The Secret of Offer and Acceptance

The underlying philosophical approach to contract law is pacta sunt servanda. Pacta sunt servanda is a Latin phrase that can be literally translated as “Pacts must be kept,” but is more commonly and colloquially translated to mean “agreements are to be kept.” This phrase is the essential theory behind contract law. However, pacta sunt servanda only applies if the contract that is formed is a legally valid one.

One of the most essential aspects used to determine if a contract is valid or not is if there is a legally recognized offer and acceptance. The focus on offer and acceptance is the traditional approach to analyzing whether an agreement is present between the two parties who are in a contract dispute.

When measuring whether there is a sufficient agreement between the two parties, there must be an offer and acceptance. The offer is the terms that are presented to the “offeree” by the “offeror”. In order for a contract to be formed, the offer must be accepted unconditionally.

If the initial “offeree” makes any changes to the terms presented to them by the offeror, then there cannot be offer and acceptance at that point, for the individuals have immediately swapped position. This new offer, and acceptance of the new terms, may result in agreement, however. The difference is largely technical, and only becomes an issue if there is a contractual dispute between the parties.

NEXT: Uncover the History Behind UCC Creation