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O P I N I O N
Offers and counteroffers We all know negotiating enforceable contracts is part of the game, but in case you forgot a few things, here’s a refresher.
I n 1904, author Mark Twain wrote, “I am a pretty versatile fool when it comes to contracts, and business and such things. I have signed a lot of contracts in my time, and at some time I probably knew what the contracts meant, but six months later everything had grown dim and I could be certain of only two things, to wit: One, I didn’t sign any contract. Two, the contract means the opposite of what it says.”
William Quatman
❚ ❚ Counter-offers and acceptance. When an offer is made (by the “offeror”), this creates the “power of ac- ceptance” in the other party (the “offeree”). The per- son receiving the offer has the power to either accept or to reject the offer. The offer may restrict the man- ner of acceptance, such as requiring signature by an officer of the company, or place a time limitation on acceptance before the offer expires. In such cases, the offer must be accepted in the manner required to form a valid contract. Silence alone is generally not deemed acceptance, but there are exceptions. Con- tracts are based on our outward actions, not secret intentions, so that acceptance must be communi- cated to the offering party to be valid. An exception can arise, however, where the parties have a course See WILLIAM QUATMAN, page 12 “When the deal goes sour, people begin to forget the terms agreed to, or deny ever making such an agreement.”
Twain’s comments reflect the reason we want clearly written, signed contracts before starting any new project. When the deal goes sour, people begin to forget the terms agreed to, or deny ever making such an agreement. Contracts can be oral (“handshake deals”), or written, customized forms or industry standard forms, all of which are legal and binding. Even an email exchange or a signed cocktail napkin can form a legal contract. Here is a refresher on some things you should know about contracts that you may not have learned in school: ❚ ❚ Clear terms of the offer. The offer is a most critical part of every contract. It must be communicated in sufficiently clear terms to make any resulting agree- ment enforceable. Key elements include certainty as to the parties (which company or LLC is entering into the contract), scope, price and time of perfor- mance. The phrase “scope creep” is sometimes used to define a contract whose scope was left vague or ill-defined, resulting in more work or services being requested than originally contemplated. Lock in the scope, schedule and price in clear terms to avoid dis- putes with your clients and contractors.
THE ZWEIG LETTER November 14, 2016, ISSUE 1176
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