Formation of Contracts

Contracts involve an offer by one party and an acceptance by the other. Both the offer and the acceptance must be definite, unqualified, and unconditional. An advertisement for bids is not itself an offer, but a bid in response to such an advertisement is an offer. An offer may be revoked at any time prior to its acceptance, but that revocation must be communicated to the offeree before acceptance.

Under common law principles, the offer and the acceptance must match (i.e., must be a mirror image of each other) at least as to those aspects that are considered “material.” The term  material basically means important or significant. In contract law, all the basic terms involving price, quantity, delivery, and warranty are considered material. The provision of the contract dealing with dispute resolution is also material, even though the parties may not pay much attention to that.

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