The Difference Between a Preliminary Inquiry and an Offer
A Preliminary Inquiry is like a fishing expedition. The parties merely discuss what they’d hypothetically be willing to offer or accept, this is to test whether a party had presented an offer, or asked whether a reasonable person would think that no more than an acceptance is required to form a contract, carefully scrutinize the language and the context.
Suppose Mary says to Tom, “How much would you sell your house for? “ Tom responds, “I’d like to get $10, 000 for it” Mary says “ I accept” Have the two parties formed a contract? Mary clearly uttered a manifestation of acceptance, but does what Tom said constitute an offer?
The test is whether a reasonable person observing this conversation would think that when Tom said, “I’d like to get $100, 000 for it,” he was expecting Mary to make him an offer, it’s not the same as saying something like “Give me $100, 000 for it, and it’s yours, “ Tom statement is more along the lines of a preliminary inquiry than an offer.
Similarly, If Tom puts a sign outside his house that says, “for sale, $100, 000 that’s not an offer, Mary can’t simply accept the offer by handling Tom a suitcase with $100, 000 in it, because that’s not the customary practice for this type of transaction.
Read more: The Role of remedies in Relational theory of contract
Customary practice is to put a for sale sign outside a house to solicit offer to buy the house, not to get people to give an acceptance in preliminary offer, based on the language and the context, more than acceptance is required to form a contract.
Distinguishing Advertisement from Offer
An Advertisement is generally not an offer, it’s an invitation to make an offer, assume a store advertised in the newspaper, “Golden 50” HDTVs $500.
“If this were an offer, the store would legally be obligated to sell a TV to everyone who accepted the offer, even if the store ran out of these TV’s.
If the store couldn’t deliver on its commitment, it would be found in breach.
Contract law comes to the aid of the store by saying that the aid is merely an invitation to make an offer.
Technically, when a customer goes to the store and says, “I’d like to buy one of those TVs you advertised” The customer is making an offer. The store can then accept or regret it.
Similarly, a catalogue is not an offer but an invitation to make an offer.
For example, if I order something from a store and says, “I’d like to buy one of those TVs you advertised.” The customer is making an offer. The store can then either accept or reject it.
Similarly, a catalogue is not an offer but an invitation to make an offer for example, if I order something from a store catalogue and they’re unable to supply it, the store isn’t in breach.
I make my offer when I submit my order. If they can’t fill my order, they decline my offer.
Of course, stores can take advantage of this arrangements by employing bait and switch- advertise an incredible deal (the bait) and then offer a deal that’s not so great (the switch).
Contract law has no situation for this problem, but most jurisdiction have enacted consumer protection laws that make the bait and switch a legal violation.
This is why store often add language to their advertisement such as “while supplies last’ or “quantities limited”.
Another way to resolve the issue of multiple acceptance and limited supplies is to make an item available only to the first person who accept it, if I have six friends over to my house, for example, and say to them.
“I’ll sell this widget for $10 five of them may accept, I’d best in trouble if the remaining four file a breach of contract claim against me.
Read more: Navigating Breach of Contracts
A reasonable person in this situation would probably say that because the six offeree knew I had only one widget for sale, a reasonable way to resolve which of them got it would be the first to accept.
An advertisement may be an offer, if it’s so clear and definite that only acceptance is required to form the contract.
Circulars are especially vulnerable because each recipient might not reasonably know that the others have received the same circular.
If I send a letter to six friends offering to sell a widget for$10, this may constitute an offer if each recipient didn’t know I’d sent the offer to others.
Then I could be bound by multiple acceptances, because each offeree might reasonably think I had one widget and was offering it to him or her exclusively.
Deciding how long an offer remains open
An offer remains open for whatever time period is reasonable, what’s reasonable values according in facts and circumstances.
If late in the day on Friday I offer to sell you 1000 shares of megalmort stocks for $20 a share, you may reasonably expect the offer to remain open until the opening bell on Monday, because the share views won’t change over the weekend.
If we’re standing on the floor of the new York stock Exchange during the trading day, however abd I say the same thing to you, the other may be open for only a few seconds because value may be very volatile, (some old cases state that an offer made during a face-to-face face meeting lapse when that meeting ends).
The offerer may revoke the offer any time before acceptance, for example, if I say, “I’ll sell you 1000 shares of megalmort stocks for $20 a share, you may reasonably expect the preliminary inquiry to remain open until the opening belt on Monday, because the share value won’t change over the weekend.
If we’re standing on the floor of the new York stock Exchange, during the trading day, however and I say the same thing to you, the other may be open for only a few seconds because values may be better volatile, (some old cases that state that an offer made during a face to face meeting lapse when that meeting ends).
The offerer may revoke the offer and its no longer available for you to accept.
In Preliminary Inquiry even if the offerer promise to keep the offer open for a specific time, she may revoke the offer before the time expires.
for example, if on Friday, I say “I’ll sell you 1000 shares of megalmort stocks for $20 a share and this offer is open until Tuesday noon and then I say I take it back” I’ve successfully revoked the offer, because I merely made you a gift promise to keep the offer open until Tuesday.
In U. S law, gift promise are not enforceable.
The rule that the offerer may revoke the offer any time before acceptance has several exception, including the following:
- Option contract
- Statutes that create an option
- Reliance on the offer
Making an Option contract
For an offer to remain open, a party must make an enforceable promise- a promise given in exchange for something from the other party.
One way to keep an offer open is through the use of an option contract, one party agrees to keep the option open in exchange for something often money.
Assume that after I made the offer on finding your say, “I promise you a dollar to keep that offer open until Tuesday noon” you made an offer to give me a dollar for my agreeing to keep my offer open until Tuesday. If I accept, then we have an enforceable contract.
Recognizing statues that create an option
Through a statue, the legislature is free to charge the common-law rule. The law may disallow an offerer from revoking an offer under certain conditions. In situations in which the specified conditions exists parties make an option contract without meeting the common law requirements.
The legislature had done this in UCC 20s, which is called firm offer. An offer buy a merchant to buy or sell good in a signed writing which by its form gives assurance that it will be held open is not revocable, for lack of consideration during the time stated or if no time stated for a reasonable time.
But in no event may such period of irrevocably exceed 3 months by any such terms of assurance on a form supplied by the offeree must be separately signed by the offerer in Preliminary Inquiry .
