All contracts contain three basic elements: offer, acceptance, and consideration. Consideration is what each side gives up in exchange for the benefit that he or she is receiving. Sometimes this is money, doing something for someone, or refraining from doing something.
Forming a Contract May Take Time and Negotiation
Offers may be accepted or rejected. Offers also may be revoked. Counteroffers may be made. All contracts require consideration for the promises of the parties to the contract.
It is not often that an offer is made and accepted with valid consideration and no further negotiation occurs. Often offers are made and rejected or counteroffers are made. Sometimes an offer is made and the other party never responds. Each of these actions has legal ramifications beyond the basic legal concepts governing offers and acceptance.
The End of an Offer
The concepts of counteroffers, rejections, and revocation are important because they all affect the initial offer. If timely made, they all kill the original offer in ways the parties must understand.
A rejection kills the offer. Once an offer is rejected it may not later be accepted. It is done and over. The party making the initial offer may decide to make it again, and that offer may be accepted or rejected. Or the person who rejected the offer may propose the same offer at a later time, which may be accepted or rejected.
However, once an offer is rejected, the person making the offer is no longer required to agree to those terms. The offer is closed.
Rather than accept an offer, a party may propose a counteroffer. The counteroffer has the effect of rejecting the offer and proposing a new offer. If the counteroffer is not accepted, the original offer is unavailable and may not be accepted. The person making the original offer may decide to offer the same offer again, or not.
A person making an offer may revoke that offer. A revocation may occur only before an offer is accepted. An offer that has been accepted may not later be revoked.
If a person makes an offer and then revokes it before the other party accepts it, the person making the offer is no longer required to agree to its terms. The person to whom the offer was made may no longer accept that offer. Again, either party is free to propose once again an offer with the same terms and conditions as initially made, which starts the offer process all over again.