Offer and Reply

A contract of sale is normally concluded upon acceptance of an offer. The offer is binding on the offeror (i.e. the person making the offer), provided the offer is sufficiently detailed. As a general rule, an offer is sufficiently detailed, if it can be accepted without any further negotiation. An advertisement or a product brochure does not constitute an offer, but rather an invitation to make an offer. Therefore, they are not binding on the advertiser. Also, if the offer is qualified, for example, by including a “no obligation” clause, no binding offer is deemed to have been made.

The Contracts Act regulates, among others, the conclusion and invalidity of contracts. The Contracts Act refers only to offers that include a fixed price. In the business world, however, it is common that the offeror wants to reserve the right to adjust the price, for example when the exact costs of raw materials required for the delivery have been established. Such offers are referred to as indicative offers. If the offeror wishes to include reservations in the offer, they should be clearly indicated in the offer, for example by stating that the price is indicative.

The period of validity of the offer may be defined in the offer itself. For example, if the offer is defined to remain valid until 1 January 2024, it is no longer binding on the offeror on 2 January 2024. It is advisable to set out a specific date, instead of using statements such as “the offer is valid for three weeks”. If the period of validity is expressed in days, weeks or months, the expiry date will be calculated on the basis of the date of the offer letter.

If the offer does not specify a period of validity, it will remain valid for a reasonable period of time. Offers made orally must, however, be responded to immediately, unless the offer period has been explicitly extended. It is not possible to exactly define what constitutes reasonable time. However, the offer should be responded to within a reasonable period for deliberation from receipt of the offer. The time for the offer to reach the offeree is included in the concept of reasonable time. The offeror is entitled to assume that the offer reached the offeree in time, in other words, typical time for the method of delivery used. Relevant factors for assessing the reasonableness of time for deliberation include, for example, the relative size of the relevant transaction.

Furthermore, the identity of the offeree may also be relevant for assessing the reasonable time for responding to the offer. It is, for instance, reasonable to expect that an entrepreneur responds within a shorter time period than a private person. It is prudent to deliver the acceptance using the same method of delivery as was used for the offer. For instance, an e-mail offer may be regarded as indicating a desire for a quick response. Therefore, a response sent by ordinary mail might not reach the offeror within a reasonable time. Consequently, importance will also be given to possible urgency evident from the offer.

The offer becomes a binding contract if the offeror receives an acceptance within the period of validity of the offer. The acceptance must correspond to the offer. If the acceptance is conditional, it will constitute a new offer, a counter-offer.

Acceptances arriving after expiry of the offer period are also often regarded as counter-offers. However, the principle of fair dealing provides some relief: if the late acceptance was sent well in advance, so that the sender was reasonably entitled to believe that it would reach the recipient in time, and the recipient should also have realized this, then the recipient must, without delay, notify the sender of the late acceptance, unless the recipient decides to accept it. If the recipient (offeror) does not notify the sender (offeree), then a binding contract is deemed to have been concluded. The same obligation applies in situations, where the counter-offer is so similar to the original offer, that the offeree has not realized that he/she has made amendments to the original offer.

Offers and acceptances should both be carefully drafted. If there is a slightest possibility of delays or ambiguities, they should be actively dealt with and resolved as soon as possible.

A contract is not concluded if the offer is rejected. This is also the case if the offer is not responded to at all.

An offer may be cancelled until the moment it reaches the offeree. The latest time an offer may be cancelled is before the offeree receives the offer. The cancellation may take place through a notice of cancellation.