Requirements for a valid offer

By 27th November 2020Corporate & Commercial
binding contracts

We often hear about contracts that bind us to do certain things. However, many people may not know that there are specific elements that need to be met for a contract to be valid and binding.

The first thing you need to have clear in your mind is whether the five elements of a contract have been satisfied, namely, certainty, consideration, competency, legality and offer and acceptance.

But how do you know you are accepting a valid and proper offer?

The requirements below indicate the elements of an offer. Note that the Consumer Protection Act 68 of 2008 (CPA) may also apply, however, this is slightly more intricate, and you may need to consult your attorney, as the CPA isn’t always as simple as it seems. With that said, please note that:

THERE MUST BE A DECLARATION OF WILL

There must be an external action/declaration of will. This is form-free, though it is usually done orally. But be careful, there are cases where certain formalities are prescribed in which case those formalities must be followed, for example, in the sale of immovable property and suretyship agreements, The offer and acceptance must be in writing in these circumstances. Make sure you consult your attorneys if you’re dealing with the sale of land for example.

THE OFFER MUST BE FIRM

The offer must be made with the intention to create reciprocal obligations (with the necessary “animus contrahendi”); therefore it must be specific and not tentative.  An attempt to merely get people to come and do business with you without expressly agreeing the material terms will not constitute the necessary animus contrahendi.

THE OFFER MUST BE COMPLETE

The content of the offer must be complete and certain. In this instance, you as the offeree must know what you are accepting and binding yourself too. Again, this sounds simple enough, but people often get caught up in situations believing they are accepting one thing when they are in fact receiving something else, or something additional on top of what they think they are accepting.

THE OFFER MUST BE AIMED AT SOMEONE

The offer to be aimed at someone, and this must come to their attention. Take note that an offer can also be made to the public at large through, for example, adverts. However, offers made to the public for rewards can be slightly more complex in terms of whether they meet requirements for a valid offer.

THE OFFER MUST NOT HAVE LAPSED

The offer must not have lapsed / it must still be possible to accept the offer. Sounds simple enough, right? Watch out – an offer will lapse when one of the parties say “you must accept this offer in 14 days” and this time expires. You don’t want to end up in a position where you miss the cut-off date.

 

We trust that the above will provide you with some guidance and clarity on the topic. But if you find yourself questioning the validity of either an offer you made or accepted, please don’t hesitate to contact us, we will be happy to provide you with the legal clarity you require.

 

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