Agreement

For there to be agreement of contractual terms there must be an offer and acceptance of that offer.

Offer

What is an offer?

An offer is a definite and unequivocal statement of willingness to be bound on specified terms without further negotiations.

An offer can be in any form - oral, written or by conduct. However, it is not effective until it has been communicated to the offeree. For example, if a reward is offered for the return of a lost item, it cannot be claimed by someone who did not know of the reward before they returned the item.

An offer can be made to a particular person, to a class of persons or even to the whole world.

What is not an offer?

(1)An invitation to treat is not an offer.

An invitation to treat means an invitation to the other party to make an offer; e.g. 'we may be prepared to sell." An invitation to treat cannot be accepted to form a valid contract.

Examples of invitations to treat:

• Most advertisements
• Shop window displays
• Goods on shop shelves
• A person/company inviting a tender.

(2)  A mere statement of selling price in response to a request for information is not an offer.

(3)  A mere statement of intention to sell is not an offer.

Termination of an offer

Once an offer has been terminated, it cannot be accepted. An offer can be terminated by:

• revocation (i.e. withdrawal of the offer)
• rejection (i.e. by the party being offered the goods/services. This includes issuing a counter-offer)
• lapse (i.e. on death of the offeror or after a fixed time period).

Acceptance

Acceptance is the unqualified and unconditional assent to all the terms of the offer. t can be oral, written or by conduct.

Communication

As a general rule acceptance is not effective until it is communicated to the offeror.

The postal rule

The postal rule is an exception to the rule that acceptance must be communicated. The postal rule states that acceptance is complete as soon as letter accepting an offer is posted.

The postal rule only applies if:

• the letter is properly stamped, addressed and posted, and
• post is a reasonable method of communication.

It applies even if the letter is never received by the offeror.

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Tags:	offer;invitation to treat;acceptance;the postal rule