Offer AND Acceptance - Is There a Valid Contract

By Lane V. Erickson, Idaho Business Attorney

Our goal as the premier Idaho business law attorneys is to provide our business clients with sound legal advice and counsel that will help them move forward with a successful business. In other words, we want to see our business clients succeed. More importantly, we want to make sure that our business clients can avoid several of the legal problems that could arise while they operate their businesses. Having represented business clients in Idaho for over 70 years, we have learned that each of our clients, and their businesses, are unique, and need specific guidance and counsel to help them be successful.

Our team of premier Idaho business lawyers includes partners Lane Erickson and TJ Budge, and attorneys Nate Palmer and Dave Bagley. Our team of attorneys have the experience, skill, and knowledge, to provide sound legal advice to each of our business clients. Whether it is creating a small business, or working through the intricacies of negotiating contracts, or helping clients when something goes wrong, we have helped numerous business clients make sound business decisions that have helped them and their businesses be successful. We are confident that we can help you too.

The purpose of this article is to help you understand the basics about creating a contract. We walk you through the offer and acceptance process and help you determine whether in fact a legally binding contract exists. While there is much more involved in the creation of a valid contract, this article will provide you with some of the basics to help you get started in understanding how to reach an agreement with someone and whether your agreement is legally binding.

The traditional place to start in determining whether a valid contract exists is with the offer. And offer is an expression of willingness to enter into an agreement about certain terms made with the intention that it will become binding with another person if it is accepted by them. An offer can take many different forms. Whether a statement actually is an offer to enter into an agreement is really based on the intention of the person communicating it. Without getting into all the legal details, at its most basic level, an offer invites an acceptance by another person.

The classic and easy language for a person to understand is the following example. “I offer to sell to you my car for $1,000.” In this example, there is a clear offer being made that invites an acceptance. A less clear example would be the following statement. “I would sell my car today for $1,000.”

When we help our clients in setting up a business transaction, we always help them be very clear with the offer they are providing to another party. When the offer is extended, the party receiving it has the option of either accepting it or doing something different such as a counter offer. Once a clear offer has been made, we then move on to the next element of whether a valid contract exists which is has there been an acceptance.

An acceptance of an offer is a final and unqualified acceptance or agreement to the terms of the offer. As was set forth above, if an offer has been made to a party and they make a counter-offer, the counter offer does not act as an acceptance. Rather, it acts as a new offer that the other party now has the opportunity to decide whether they will accept or not.

An acceptance can take the form of either an oral or written answer or could be completed by the actions of the person making the acceptance. To use the example above, if a person said, “I offer to sell to you my car for $1,000” and the person that statement was directed to says nothing but pulls $1,000 out of their wallet and holds it out towards the person making the offer, this action would be a valid acceptance.

Having a valid contract doesn’t require that all the terms and conditions of the agreement be spelled out completely. Rather, using the example above, there is no indication as to when the car will be delivered, what condition the car is in, whether the items in the car are included in the transaction, or whether there any other details, or terms and conditions that need to be figured out, such as delivering title to the car. Regardless, if a simple offer is made in a simple acceptance has made that a valid contract exists.

Our goal in assisting our business clients is to help them understand all of the terms and conditions that may be applicable to any contract they either have entered into or are considering entering into with another party. More importantly, our goal is to help our clients avoid misunderstandings, miscommunications, or other problems that could arise that could result in costly legal disagreements or litigation. We really do want to help our clients succeed with their businesses.

We have assisted numerous business clients in creating their businesses, and in entering into contracts with other parties. We have the skill, experience, and knowledge necessary to guide and counsel you through this process as well.

Our team of Idaho lawyers can help you with any of your business structure or operation needs. Whether you are seeking to create a new business or review a current business, we are available to discuss your options and answer your questions at an initial consultation. Call us toll free at 877.232.6101 or 208.232.6101 for a consultation. You can also email us directly at lane@racineolson.com or stop by our office at 201 East Center Street, Pocatello, Idaho 83201. We will answer your questions and help you solve your Idaho business problems.