Offer and acceptance

What it means

Offer and acceptance are the two steps that create a contract. The offer must be sufficiently definite, addressed to a specific person and show the offeror's intention to be bound if it is accepted. Acceptance must be timely and unconditional, otherwise no contract is formed.

An acceptance with additions, reservations or changes rejects the original offer and is itself a new offer. In business dealings, however, the Commercial Code allows minor deviations that do not materially change the terms to stand without preventing a contract, unless the offeror objects without undue delay.

Advertising, catalogues and public calls addressed to an indefinite group are not offers unless they clearly say otherwise; they are merely invitations to make offers. That is why online shops usually state in their general terms and conditions that the contract arises only when the order is confirmed.

How it works in practice

In everyday deals it helps to be clear which document is the offer and which the acceptance. A price quote with a validity period is an offer, and a customer's order within its terms is the acceptance. If the customer orders something different, that is a new offer the supplier must confirm.

The offer can set a deadline for acceptance. If it does not, a reasonable period applies given the nature of the offer and the speed of communication; an oral offer must be accepted immediately. A late acceptance can still take effect if the offeror promptly says so.

For distance contracts with consumers, information duties also apply, and the consumer must expressly confirm that the order entails an obligation to pay. The order button must therefore be clearly labelled, for example order with obligation to pay.

What to watch out for

Silence or inaction is not acceptance in itself unless the parties agreed otherwise or it follows from their established practice. An invoice for unsolicited goods therefore creates no duty to pay, although in long-term business relationships established practice can change the position.

The so-called battle of the forms, where each side sends its own terms, creates uncertainty about which terms apply. It is wise to state clearly in the offer which terms form part of the contract and expressly exclude the other side's differing terms.