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OFFER
[1] "Offer" Defined
An offer is a manifestation of an intent to be contractually bound upon acceptance by another party. An offer creates in the offeree the power to form a contract by an appropriate acceptance. [Restatement § 24]
[2] Communications that do not constitute offers
The following types of communications, which do not manifest an intent to be contractually bound, do not constitute offers:
1) opinions about future results, including professional opinions
2) statements of intention (including letters of intent which merely memorialize negotiations)
3) invitations to submit a bid
4) price estimates – However, where the estimate is deemed to be a factual misrepresentation because it was made by an expert, estoppel may be invoked if the offeree relied to his detriment on the estimate.
5) advertisements, catalogs and mass mailings – Courts have ruled that it is unreasonable for one to believe that the merchant intends to be bound with all whom receive or read such literature unless the power of acceptance is clearly limited to the first person(s) that fulfills the act for which the incentive is offered.
6) auctions with reserve – An auction is "with reserve" unless announced to the contrary. In an auction with reserve, the auctioneer solicits offers in the form of bids. However, if the auction is announced to be "without reserve," the auctioneer's request for bids or his statement that an item will go to the highest bidder will be deemed an offer.
§ 3.02 When is the Offer Effective?
[1] Receipt of offer
An offer is not valid until received by the offeree or his agent. [Restatement § 68]
[2] Duration of offer
If the offer has a stated time within which the acceptance must be made, any attempted acceptance after the expiration of that time will fail and will merely constitute a counter-offer by the offeree. If no specific time is stated within which the offeree must accept, it is assumed that the offeror intended to keep the offer open for a reasonable period of time, to be determined based on the nature of the proposed contract, trade usage, prior dealings and other circumstances of which the offeree knows or should know.
Generally, the time for accepting an offer begins to run from the time it is received by the offeree. If there was a delay in delivery of the offer of which the offeree is aware, the usual inference is that the time runs from the date on which the offeree would have received the offer under ordinary circumstances.
Generally, courts hold that in telephonic or face-to-face communications in which an offer is made, the offer lapses when the conversation terminates in the absence of a clear indication that the offer remains open beyond the conversation.
With limited exceptions (see [2] below), an offer is generally revocable at any time prior to acceptance.
[1] Communication of revocation
An offer may be revoked by any words that communicate to the offeree that the offeror no longer intends to be bound. An offer is also revoked by action that is inconsistent with the intent to be bound once the offeree learns of such inconsistent action.
[2] Offers that may not be revoked
An offer is irrevocable where:
1) there is an option contract in which the offeree gave consideration for an irrevocable offer for some period of time;
2) the offeree relied to his detriment upon an implied or express promise by the offeror not to revoke if such detrimental reliance was foreseeable by the offeror;
3) the offeree relied to his detriment upon the offer itself if the such detrimental reliance was reasonably foreseeable by the offeror [Restatement § 87(2)]
4) in the case of a unilateral contract, the offeree began performance of the promised act to any extent [Restatement § 45] – Upon commencement of performance, the offeror must give the offeree the amount of time specified in the offer (or, in the absence of a specified time, a reasonable time) in which to complete the bargained-for promise. However, the offeree's mere preparation to perform does not preclude the offeror from revoking.
5) in goods contracts, a merchant indicates in a signed writing that an offer to buy or sell goods will be held open for the stated time or a reasonable time if no time is specified, not to exceed three months, if no consideration if given [UCC § 2-205]
[3] Effective time of revocation
A revocation is effective upon receipt by the offeree. However, a few jurisdictions (e.g., California, Montana, South Dakota, North Dakota) provide by statute that revocations are to be treated similar to acceptances; thus, courts might interpret these statutes to make a revocation of an offer effective when sent by the offeror.
§ 3.04 Termination of the Offer
An offeree's power to accept an offer is terminated by:
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