Topics: Contract, Offer and acceptance, Option contract Pages: 3 (806 words) Published: February 27, 2014

If a contract is a legally binding agreement, the first question to consider is the method by which the court ascertains whether a contract is to be formed. The offer must express the definite intention on the part of the person or organization making it (called “the offeror”) to enter into the contract with the person or organization to whom or which it is addressed (known as “the offeree”). An offer may be defined as a statement of willingness to contract on specified terms made with the intention that, if accepted, it shall become binding contract. An offer may be express or implied from conduct. It may be addressed to particular person, a group of persons, or the world at large. A genuine offer must be distinguished from an “invitation to treat”; i.e. where a party is merely inviting offers, which it then free to accept or reject. An offer must be clear and contain the details of the contract; for example, if A asks B ‘would you like to buy my car’ and B replies ‘yes’, there is no contract because the offer did not include an essential detail, the price. The offeree may choose to accept or reject the offer but once it is accepted the contract is concluded and the parties are bound by its terms. An offer may be withdrawn or revoked by the offeror at any time as long as it has not yet been accepted by the offeree. The offeror may revoke the offer even if he has given the offeree some time for acceptance. The purpose of giving the offeree a time-limit for acceptance is to indicate that the offer will lapse automatically if it has not been accepted before this time has expired. If the offeree wants to ensure that the offer should not be revoked before a certain time has expired he may do so by obtaining an option from the offeror. An option is a separate contract, made between the offeror and offeree, where by in return for same consideration the offeror agrees to keep the offer open.

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