Offer and acceptance

One party must make an offer to the other, which the other accepts. This offer and acceptance can be written or oral, but of course written agreements are more clear, and easier to prove in the case of a dispute.

The offer can be made is such a way that it is valid for only a certain time period, or under certain conditions, and these then define the boundaries of the offer. It is not valid outside these boundaries unless the offering party decides to extend it.

The offer must be in accordance with the laws, which apply geographically and otherwise to the situation. In the case of international services, this can become quite complicated, as the laws in each location as well as international law might all come into play. And in the case of services such as internet, even the location of the service can be tricky to define.

Contracts can include many additional options and clauses, all of which should be worded according to the applicable laws.

Problems can occur when negotiations stretch over a period of time, if each party does not wait for the other to respond before taking the next action. Since many agreements move forward before the paperwork has been completed, there is considerable possibility for disagreements or misunderstandings to occur. If one party provides service or delivers the product before the contract is complete, or if both parties independently start to mark up the contract, in order to save time, there is obvious potential for misunderstanding.

When such misunderstandings lead to actual contract disputes, these may need to be settled in court, and there is no clear direction that the courts will take. There are three different principles that a court might use to rule on such an issue, and these would lead to different conclusions.

A. Mirror Image Rule: This rule might be used when both parties are exchanging amended forms without waiting to hear from the other party. When the forms exchanged are materially different, the court would rule there was no contract formed. However, if one party has performed the contract, the court is not likely to use this rule as at least one of the parties believed that there was a valid contract.

B. "Last Shot" Rule: In this case the court would rule that the final document sent is the contract. This can be a good solution, particularly if one party has delayed for some time in responding. However in some cases this can be inappropriate. The last document could be an invoice sent by a contractor after performing service which includes additional time, or a higher rate than had been under consideration in earlier correspondence.

C. "Wink of the Eye" Rule: In this case the court chooses one point in time during the negotiations and declares the conditions in this document to be the contract.

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Project Management Made Easy

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