Mutual Assent: Offer, Acceptance, Mailbox Rule, and UCC 2-207

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:

Four situations make an offer IRREVOCABLE:

1. Option contract — the offeree pays consideration to hold the offer open.
2. 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.
3. Unilateral contract part performance — once the offeree begins the requested performance, the offer becomes temporarily irrevocable (Restatement 45); mere preparation does not lock it.
4. 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

1. Is there a definite expression of acceptance, or is it expressly conditional? If conditional → counteroffer, analyze under 2-207(3) if they perform.
2. Contract formed under 2-207(1)? Then run additional terms through 2-207(2)'s three filters.
3. Conflicting terms? Apply the knockout rule (majority).