All contracts are made through the process of an offer and acceptance. This process is the first requirement of any contract in business.

Whilst an offer can be as simple as a verbal sentence, both parties benefit from a detailed written set of terms for that offer. An offer is a promise to do or not to do something that may be accepted by another. Almost all business contracts are like this and are known as bilateral, because both parties make a contractual promise to the other. The offeror (the person making the offer) has promise to provide the goods or services to the offeree (the person to whom the offer is made too). The offeree in return has promised to pay the price agreed when accepting the offer. Offers can also be unilateral and so therefore not necessarily made to one person – these may be made to the world or to specific groups of people.

An offer is different from an invitation to treat. When we are browsing in a shop or searching the internet for a new pair of shoes the goods we see before us are not offers for us to accept. They are an invitation to treat, we make the offer when we purchase the goods and the shop/company are not bound to sell you those goods. For example if the item has been priced up wrong, or they have ran out of stock.

As soon as an offer is accepted, a contract comes into existence and both sides are legally bound. An acceptance can be made by words, or by conduct and does not need a signature. The acceptance needs to be clearly communicated for the agreement to be in place.

In addition to being accepted, an offer may be rejected, a counter-offer may be made, the offer may lapse or the offer may be withdrawn. Any of these will terminate the offer and therefore it will no longer exist and acceptance of it is therefore no longer possible.

When business contracts are made there are often a series of negotiations, proposals and enquiries. It can be very difficult to distinguish what is a counter offer and what is not should a dispute arise. All remember many businesses will use their standard terms of business when entering into contracts with other businesses. Just because you are the one providing the services does not necessarily mean your terms will be the ones that you bound by. It can often cause issues when a business believes the contract was made on their terms of business, and the other business believes it was made on their terms of purchase. In these cases the courts have to decide whose terms apply. They literally do this by applying the ordinary rules of offer and acceptance.  When was the offer made and by who? When was it accepted? Basically who ever has the last say.

This is why it is important to be strict with your policies and processes. Have a professional read over any terms you do not understand when entering into a contract with another business and always be very clear about your own terms.