This chart is designed to help you walk through the steps for determining if a communication is or is not a true offer – the first part of the contract formation analysis. A few words of explanation:
- The first step requires you to know the difference between offers and non-offers. Relevant questions to ask in this part of the analysis: (1) Would an objective person have construed the purported offer as a joke, or not serious? (2) Was the purported offer an advertisement? (3) If the purported offer was an advertisement, was it sufficiently narrow to constitute an offer?
- The second step requires you to know the requirements for definiteness. In contracts governed by common law, a valid offer must contain the essential terms of the deal: (1) quantity; (2) time of performance; (3) identification of the parties; (4) price; and (5) subject matter (use the mnemonic “Q-TIPS” to remember the rule). In contracts governed by Article 2 of the UCC, the only required term is the quantity of goods.
- The remaining steps walk you through the various means of terminating an offer. Even if there is a manifestation of a willingness to enter into a bargain, and the offer is sufficiently definite, the offer can still terminate before acceptance.