What is an offer?

October, nineteen twenty nine. A man in Bucksport, Maine, wants to buy a building on Main Street, a block of shops with apartments above, called the Bradley block. The owner lives in New Jersey and is travelling in France. So the buyer writes him a letter. Will you sell me your store property, he asks, for the sum of six thousand dollars.
The answer takes a while to arrive. It is written in Cannes in November and lands in Bucksport in December. Here is what it says. Because of improvements which have been added and an expenditure of several thousand dollars it would not be possible for me to sell it unless I was to receive sixteen thousand dollars cash. The owner adds that the upper floors have been converted into apartments with baths and the building put into first class condition.
The buyer does not hesitate. He sends a telegram to France that same day. Accept your offer for Bradley block Bucksport, terms sixteen thousand cash, send deed to Eastern Trust and Banking Company, Bangor, Maine, please acknowledge. Four days later he is told that the owner does not wish to sell. He sues.
So here is the question. The buyer asked. The owner named a price. The buyer said yes to that price. Is there a contract? Think about it before I go on, and notice that this is not the question we asked last time. Nobody here is claiming to have joked. The question is whether the owner's letter was an offer at all.
And now the question I keep asking. What exactly did these people promise each other? The buyer asked a question. The owner answered it. Did the owner, in answering, promise to sell? Read his sentence again. It would not be possible for me to sell unless I was to receive sixteen thousand dollars cash. Is that a promise, or is it a statement about the price below which he would not go?
Here is the first line for the board. An offer is a manifestation of willingness to enter into a bargain, made in such a way that the other person is justified in understanding that his assent will conclude the deal. Three things are packed into that sentence, and I want each of them on the board. Willingness to be bound, not just willingness to talk. Definite enough terms that a court could enforce them. And an addressee, someone who is justified in understanding that saying yes will close the bargain.
Second line. The opposite of an offer is not silence. It is preliminary negotiation. Statements of the price at which one might sell. Expressions of interest. Invitations to make an offer. Requests for bids. All of these are how people get toward a bargain, and none of them, by itself, gives the other side the power to close it. The person who makes an offer hands the other party a power, the power of acceptance. The person who merely negotiates keeps that power for himself.
Third line, and it is the test you will actually use. Ask what a reasonable person in the recipient's position would understand from the words. That is the same objective test as last time, pointed at a new question. Not, did the speaker mean it, but, would a reasonable recipient understand that he was being handed the power to close the deal by saying yes?
Now the case. Owen against Tunison, decided by the Supreme Judicial Court of Maine in nineteen thirty two. The buyer's claim was that the owner had agreed in writing to sell for a stated price in cash and then refused. The court's answer turned entirely on the owner's letter.
Here is what the court said. It remains for us to point out that defendant here is not shown to have written to plaintiff an offer to sell. And the reason. There can have been no contract for the sale of the property desired, no meeting of the minds of the owner and prospective purchaser, unless there was an offer or proposal of sale. It can not be successfully argued that defendant made any offer or proposal of sale.
The court then did what courts do. It looked at how earlier courts had read similar words. One case had held that the words, would not consider less than half, were not to be taken as an outright offer to sell for one half. Another concerned a seed dealer who wrote that he wanted two dollars and twenty five cents a hundredweight for his seed. The court quoted that decision. He does not say, I offer to sell to you. The language used is general, and such as may be used in an advertisement or circular addressed generally to those engaged in the seed business, and is not an offer by which he may be bound, if accepted, by any or all of the persons addressed.
And then the court's own conclusion, in two sentences. Defendant's letter of December fifth in response to an offer of six thousand dollars for his property may have been written with the intent to open negotiations that might lead to a sale. It was not a proposal to sell. Judgment for the defendant. The buyer who had said yes had said yes to nothing, because there was nothing on the table to say yes to.
Notice something about the shape of this case, because you will see it again and again. The buyer's letter, will you sell me the property for six thousand dollars, was itself an offer. The owner's reply was not an acceptance, and it was not a counter offer either. It was a statement of the owner's position, which invited the buyer to make a better offer. And the buyer's telegram, accept your offer, was, in law, a new offer, at sixteen thousand, which the owner was free to decline. And did.
Now a case that comes out the other way, so you can see where the line is. Eighteen ninety five, Kentucky. A wooden ware company writes to a glass works. Please advise us the lowest price you can make us on our order for ten car loads of Mason green jars, complete, with caps, packed one dozen in case. The glass works replies three days later. Replying to your favor of April twentieth, we quote you Mason fruit jars, complete, in one dozen boxes, delivered. Then the prices. And then these words. For immediate acceptance, and shipment not later than May fifteenth. The next day the buyer telegraphs. Enter order ten car loads as per your quotation. The glass works refuses to fill it.
The Kentucky court held that there was a contract. Listen to how it handled the word quote, which the seller relied on. In this case we think there was more than a quotation of prices, although appellant's letter uses the word quote in stating the prices given. What made the difference was the rest of the letter. It answered a request for a price on a specific quantity of specific goods. It said, for immediate acceptance. A reasonable buyer reading those words would understand that he was being invited to close the deal by saying yes, and he said yes.
So put the two letters side by side. Maine. It would not be possible for me to sell unless I was to receive sixteen thousand dollars. Kentucky. We quote you, for immediate acceptance, shipment not later than May fifteenth. The first names a floor. The second invites a yes. The word quote did not decide the Kentucky case, and the words would not be possible did not decide the Maine case by themselves either. What decided both was what a reasonable recipient would understand the whole letter to mean.
Now let's change one fact. The Maine owner writes instead, I will sell you the Bradley block for sixteen thousand dollars cash if you let me know by the end of the month. The buyer telegraphs yes the next day. Is there a contract? Choose an answer before I go on.
Most people say yes, and this time they are right. Look at what has changed. I will sell is a commitment, not a floor. The price is definite. The addressee is one person. And the deadline tells the buyer that his yes, given in time, will close the deal. That is an offer, and the telegram accepts it.
Change one fact again. The owner writes, I would consider sixteen thousand dollars. Is there an offer? Choose.
Most people say no, and they are right, but I want you to be able to say why. Consider is a word about the owner's state of mind, not about what he will do. A reasonable reader understands that the owner is telling him what price is worth talking about. The power to close the deal has not been handed over. It is preliminary negotiation, almost exactly the Maine letter with different words.
Change one fact a third time. The owner writes the strong version, I will sell for sixteen thousand cash, but he writes it to the buyer and to three other people who had asked about the building. Is there an offer to our buyer? Choose.
This one is argued, and the argument is the point. On one hand, the words are words of commitment. On the other, there is one building and four recipients, and the seed case tells you why that matters. A reasonable reader who knows that the same letter went to several people has reason to doubt that his yes alone will close the deal, because the seller cannot sell one building four times. Many courts would call this an invitation for offers. Some would find an offer to each recipient, with the seller bound to the first to accept. You should be able to argue both sides, and you should notice that the answer turns on what the recipient knew about the other letters.
Here is what people get wrong here, and why it is tempting. The first mistake is treating any statement of a price as an offer. I'd take sixteen thousand, sounds like an offer, and it is not, because it does not commit the speaker to sell. The second mistake is assuming the first person to speak is the offeror. In Maine the buyer spoke first, and he was the offeror, and the owner never became one. Work out who is handing over the power of acceptance, not who spoke first. The third mistake is reading one word, quote, or offer, or accept, as if it decided the question. Words matter, but the whole communication decides it. The Kentucky seller wrote quote and made an offer. The Maine buyer wrote accept and accepted nothing.
Here is the rule, in one breath. An offer is a communication that a reasonable recipient would understand as handing him the power to close the bargain by saying yes, definite in its terms and addressed to him, and a statement of price, interest, or intention, without that commitment, is negotiation and nothing more. Now, five questions.