Offer and acceptance are elements required for the formation of a legally binding contract, the expression of an offer to contract on certain terms by one person (the "offeror") to another person (the "offeree"), and an indication by the offeree of its acceptance of those terms.
The other elements traditionally required for a legally binding contract are (i) consideration and (ii) an intention to create legal relations. Offer and acceptance analysis is a traditional approach in contract law. The offer and acceptance formula, developed in the 19th century, identifies a moment of formation when the parties are of one mind. This classical approach to contract formation has been weakened by developments in the law of estoppel, misleading conduct, misrepresentation and unjust enrichment.Offer An offer is a promise to do or not to do something in sufficiently clear terms that may be accepted by another. An offer should be distinguished from an invitation to treat and a mere expression of intention to do or not to do some act.
Offers do not necessarily need to be made to one person – that may be made to the world at large or to specific groups of people. The significance of an offer is that when it is accepted, the contract is formed. In addition to being accepted, an offer may be rejected, a counter-offer may be made, the offer may lapse or the offeror may withdraw the offer, such that it is no longer available to be accepted.AcceptanceThe acceptance of the offeror’s terms must be unconditional. In many cases this may constitute a ‘yes’ or ‘no’ reply to an offer made.
There are situations where such a simple exercise may not be possible and it requires the courts to give direction as to how acceptance may be established. An offer may be accepted by conduct; silence, however, can never constitute acceptance.
