a proposal for a routine service may remain open longer. An offer made during a face-to-face conversation ordinarily lapses when the conversation ends unless the circumstances show an intended later response. A stated deadline does not itself make an offer irrevocable; it only identifies when the power ends.

Rejection. A rejection is the offeree’s communicated refusal to accept the offer. It terminates the power when received by the offeror. A private decision to reject has no operative effect until communicated. Mere silence, delay, or failure to respond is not a rejection and ordinarily does not terminate the power.

Counteroffer. At common law, a response that is conditional on the offeror’s assent to changed terms is both a rejection of the original offer and a new offer. “I will buy your car for $8,000 instead of $10,000” ordinarily rejects the $10,000 offer and proposes a new bargain. A mere inquiry does not: “Would you take $8,000?” seeks information and leaves the original power alive. The decisive fact is whether the response objectively communicates refusal of the original terms or merely asks whether different terms are possible.

For goods, UCC 2-207 prevents a different-term response from automatically becoming a counteroffer. A definite and seasonable expression of acceptance can operate as acceptance even though it proposes additional or different terms. But language making assent expressly conditional on the offeror’s agreement to the new terms is not acceptance; it is a counteroffer.

Death or incapacity. Death or incapacity of the offeror or offeree generally terminates the power of acceptance even if the other party does not yet know. Thus, an offeree cannot accept an ordinary offer after learning that the offeror died, even if the stated deadline has not arrived. The principal qualification is an irrevocable offer such as an option: the offeror’s death or incapacity does not ordinarily terminate that protected power. The sibling chapter treats the mechanics of options and reliance; the point here is to recognize that death is an automatic ending event for an ordinary offer, not a revocation requiring notice.

Ending eventRequired triggerConsequenceNear miss
RevocationCommunication of direct withdrawal or reliable information of definite inconsistent actionPower ends upon receipt of revocation informationSecret intent, rumor, or mere preparation
LapseStated deadline or expiration of reasonable timePower ends at the deadline or reasonable-time endpointA deadline sets duration but does not make the offer irrevocable
RejectionOfferee communicates refusal and offeror receives itPower ends upon receiptSilence, delay, or an uncommunicated decision
CounterofferConditional response proposes a bargain on changed termsOriginal power ends and new offer arisesA nonconditional inquiry or UCC 2-207 acceptance proposing terms

The timing question is always comparative: which event occurred first-effective acceptance or effective termination? If revocation, rejection, counteroffer, lapse, or death ends the power before acceptance becomes effective, the later attempted acceptance cannot create a contract. The sibling chapter owns the general rules governing the manner and timing of acceptance, including the mailbox rule; apply those rules after this chapter identifies whether the power was still available.

Recurring errors to eliminate:

  • Treating a definite advertisement as automatically nonbinding even when it promises a specified item to the first identified responder.

  • Calling every request for a lower price a counteroffer when the wording merely asks whether the offeror would consider it.

  • Treating revocation as effective when sent rather than when received.

  • Treating a stated acceptance deadline as a promise to keep the offer open.

  • Treating death as a revocation that requires notice instead of an automatic termination of an ordinary offer.

One Item Under Time Pressure: Inquiry Before Revocation

A services transaction keeps the analysis under common law and isolates the difference between an inquiry, a counteroffer, and revocation.

On May 1, Painter offered by email to paint Client’s portrait for $10,000.

The email stated, “Please accept by May 10.”

On May 5, Client replied, “Would you take $9,000?”

On May 7, Painter emailed, “I withdraw my offer,” and Client read the email that afternoon.

On May 8, Client emailed, “I accept the $10,000 offer.”

Practice

Did Client’s May 8 email create a contract?

Three Short Drills: Separate the Trigger from the Consequence

Practice

During a serious conversation, Nora tells Omar, “I might sell my bicycle for $500; let me know.” Omar immediately says he will buy it and offers $500. Which statement is most accurate?

A radio station announces, “The first person who brings us a blue 2019 bicycle by Friday receives $300; no other conditions.” Priya hears the announcement, finds a matching bicycle, and delivers it to the station on Thursday. Which statement is most accurate?

On June 1, Pat offered Lee a painting for $4,000 and stated, “Accept by June 10.” On June 3, before Lee accepted, Pat died. Lee learned of Pat’s death on June 4 and emailed an acceptance. What is the result?

High-Yield Points - ⚡ Biggest Takeaways

Treat assent and offer status objectively: present commitment, not secret intent, controls. A clear reward promise can be an offer to the public; an ordinary advertisement usually invites offers. Separate revocation, lapse, rejection, counteroffer, and death by trigger, communication requirement, and timing.

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Practice Questions: Offers and the power of acceptance

  1. 1. A collector signed a written offer promising to sell a rare watch to a buyer for $18,000. The writing stated, "I will keep this offer open until Friday at 5:00 p.m." The buyer gave no consideration for that promise. On Thursday morning, a reliable mutual acquaintance told the buyer that the collector had sold the watch to another person. The collector had not directly communicated with the buyer. On Thursday afternoon, the buyer emailed an acceptance, which the collector received immediately. The transaction is a sale of goods, but the collector is not a merchant in watches. Which of the following best states whether a contract was formed?

    • A. A contract was formed because a signed promise to keep an offer open creates an option without consideration.
    • B. A contract was formed because only a revocation communicated directly by the offeror can terminate an offer.
    • C. No contract was formed because reliable information of the sale indirectly revoked the offer before acceptance.
    • D. No contract was formed because an offer to sell goods may be accepted only by tendering payment.
    Show answer

    Answer: C. No contract was formed because reliable information of the sale indirectly revoked the offer before acceptance.

    No contract was formed because reliable information of the sale indirectly revoked the offer before acceptance. - The reliable mutual acquaintance’s report that the collector had sold the watch gave the buyer notice of definite action inconsistent with the offer, indirectly revoking it on Thursday morning. - The buyer’s email arrived Thursday afternoon, after the offer had been revoked, so it could not form a contract. A contract was formed because a signed promise to keep an offer open creates an option without consideration. - The collector’s promise to keep the offer open until Friday lacked the consideration needed to create an option contract. - A signed offer to sell goods can be irrevocable without consideration under the merchant firm-offer rule, but the collector was not a merchant in watches. A contract was formed because only a revocation communicated directly by the offeror can terminate an offer. - Revocation need not come directly from the collector when the buyer learns from a reliable source that the collector has sold the watch. - That information reached the buyer Thursday morning, before the buyer emailed an acceptance. No contract was formed because an offer to sell goods may be accepted only by tendering payment. - The written offer did not require tender of the $18,000 as the method of acceptance; an emailed acceptance could ordinarily suffice. - No contract formed because the offer had already been indirectly revoked, not because the buyer failed to tender payment.

  2. 2.

    • 3. Using only the supplied client file and legal resources, prepare an advisory letter to the client assessing whether the client can compel the seller to complete the land sale. Explain the writing requirement, the financing condition, available remedies, litigation risks, and the most appropriate immediate next step.

      • 4. A building contractor asked a steel supplier for a price on 100 standard steel beams needed for a project. The supplier, a merchant in steel products, sent a signed email stating, “We offer 100 beams at $900 each and will hold this offer open for 5 months.” The contractor gave no consideration for that assurance. Relying on the quoted price, the contractor submitted a project bid that same afternoon but did not notify the supplier of the bid. Ten days later, before the contractor accepted, the supplier emailed a revocation because steel prices had increased. The contractor received the revocation immediately and attempted to accept the original offer the next day. Which of the following is the contractor's strongest argument that a contract was formed?

        • A. The contractor may enforce the promise because its foreseeable reliance substituted for acceptance of the supplier's offer.
        • B. The contractor may enforce the promise because a signed merchant firm offer is irrevocable for the stated period, capped at three months, and the revocation came well within that three-month window.
        • C. The supplier revoked effectively because the contractor gave no consideration to keep the offer open for 5 months.
        • D. The supplier could revoke because the assurance exceeded three months, so the firm-offer protection was void from the start.
        Show answer

        Answer: B. The contractor may enforce the promise because a signed merchant firm offer is irrevocable for the stated period, capped at three months, and the revocation came well within that three-month window.

        The contractor may enforce the promise because a signed merchant firm offer is irrevocable for the stated period, capped at three months, and the revocation came well within that three-month window. - The supplier was a steel merchant whose signed email offered goods and expressly promised to hold the offer open, satisfying the UCC firm-offer rule without consideration. - Although the five-month assurance is capped at three months of irrevocability, the supplier tried to revoke after only ten days, so the contractor’s acceptance the next day formed a contract. The contractor may enforce the promise because its foreseeable reliance substituted for acceptance of the supplier's offer. - Submitting the project bid was not acceptance of the supplier’s offer, and the contractor did not notify the supplier of the bid. - Reliance may support a separate argument for relief, but the signed merchant firm offer supplies the stronger basis for treating the next day’s acceptance as effective. The supplier revoked effectively because the contractor gave no consideration to keep the offer open for 5 months. - A qualifying merchant firm offer is irrevocable without consideration for up to three months. - The lack of consideration prevents enforcement of the full five-month assurance under that rule, but it did not make the revocation after ten days effective. The supplier could revoke because the assurance exceeded three months, so the firm-offer protection was void from the start. - The three-month cap limits how long the signed assurance makes the offer irrevocable; it does not void that protection from the start. - Because the supplier’s revocation arrived only ten days after the offer, it fell within the protected period.

      • 5. Using only the supplied file and legal resources, prepare a confidential negotiation memorandum for the supervising attorney and client. Evaluate whether BrightLeaf could assign royalty-payment rights or delegate editing and marketing duties to PageTurn Media, whether Ortiz must accept PageTurn's performance, and whether BrightLeaf's communications amount to repudiation. Recommend negotiation objectives, concessions, information requests, and protective terms that preserve the book's launch while addressing Ortiz's financial and performance concerns.

        • 6. Using only the supplied file and legal resources, draft a persuasive settlement letter to counsel for Metro Packaging concerning FreshField Foods' purchase of 10,000 glass jars. State FreshField's supportable damages demand, explain which claimed losses are recoverable or vulnerable, address Metro's arguments about the limitation clause, foreseeability, certainty, and mitigation, and propose a commercially reasonable settlement structure. Do not threaten unsupported remedies or rely on outside law. The client wants prompt reimbursement while preserving the supplier relationship if adequate quality controls are adopted. Include a concise factual introduction, legal analysis, quantified demand, response to counterarguments, and a practical proposal for payment and future performance.

          • 7.

            • 8. On March 1, a machine manufacturer sent a signed email to a retailer offering to sell 20 standard generators for $8,000 each. The email stated, "This offer will remain open through April 15." Both parties regularly deal in generators. The retailer gave no consideration for the promise to keep the offer open. On March 20, the manufacturer emailed, "Market prices have increased, so I withdraw my offer." The retailer received that message immediately. On March 25, the retailer emailed an unconditional acceptance of the March 1 terms. The manufacturer refused to deliver, asserting that the offer had been revoked. The retailer asks whether an enforceable contract was formed. Which of the following is the most appropriate advice?

              • A. A contract was formed because the signed merchant's assurance made the offer irrevocable when the retailer accepted within the stated period.
              • B. No contract was formed because an offeror may revoke any unaccepted offer unless the offeree paid consideration for an option.
              • C. No contract was formed because the retailer did not accept before the manufacturer communicated its attempted revocation.
              • D. A contract was formed only if the retailer can prove foreseeable reliance on the promise that the offer would remain open.
              Show answer

              Answer: A. A contract was formed because the signed merchant's assurance made the offer irrevocable when the retailer accepted within the stated period.

              A contract was formed because the signed merchant's assurance made the offer irrevocable when the retailer accepted within the stated period. - Generators are goods, and the manufacturer’s signed email assuring that the offer would remain open through April 15 was a merchant’s firm offer under UCC Article 2. - The March 20 withdrawal was ineffective during that period, so the retailer’s unconditional March 25 acceptance formed a contract for 20 generators at $8,000 each. No contract was formed because an offeror may revoke any unaccepted offer unless the offeree paid consideration for an option. - Although an ordinary offer generally can be revoked before acceptance, UCC Article 2 makes a qualifying merchant’s firm offer irrevocable without consideration. - The retailer’s failure to pay for an option therefore did not permit withdrawal of the manufacturer’s signed offer before April 15. No contract was formed because the retailer did not accept before the manufacturer communicated its attempted revocation. - The retailer received the withdrawal on March 20 and accepted on March 25, but the signed assurance protected the offer through April 15. - Because the attempted revocation was ineffective, acceptance did not have to precede the March 20 message. A contract was formed only if the retailer can prove foreseeable reliance on the promise that the offer would remain open. - Reliance is not required to enforce a merchant’s firm offer satisfying UCC Article 2’s requirements. - The manufacturer’s signed assurance kept the offer open, and the retailer accepted its terms on March 25 without needing to prove any change of position.

            Flashcards: Offers and the power of acceptance

            1. 1. What standard determines whether a party manifested intent to enter a contract?

              Show answer

              The majority rule applies an objective standard: intent is determined by the party’s outward words and conduct as reasonably understood by the other party, not by undisclosed intent.

            2. 2. How are advertisements and other general solicitations ordinarily treated in contract formation?

              Show answer

              Under the majority rule, they are invitations to make offers rather than offers because they usually lack commitment and definite terms. An advertisement can be an offer if it is clear, definite, explicit, and leaves nothing open for negotiation.

            3. 3. What events terminate the power of acceptance before acceptance occurs?

              Show answer

              Under the majority rule, the power of acceptance ends by rejection or counteroffer, lapse of the stated or reasonable time, revocation communicated to the offeree, or death or incapacity of either party.

            4. 4. In a gift promise scenario where the promisee incurs a detriment in reliance but confers no benefit on the promisor, what is the most likely basis for recovery, and what is the typical scope of the remedy?

              Show answer

              Promissory estoppel, assuming a clear promise and foreseeable, reasonable, detrimental reliance; enforcement must be necessary to avoid injustice. Because the promisee conferred no benefit on the promisor, restitution is generally unavailable. The remedy is flexible and limited as justice requires—often reliance damages, although expectation damages are not categorically barred.

            5. 5. What are the requirements for forbearance to serve as consideration?

              Show answer

              Forbearance can be consideration if the promisee refrains from exercising a legal right, the promisor seeks that forbearance in exchange for the promise, and the underlying claim is valid, doubtful, or honestly and reasonably believed to be well-founded.

            6. 6. Under Restatement (Second) of Contracts §90, what are the five elements required to enforce a promise based on promissory estoppel, and what is the typical remedy?

              Show answer

              The five-part formulation is: 1) a promise; 2) the promisor should reasonably expect the promise to induce action or forbearance by the promisee (or another person); 3) the promise actually induces such action or forbearance; 4) the reliance is reasonable and detrimental; and 5) enforcement is necessary to avoid injustice. Under Restatement (Second) of Contracts §90, the remedy is limited to what justice requires. Reliance damages are commonly awarded, but the remedy is not categorically restricted to reliance damages; expectation or other relief may be appropriate in some cases.

            7. 7. Under Article 2, what is the effect of a definite acceptance that includes an additional term?

              Show answer

              Under UCC § 2-207, a definite and seasonable acceptance forms a contract despite additional or different terms, unless expressly made conditional on assent to those terms. Between merchants, an additional term becomes part of the contract unless the offer limits acceptance to its terms, the term materially alters the bargain, or timely objection is made; otherwise, it is merely a proposal.

            8. 8. List three key terms from Article 2's formation and gap-filling rules.

              Show answer

              Any three of the following are acceptable: merchant; definite and seasonable expression of acceptance; expressly conditional acceptance; additional term; different term; conduct recognizing a contract; output contract; requirements contract; reasonable price; reasonable time; seller’s place of business; single delivery; merchant confirmation.

            9. 9. Under UCC Article 2, what is the effect of a 'no oral modification' (NOM) clause, and how can an attempted oral modification still be relevant?

              Show answer

              Under UCC §2-209(2), a signed agreement that excludes modification or rescission except by a signed writing is effective. However, under §2-209(4), an attempted modification that does not satisfy the writing requirement can still operate as a waiver.

            10. 10. What is the primary difference in consideration requirements for contract modifications under common law versus UCC Article 2?

              Show answer

              Under common law, a modification ordinarily requires new consideration. Under UCC Article 2, an agreement modifying a contract for the sale of goods needs no consideration, but must satisfy good faith.

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