In plain terms
An offer is a clear, communicated promise to do or provide something on stated terms, made with the present intent that it will become binding the moment the other side agrees. Acceptance is the offeree’s unconditional “yes” to those terms, communicated back to the person who made the offer.
Three ideas do most of the work:
- Definiteness. A real offer states the essential terms (parties, subject matter, quantity, and price or a way to determine it) clearly enough that a court could enforce them.
- Mirror image rule. Under classic common law, an acceptance must match the offer exactly. If the offeree changes a term, that response is a counteroffer, not an acceptance, and it flips the power to accept back to the original offeror.
- Communication and timing. Acceptance generally takes effect only when it is communicated. Under the traditional mailbox rule, a mailed acceptance can be effective when sent, while a revocation is effective only when received.
An offer can usually be revoked any time before it is accepted, unless it is held open by an option contract or another exception. Advertisements, price lists, and catalogs are normally treated as invitations to deal rather than binding offers.
Why it matters in a contract
Offer and acceptance is where a deal legally begins, so disputes about whether a binding contract exists almost always trace back to it. Common flashpoints include whether a document was a firm offer or just a negotiating position, whether silence counts as acceptance (it usually does not), and whose terms govern when two businesses exchange conflicting forms.
That last problem, the battle of the forms, is handled differently under the Uniform Commercial Code (UCC) for the sale of goods: UCC 2-207 can form a contract even when the acceptance does not perfectly mirror the offer, changing the common law mirror image analysis. Getting formation wrong can mean an organization is bound to terms it never intended, or that it has no contract when it believed it did.
This is why formation should be tracked, not assumed. A CLM platform such as Pactolane keeps a versioned audit trail of who proposed and accepted which terms, and PactAI can surface conflicting provisions through conflict detection and extract the key economic terms so a reviewer can confirm the offer and the acceptance actually align. PactAI prepares that view; the human decides whether a binding agreement exists.
Example
A supplier emails a buyer: “We will sell you 500 units of Model X at $40 per unit, delivery within 30 days, this offer open until Friday.” That message is a definite offer.
If the buyer replies “Agreed, 500 units of Model X at $40, delivery within 30 days,” that is a mirror image acceptance and a contract is formed on those terms. If instead the buyer replies “Agreed, but the price is $38 per unit,” that response is a counteroffer, and no contract exists until the supplier accepts the new price. And if the supplier revokes the offer on Thursday before the buyer responds, there is no longer an offer to accept, because the revocation reached the buyer first.
This page provides general legal information, not legal advice.
Frequently asked questions
What is the difference between an offer and an invitation to treat?
An offer is a definite proposal that the offeror intends to be bound by once it is accepted, while an invitation to treat (such as an advertisement, catalog, or store display) is only an invitation for others to make offers. In US practice this distinction determines who is the offeror and when a binding contract can form. Treating a price list as a firm offer, or the reverse, is a common source of formation disputes.
When does acceptance become legally effective?
As a general rule, acceptance is effective only when it is communicated to the offeror. Under the traditional mailbox rule, a properly mailed acceptance can take effect at the moment it is sent, whereas a revocation is effective only when the offeror actually receives it. The exact timing can vary by state and by the method of communication used.
What is the mirror image rule?
The mirror image rule is the common law principle that an acceptance must match the terms of the offer exactly. If the offeree adds, omits, or changes a term, the response is treated as a counteroffer rather than an acceptance, and no contract forms until the original offeror agrees. For sales of goods, UCC 2-207 relaxes this rule and can form a contract despite some differing terms.
Can an offer be revoked before it is accepted?
Yes, an offeror can generally revoke an offer at any time before it is accepted, and the revocation takes effect when the offeree receives it. Important exceptions include option contracts, where the offeree has given value to keep the offer open, and certain firm offers by merchants under the UCC. Once a valid acceptance is made, the power to revoke is gone.
Does silence count as acceptance?
Silence usually does not count as acceptance, because acceptance normally must be shown through words or conduct. A limited exception can apply where the parties' prior course of dealing or the offeree's own conduct makes silence a reasonable sign of agreement. Relying on silence to form a contract is risky and often leads to disputes over whether any agreement was reached.
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