Offer, Acceptance, Rejection, Counteroffer

Understanding key legal terms – and how they impact your legal rights – is essential for protecting yourself in contracts.

Most people take certain common words for granted when it comes to contracts and written agreements until it’s too late – and you’re in court debating about what happened. Among these top misunderstood terms are offer, acceptance, rejection, and counteroffer, which are pivotal elements that define the formation of an agreement which can then be enforced. These terms are used throughout all of contract law – not just real estate contexts.

“Offer” in Contracts

An offer is a foundational element in the formation or establishment of agreements. The offer is made by one party to another, such that the recipient of the offer only has to “accept” in order to bind the parties to a contract.

One key hallmark for offers as applied to Oklahoma real estate agreements is that the offer can be revoked if it is not accepted before the revocation is communicated. The Oklahoma Real Estate Commission (OREC) standard offer sheet allows an offeror to set a deadline for acceptance, which should be incorporated by your agent, if using an agent or broker.

What constitutes an offer?

• An offer must be aimed at specific limited persons
• An offer must have essential terms for the type of agreement being created, such as a price, subject matter, and timing
• The offeror must demonstrate present intention to be bound to the proposed terms upon the recipient’s acceptance
• If the offer does not have a termination date, the offer is open for a reasonable period of time

“Acceptance” in Contracts

Acceptance is the expression of agreement, or assent, to the terms of an offer. The accepting party must communicate their acceptance to the offeror, and the acceptance must be an exact match to the terms of the original offer. If the acceptance is conditional or changes even one minor detail of the original offer, the accepting party is likely making a counteroffer as described below.

What is an acceptance?

• An acceptance must mirror the terms of the offer without modification
• Acceptance requires communication to the offeror – which can be conducted through the parties’ agents, such as an attorney or real estate agent
• The acceptance must be communicated in the manner in which the original offer requires – the offer can specify whether an email, text message, or other method is sufficient to show agreement

“Rejection” in Contracts

Rejection is a straight-forward term in contract law. A rejection is the refusal or dismissal of an offer by the recipient which clearly communicates denial of an agreement. A key feature of a rejection is that it extinguishes or “kills” the offer as to that recipient; this means that if the rejecting party later changes their mind, even before the offer’s termination time, the rejecting party can no longer simply agree to the original offer to form a contract.

What is a rejection?

• A rejection formally denies the existence of any agreement between the offering party and recipient
• Rejections must be communicated clearly and unequivocally to the offeror – silence or ambiguous responses may not always constitute a valid rejection
• Offers cannot be accepted after a rejection has been communicated – a new offer would have to be initiated

“Counteroffer” in Contracts

Counteroffers are a response to an original offer which introduces new or modified terms to the original offer. A counteroffer has a few key features under law; it is a rejection of the initial offer and starts a new offer from the original recipient to the original offeror. After a counteroffer has been made, the opposing party has the same options as the original recipient – they can accept, reject, or counteroffer the new proposal.

What constitutes a counteroffer?

• A simultaneous rejection of the original offer and proposal of new or different terms
• The mirror image rule still applies – acceptance of a counteroffer must be an agreement to each and every term of the counteroffer without any changes
• Counteroffers are helpful for keeping parties engaged during a negotiation process, which can refine terms, address concerns, and ultimately reach an agreement that each party can appreciate

Trusted Oklahoma Contract Lawyers

Understanding essential contract terms is important. Having experienced, professional representation throughout a contract formation, negotiation, or dispute can make all the difference for your position. Contact Avenue Legal Group to speak with an attorney about your contract matter.