- 10 -
329-330 (1997). A prerequisite to the formation of a contract is
an objective manifestation of mutual assent to its essential
terms. Manko v. Commissioner, T.C. Memo. 1995-10. Mutual assent
generally requires an offer and an acceptance. Id. "'An offer
is the manifestation of willingness to enter into a bargain, so
made as to justify another person in understanding that his
assent to that bargain is invited and will conclude it.'"
Dorchester Indus. Inc. v. Commissioner, supra at 330 (quoting 1
Restatement, Contracts 2d, sec. 24 (1981)). Settlements offers
made and accepted by letters are enforced as binding agreements.
Dorchester Indus. Inc. v. Commissioner, supra at 330-333; Haiduk
v. Commissioner, T.C. Memo. 1990-506.
Respondent argues that only a properly executed Form 870-P
or a closing agreement (Form 906) constitutes a settlement
agreement for purposes of sections 6224(c) and 6231(b)(1)(C).6
Without the requirement of a formal written agreement, respondent
anticipates confusion and judicial inefficiency: disputes will
arise over whether there was a settlement and will necessitate
judicial review as to whether there was a settlement and the
6
Neither the Code nor respondent's regulations defines
what constitutes a "settlement agreement" for purposes of secs.
6224(c) and 6231(b)(1)(C). A closing agreement (Form 906)
statutorily authorized by secs. 7121 and 7122 has been used to
settle TEFRA cases. See, e.g., Pack v. United States, 992 F.2d
955, 956 (9th Cir. 1993); Monge v. United States, 27 Fed. Cl.
720, 722 n.3 (1993). In addition, we have held that a Form 870-P
qualifies as a settlement agreement under sec. 6224(c). Korff v.
Commissioner, T.C. Memo. 1993-33.
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