Rejection in Contract Law: Everything You Need to Know
Rejection in contract law occurs when one party rejects the offer made by another party.3 min read
2. What Are Counteroffers?
3. Terminating an Offer
Rejection in contract law occurs when one party rejects the offer made by another party. There are several different ways that rejection can occur, including verbally and through writing.
Basics of Rejection
Offer and acceptance is one of the most important parts of contract law. Rejection occurs when one party decides not to accept the offer that was made. Rejection can also mean that one party refused goods offered to them as a part of contractual performance.
If the goods offered in a contract do not conform to their contractual description, the buyer has the right to reject those goods. If the buyer wants to reject the goods, however, they should make their rejection within a reasonable amount of time after delivery. The buyer must also alert the seller that they are rejecting the goods. The Uniform Commercial Code outlines these requirements for rejection.
Rejection can mean different things depending on the law. For instance, in terms of Parliamentary law, rejection indicates a failure to ratify or adopt. In patent law, rejection means that a patent examiner decided that an invention cannot be patented. A rejection does not take effect until the offeror receives notification of the rejection. This is much different than acceptance, which occurs upon the sending of the notification of acceptance.
Because rejections take effect once received and acceptance takes effect once sent, it is possible to cancel a rejection by providing acceptance. For instance, if you reject an offer by mail and then later change your mind, you could accept the offer by phone call, and the acceptance would take priority if it occurs before the other party receives the rejection letter.
What Are Counteroffers?
If you respond to an offer by sending an offer of your own, this is known as a counteroffer. Sending offers and counteroffers are a normal part of contract negotiation.
When you send a counteroffer, it is same as rejecting the initial offer. Once the counteroffer is sent, the other party can respond in several ways:
- Accept the new offer
- Send their own counteroffer
- Reject the new offer
Imagine, for instance, that you make an offer to sell your home to another person for $150,000, and this amount is due within 60 days. The potential buyer responds by offering to pay you $130,000 in 30 days. The buyer rejected your offer and sent you a counteroffer. You can now either accept the counteroffer, provide your own counter, reject the counteroffer, or let the offer expire without responding. Essentially, letting an offer expire is the same thing as rejection.
Terminating an Offer
One of the most interesting facts about contract law is that offerors and offerees both have the right to terminate an offer. The offeree is the person who received the offer, and they can terminate an offer either by letting it expire or by rejecting the offer outright. Let's examine each option so that you can better understand how offer termination occurs.
If an offeree wishes to terminate an offer, they can easily do so just by letting the offer expire. Almost every offer has an acceptance deadline, and if the offeree does not provide acceptance during this timeframe, the offer terminates. If the offer does not include a strict deadline for acceptance, it will expire after a reasonable amount of time.
Rejection is another way that an offeree can terminate an offer. Once the offeror receives the notice of rejection, termination of the offeree will take effect.
There are two ways to reject an offer. First, the offeree can provide an express rejection. This can via mailing a letter, making a phone call, or sending an email. All that matters is that the offeror receives notification of the rejection. Second, an offeree can reject an offer by making a counteroffer.
Counteroffers mean that you are rejecting the original offer and then making a new offer. Essentially, making a counteroffer results in a role reversal, with the original offeror now becoming the offeree. It is common for counteroffers to be made during real estate transactions.
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