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How to Accept an Offer to Create a Valid Contract
To create a valid contract, there must be an offer, an acceptance of the offer, and some form of consideration that will be exchanged between the parties. An offer is a promise to perform a specified act. To accept the offer, one must manifest assent to be bound by the terms of the offer.
What Are the Alternatives to Acceptance of an Offer?
Sometimes one party makes a valid offer to enter into a contract, but it is not accepted right away. Different rules apply depending on whether:
- The original party revokes the original offer
- The second party rejects the original offer
- The second party makes a counter-offer
- The offer expires.
When Can the Offer be Revoked?
In general, an offer can be revoked any time up until it is accepted by the other party. The exception to this is with option contracts.
What Is an Option Contract?
An option contract creates an exception to the rule that offers are revocable any time until they are accepted. In an option contract, the party promises to keep an offer open for a certain amount of time. For the stated amount of time, the party cannot revoke the offer, modify it, or make it to someone else.
How Do I Create an Option Contract?
In order to keep the offer open, you need two things:
- First, the party making the offer has to make a promise to keep the offer open for a set amount of time.
- Second, there must be valid consideration on that promise. For example, if someone offers to sell you their car, you want to think about it overnight, and you don't want him to sell it to someone else before then, you might pay a deposit to keep the offer open. That is valid consideration, and the car owner must keep the offer open overnight.
What Happens if the Offer is Rejected?
Once the offer is rejected, contract negotiations are ended and the original offer is no longer available. In other words, the rejecting party can't go back later and attempt to accept the original offer. Either party is free to make a new offer and re-open negotiation.
What Happens if the Second Party Makes a Counter-Offer?
A counter-offer does not amount to an acceptance. In general, it will be treated as a rejection. The counter-offer differs from a rejection, however, in that it can be accepted by the person who made the original offer. In a sense, therefore, a counter-offer reverses the roles of the party making an offer and the party accepting it.
Does an Offer ever Expire?
When a person makes an offer, he or she can specify a time when that offer will expire. Where there is no specified deadline, the offer does not simply remain on the table forever, however. It will expire after a reasonable time, which will depend on the subject-matter of the contract.
Do I Need a Lawyer?
The rules of contracts often vary from state to state. If you have questions about whether there has been valid offer and acceptance to a contract, an attorney familiar with contract law can help.
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Last Modified: 01-20-2014 03:49 PM PST
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