Business Law Chapter 3: The Legal Concept of Acceptance

Introduction to Acceptance In order to have a valid contract there must be both an offer and an acceptance of the offer Offer + Acceptance = Contract

“Meeting of the Minds” There must be a meeting of the minds in order to form a contract.

When a person accepts an offer, he or she is agreeing to all of the terms expressed in that offer.

Sufficiency of acceptance The acceptance itself must satisfy certain basic requirements.

An acceptance must present some proof that the person accepting the offer has manifested agreement to the terms of the offer.

When there is no clear evidence that a person gave a verbal acceptance, his acceptance can be inferred from his actions.

The person must show some objective action that clearly signals this intent.

Communicating an Acceptance For a person to accept an offer, he must do more than simply state that he wishes to enter into a contract.

When an offer fails to state a particular mode or method of communicating the acceptance, any method will be sufficient.

What words are required to indicate acceptance? “I accept” is not required. The person accepting the offer must communicate, so that the person who made the offer understands that it has been accepted.

The acceptance must be unambiguous.

Acceptance without words A person can even accept a contract without saying anything. In this case, actions speak louder than words.

When the offer calls for a bilateral contract, i.e., a promise in exchange for a promise, silence is usually not a permissible method of acceptance.

The “Power” of Acceptance The power of acceptance is a term used by the courts to describe the rights of a party to accept an offer and thereby create a binding contract.

The power of acceptance can shift from one person to another during the course of negotiations.

Conditions that Limit Acceptance Offers can contain all manner of conditions regarding acceptance.

Restrictions on communicating acceptance When an offer does not provide any limitations on the manner and mode of communicating the acceptance, it can be accepted in any manner.

Time limits on acceptance When an offer does not contain any language expressly limiting the time on which an offer can be accepted, the offer will remain open for a “reasonable” period of time.

Waiving a Stipulation or Condition The person making the offer is always free to amend his offer, or to waive a special condition.

Acceptance Must Be Unambiguous If a person uses the words “maybe” and “perhaps,” or his language is so ambiguous that it is impossible to discern his acceptance, the courts will usually interpret this as a rejection of the offer.

Accepting Alternative Terms An offer can include alternative terms. An offer can also contain an indefinite quantity.

Accepting by mail Unless otherwise stated, the offeree is usually free to accept the offer by posting it in the United States mail

Mailbox Rule Under the Mailbox Rule, the law creates a legal fiction: the fiction is that an acceptance is fully communicated at the time that it is posted, not at the time at which it is received.

Exceptions to the Mailbox Rule When a purported acceptance is mailed to the offeror and he changes the terms of the offer, or places conditions on the acceptance, the Mailbox Rule is no longer applicable.

Rejecting an Offer When an offer has been revoked, there is no power of acceptance and therefore there is no way that a person can accept.

An offeree may reject an offer through actions instead of words.

Once an offer has been accepted, the offer cannot be revoked.

Modifying Terms After Acceptance Once a contract has been formed, both parties must agree to any modifications of the contract.

Acceptance by an Agent When an agent has expressly received authority to make or receive an offer, he or she can do so on behalf of the principal.