For contracts to exist there are four major elements which must be satisfied.
1. There must be an offer
2. There must be an acceptance of an offer
3. There must be valuable consideration passing between the parties of the contract
4. There must be an intention between the parties to create a legally binding agreement which will be backed up and enforced by the courts of the land.
This article will be looking at the first element of the creation of a contract, the offer, what it is and how this affects the contract and then look at what a counter offer is and how this affects an offer.
The definition of an offer is fairly straightforward:
"I will sell you my car for $4,000"
"I will be your personal assistant for 6 months for $20,000"
"I will build you an airport terminal with car parking for 5,000 cars for $350 million"
are all examples of valid offers.
Once an offer has been made it is capable of being accepted. If A makes an offer to B then provided that there was an intention to creating relations and valuable consideration has passed then if B accepts that offer then there is a legally binding contract created.
What is the timeframe under which we B can accept A's offer. In the absence of the parties stating a timeframe (e.g. would you like to buy my car, you have two days to decide) then a reasonable timeframe for acceptance will be inferred by the courts. What is a reasonable timeframe depends on the circumstances. Clearly if A makes an offer to B to sell a painting for $1000 and B says he needs time to think about it and then comes back 11 months later saying I would like to accept your offer and buy your painting as offered for $1000 then if A says no then B cannot sue him for breach of contract because A can rightly say that his offer was withdrawn over the passage of time.
It is important to note that once an offer has been made it is capable of being withdrawn by the person making the offer at any time prior to its acceptance provided that it was not promised to keep the offer open for a set period of time.