Explain the element of an effective offer?

Answer 1

In order for the offer to be effective, the offeror must have the proper intent. This means that the offerer's intention must be to make an offer and not merely to start the bargaining process. For example, if John tells Mary, "I'd like to purchase your car for $2,500. How would you like me to pay?", then there is no mistaking his intention of wanting to purchase the car at the stated price. On the other hand, if he states, "I'd like to purchase your car, how much are you willing to sell it to me for?", then he is simply attempting to start the bargaining process.

The second requirement for an offer to be valid is that it must be communicated to the offeree - generally in a manner that the parties have agreed upon during the negotiation phase, if any. For example, if John had sent over a fax to Mary indicating that he is willing to purchase her car for $2,500 but does not follow up with her to confirm that she has received the fax, then no effective offer exists until Mary has looked at the fax.

The third requirement for an offer to be effective is that the offer must be definite. In essence, the terms of the offer must be definite. For example, if John tells Mary, "I'll pay you $2,500 in cash for your car right now and I need you to sign the title over to me today. I'll meet you at your apartment at 10 AM.", then he is making a definite offer and his intention is unambiguous. On the other hand, if he were to say "I would like to purchase your car at a fair price, in the near future", then he is being ambiguous and his offer is not effective since there is no mutual agreement as to what a 'fair price' is or how the 'near future' is defined.