Assuming a contract is formed, the court may apply different rules for determining its terms. This common law formality was known as the mirror image rule, because the terms of the acceptance had to mirror the terms of the offer to be effective. If the offeror proceeded with the contract despite the differing terms of the supposed acceptance, he would, by his performance, accept the terms of the counteroffer , and be bound by its terms. As a result of these rules, the terms of the party who sent the last form would become the terms of the parties contract. This result was known as the last shot rule.
Several decisions apply the last shot rule in intellectual property situations.
There the parties negotiated their paperwork for more than a year while both performed. The issue was whether an arbitration clause was enforceable. Applying Illinois law, the Seventh Circuit held that parties with an on-going business relationships can establish a contract when they have not been able to agree on all terms, even though the mirror image rule for executory agreements has not been satisfied. In other words, it is a knock-out rule, not a last shot rule. Thus, the arbitration clause, which was contained in successive drafts, was part of the deal.