AMI 2409 Counteroffer

Use this instruction when it is alleged that a counteroffer was made by one party. Use this instruction with AMI 2405.

The principle of mutuality of obligation requires an offer to be accepted unconditionally and without new terms or conditions. Reservations or limitations in the acceptance effect a rejection of the offer and a counter-offer. Tucker Duck & Rubber Co. v. Byram, 206 Ark. 828, 830–31, 177 S.W.2d 759, 760 (1944) (the inclusion in an acceptance of offer to sell one grade of lumber of a request to purchase an additional, different grade of lumber constitutes a conditional acceptance).

Arkansas law has historically required the parties to mutually agree to “every essential term of the contract.” Id. “It is the settled law of this State that, before an acceptance of an offer becomes a binding contract, the acceptance must be unconditional, and must accept the offer without modification or the imposition of new terms.” Smith v. School Dist. No. 89 of Crawford County, 187 Ark. 405, 59 S.W.2d 1022 (1933) (quoting the Supreme Court of North Dakota). However, this “mirror image” rule has been “mitigated by the interpretation of offers, in accordance with common understanding, as inviting acceptance in any reasonable manner unless there is contrary indication.” Restatement (Second) of Contracts § 58 cmt. a (1981). For example, an acceptance does not become a counteroffer merely by reciting terms that were implied in the original offer. See Byford v. Gates Bros. Lumber, 216 Ark. 400, 402–03, 225 S.W.2d 929, 930–31 (1950) (where offer required performance within a reasonable time, the “suggestion” in acceptance of ninety days for performance was not such a substantial change as to qualify the offer). And more recently, the Arkansas courts have stated that an acceptance must be identical with the material terms of the offer. Aon Risk Services, Inc. v. Meadors, 100 Ark. App. 272, 283, 267 S.W.3d 603, 611 (2007) (“an acceptance must unconditionally agree to all the material provisions of the offer”); MDH Builders, Inc. v. Nabholz Constr. Corp., 70 Ark. App. 284, 289, 17 S.W.3d 97, 101 (2000) (a response to an offer that introduces new, material terms or conditions is a counteroffer, not an acceptance). The Committee has consequently included the qualifying word “material” to describe the new terms and conditions that render a purported acceptance a counter-offer.