In everyday life, offers often come across to buy goods on certain conditions. Such offers to make transactions are called an offer. The person who made the agreement is obliged to conclude an agreement on the specified conditions. The offer includes not only the contract of sale, but also advertising.
Terms
An offer is an offer of one person (offeror) to an acceptor to conclude a transaction in which all its conditions are spelled out. If the addressee accepts the offer, that is, accepts it, then the contract is signed on the agreed terms. A feature of this document is that the issuance of the offer obliges the sending person to conclude an agreement with the acceptor. The text of the document should be clear and understandable. It should clearly indicate that the person intends to conclude an agreement on specific conditions. The order of execution of the agreement is also prescribed in the document. In some cases, the offer is made orally.
Legislative regulation
The rules for the distribution and functioning of such types of contracts, including an irrevocable offer, are spelled out in Art. 438 of the Civil Code of the Russian Federation. In some cases, even advertising is recognized as an offer. Its validity is regulated by the Federal Law “On Advertising”. In Anglo-American law, the emphasis is not on the recipient of the proposal, but on the clarity of the conditions. The acceptor from the text of the agreement must clearly understand all the conditions of interaction. For example, in the offer the price may not be indicated. If such a document is accepted, then it is valid at “reasonable prices.”
If in Russian law a contract is considered concluded after the person who sent the offer receives an acceptance, then the "mailbox rule" applies in American law. The contract is considered accepted at the time when the addressee has placed the signed agreement in the mailbox. The term of delivery of the agreement to the provider does not matter. The risk of non-compliance with the terms of the agreement due to loss of correspondence increases. Therefore, an irrevocable offer to conclude a contract often prescribes the procedure for determining the time for concluding a contract.
Types of offers
A public offer is sent to an indefinite number of persons, contains all the conditions for concluding a contract. The agreement is signed with any person who responds to the proposal. The recipient after taking any action in order to accept the proposal (for example, sending an application for a product) may require the fulfillment of obligations. A free offer is offered to several buyers for a preliminary study of the market by the seller.
A solid offer is offered to one potential buyer. It indicates the period during which the seller must enter into an agreement. If at this point the buyer does not give his acceptance, then the preliminary agreement is canceled.
An irrevocable offer does not provide for the withdrawal of an offer. It is often used by issuers in offers to redeem or redeem the securities of their customers. The contract comes into force after emphasis by the recipient. Silence is not a positive response to the offer.
Advertising
In the laws of most countries, advertising is interpreted as an invitation to negotiations. However, judicial practice shows that such an offer often contains misleading information regarding the product and its price, although such an announcement may be considered an offer. Therefore, if the contract is concluded on the conditions presented in the announcement, then such advertising is considered an offer.The advertiser is solely responsible for fulfilling the obligations.
Irrevocable offer for bonds
Many issuing companies draw up offers for bonds. They prescribe the possibility of early repayment of the Central Bank at the agreed price. In long-term bonds, an irrevocable offer for the investor and issuer is a means of regulating the yield. Thus, the issuer may prescribe that the payment of coupons will be less than its market price.
The date of acceptance of an irrevocable offer is fixed in advance and is not subject to change. This enables the investor to regulate credit risk, and the issuer - interest rate risk. The buyback price is determined by the contract and may be higher or lower than the market price. The redemption order is also prescribed in the contract.
An option for an irrevocable offer means the execution of an agreement by one party and its transfer to the other party. However, in this case, mandatory fees are not provided. Such an agreement greatly facilitates the process of mergers and acquisitions. It gives owners the opportunity to smoothly regulate capital and transfer rights upon liquidation of the organization.
Life examples
The simplest example of an irrevocable offer is a bank sending out offers to its customers to open a credit card. The recipient, by signing the agreement, accepts the terms of the contract. Another potential customer might just throw the offer in the trash. Both clients will be absolutely right, as the advertising mailing only informs the buyer about the opportunity to make a deal. The bank can no longer refuse to grant a loan to a client if he provides only a passport, an offer and has not provided a certificate of his income. Only if the bank manages to send a review of the offer, it will be entitled not to provide a loan. At the same time, an irrevocable offer certificate is not required if the deadline is not specified in the text. In practice, banks rarely prescribe in such agreements a deadline during which the customer can apply for a credit card.
Any advertising (product catalogs, booklets or announcements) is considered a public offer. As well as the announcement of the sale of private property. The advertiser is required to comply with the terms of the public offer. Advertising, which is filled with streets, magazines, radio, newspapers, television, is only an invitation to offer. It does not entail the obligation to conclude a contract.
Features of an irrevocable offer
From the name of the document itself, it is clear that such an offer cannot be canceled after signing. The person initiating the issuance of the contract may not change the terms of service of the contract. Therefore, the text of the document should be immediately framed in a simple and understandable language, so that none of the parties would have disagreements about the interpretation of the terms.
Another distinguishing feature is the absence of a deadline for withdrawing an offer. The addressee who has received the offer is not required to conclude a contract, but he may refuse the offer. Consider this situation using the same credit card as an example. After receiving a card, one client immediately activates it, and the other throws it in the trash along with the ballot.
Often such agreements are used by the participants of the LLC when selling the company to third parties. Changes to the legislation on LLCs since 2016 have touched this issue. Now only a notarization of an irrevocable offer makes such a document valid.
Offer example
In accordance with the offer of LLC “AVS” (“Issuer”), it irrevocably agrees to purchase interest-bearing bonds of “VAS” LLC series AAA to bearer, having state number 444, worth 1,000 rubles each, in an amount up to 315 thousand pieces from any holder of the issue of February 11 2012 ("Offer Execution Day"), under such conditions.
Procedure for accepting an offer through the Trading System of MICEX CJSC
An offer is considered accepted while observing two conditions:
a) If, from 14 to 7 calendar days before the Offer Execution Day, the holder (acceptor) will send the issuer’s underwriter a written notice of intention to sell a certain amount of securities signed by the holder’s authorized person.
b) After the notification is sent, an address application for the sale of bonds will be submitted to the MICEX system with an indication of the price. The application must be submitted from 11:00 to 15:00 on the day the offer is executed.
The fulfillment of conditions a and b of clause 1 is an unconditional acceptance of the offer and means a conclusion between the issuer and the acceptor.
The issuer is obliged to purchase the Central Bank at a price equal to 100 percent of the nominal value.