Contract Law Made Simple

• Invitation to negotiate - Communication inviting offers rather than making a binding offer.

• Mailbox rule - Acceptance is generally effective when properly dispatched, unless the offer requires receipt.

Active Recall

• Offer

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• Acceptance

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• Mutual assent

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• Revocation

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• Counteroffer

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• Invitation to negotiate

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• Mailbox rule

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Worked Examples

1. Definite offer

• Seller emails: “I will sell you my laptop for $800. You may accept by Friday.”

• The price, subject matter, and deadline are stated.

• A reasonable person would understand that acceptance creates a contract.

• This is an offer.

Now you try: A seller says, “I might sell my laptop for around $800.” Is this an offer?

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2. Counteroffer

• Owner offers to sell land for $100,000.

• Buyer replies, “I will pay $90,000.”

• Buyer changed a material term: price.

• The response is a counteroffer, not acceptance. The original offer is rejected under the mirror-image rule.

Now you try: Owner offers land for $100,000. Buyer replies, “I accept, provided you include the furniture.”

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3. Revocation and acceptance

• Seller offers to sell a car and gives Buyer until Friday to accept.

• Before Friday, Seller sells the car to another person and Buyer learns of the sale from a reliable source.

• The offer has been revoked before acceptance.

• Buyer’s later attempted acceptance is ineffective, unless the offer was irrevocable.

Now you try: Seller privately decides to withdraw the offer but does not communicate this before Buyer accepts.

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Practice Questions

• (Easy) Define mutual assent and state the objective test.

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• (Easy) Is a normal store display an offer or an invitation to negotiate? Explain.

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• (Medium) A offers to sell a watch for $500. B replies, “I accept if you pay shipping.” Analyze.

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• (Medium) A mails an offer requiring acceptance by mail. B properly mails acceptance. When is acceptance effective?

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• (Hard) A offers to sell property and states, “Acceptance must be received by Monday.” B mails acceptance on Sunday, but A receives it Tuesday. Is there a contract?

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Answer Key

• Mutual assent is objective agreement shown through a valid offer and acceptance; courts examine reasonable meaning.

• Usually an invitation to negotiate, because the seller expects customers to make offers at the register.

• The added shipping term creates a counteroffer, not mirror-image acceptance.

• Acceptance is generally effective when dispatched under the mailbox rule.

• No. The offer expressly requires receipt by Monday, so the mailbox rule does not apply.

Exam Tips & Common Mistakes

• Mistake: Treating every promise or advertisement as an offer. Avoid it: Check definiteness, commitment, and whether further bargaining is expected.

• Mistake: Ignoring changed terms. Avoid it: Compare the offer and response term by term.

• Mistake: Using subjective intent. Avoid it: Apply the reasonable-person, objective test.

• Mistake: Assuming silence equals acceptance. Avoid it: Look for conduct, prior dealings, or an agreed exception.

• Examiner tip: Write the sequence: offer → attempted acceptance → communication rule → mutual assent.

• Examiner tip: State the rule, apply specific facts, and conclude clearly. Mention the mailbox rule only after checking the offer’s wording.

Quick Reference

Key rules

• Contract formation: valid offer + valid acceptance = mutual assent.

• Acceptance must be clear, timely, communicated, and generally identical to the offer.

• Counteroffer changes or rejects the original offer

; it does not accept it.

• Silence is usually not acceptance, but conduct may show acceptance.

• The mailbox rule usually makes acceptance effective on dispatch, unless the offer requires receipt or an option contract applies.

Mnemonic: O-A-C

• O - Offer: Was there a definite commitment?

• A - Acceptance: Did the response objectively agree to the offer?

• C - Communication: Was acceptance communicated in the required manner and time?

Absolute essentials

• Courts use objective words and conduct, not hidden intentions.

• An invitation to negotiate is not an offer.

• A counteroffer normally terminates the original offer.

• Acceptance must follow the offer’s stated method and deadline.

• Mutual assent fails if the parties never objectively agreed to the same bargain.

Confidence Check

• I can distinguish an offer from an invitation to negotiate. [ ] 1 [ ] 2 [ ] 3 [ ] 4 [ ] 5

• I can apply the objective test to words and conduct. [ ] 1 [ ] 2 [ ] 3 [ ] 4 [ ] 5

• I can identify a counteroffer and explain its effect. [ ] 1 [ ] 2 [ ] 3 [ ] 4 [ ] 5

• I can apply the mailbox rule and its exceptions. [ ] 1 [ ] 2 [ ] 3 [ ] 4 [ ] 5

• I can write an exam conclusion explaining whether mutual assent exists. [ ] 1 [ ] 2 [ ] 3 [ ] 4 [ ] 5

Exam Practice

• Offer = definite commitment; acceptance = objective agreement; mutual assent = agreement shown by both.

• Use the O-A-C sequence: Offer, Acceptance, Communication.

• Always compare the response with the exact terms of the offer.

Exam Tips

• Identify the offeror, offeree, offer terms, response, and communication method.

• Apply the objective test before discussing subjective intent.

• Treat a stated receipt deadline as an exception to the mailbox rule.

Remember

• A price quote is not automatically an offer.

• “I accept, but…” usually signals a counteroffer.

• Acceptance and rejection are judged by outward words and conduct.

End of chapter one. 11 more chapters in the full book.