What is an offer in contract terms?

An offer in contract terms refers to certain contractual terms posed by one party to another, indicating a willingness to enter into a binding agreement under those specified conditions. It is a critical first step in the formation of a contract and includes the essential details such as the subject matter, price, and terms of performance. When one party makes an offer, they are essentially inviting the other party to accept those terms, which can lead to a legally enforceable contract if accepted.

Understanding this definition is essential in the context of contract law, as it sets the groundwork for establishing the subsequent elements of a contract, such as acceptance and consideration. The clarity and specificity of the terms within the offer are vital, as vague or ambiguous offers may lead to disputes or may not be enforceable.

In contrast, a promise made between two parties may not necessarily constitute a formal offer unless it includes the specific terms required for a contract. A negotiation tactic, while relevant in discussions, does not define an offer as it doesn't imply a willingness to be bound by terms. A signed agreement indicates that both parties have accepted the offer and are formalizing their contract, but it comes after the offer has been made and accepted.