An offer is an unequivocal expression of willingness to contract on specified terms. It must be distinguished from other negotiations and from the ‘invitation to treat’ which is merely an indication of a willingness to receive offers.
The word “offer” has so often been loosely used that in the shipbroking world one is careful to use the words “firm offer”. Care must also be taken when responding to a request for information, such as asking what is the lowest rate an owner would accept for a certain cargo; the reply to such a request does not constitute an offer; an offer has to be an unequivocal indication of a willingness to be bound.
An offeree’s power of acceptance can also be terminated by the non-occurrence of any condition of acceptance under the terms of the offer. The offer made by the offeror must now be accepted by the offeree on the stated terms. Thus the acceptance turns the offer – made with an intention to be bound – into an agreement. The acceptance must be made in response to the offer and must exactly match the offer. If the offeree alters the term in any way this will not be an acceptance but a counter-offer. The original offer is said to have lapsed.
The acceptance must be communicated to the offeror. The general rule is that acceptance has not occurred until actually received by the offeror. Spoken words must be heard. If the negotiations are by telephone and loud noise drowns out of the offeree’s words, then no acceptance has occurred.