Contract Law: What is an Offer?
Offer Defined
As found in Restatement of Contracts 2d § 24, “An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.”
The offer must be clear, definite, and explicit, leaving nothing open for negotiation, the acceptance of which will complete the contract. Lefkowitz v. Great Minneapolis Surplus Store, 86 N.W.2d 969 (1957).
Generally, an offer must clearly, definitely, and explicitly state the quantity, quality, price, and time to perform. However, situations can exist where the quality, price, and time can be omitted in place of the reasonable person standard. The quantity must always be explicitly stated.
§2-201 of the UCC – Formal Requirements; Statutes of Frauds
“1) Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing.
The only term which must appear in writing is the quantity term which need not be accurately stated but recovery is limited to the amount stated. The price, time and place of payment of delivery, the general quality of the goods, or any particular warranties may all be omitted…. [O]nly three definite and invariable requirements as to the memorandum are made by this subsection. First, it must evidence a contract for the sale of goods; second, it must be “signed”, a word which includes any authentication which identifies the party to be charged; and third, it must specify a quantity.” UCC 2-201
Courts have held that an offer doesn’t exist in the following situations:
- Opinions about future results
- Invitations to submit a bid
- Price estimates
- Advertisements, Catalogs and Mass Mailings (form letters)
- Auctions with a reserve
*Note on advertisements*
“Whether in any individual instance a newspaper advertisement is an offer rather than an invitation to make an offer depends on the legal intention of the parties and the surrounding circumstances. There are numerous authorities which hold that a particular advertisement in a newspaper or circular letter relating to a sale of articles may be construed by the court as constituting an offer, acceptance of which would complete the contract… The test of whether a binding obligation may originate in advertisements addressed to the general public is ‘whether the facts show that some performance was promised in positive terms in return for something requested.’” Lefkowitz v. Great Minneapolis Surplus Store, 86 N.W.2d 969 (1957).
A common example of a valid newspaper advertisement where “some performance was promised in positive terms in return for something requested” is a reward ad (lost and found, etc…).
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