Elements of Offer and Acceptance

•  An agreement represents the first and most important aspect of contract formation. Agreement is reached through offer and acceptance.

•  To be a genuine offer (legally effective), the offer must be seriously intended, be definite (clearly stated), and be communicated to the offeree.

•  The seven methods of terminating an offer are (1) lapse, (2) rejection, (3) counteroffer, (4) revocation, (5) death or insanity, (6) illegality, and (7) impossibility.

•  Acceptance involves the offeree’s assent to all the terms of the offer. (Only the offeree can accept the offer.) Under common law rules, the acceptance must be a “mirror image” of the offer—that is, it must match term by term what was requested in the offer.

•  In bilateral contracts, communication of the acceptance is usually necessary, but this is not true for unilateral contracts. In unilateral contracts, the offeree accepts simply by completing the act requested in the offer, although as a practical matter, the offerer must actually know about the completed act.

•  Although neither a rejection nor a revocation is effective until it is communicated to (received by) the other party either directly or indirectly, an acceptance to an offer may be effective when properly sent if an offeree uses a means of communication requested by the offerer or uses any reasonable means when none is specified. If an unauthorized means is used, acceptance is not effective until the offerer actually receives the communication.

•  As a general rule, the offeree’s silence is not regarded as acceptance.