THE ART OF OFFER AND ACCEPTANCE

Meetings & Conventions: Planner's Portfolio October 2001
October 2001 PLANNER'S PORTFOLIO:

The Law & the Planner

By Jonathan T. Howe, Esq.


THE ART OF OFFER AND ACCEPTANCE

A contract becomes legally binding only when both sides agree with every single element

Last month's column addressed the basics of contracts. Of course, the reason contracts exist is to document mutual agreements, which are manifested by an offer from one party and the acceptance by another of all the terms and conditions of the proposed offer.

YES, YOU CAN REFUSE
The legal definition of an offer is the presenting of terms, which once accepted leads to the formation of a contract. To make a valid offer, the terms must be clearly understood by the party to whom the contract is offered. This is generally expanded to say that the person making the offer must intend to create a legal obligation or appear to intend to do so. If that is not the case, it makes no difference whether the person accepting the offer takes any action.

Certain activities we do in daily life do not lead to a legal offer. An invitation for a social activity does not give rise to a binding agreement or contract. Offers made in jest are not considered legal.Similarly, an invitation to negotiate does not create an offer. A typical example is an advertisement to sell a product at a certain price. This is an indication the seller will entertain an offer at that price. So when a hotel offers an incredible rate of $75 for a room with an oceanfront view on the Kona coast, it is only inviting people to negotiate for that room. This is often misunderstood, especially by planners who receive an enticing brochure.

COMING TO TERMS
An agreement to agree in the future is not binding. No contract is made if the parties merely state they will consider entering into a contract or will finalize a contract at a later time.

Neither party is under any obligation until the contract is signed. Thus a hotel contract where the prices for rooms or F&B are to be established at a later date gives no guarantee. Contract language often states the hotel will set the price, and there is legal precedent allowing such wording to be enforceable. Nonetheless, the price must be set in good faith. It is preferable to have a set price in the contract, or a structure by which the price will be determined later.

Acceptance means assent to the exact terms and conditions outlined in the offer, absolutely and unconditionally. Any changes would be considered a counteroffer.

TAKE IT BACK
Offers can be terminated in six ways: revocation of the offer by the offeror, which is within his rights and cannot be negated by a late acceptance; delivery of a counteroffer; rejection of the offer; a lapse of time; death or disability of either party; or the offer becoming illegal.

Often overlooked is the time element. For instance, a hotel says it will hold rooms until a certain date. That's the drop-dead date to accept the offer. If acceptance isn't given in time, a subsequent attempt by the planner to accept becomes a counteroffer.

Of equal importance is the right of the offeror to control the method by which acceptance can be given. Failure to adhere to these requirements turns a planner's acceptance into a counteroffer. If, for example, the offer states that in order for it to be accepted a signed copy along with a $10,000 deposit must be returned to the hotel, returning the offer without the check doesn't secure the deal.It is important to note in commercial transactions that silence does not constitute acceptance. Often when a change is made by the offeree and the other party gives no response to the changes, the assumption is that the silence indicates approval. This is not the case. Changes must be accepted to create the contract. So if you make a change, confirm acceptance.