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The video explains the common-law mirror image rule in contract law, which states that acceptance must match the offer's terms exactly for a valid contract to exist. It illustrates this with an example: a farmer offers to sell a thousand red apples with delivery by truck the next day at noon. If the businessman responds by agreeing to the sale but requests delivery by train, the acceptance does not match the original offer. Consequently, the businessman has rejected the farmer's offer and made a counteroffer. The farmer then faces a choice: he can either decline to deliver the apples, resulting in no contract, or accept the counteroffer, obligating him to ship the apples by train.