The courts normally attempt to “save” contracts whenever feasible, but sometimes it is impossible to do so. Two common reasons that contracts fail are that (1) the terms of the offer were too unclear or indefinite to constitute a binding contract on the offer’s acceptance, and (2) the acceptance was not timely. If you are an offeror, you can control both of these factors: you can determine what the terms of the future contract will be, as well as the time and mode of acceptance. Include Clear and Definite Terms If a contract’s terms are too unclear or indefinite, the contract will fail. Unless a court can ascertain exactly what the rights and duties of the parties are under a particular contract, the court cannot enforce those rights and duties. Therefore, as an offeror, make sure that the terms of your offer are sufficiently definite to constitute a binding contract if the offer is accepted. A statement such as “Quantity to be determined later” may allow the offeree, after acceptance, to claim that a contract was never formed because the quantity term was not specified or is ambiguous. (Note, however, that sales and lease contracts governed by the Uniform Commercial Code may be formed even though terms are missing or ambiguous.) Another reason an offeror should make sure that the offer’s terms are clear and definite is that if a contract results, any ambiguous provision may be interpreted against the party that drafted the contract (see Chapter 8). Specify the Time and Mode of Acceptance Problems concerning contract formation also arise when it is unclear whether an acceptance is effective or at what time it became effective. To avoid such problems, you should take some precautions when phrasing the offer. Whether your offer is made via the Internet, fax, express delivery, or mail, you can specify that the offer must be accepted (or even that you must receive the acceptance) by a certain time, and if it is not, the offer will terminate. Similarly, you can specify the mode of acceptance. In online offers, you can indicate that to accept the offer, the user must click on a certain box on the screen. If you make an offer and want the acceptance to be faxed to you, make sure that you clearly indicate that the acceptance must be faxed to you at a given fax number by a specific time, or it will not be effective.
CHECKLIST FOR THE OFFEROR
1 Make sure that the terms of the offer are sufficiently clear and definite to allow both the parties and a court to determine the specific rights and obligations of the parties. Otherwise, the contract may fail for indefiniteness.
2 Specify in the offer the date on which the offer will terminate and the authorized mode of acceptance. For example, you can indicate that an acceptance, to be effective, must be faxed to you at a specific fax number by a specific time or date. You can even specify that the acceptance will not be effective until you receive it.