Contract formation hinges on offer and acceptance. These elements determine when a legally binding agreement exists, with courts analyzing them to resolve disputes and enforce contracts.

Offers must be communicated and show intent to be bound. Acceptance must match the offer's terms. Special cases like option contracts and electronic agreements modify these rules, adapting contract law to modern commerce.

Elements of offer

• Offer and acceptance form the foundation of contract formation in United States contract law
• Understanding the elements of an offer helps determine when a legally binding agreement has been created
• Courts analyze these elements to resolve contract disputes and enforce agreements

Definition of offer

• A manifestation of willingness to enter into a bargain
• Must be communicated to the offeree
• Creates power of acceptance in the recipient
• Distinguishes from preliminary negotiations or invitations to make offers

Offeror vs offeree

• Offeror initiates the offer and sets its terms
• Offeree receives the offer and has power to accept
• Roles determine rights and obligations in contract formation
• Offeror generally has more control over offer terms and revocation

Intent to be bound

• Offeror must objectively demonstrate intent to enter binding agreement
• Courts look at language used, circumstances, and conduct of parties
• Mere expressions of future intent or "agreements to agree" insufficient
• Clear and definite language indicates stronger intent to be bound

Definiteness of terms

• Offer must be sufficiently definite for courts to determine existence of breach
• Essential terms typically include subject matter, price, quantity, and time for performance
• Courts may imply reasonable terms to save otherwise indefinite agreements
• UCC allows more flexibility in definiteness for sale of goods contracts

Communication of offer

• Communication of offer plays a crucial role in contract formation under U.S. law
• Proper communication ensures both parties understand the proposed terms
• Timing of communication affects when acceptance can occur and when revocation is effective

Methods of communication

• Verbal offers made in person or over phone
• Written offers via mail, email, or other electronic means
• Implied offers through conduct or circumstances
• Formal methods like sealed bids or tenders in some commercial contexts

Mailbox rule

• Acceptance effective upon dispatch, not receipt by offeror
• Applies to acceptances sent by mail or similar means
• Protects offeree from revocation during transmission
• Does not apply to instantaneous forms of communication (phone, email)

Revocation of offer

• Offeror can revoke unaccepted offers at any time before acceptance
• Revocation must be communicated to offeree to be effective
• Indirect revocation possible if offeree learns from reliable source
• Option contracts and firm offers limit ability to revoke

Acceptance

• Acceptance completes the formation of a contract under U.S. law
• Must be unequivocal and match the terms of the offer
• Timing and method of acceptance can affect contract validity

Definition of acceptance

• Unqualified assent to terms of offer
• Must be communicated to offeror to be effective
• Can be expressed through words, conduct, or performance
• Mere acknowledgment or expression of interest not sufficient

Methods of acceptance

• Express acceptance through oral or written communication
• Implied acceptance through conduct or performance
• Silence as acceptance in limited circumstances
• Electronic acceptance in modern commerce (email, click-wrap agreements)

Silence as acceptance

• Generally, silence does not constitute acceptance
• Exceptions where prior dealings create duty to speak
• When offeree takes benefit of offered services
• Where offeror gives offeree reason to understand silence will be acceptance

Mirror image rule

• Traditional common law rule requiring exact match between offer and acceptance
• Any variation in acceptance terms creates a counteroffer
• Modern approach allows minor variations in some jurisdictions
• UCC § 2-207 modifies rule for sale of goods contracts

Termination of offer

• Understanding offer termination is crucial in U.S. contract law
• Termination ends the offeree's power of acceptance
• Multiple ways an offer can be terminated before acceptance

Rejection by offeree

• Express rejection terminates offer immediately
• Implied rejection through inconsistent conduct
• Rejection effective upon communication to offeror
• Once rejected, offer cannot be subsequently accepted without renewal

Counteroffer

• Proposal of different terms operates as rejection and new offer
• Terminates original offer and shifts roles of offeror and offeree
• Common in negotiations and can lead to "battle of the forms"
• UCC modifies effect of counteroffers in sale of goods contracts

Lapse of time

• Offers with specified duration terminate at end of stated period
• Offers without specified time lapse after reasonable time
• What constitutes reasonable time depends on nature of offer and circumstances
• Seasonal or perishable goods offers may lapse more quickly

Death or incapacity

• Death or legal incapacity of offeror terminates offer
• Based on presumed intent and inability to perform
• Exception for option contracts which may survive death
• Termination occurs even if offeree unaware of death or incapacity

Special cases

• U.S. contract law recognizes several special cases in offer and acceptance
• These cases often modify or create exceptions to general rules
• Understanding these special cases is crucial for complex contract analysis

Option contracts

• Offeror promises to hold offer open for specified time
• Requires consideration or seal to be binding
• Prevents revocation during option period
• Common in real estate and business acquisitions

Unilateral vs bilateral contracts

• Unilateral contracts require performance for acceptance
• Bilateral contracts formed by mutual promises
• Unilateral offers cannot be revoked once performance begins
• Distinction affects timing of contract formation and remedies

Advertisements as offers

• Generally considered invitations to make offers, not binding offers
• Exceptions for ads with clear, definite terms (reward offers)
• Price mistakes in ads may be binding if detrimental reliance occurs
• Online marketplaces may create binding offers in some circumstances

Electronic contracts

• Electronic contracts have become increasingly important in U.S. commerce
• Federal and state laws govern formation and enforcement of e-contracts
• Understanding electronic contract principles crucial for modern business transactions

E-signatures

• Electronic Signatures in Global and National Commerce Act (E-SIGN) gives legal effect to e-signatures
• Digital signatures, typed names, or clickable "I agree" buttons can constitute valid signatures
• Must show intent to sign and be attributable to the signer
• Some documents (wills, certain real estate transactions) may still require physical signatures

Click-wrap agreements

• Common in software and online service contracts
• User must click "I agree" or similar button to proceed
• Generally enforceable if terms are reasonably conspicuous
• Courts may scrutinize for unconscionable terms or lack of opportunity to review

Uniform Electronic Transactions Act

• Model law adopted by most states to govern electronic transactions
• Establishes legal equivalence of electronic records and signatures with paper and ink
• Allows contract formation by electronic means
• Provides rules for determining time and place of sending and receipt of electronic communications

Offer and acceptance in UCC

• Uniform Commercial Code (UCC) modifies common law rules for sale of goods
• Applies to transactions between merchants and consumers involving movable goods
• More flexible approach to contract formation than traditional common law

Battle of the forms

• Occurs when businesses exchange forms with conflicting terms
• Common law mirror image rule would prevent contract formation
• UCC § 2-207 allows contract formation despite conflicting terms
• Additional or different terms become part of contract between merchants unless materially alter agreement

UCC 2-207

• Governs additional terms in acceptance or confirmation
• Allows contract formation even if acceptance states terms additional to or different from offer
• Between merchants, additional terms become part of contract unless they materially alter it
• Provides rules for determining which terms survive in final contract

Firm offers

• Written promise by merchant to hold offer open
• No consideration required if signed and for stated period (max 3 months)
• Cannot be revoked during stated period
• Provides certainty in commercial transactions without formal option contracts

Promissory estoppel

• Equitable doctrine in U.S. contract law that can create enforceable promises
• Based on reliance rather than traditional offer and acceptance
• Can be used to enforce promises that lack consideration
• Important exception to general rules of contract formation

Reliance on promise

• Promisee must reasonably rely on a clear and definite promise
• Promise must be one that promisor should reasonably expect to induce action or forbearance
• Reliance must be actual and provable
• Courts consider nature of promise and relationship between parties

Detrimental reliance

• Promisee must suffer detriment as a result of reliance
• Can involve economic loss, change of position, or foregone opportunities
• Must be substantial enough to make it unjust not to enforce the promise
• Courts balance interests of promisee against burden on promisor

Enforcement without consideration

• Allows enforcement of promises that lack traditional consideration
• Based on principles of fairness and preventing injustice
• Limited to situations where reliance is reasonable and foreseeable
• Remedy may be limited to reliance damages rather than expectation damages

Remedies for breach

• Understanding remedies is crucial for assessing risks and benefits of contracts
• U.S. contract law provides various remedies to compensate injured parties
• Choice of remedy depends on nature of breach and type of contract

Expectation damages

• Aim to put injured party in position they would have been if contract performed
• Standard remedy for breach of contract
• Calculated based on benefit of bargain lost due to breach
• Subject to limitations of foreseeability, certainty, and duty to mitigate

Reliance damages

• Compensate injured party for losses incurred in reliance on contract
• Often used when expectation damages are difficult to prove
• Can include out-of-pocket expenses and lost opportunities
• May be limited to foreseeable reliance

Specific performance

• Court order requiring breaching party to perform as promised
• Typically limited to unique goods or real property
• Requires showing that money damages are inadequate
• Discretionary remedy subject to equitable considerations