When a party makes an offer, they communicate that they are willing to enter into a bargain. When a party makes an offer (the "offeror"), the intended recipient (the "offeree") has the power to either accept or reject the offer. The offer must be reasonable under the circumstances and the recipient of the offer must understand the terms.
There are many complicated rules, which dictate whether an offer is legally binding on a party, including the length that an offer will stay open before acceptance. However, a party may withdrawal an offer any time before acceptance. The length of the offer depends on many factors, including the subject of the contract.
If the offer does not specify the length time it is to remain open, then it ends after the passage of a reasonable period of time. This reasonable period of time depends on the subject of the potential contract, and its determination varies between different states.
Often, if the contract is contested in court, the "reasonableness" is left up to the discretion of the judge. For example, an offer dealing with perishable goods, like vegetables and fruits, will have a shorter period of time than a contract to the sale of a house or car.
Even if the person making the offer says that he/she will keep the offer open for you for a specific period of time, they can still revoke at any time before acceptance. This is the general rule, but there are exceptions.
The following are some common exceptions to the right to revoke an offer:
- Option contract – A promise made to keep the offer open for a specific period of time for a specified price. If the person making the offer revokes before that time has come, then he/she will be in breach of the option contract and the recipient of the offer may be entitled to damages.
- Unilateral contract – Unilateral contract occurs when a party offers to pay the other party if they complete some act (e.g. wash a car or mow the lawn.) The person making the offer cannot revoke if the other party has already substantially performed or, in some cases, has begun to perform.
- Reliance – Reliance occurs when the recipient of the offer has reasonably relied on the offer remaining open and will suffer injustice if the revocation is allowed. In this case, the court may forbid the withdrawal of the offer.
- Firm offer – This occurs when business owner makes a firm written offer to sell merchandise to a buyer. The business owner normally cannot revoke the offer if he/she has specified a period of time in which to keep the offer open. If no time has been set, a reasonable period of time not longer than 3 months.
Contract negotiations can be complicated and difficult to understand. An attorney can assist you with negotiations so your needs and requirements will be met. Additionally, a lawyer can help you with drafting and reviewing contracts. They will explain your duties under the contract, when it comes to making a valid offer or an acceptance. An experienced contract lawyer will look out for your best interests throughout the entire contract process.