You walk into the MBE knowing you’ve memorized dozens of contract rules. Then question 3 hits you with a fact pattern about whether a response to an offer creates a binding contract, and suddenly you’re second-guessing everything. Was that acceptance valid? Did the counteroffer terminate the original offer? Is this common law or UCC?

Offer and acceptance questions are everywhere on the Contracts portion of the MBE, and they’re deceptively tricky. The examiners love testing the formation stage because one misapplied rule means the entire contract analysis collapses. If mutual assent never happened, nothing else matters—no breach, no remedies, no contract. You need these rules locked down cold.

What Makes a Valid Offer?

An offer is a manifestation of present contractual intent communicated to an identified offeree, containing definite and certain terms, that creates the power of acceptance in that offeree. That’s the formal definition. Here’s what it means in practice: the offeror must demonstrate they’re ready to be bound right now, not just exploring possibilities.

The MBE will test whether a communication is actually an offer or just preliminary negotiation. Advertisements are the classic trap. Generally, ads are invitations for others to make offers, not offers themselves. But—and this is where points are won or lost—an advertisement becomes an offer if it’s specific enough that nothing is left open for negotiation and it limits who can accept. The classic example: “First 10 customers Saturday morning get this laptop for $200.” That’s an offer because it identifies exactly who can accept and on what terms.

Required Terms Depend on What’s Being Sold

Under common law (services, real estate, employment), an offer must include all essential terms: parties, subject matter, price, and time of performance. Real estate contracts must identify the specific land and state the price. Leave out the price? Not an offer.

Under the UCC (sale of goods—tangible, movable things), you only need quantity. That’s it. The UCC supplies gap fillers for price, place of delivery, time of performance, and payment terms. This is a massive difference and the MBE exploits it constantly. If a question involves selling 500 widgets but doesn’t mention price, that’s still a valid offer under the UCC. The court will imply a reasonable price at the time of delivery.

When Does an Offer Terminate?

An offer doesn’t last forever. It terminates through revocation, rejection, lapse of time, death or incapacity of either party, or supervening illegality. Let’s focus on the two that trip up students most.

Revocation by the offeror is effective when the offeree receives it. The offeror can revoke any time before acceptance unless the offer is irrevocable. Revocation can be direct (the offeror tells you) or indirect (you learn the offeror sold the item to someone else). If you see a fact pattern where the offeree hears from a reliable source that the offeror has acted inconsistently with the offer, that’s an indirect revocation.

Rejection by the offeree terminates the offer immediately. A counteroffer counts as rejection. This is critical: if the offeree says “I’ll pay $4,000 instead of $5,000,” that’s a counteroffer, which terminates the original offer and creates a new offer going the other direction. The original offeror is now the offeree and can accept or reject the new terms. But a mere inquiry—“Would you consider $4,000?”—is not a counteroffer. The original offer survives.

Irrevocable Offers: Four Exceptions You Must Know

Most offers are revocable, but four situations make an offer irrevocable:

Option contracts: The offeree pays consideration (even nominal consideration like one dollar) to keep the offer open for a stated period. The offeror cannot revoke during that time.

UCC firm offers: A merchant’s signed written offer to buy or sell goods that states it will remain open. No consideration required. Irrevocable for the stated time, or up to three months if no time is stated. This only applies between merchants in a goods transaction.

Unilateral contracts: Once the offeree begins performance (not mere preparation), the offer becomes irrevocable. If I offer you $500 to paint my house and you show up with a ladder and start painting, I can’t revoke. But if you’re still shopping for paint, I can.

Detrimental reliance: If the offeror should reasonably foresee that the offeree will rely on the offer, and the offeree does rely to their detriment, the offer may become temporarily irrevocable under promissory estoppel principles.

Acceptance: The Mirror Image Rule vs. Battle of the Forms

This is where students lose the most points, because the rules are completely different under common law and the UCC.

Common Law: Mirror Image Rule

Under common law, acceptance must be the mirror image of the offer. Any change—no matter how minor—is a counteroffer, not an acceptance. The original offer is terminated. If the offeror offers to sell services for $5,000 and the offeree responds “I accept, payment in 60 days instead of 30,” that’s a counteroffer. No contract exists unless the original offeror accepts the new terms.

UCC: Battle of the Forms (Section 2-207)

The UCC throws out the mirror image rule for the sale of goods. A definite expression of acceptance operates as acceptance even if it contains additional or different terms. The key question becomes: do those extra terms become part of the contract?

Between non-merchants, additional terms are merely proposals. They don’t become part of the contract unless the offeror expressly agrees to them.

Between merchants, additional terms automatically become part of the contract unless: (1) the offer expressly limits acceptance to its terms, (2) the new terms materially alter the contract, or (3) the offeror objects within a reasonable time.

Material alteration is the big issue. Adding an arbitration clause? Material. Changing payment terms significantly? Material. Adding a standard warranty disclaimer when the offer was silent? Probably material. These terms get knocked out, and the contract is formed on the offeror’s terms.

Here’s a hypothetical: Buyer sends a purchase order for 1,000 units at $10 per unit. Seller responds with an acknowledgment form agreeing to 1,000 units at $10 per unit but adding a clause limiting consequential damages. Both parties are merchants. Is there a contract? Yes. Does the limitation clause become part of it? Only if it’s not a material alteration. Limiting consequential damages is typically considered material, so the clause would be knocked out unless Buyer expressly agreed or failed to object.

The Mailbox Rule: When Is Acceptance Effective?

Acceptance is generally effective upon dispatch—the moment you drop it in the mail or hit send. This is the mailbox rule, and it only applies to acceptances, not revocations or rejections (those are effective upon receipt).

Four exceptions you must know:

  1. The offer stipulates that acceptance is only effective upon receipt.
  2. Option contracts—acceptance is effective upon receipt.
  3. If the offeree sends a rejection first, then sends an acceptance, whichever arrives first controls.
  4. If the offeree sends an acceptance first, then sends a rejection, the acceptance is effective unless the rejection arrives first and the offeror detrimentally relies on it.

The MBE loves testing the third and fourth scenarios with crossed communications. Visualize the timeline. Did the acceptance get mailed before the rejection? Then acceptance is effective when mailed unless the rejection somehow beats it to the offeror and causes detrimental reliance.

Bilateral vs. Unilateral Contracts: What Type of Acceptance Is Invited?

A bilateral contract is a promise for a promise. You accept by promising to perform. A unilateral contract is a promise for performance. You accept only by completing the requested act.

Modern contract law presumes bilateral contracts when the offer is ambiguous. If the offer says “I’ll pay you $500 to paint my house,” that’s ambiguous. You can accept by promising to paint or by actually painting. But if the offer clearly requires performance—“I’ll pay $500 when you finish painting my house”—that’s unilateral. Starting to paint makes the offer irrevocable, but you haven’t accepted until you finish.

The MBE will give you fact patterns where the offeree begins performance. Ask yourself: was this offer clearly unilateral, or could it be bilateral? If bilateral, the offeree accepted by beginning performance (which implies a promise to complete). If unilateral, the offeree hasn’t accepted yet but the offer is now irrevocable.

Silence as Acceptance: Almost Never

Silence or inaction generally does not constitute acceptance. You can’t mail someone a product and say “if you don’t return this in 10 days, you’ve agreed to buy it.” That’s not how contract law works.

Three narrow exceptions:

  1. Prior course of dealing makes silence reasonable (e.g., a book club where you’ve accepted the default selection by silence for years).
  2. The offeree takes the benefit of services with a reasonable opportunity to reject and doesn’t.
  3. The offeree exercises dominion over goods sent by the offeror (you start using the product).

If you see a fact pattern where someone receives unsolicited goods and just ignores them, there’s no acceptance. But if they start using those goods as if they own them, that’s acceptance by conduct.

What to Memorize for Exam Day

Offer and acceptance questions require you to move fast through a decision tree. Here’s your checklist:

Was there a valid offer? Present intent, definite terms (all essential terms for common law; just quantity for UCC), communicated to an identified offeree.

Was the offer still open? Check for revocation, rejection, counteroffer, lapse of time, or death. Then check for irrevocability (option, firm offer, begun performance, detrimental reliance).

Was there valid acceptance? Under common law, mirror image rule applies—any deviation is a counteroffer. Under UCC, additional terms might become part of the contract depending on merchant status and materiality.

When was acceptance effective? Mailbox rule (effective on dispatch) unless an exception applies.

What type of contract? Bilateral (promise for promise) or unilateral (promise for performance)? This determines what constitutes acceptance.

The Formation of Contracts section is the foundation for every other Contracts question on the MBE. If you can’t spot whether mutual assent occurred, you’ll struggle with performance, breach, and remedies questions later. These rules aren’t particularly complex individually, but the MBE tests them in combination with overlapping fact patterns designed to make you second-guess yourself.

If you want all 106 Contracts rules organized for active recall—including every formation rule, consideration substitute, and enforceability defense—FlashTables breaks them down in a structured two-column format that’s built for memorization under pressure. The table format forces you to actively test yourself on elements and exceptions rather than passively rereading outlines. You can check out the Contracts table and the complete MBE bundle at getflashtables.com.

Master offer and acceptance, and you’ll walk into the MBE with the confidence that comes from knowing exactly what to look for in those first few Contracts questions. That confidence compounds. Get formation right, and the rest of Contracts becomes significantly more manageable.