This classical approach to contract formation has been modified by developments in the law of estoppel, misleading conduct, misrepresentation, unjust enrichment, and power of acceptance.
Treitel defines an offer as "an expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed", the "offeree".
Offers may be presented in a letter, newspaper advertisement, fax, email verbally or even conduct, as long as it communicates the basis on which the offeror is prepared to contract.
Traditionally the common law treated advertisements as being unable to contain offers, but that view is less forceful in jurisdictions today.
[3][4] In Smith v. Hughes, the court emphasised that the important thing in determining whether there has been a valid offer is not the party's own (subjective) intentions but how a reasonable person would view the situation.
For example, in some jurisdictions, a minimum requirement for sale of goods contracts is the following four terms: delivery date, price, terms of payment that includes the date of payment, and a detailed description of the item on offer including a fair description of the condition or type of service.
[6] In this sense, an obvious joke cannot become the basis of an offer because the potential offeror lacks actual intent to enter into an exchange.
[7] For instance, in the famous case of Leonard v. Pepsico, Inc., depiction of a military aircraft offered in exchange for "Pepsi Points" was interpreted by a court as a joke.
Despite having clear terms (7,000,000 Pepsi Points in exchange for one aircraft), the humorous elements of the commercial rendered that portion of the advertisement a joke rather than a serious offer.
[8] In the case of Lucy v. Zehmer, what one party believed were jests about selling a farm turned into a binding contract, based on the court's evaluation of the circumstance from the perspective of a reasonable observer.
Therefore, the company's offer to pay 100 pounds "in return for" the use of the Smoke Ball remedy and guarantee not to contract the flu was performed by Carlill.
In the UK case Harvey v. Facey,[13] an indication by the owner of property that he or she might be interested in selling at a certain price, for example, has been regarded as an invitation to treat.
The courts have tended to take a consistent approach to the identification of invitations to treat, as compared with offer and acceptance, in common transactions.
The rule is that the bidder is making an offer to buy and the auctioneer accepts this in whatever manner is customary, usually the fall of the hammer.
For example, in the United States, the Uniform Commercial Code allows merchants (e.g., those who deal in the type of goods at issue) to create firm offers for up to three months without consideration, through a signed writing.
[27] Under this meeting of the minds theory of contract, a party could resist a claim of breach by proving that he had not be intended to be bound by the agreement.
Here, we can apply the test of whether a reasonable bystander (a "fly on the wall") would have perceived that the party has impliedly accepted the offer by conduct.
[30] These rules might require, for instance, that conflicting terms in the offer and acceptance are "knocked out" and replaced by default language provided in the Code.
Such disputes may be resolved by reference to the 'last document rule', i.e. whichever business sent the last document, or 'fired the last shot' (often the seller's delivery note) is held to have issued the final offer and the buyer's organisation is held to have accepted the offer by signing the delivery note or simply accepting and using the delivered goods.
Under English law, the question was raised in Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (England) Ltd,[43] as to which of the standard form contracts prevailed in the transaction.
Lord Denning MR preferred the view that the documents were to be considered as a whole, and the important factor was finding the decisive document; on the other hand, Lawton and Bridge LJJ preferred traditional offer-acceptance analysis, and considered that the last counter-offer prior to the beginning of performance voided all preceding offers.
In Leicester Circuits Ltd. v. Coates Brothers plc (2002) and GHSP Incorporated v AB Electronic Ltd (2010) the English High Court has found that companies may have not agreed on any terms, and so the 'last document rule' may not apply.
[47] In cases where the offeree accepts in ignorance of the death, the contract may still be valid, although this proposition depends on the nature of the offer.