Contract Law Made Simple

Key ConceptsThis chapter covers how courts identify an offer, acceptance, and mutual assent. On an exam, you must show the sequence clearly and distinguish a true offer from negotiations or preliminary communication.

Offer: A definite promise to be bound on stated terms if accepted.

Objective test: Courts ask what a reasonable person would understand from the words and conduct, not what a party secretly intended.

Acceptance: Clear, final, and communicated agreement to the offer’s terms.

Mirror-image rule: Acceptance must match the offer; a new or changed term is usually a counteroffer.

Mutual assent: Offer plus valid acceptance, judged objectively.

Advertisements, price lists, and displays are usually invitations to negotiate, unless unusually definite and limited.

Silence is generally not acceptance, although prior dealings or conduct may create an exception.

An offer may end by revocation, rejection, counteroffer, lapse of time, death, or failure of a stated condition.

Before you continue: Can you explain why a counteroffer usually rejects the original offer?

Key TermsOffer - A definite manifestation of willingness to contract, inviting acceptance.

Acceptance - A manifestation of assent to the offer’s terms.

Mutual assent - Objective agreement shown by offer and acceptance.

Revocation - Withdrawal of an offer before acceptance.

Counteroffer - A response that changes the offer’s terms and proposes a new bargain.

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 RecallOffer

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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 Examples1. Definite offerSeller 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. CounterofferOwner 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 acceptanceSeller 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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