I am currently negotiating a contract for supply of services between my business and another business. I have looked into the principles of contract law and have seen that the principle of offer and acceptance are important legal principles. Can you please explain them to me and how they work.
I want to make sure that the business contract that I create is water tight and meets the principles of offer and acceptance, so that I will definitely have a valid contract in place, just to cover my back in case anything goes haywire in the future. Can you explain what is the meaning of offer and acceptance in contract law in the simplest terms possible?
The Answer from Solicitors Online
What is the meaning of offer and acceptance in contract law?
Offer and acceptance are legal concepts that must be present for a contract in business to be legally valid.
What is an offer in contract law?
An offer in contract law is defined as a “statement of an intention to be bound on terms which are certain, made by one party to another, which upon acceptance by that other party, form a binding contract.
The offer must have been made to a particular person, or to a group of persons or to the world at large.
An offer should be distinguished from an invitation to treat. An invitation to treat occurs when one party invites another to make an offer. In this case the parties have not gone beyond the negotiation stage. The display of goods in a shop window is an invitation to treat and not an offer.
If a person makes an offer for a car at a car auction, then this will be regarded as an offer sufficient to form a binding contract, if the auctioneer accepts the offer
On the other hand if an auctioneer advertises cars that are going to be auctioned at a specified time and place, this will not count as an offer, but an invitation to consider offers for the cars.
What is acceptance in contract law?
An acceptance by one party of an offer must be clearly identifiable in the words used to accept the offer or the documentation used.
A conditional acceptance of an offer is not a valid acceptance under contract law.
A fundamental rule of acceptance of an offer is that the acceptance must be communicated to the person who gave the offer; the intention to accept an offer is not enough.
If a person makes an offer to buy a car, and the seller does not respond to state that they accept the offer, then no contract has been created between the buyer and seller under contract law.
However it is possible to have communication of the acceptance waived, in such a situation, acceptance will take place by the buyer displaying some sort of conduct.
If the person who has made the offer has stated there needs to be a particular method used in communicating acceptance, then a valid contract will not exist until that method has been used for acceptance.
In the case that this method is by post, case that this method is by post, the contract will be made as soon as the acceptance has been posted. Even if the letter is delayed, lost or destroyed so that it never reaches the person who made the offer. There will still be sufficient acceptance for a contract to be created.
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