Contracts-Offer and Acceptance
The way that an agreement comes about is generally through an offer being made by one party and then that offer being accepted by the other party.
Example: If Joe were to send you a letter offering to paint your house for one hundred dollars with such work to be accomplished by a certain date and you then wrote on the bottom of the letter that these terms were agreeable and sent that back to Joe, that letter would constitute a written contract. The offer was in the form of the letter. The acceptance came in the form of your acknowledging the agreement. The consideration for the agreement is the one hundred dollars to be paid for the services rendered.
The offer may come in two different forms—written or oral form. The more precise the terms of the offer, the better off the parties will be in establishing the certainty of their agreement. A common example of an offer is an advertisement that may appear in the newspaper by a car dealer offering to sell a used Toyota Camry for $17,500.
Suppose you were to see that advertisement and go to the dealership prepared to pay $17,500. If the dealer then told you that there were other terms that were not stated in the advertisement (handling charges, processing fees and other such fees), you could rightfully tell the dealer that it made an offer to sell this vehicle for $17,500 and you are prepared to pay it. The dealer is obliged to sell the vehicle to you for that amount. (Of course on top of that $17,500 would be any taxes that are mandated by law.) The advertisement constituted an offer and you accepted the offer for the agreed upon consideration of $17,500.
If, on the other hand, you had come into the dealership and rather than offering $17,500, you offered to pay $17,000 for the vehicle, then that would be a counter offer. A counter offer is, by its very terms, a rejection of the original offer. The dealership would be free to reject your counter offer.
There are several different ways that an offer may be framed. The person making the offer may state certain terms and conditions that have to be met in order for the offer to be accepted. If those terms and conditions are not met, then there cannot be a valid acceptance of the offer.
