1. What Is an Offer?
2. Acceptance, Rejection, and Termination of an Offer
3. Essentials of a Valid Offer

“What is an offer in law of contract?” is something you need to know if you are planning to enter into a contract. An offer refers to a promise that one party makes in exchange for another party's performance. In other words, it is an invitation to enter into a contract on certain terms. It can be expressed in many different ways, from a short and simple oral statement to a long and detailed written statement. However, you have to make sure that your offer is clearly communicated and reasonable in order to convince the other party that you are actually making an offer.

What Is an Offer?

In order to create a valid contract, one party must make an offer, another party must accept the offer, and consideration must be exchanged. The one who makes the offer is known as the “offerer,” while the person who receives the offer is called the “offeree.” Although you can make an offer with just a single-sentence verbal statement, you and the other party will generally benefit from a detailed written description of the offer and its terms.

An offer refers to a promise that is dependent on a certain act, promise, or forbearance given in exchange for the initial promise. It is a demonstration of your willingness to enter into an agreement and an invitation to the other party to conclude the agreement by expressing assent.

Determining whether a party has actually made an offer is a common challenge in a contract case. As a rule of thumb, the offer must be definite and reasonable enough for the receiving party to believe that it is indeed an offer. If your offer includes terms such as quantity, price, quality, and place and time of delivery, the court may find that you have indeed made an offer.

A simple price quote is generally not regarded as an offer. While an advertisement may be considered an invitation to an offer, it is not an actual offer. However, if an advertisement promises to give out an award, it may constitute an offer. A verbal offer is not enforceable against the offerer for contracts involving real estate, the sale of goods worth $500 or more, or transactions that require more than a year to complete. Such contracts must be written in order to be enforceable.

Acceptance, Rejection, and Termination of an Offer

If the one receiving the offer decides to accept it and make a partial payment, the offerer may be bound to the terms and conditions of the offer. Once the offerer takes the payment, an agreement is struck. He or she will then be legally obligated to perform his or her part of the contract. If the offerer fails to fulfill his or her contractual duties, the offeree is entitled to take legal action.

If the offer is rejected, it is regarded as terminated. If changes are made to the terms of the offer, the initial offer will be terminated and replaced with a new offer. The new offer is referred to as a counteroffer. If it is indicated that an offer will end within a certain timeframe, the receiving party cannot accept it after the expiration date. An offer may be automatically terminated after a reasonable amount of time.

Essentials of a Valid Offer

There are two types of offer: general offer and specific offer. A general offer is made to a group of people, while a specific offer is specifically made to one person. In order for an offer to be considered valid, it must meet the following requirements:

  • Must be communicated
  • Must be made with the purpose of obtaining the assent of the other party
  • Must be capable of establishing legal relation, meaning that consideration must be a two-way process
  • Must contain language that is certain and no element of uncertainty

In addition, an offer may be express or implied. An express offer is made in the presence of conversation, while an implied offer is communicated in the absence of conversation. In a situation where the offerer says that silence means consent, the offer is considered invalid. Acceptance of an offer must be communicated.

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