Offer and acceptance is the classical mechanism for identifying the moment a contract comes into existence. An offer is a clear expression of willingness to be bound on specified terms, communicated to an identifiable offeree. Acceptance is the offeree's unqualified agreement to those exact terms, communicated back to the offeror. Together with consideration (in common law systems) and an intention to create legal relations, they form the core elements of contract formation.
Several refinements have developed through case law and codification:
- Invitations to treat — shop displays, advertisements, and auction listings are generally not offers but invitations for others to make offers. The English case Pharmaceutical Society of Great Britain v Boots (1953) established this for self-service retail.
- The mirror-image rule — at common law, acceptance must match the offer exactly; a purported acceptance that varies the terms is a counter-offer that kills the original offer (Hyde v Wrench, 1840).
- The postal rule — acceptance by post is effective on dispatch, not receipt (Adams v Lindsell, 1818), though instantaneous communications generally take effect on receipt.
- Revocation — an offer may usually be revoked any time before acceptance, provided the revocation is communicated.
Civil law systems treat the concept similarly but with variations. The United Nations Convention on Contracts for the International Sale of Goods (CISG), in force since 1988, codifies offer and acceptance in Articles 14–24, including a modified mirror-image rule that tolerates immaterial alterations. The UNIDROIT Principles of International Commercial Contracts adopt a comparable framework.
For international relations researchers, the doctrine is analogically useful: treaty formation under the Vienna Convention on the Law of Treaties (1969) mirrors offer-and-acceptance logic through the stages of negotiation, adoption, signature, and ratification, though states are bound by consent expressed in forms specified in Articles 11–17 rather than by private-law contract rules.
Example
In 2014, Microsoft's tender to acquire Nokia's mobile phone business was completed only after Nokia's board accepted the revised offer terms, satisfying the offer-and-acceptance requirement under applicable contract law.
Frequently asked questions
Generally no. Most advertisements are treated as invitations to treat, inviting customers to make offers the seller can then accept or reject. Narrow exceptions exist for unilateral promises, as in Carlill v Carbolic Smoke Ball Co (1893).
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