Mirror Image Rule
One way people can differentiate between negotiations and a contract formed by mutual ascent is by applying the mirror image rule. The mirror image rule is the theory that a contract is not formed until both sides stop providing modifications and counteroffers to a deal. They must both accept the exact same deal with the exact same terms. Any modification to an offeror’s offer, or any new conditions for the acceptance of an offer, no matter how small, would not be considered mutual ascent according to the theory of the mirror image rule. By modifying the offer or providing a condition, an offeree has rejected the offer and had become the offeror of a new offer that must be accepted entirely by the original offeror for the contract to take effect, assuming there are no other impediments to the formation of a contract such as lack of consideration according to our friends at the Mughal Law Firm..
A famous example of the mirror image rule being applied is in the 1886 United States Supreme Court Case, “Minneapolis S. L. Ry. v. Columbus Rolling Mill.” In this case, a railroad company needed to buy rails from a manufacturer of rails. The railroad company inquired through the mail for the price of steel rails and iron rails for a certain quantity that was needed, and the manufacturer responded that they only sold iron rails; the manufacturer stated they could provide a certain quantity of rail for a certain price, but that the railroad company must accept the deal by a specific deadline. The railroad company then sent an order for a different quantity of rail before the deadline, and assumed that a contract had taken effect, despite asking for a different quantity than what was originally offered by the manufacturer. The manufacturer was unable to produce the different quantity of rails for the price that they quoted for the original quantity, and the railroad company then sued the manufacturer for not fulfilling the order. The manufacturer denied that a contract existed, and the Supreme Court issued an opinion that sided with the manufacturer.
The mirror image rule is not always applicable to every contract. Each contract is different and some jurisdictions may have laws that stipulate when a counteroffer can actually cause a contract to take effect. Furthermore, one could argue that a contract is implied-in-fact, making the strict application of the mirror image rule less likely. If you have questions about how the mirror image rule applies to your contract, you should contact an experienced contract attorney in your area.