Offeror
Definition
An Offeror is a person or entity that presents an offer to another party (the offeree) intending to create a legal contract. The offeror’s proposal details the terms under which they are willing to be bound in exchange for something of value. Once the offeree accepts this proposal, a legally enforceable contract is typically formed.
Examples
- Sales Transactions: A business sends a quotation to a prospective buyer, proposing to sell goods at a specified price. Here, the business is the offeror.
- Employment Offers: A company offers a job to a candidate, specifying the salary, responsibilities, and other employment conditions.
- Real Estate Contracts: A buyer submits a written offer to purchase a piece of property from a seller at a specified amount.
Frequently Asked Questions
What happens if the offeree makes a counteroffer?
A counteroffer nullifies the original offer and puts a new offer on the table. The roles are reversed here, making the initial offeree the offeror.
Can an offer be revoked by the offeror?
Yes, an offeror can generally revoke an offer any time before it is accepted unless it is an irrevocable offer, which includes options contracts or if consideration has been provided for holding the offer open for a specified period.
What constitutes a valid offer?
A valid offer must be clear and definite, communicated to the offeree, and indicate the offeror’s intention to be bound upon acceptance of the offer.
Is there a time limit on how long an offer can stay open?
An offer can include a specific time limit within which it must be accepted. Without such a limit, it remains open for a “reasonable time,” depending on the nature of the offer and the circumstances.
- Offeree: The person or entity to whom the offer is made.
- Offer: A proposal indicating willingness to enter into a contract on specified terms.
- Acceptance: The offeree’s agreement to the terms of the offer.
- Consideration: Something of value that is exchanged between the parties in a contract.
- Counteroffer: A response to an initial offer, changing its terms and constituting a new offer.
Online References
Suggested Books for Further Studies
- “Contract Law for Dummies” by Scott J. Burnham
- “Principles of Contract Law” by Robert A. Hillman
- “Studies in Contract Law” by Ian R. Macneil & Richard E. Speidel
Fundamentals of Offeror: Business Law Basics Quiz
### Who is an offeror in a contract?
- [x] The party presenting the offer
- [ ] The party accepting the offer
- [ ] The party challenging the offer
- [ ] The party observing the offer
> **Explanation:** The offeror is the party who presents the offer to another party with the intention of entering into a legally binding contract.
### What happens when an offeree makes a counteroffer?
- [ ] The original offer remains valid.
- [x] The original offer is nullified.
- [ ] The offeror automatically accepts the counteroffer.
- [ ] The contract is immediately formed based on the counteroffer terms.
> **Explanation:** A counteroffer nullifies the original offer and places a new offer on the table.
### Can the offeror revoke an offer before acceptance?
- [x] Yes, generally, unless it is an irrevocable offer.
- [ ] No, an offer cannot be revoked once made.
- [ ] Only under certain conditions, such as mutual agreement.
- [ ] Yes, but only after acceptance.
> **Explanation:** An offeror can usually revoke an offer any time before it is accepted unless it is an irrevocable offer.
### What makes an offer valid?
- [ ] Vague terms and conditions.
- [x] Clear and definite terms.
- [ ] Oral communication only.
- [ ] Lack of intention to create a legal obligation.
> **Explanation:** A valid offer must be clear, definite, and show the intention to be legally bound upon acceptance.
### What is the role of an offeree?
- [ ] To create the offer.
- [ ] To nullify the offer.
- [x] To receive and potentially accept the offer.
- [ ] To enforce the contract.
> **Explanation:** The offeree is the party to whom the offer is made and who has the potential to accept it.
### What term refers to something of value exchanged in a contract?
- [ ] Offer
- [ ] Acceptance
- [x] Consideration
- [ ] Intention
> **Explanation:** Consideration refers to something of value that is exchanged between the parties in a contract.
### What is a counteroffer?
- [ ] Acceptance of an offer.
- [ ] Revocation of an offer.
- [x] A response that modifies the original offer.
- [ ] Nullification of a contract.
> **Explanation:** A counteroffer is a response to the original offer, modifying its terms and constituting a new offer.
### When does a contract become legally binding?
- [ ] When the offer is made.
- [’] Upon the presentation of a counteroffer.
- [x] When the offer is accepted.
- [ ] When the offer is nullified.
> **Explanation:** A contract becomes legally binding once the offer is accepted as per the terms proposed by the offeror.
### If an offer includes a time limit, what happens once that time expires?
- [x] The offer expires and no longer can be accepted.
- [ ] The offer automatically renews.
- [ ] The offer gets enforced as a contract.
- [ ] The offer must be renegotiated.
> **Explanation:** An offer remains open only for the specified time limit, if any. Once it expires, the offer can no longer be accepted.
### How long does an offer remain open if no time limit is stated?
- [ ] Indefinitely
- [ ] One year
- [x] A reasonable time
- [ ] One month
> **Explanation:** If no specific time limit is stated, an offer remains open for a reasonable time, depending on the circumstances and industry norms.
Thank you for exploring the concept of an offeror with our comprehensive guide and challenging quiz. Keep diving deeper into the intricacies of business law!
