It is in the interests of the offeror to define a time during which the offeree’s response is due. But even if the offeror fails to do so, its offer will not be valid without a term.
In accordance with Civil Code’s Article 66, a declaration of intent to contract made to the other party constitutes an offer if it specifies essential terms of the contract. An offer may specify a term during which the offeror will be waiting for the offeree’s response. But this is not obligatory. Does that mean you can make an offer with an indefinite validity?
A common procedure
Offer and acceptance is among the basic procedures to form a contract. It is widespread in practice and used for all kinds of contracts, including important commercial transactions.
In the procedure, one party (offeror) makes a declaration of intent constituting an offer to the other (offeree), while the other makes a declaration of intent constituting the acceptance. The offeree’s declaration is constitutive of the contract.
Firm offer period
The time of waiting for acceptance by offeree is the so-called firm offer period. During this time, the offeror is as a rule not allowed to avoid entering into the contract and must remain ready to execute and perform it. But whether or not the contract will be executed is beyond her control. This decision is exclusively the offeree’s to make.
The offeror may specify a time for acceptance by the offeree. This time may designated as a date, a period, or a future and certain event marking the end date by which the offeror will be waiting for the response. After this deadline passes, acceptance will be ineffective and no contract will be formed. However, there is no duty to indicate such a deadline. Does that mean that without a deadline for acceptance the offer will be termless? And is the offeror himself allowed to stipulate that his offer is termless?
Termless offer clauses are ineffective
Unfortunately, the offeror is not entirely free setting a time for acceptance. It is accepted that a clause in the offer specifying that it is termless will be ineffective.
Some authors consider that such an offer will be a mere invitation to treat. But most believe that a termless offer will fall within Civil Code’s Article 66(2) containing rules on how to set a firm offer period. This law applies also where the offeror sets no period or deadline for acceptance at all. Each offer is thought to intrinsically and structurally involve a limitation of time for acceptance and making a termless offer would be contrary to the essence of the offer as such.
While there are some legal scholars supporting an opposing view (that termless offers are admissible), they are few and far between.
Interestingly, setting a period that is too short is also considered ineffective.
Civil Code rules
Article 66(2) says that “an offer made either in the presence of the other party or via means of direct distance communication shall cease to be binding when it is not accepted promptly.”
Interpretation of the law may become problematic when it comes to offers made using means other than means of direct distance communication. As the law says, such an offer “shall cease to be binding upon expiry of the time during which the offeror could receive the response in the ordinary course, if sent without an unreasonable delay.
The law merely offers guidance on how to specify a firm offer period. This obviously is a useful option for adjusting the period to desired length. On the other hand, it creates uncertainty as the offeror and the offeree may each have a different take on how long the period actually is.
When setting the firm offer period, you should consider the following factors:
– the time needed for the offer to reach the offeree;
– the time needed to take cognizance of the offer;
– the time needed to consider the offer and make decision whether or not to accept it;
– the time needed to prepare and send the response to the offeror;
– the time for the response to be delivered to the offeror.
In addition, the length of this period may be affected by the nature of the proposed contract, including its complexity and intricacy. The decision-making procedures in the offeree’s company as well as their duration may be of importance as well.
It is in the interests of the offeror to set a time for acceptance by the offeree. Otherwise the code rules will apply by default. Consequently, it is not possible to make a termless offer that can be accepted at any time indefinitely.
For the full article, see also rp.pl.