The Certain Offer
Episode #4 of the course Contract basics: Let’s make a deal! by James Wong
Welcome back!
Yesterday, we took a big-picture look at contracts. Today, we’re going to get granular by looking at the first of the four required elements: the offer.
What Certain Offers Look Like
Every offer starts with a promise—for example: “I’ll trade you this chicken for those pots.” For an offer to be enforceable (that is, accepted by the court), an offer has to:
1. Be intentional: The offeror has to mean it. Courts usually ask if a “reasonable person” hearing the offer would consider it serious.
2. Contain a demand and a promise, e.g., “Do THIS for me and I’ll pay you THAT.”
3. Have definite and specific terms. For example, “I’ll think about paying you something if you clean my house,” is NOT an offer because, “I’ll think about …” is vague and “… something …” is not specific.
The offeror is making a promise. The person hearing the offer (called the “offeree”) has to have clear expectations of what rights they will receive if they accept.
Advertising
The law makes a special case for advertising. If you get a text from TicketMonster for John Legend tickets, four for $150, you might think of that as an explicit unilateral offer. But of course, you click on the site and the cheapest tickets are $150 each. Can you sue TicketMonster to enforce the “four for $150” price?
Sadly, no. The text is called an “invitation to bid” and is not an offer. Technically, when you click on the link waving your virtual $150, YOU are actually making the offer. The website is the offeree and can choose to not accept your money.
So, how can you tell if it’s an offer or if it’s an “invitation to bid”? Here, courts assume that common sense applies. All advertising broadcast to the world—newspapers, radio, TV, internet—are meant to show a product, not fix the terms of a deal. Offers are more directed, like say, from Perry to Lisa. Or else, they are for a singular item: “Find my cat Mittens …”
Things get edgy when there is an advertisement for a single item: e.g., “Abraham Lincoln’s hat: $500.” That’s why “single item for sale” websites like eBay have added features like “Buy It Now” to let consumers know that they can choose to accept the offered item at a given price and not have to worry whether that was just an invitation to bid.
How Long Does an Offer Last?
Offers can expire because of:
Revocation: This is also known as withdrawing the offer. Hey, nobody likes to be left hanging, but the revocation has to be open and public. In some cases, the revocation has to be “louder” (meaning broadcast more publicly) than the offer.
Rejection: This is where the hearing party doesn’t want it, e.g., “No way will I pay $100 for a Skittle.”
Counter-offer: After saying no, make a new offer to the offeror, e.g., “Instead of $100 for the Skittle, how about a penny?”
Lapse of time: Courts will usually say that an offer has expired if a “reasonable amount of time” has gone by. This is going to vary according to the offer and situation. But sometimes, even 100 years is not enough. In 2015, a German couple returned a postcard found inside a bottle that was dropped into the sea from the UK in 1904. The instructions promised the senders one shilling. Of course, shillings are no longer used in the UK. But the Marine Biological Association of the UK acquired an old shilling and dutifully sent it to Germany as promised.
Offeror’s incapacity: Sometimes, the offeror gets hurt, dies, or maybe goes broke and can no longer deliver on the promise. Usually, courts revoke offers in this situation because the offeror cannot (or could not) do it. If the offeree has accepted by performing, they would otherwise have rights. But if the offer is revoked, they could be out of luck. We’ll cover the final two situations—impossibility and illegality—in future lectures on consideration and enforcement.
So, offers need to be definite, specific, not advertising, and not expired.
Tomorrow, we’ll discuss how offers are accepted.
See you then.
James
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