Study guide
Mutual Assent: Offer, Acceptance, Mailbox Rule, and UCC 2-207
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Mutual Assent: Offer, Acceptance, Mailbox Rule, and UCC 2-207
Key Takeaways Explain This Topic AI
An OFFER is a manifestation of present willingness to contract, communicated to the offeree, with terms definite enough that acceptance creates a binding deal; under the objective theory, secret intent is irrelevant.
Offers can be terminated by revocation (effective on receipt), rejection/counteroffer, lapse of time, death/incapacity, or destruction of subject matter; IRREVOCABLE offers include option contracts (paid-for), UCC firm offers (2-205, max 3 months), part performance of a unilateral offer, and detrimental reliance.
The MAILBOX RULE: acceptance is effective on DISPATCH (not receipt); but rejections, revocations, and counteroffers are effective on receipt — and the mailbox rule does not apply to option contracts (acceptance must be received by the deadline).
Common law uses the MIRROR-IMAGE RULE (acceptance must match exactly; any variance is a counteroffer); UCC 2-207 abandons it — a definite acceptance with additional/different terms still forms a contract, and 2-207(2) decides whether the new terms enter.
Under 2-207(2) between merchants, ADDITIONAL terms become part of the contract unless (a) the offer expressly limits acceptance to its terms, (b) the new terms materially alter the deal, or (c) the offeror objects within a reasonable time.
Last updated: June 2026
The Offer and the Objective Theory
Mutual assent ('meeting of the minds') is tested objectively: a party is bound by what a reasonable person in the other party's position would understand from their words and conduct, not by secret subjective intent. An offer is a manifestation of present willingness to enter a bargain, made in a way that justifies the offeree in understanding that their assent will close the deal. It needs (1) a manifestation of present intent to contract, (2) communication to an identified offeree, and (3) reasonably definite terms.
Under the common law the essential terms are parties, subject matter, price, and quantity. The UCC is far more forgiving: a contract for the sale of goods does not fail for indefiniteness even if terms are left open, so long as the parties intended to contract and there is a reasonably certain basis for a remedy (2-204). The Code supplies gap-fillers — a reasonable price (2-305), a reasonable time and place for delivery (2-308, 2-309) — but quantity generally must be stated (except in valid requirements/output contracts under 2-306).
Advertisements are usually invitations to deal, not offers, unless they are specific and limited (the classic 'first come, first served, 1 fur coat $1' is an offer).
Termination and Irrevocability
An offer can be accepted only while it is alive. Power of acceptance terminates by:
Method Timing / Notes
Revocation by offeror Effective on RECEIPT; allowed any time before acceptance (general rule: offers are freely revocable)
- Rejection by offeree Effective on receipt
- Counteroffer Operates as a rejection plus a new offer
- Lapse of time At the stated deadline, or after a reasonable time
- Death or incapacity of either party Terminates a revocable offer automatically, even without notice
- Destruction of subject matter or supervening illegality Automatic termination
Four situations make an offer IRREVOCABLE:
Option contract — the offeree pays consideration to hold the offer open.
UCC firm offer (2-205) — a merchant's signed writing giving assurance it will be held open is irrevocable for the stated time, or a reasonable time, but in NO event longer than 3 months , even with no consideration.
Unilateral contract part performance — once the offeree begins the requested performance, the offer becomes temporarily irrevocable (Restatement 45); mere preparation does not lock it.
Detrimental reliance — foreseeable, substantial reliance on the offer (Restatement 87(2)).
The Mailbox Rule
Under the mailbox rule , an acceptance is effective the moment it is DISPATCHED (placed in the mailbox, sent), not when received — so a contract forms even if the acceptance is lost in transit. The rule's tricky corollaries:
Revocations, rejections, and counteroffers are effective on RECEIPT , not dispatch.
If the offeree sends a rejection first and then an acceptance, whichever arrives FIRST controls (the mailbox rule is suspended).
If the offeree sends an acceptance first and then a rejection, the acceptance is effective on dispatch and a contract forms — unless the offeror receives the rejection first and detrimentally relies on it.
The mailbox rule does NOT apply to option contracts: acceptance of an option must be RECEIVED by the deadline.
The mailbox rule applies only to a permissible medium and does not save a late-arriving acceptance the offeror never sees if the offer required receipt.
The Battle of the Forms: Mirror-Image vs. UCC 2-207
At common law, the mirror-image rule demands that the acceptance match the offer exactly. Any addition, deletion, or qualification turns the response into a counteroffer, which rejects the original. Combined with the last-shot rule , the party who fired the last form before performance dictated the terms.
The UCC rejected this. Under 2-207 :
2-207(1): A definite and seasonable expression of acceptance forms a contract EVEN IF it states terms additional to or different from the offer — UNLESS acceptance is expressly made conditional on assent to the new terms (a true counteroffer).
2-207(2): Additional terms are proposals. Between merchants they automatically become part of the contract UNLESS (a) the offer expressly limited acceptance to its terms, (b) the new terms materially alter the deal (e.g., disclaiming warranties, adding arbitration in some courts, shifting risk), or (c) the offeror objects within a reasonable time. If either party is a non-merchant, additional terms are mere proposals that need express assent.
DIFFERENT (conflicting) terms: courts split. The majority 'knockout rule' cancels both conflicting terms and fills the gap with UCC defaults.
2-207(3): If the writings do not form a contract but the parties perform as if one exists, a contract exists on the terms they agree on, supplemented by UCC gap-fillers.
Quick 2-207 Decision Path
Is there a definite expression of acceptance, or is it expressly conditional? If conditional → counteroffer, analyze under 2-207(3) if they perform.
Contract formed under 2-207(1)? Then run additional terms through 2-207(2)'s three filters.
Conflicting terms? Apply the knockout rule (majority).