In contract law, an offer is defined as a promise that is made from one party to another. It is often the first step in forming a contract and demonstrates the offeror’s willingness to enter into a bargain with the offeree. After the offer is made, the power then shifts to the offeree to decide whether to reject or accept the initial offer. 

All offers must be viewed as reasonable when compared to the surrounding circumstances. Also, the offeree must understand the terms of the offer before they accept or else the offer will be invalid. The offer will transform into a binding agreement on the parties, so long as the offeree was made aware that accepting the offer would create such an arrangement.

Additionally, there are many complex rules and procedures to follow when making an offer that will aid in resolving legal issues like whether an offer is legally enforceable and/or if a party rescinded their offer before the offeree accepted it. 

Finally, there are multiple types of offers found in contract law. Each kind can be distinguished by its unique set of features. For instance, a conditional offer is an offer that requires a certain condition to be met before the offer is considered as accepted. A common example of a conditional offer is when an employer promises to hire a prospective employee, but only if they can pass a mandatory drug test. 

How Long Does an Offer Last?

When an offer does not specify how long it will remain open for, then the general rule of thumb is that it will terminate after a reasonable amount of time. How long a reasonable period of time is will depend on: 

  • The type of offer it is; 
  • The subject of the potential future contract; and 
  • The laws of the state in which the offer occurs.

In the event that there is a dispute over the offer, it will be left up to the court to decide how long would still be considered a reasonable length of time based on the terms of the offer. For example, an offer for perishable goods (e.g., goods that expire like fruits and vegetables) will have a shorter time frame than an offer for a more durable object, such as a house or car.

Revoking the Offer before the Agreed Time Expires

In general, an offeror can revoke an offer at any time before the offeree accepts it. This principle will even apply in cases where an offeror claims that they will keep the offer open for the offeree for a set period of time. However, there are some exceptions to this rule. 

The following is a list of some common exceptions to the rule that an offeror can revoke an offer prior to acceptance. For instance, an offeror cannot rescind their offer if any of these situations arise:

  • Option contracts: An option contract is formed when an offeror promises to leave an offer open for a certain amount of time, the offer contains a specific price term, and the offeree has provided at least nominal consideration to keep it open. In such a scenario, an offeror will be in breach of the option contract if they revoke the offer before the agreed upon time expires. In which case, the offeree can sue the offeror for damages.
  • Reliance: A court may bar an offeror from rescinding their offer if it can be shown that an offeree reasonably relied on the offer and would suffer harm if the court allows the offeror to revoke it. 
  • Bilateral Offers: The majority of offers involve bilateral agreements. Thus, one should assume that unless there is something indicating that it is a unilateral contract, that the offer is most likely a bilateral one. The main difference between bilateral offers and unilateral offers are that bilateral offers are open to the method of acceptance (e.g., can either be accepted by substantial performance or consideration). 
    • There are also more ways to revoke a bilateral offer than there are to revoke a unilateral contract. This is especially true if an offeree has already accepted a unilateral offer through performance.
  • Unilateral offers: A unilateral offer refers to a contract in which one party promises to pay the other party for performing a specific act. For example, if an offeror says they will pay the offeree $50 to mow their lawn and the offeree does it, then the offeror will be required to pay the offeree $50 for completing the act. 
    • In most instances, a unilateral offer cannot be revoked if the offeree has already started to perform the act (e.g., in this case mowing the law) or if the offeree has completed a substantial portion of the requested act. Three ways in which an offeree can determine whether an offer is unilateral or not are by:
      • Seeing if the offer explicitly requires a performance to constitute an acceptance;
      • Accepting the offer in exchange for a reward, prize, or contest (e.g., reward for finding lost dog); and
      • Checking if the offer contains the phrase, “Offer…only by.”  
  • Merchant firm offer rule: In contract law, a merchant is defined as a person who deals in tangible goods (e.g., a business owner). If the offeror is a merchant who offers to sell or purchase goods and signs a written agreement promising to keep the offer open for the offeree, then the offeror may not revoke their offer. 
    • Also, if the merchant does not specify a time limit for when the offer will expire, the merchant firm offer rule states that the offer must remain open for a reasonable period of three months.

In addition, some important points to bear in mind when dealing with offer revocation issues are that:

  • The offeree must receive notice of the revocation from a reliable source; 
  • Only the offeror has the power to revoke an offer. While the offeree may still reject the offer, they cannot actually revoke it unless they have made a counteroffer during the parties’ interaction; and
  • Lastly, make sure that an offer is an actual offer and not a solicitation (e.g., vague advertisements). 

Should I Consult an Attorney?

Whether an offer creates a binding agreement is one of the most difficult concepts to understand in contract law. Not only are there many requirements to meet in order to form a valid offer and acceptance, but these rules will be subject to change depending on where the case is based. Therefore, if you are experiencing issues with an offer or contract agreement, then it may be in your best interest to consult a local contract lawyer for further guidance.

An experienced contract lawyer will know the laws in your state as well as the necessary elements to form a legally enforceable agreement. After an offer is made, your lawyer can also assist you in drafting a contract, so that the offer is in writing and can serve as a strong protective measure in the event of a future lawsuit.

In addition, your lawyer can explain your legal rights and obligations under the contract, and can ensure that those rights are protected.

Finally, if you fail to resolve a dispute over an offer, your lawyer will also be able to guide you through the mediation process, or alternatively, can provide representation in court on the matter.