Definition and Meaning of ‘Offer’ in Law
The term ‘Offer’ originates from English and, in a legal context, refers to a binding proposal made to one or more parties, the acceptance of which may result in the formation of a contract. In systematic legal contexts, particularly under Common Law, the Offer constitutes a central component in the creation of contracts and is legally distinct from a mere invitation to make an offer (Invitation to Treat). In German law, the counterpart to the Offer is found in the concept of ‘Angebot’ (offer) as defined by Sections 145 et seq. of the German Civil Code (BGB).
Legal Nature and Differentiation of the Offer
Offer in Common Law
In Common Law, the Offer constitutes the first step in establishing a contractual relationship. It is defined as a definite and specific declaration of intent by which the offeror (the offering party) signifies to the offeree (the receiving party) their willingness to be legally bound if the other party accepts. A legally effective Offer is fundamentally distinct from non-binding statements of intent or invitations, such as invitations to submit an offer.
Invitation to Submit an Offer (‘Invitation to Treat’)
An Invitation to Treat is an action in which a party clarifies that it does not (yet) wish to make a binding offer. Classic examples include shop window displays, advertisements, or catalogs. Only the declaration of intent directed at the supplier by the prospective contracting party is then regarded as the Offer.
Offer in German Law
In German law, the Offer corresponds to the concept of an application pursuant to Sections 145 et seq. BGB. An Offer is thus a declaration of intent that requires receipt, by which the conclusion of a contract is so presented to another party that the contract’s formation depends solely on their consent. Here, too, a clear distinction is made between the legally binding proposal and a mere invitation to submit an offer.
Formal Requirements and Content of the Offer
Certainty and Intention to Be Bound
For an Offer to be effective, both under Common Law and German law, certainty and the intention to be legally bound are required. The offer must contain the essential terms of the contract (essentialia negotii), i.e., especially the parties, the subject of the contract, and the price, insofar as these are necessary for the particular type of contract involved.
Receipt and Effectiveness
In German law, an offer becomes effective when it is received by the recipient (Section 130 BGB). In Anglo-American legal systems, an offer is considered made when it reaches the addressee by a reasonable communication channel and the addressee can take notice of its content.
Revocation of the Offer
In Common Law, an Offer is generally revocable until it is accepted, unless it has been expressly designated as irrevocable (option contract). In German law, binding offers pursuant to Section 145 BGB are generally binding for an indefinite period, but according to Section 130 BGB, they may be revoked as long as the revocation reaches the recipient before the offer does.
Acceptance and Legal Effects of the Offer
Acceptance of the Offer
If a valid Offer is accepted unconditionally and in terms matching the offer (the acceptance mirrors what was offered), a binding contract is formed between the parties. In German law, acceptance is a declaration of intent that must be received (Sections 147 et seq. BGB), with specific deadlines for acceptance to be observed. Under Common Law, an exact (‘mirror image’) acceptance is required; if the acceptance deviates from the offer, this constitutes a new Offer (‘Counter Offer’).
Expiration of the Offer
An Offer can expire due to the passage of time, rejection, revocation, or the death of the offeror (in Common Law). The precise record of the relevant time is critical for determining the binding period. Under German law, an offer expires according to Section 146 BGB upon rejection or if not accepted within the specified period.
Special Forms of the Offer
Option Contract
An Option Contract in Anglo-American law describes the right of the offeree to rely on an offer within an agreed period, during which the offeror undertakes not to revoke the offer. Comparable mechanisms exist in German law, for example in the form of a right of acceptance in exchange for an option fee.
Unilateral Offer
A Unilateral Offer constitutes a proposal to the public or an indeterminate group of people. It binds the offeror to anyone who fulfills certain conditions, such as reward announcements or promises of remuneration. In German law, parallels can be found in Section 657 BGB (Public Reward).
Significance and Practical Relevance
Offers play a central role in all areas of business and contractual dealings. Whether in trade, consumer transactions, or electronic transactions: the correct legal classification and understanding of the term ‘Offer’ are crucial both for limiting liability risks and for ensuring legal certainty.
Distinction from Related Terms
- Invitation to Treat: Invitation to submit an Offer; not legally binding.
- Counter Offer: Modified counter-offer that cancels the original offer and creates a new one.
- Acceptance: The unconditional acceptance leading to contract formation.
Summary
The term ‘Offer’ in law refers to a binding proposal made to another party, which, if accepted without reservation, leads to the conclusion of a contract. The requirements for a valid Offer are comparable in Common Law and German civil law. Key elements are certainty, intention to be bound, receipt, acceptance, and revocability. The differentiated design, particularly in the context of electronic communication and international contracts, underlines the high practical significance and complexity of the Offer in modern contract law.
Frequently Asked Questions
What legal requirements must an offer meet to be considered a legally binding Offer?
An offer (Offer) is legally binding if it shows sufficient certainty and a recognizable intention on the part of the offeror to be legally bound. The offer must contain all essential elements of the contract (essentialia negotii) so that a potential contracting party can form the contract with a simple ‘yes’. Depending on the type of contract, essential information may include the parties, the performance, the consideration, and any modalities of fulfillment. An offer is also generally addressed to a specific person or group, distinguishing it from invitations to offer (‘invitatio ad offerendum’), such as catalogs or shop window displays. If the offer lacks necessary specificity or the person making the declaration indicates that they do not wish to be bound—for example, with terms like ‘non-binding’ or ‘subject to change’—no legally binding offer exists. Formal requirements, such as written form for real estate contracts (§ 311b BGB), must also be observed, as an improperly made offer has no legal effect.
When can an offer (Offer) be legally revoked?
As a rule, an offer can be revoked at any time up to the receipt of the acceptance by the offeror (§ 130 para. 1 sentence 2 BGB). However, the revocation must reach the offer recipient at the latest at the same time as or before the acceptance of the offer. A revocation declared after receipt of the acceptance by the offeror is legally ineffective, meaning the contract is concluded. Exceptions apply if the offeror has expressly agreed to a binding period or the offer has been declared irrevocable, for example in tenders or public offers. International contracts are sometimes governed by different rules, such as under the UN Sales Law (CISG), which generally allows revocation until receipt of acceptance unless the offer itself specifies irrevocability.
What are the legal consequences of late acceptance of an offer?
A late acceptance is legally considered a new offer (§ 150 para. 1 BGB). The original offer made by the offeror thus expires. It is now up to the former offeror to accept or reject this new offer. However, this is conditional on the absence of an alternative agreement or binding period. Should the offeror promptly accept the late acceptance, a contract may still be concluded. In business transactions, it is advisable to respond carefully to late acceptances in order not to inadvertently conclude a contract.
What effect do changes or additions in the declaration of acceptance have on the original offer?
If the declaration of acceptance contains additions, limitations, or modifications compared to the original offer, it is considered—according to § 150 para. 2 BGB—a rejection of the original and simultaneously a new offer. As a result, the original offer expires. The original offeror may accept this new offer but is not obligated to do so. What matters is whether the changes affect essential elements of the offer; minor deviations, known as ‘modified acceptances,’ may, in certain cases, still lead to a contract, especially if the modification is in the offeror’s interest or appears to be immaterial.
For how long is the offeror legally bound by their offer?
The binding period of an offer depends initially on any period specified in the offer. If no period is set, the offer is, according to § 147 BGB, only binding for as long as the recipient can reasonably be expected to respond (‘statutory binding period’). For offers made to persons present—verbally or via telephone—acceptance must occur immediately. For offers to persons absent—such as by letter or email—the binding period extends over the time required for transmission of the declaration of acceptance (including postal time). After expiry of the period or upon legitimate revocation, the offer lapses and is no longer binding.
How important is the form of an offer (oral, written, electronic) from a legal perspective?
In German law, the principle of form freedom largely applies to the making of offers, i.e., offers can fundamentally be made orally, in writing, or electronically. Only for certain types of contracts does the law require a particular form, such as notarization for real estate purchases (§ 311b BGB) or written form for guarantees (§ 766 BGB). For electronic offers, especially in online commerce, the requirements of distance selling law and data protection (GDPR, BGB § 312 et seq.) must also be observed, including information duties toward consumers. The evidential power of an offer may vary depending on the form chosen, which is why written form is often preferred in commercial transactions for reasons of legal certainty.
What are the legal differences between an offer and an invitation to submit an offer (invitatio ad offerendum)?
Legally, the invitatio ad offerendum—as is often the case with advertising, catalogs, or shop window displays—is not a binding declaration of intent, but merely an invitation for potential contractual partners to submit an offer themselves. No promise of performance is made to the recipient; instead, only the possibility of concluding a contract is offered. Only the customer’s order is considered a legally binding offer, which the provider can either accept or reject. The rationale is that the advertiser should not be obliged to actually deliver, for example, due to lack of stock. The distinction between an offer and an invitatio ad offerendum may in some cases be fluid, but is determined by the specificity of the contractual elements and the discernible intention to be bound by the person making the declaration.
