The Building Blocks of a Binding Agreement: Acceptance (2024)

Acceptanceof an Offer

Thesecond stage of contract formation is the acceptance of an offer by theofferee. An offeror is the person who makes an offer and the offeree is theperson who can create a contract by accepting the offer.[1] The purpose of this articleis to provide general information about accepting an offer. This articleincludes basic concepts relating to accepting an offer, the difference betweenunilateral and bilateral contracts, complications that arise when acceptingcontracts, and an explanation of the mailbox rule.

TheBasics

Anacceptance is a clear and unequivocal articulation of agreeing to another’soffer. The ability of the offeree to accept is determined by the offeror. Anofferor can give the power of acceptance to a single person, a specific groupof people, a class of people, or anyone that meets the requirements of theoffer.[2] The offer will determine whetherthe offeree can accept by words or performance.[3] Unless the offer statessomething to the contrary, the offer may be accepted in any reasonable manner.[4] Finally, the offeree stillmust know of the offer and agree to the terms before accepting.

Unilateralv. Bilateral Contracts

Aunilateral contract is a contract where the offeror makes a promise in exchangefor an act. [5]An offeree accepts a unilateral contract by performing the requested act. Abilateral contract is where the offeror makes a promise in return for a promiseto do something in the future.[6] An offeree accepts abilateral contract by promising todo something. Unilateral and bilateral contracts have different complicationsthat can affect contract formation. Therefore, it is necessary to determinewhether a contract is unilateral or bilateral in nature.

Considerthe following examples. Eric wants to have his fence painted by Dan. Eric callsDan and says, “If, but only if, you paint my fence blue, then I will pay you $150.”This is a unilateral contract because Eric promised to pay Dan once he paintedthe fence. Alternately, Eric could have said to Dan, “If you tell me you aregoing to paint my fence, then I will pay you $150.” This is a bilateralcontract because Eric has promised to pay Dan in return for Dan agreeing topaint the fence.

In thereal world, Eric will probably say, “Dan, will you paint my fence for $150?”Since it is unclear whether this is a bilateral or unilateral contract, the lawallows Dan to accept by either painting the fence or promising to paint thefence in the future. In order to accept, Dan must either start painting thefence or tell Eric that he will paint the fence. In such as case, the offer ispresumed to anticipate a bilateral contract. In general, where it is unclearwhat type of response is anticipated, the presumption is that a bilateralcontract is anticipated because people generally do not want to be bound unlessthe offeree to the contract is also bound. [7]

ThreeComplications of Unilateral Contracts

First, what happens if the offeree doesn’t know of theoffer? Contract law requires that an offeree know of an offer before he canaccept it. Thus, if the offeree does not know of the offer, he cannot acceptit. For example, Company A, a railroad company, offers a reward to anyone whocatches a criminal. Drew apprehends the criminal and brings him to justice. Aftertaking the criminal to the courthouse, he learns that there is a reward for thecriminal’s capture. Drew cannot recover because he apprehended the criminal whenhe did not know of the offer.[8]

In some circ*mstances, the offeree can learn of the offerwhile he is in the process of completing the requested performance. If thathappens, then he can still accept the offer. For example, Company A posts amessage on the company’s internal website offering a bonus to any employee whocompletes six months of work. Three months after being hired, Mary learns ofthe offer. While the bonus may not have been Mary’s initial reason for working,it could be the reason she continues to work for the company. Therefore, if shecompletes the required six months, then she has accepted the offer by fullyperforming the requested act.[9]

A unilateral contract requires no acceptance. The offeree merely performs to make the offer enforceable. However, the offeror must be notified once performance has been completed. The offeree can notify the offeror or at least make a reasonable attempt to do so. Likewise, if the offeror learns that the performance has been complete from another source, that is sufficient to make the offer enforceable.

While the general principle is thatoffers can always be revoked, part performance of a unilateral contract makesthe offer irrevocable. For example, if Eric makes a unilateral offer to pay Dan$150 if he paints Eric’s fence, then Dan’s commencing the paint job makes theoffer irrevocable. The reason for this is self-evident. It would not be fair toallow Eric to revoke the offer when Dan is halfway through painting the fence. [10]

Once the offeree has begun performance, hehas a reasonable amount of time to complete the job. During this time and untilthe performance is completed or a reasonable time period has passed, the offercannot be revoked.

ThreeComplications of Bilateral Contracts

Generally, an offeree must communicate an acceptance to abilateral contract offer. However, there are some exceptions when silence willbe considered acceptance of a bilateral contract.

First,the offeree’s silence can act as acceptance when the offeree renders a servicewith the expectation of being paid. For example, if Dan offers to pay Eric for30 dance lessons and, without communicating an acceptance, Eric gives the firstfew dance lessons to Dan, this could be considered an acceptance to perform all30 lessons. Dan knows Eric expects to be paid and even if Dan is silent, hisconduct shows that he has accepted Eric’s offer. Therefore, the offer isaccepted.

Second,if the offer states that silence can be a form of acceptance and it can beshown that the offeree intends to accept, then the offer can be silently accepted.

Third,if because of previous dealings between the parties where silence wasconsidered acceptance. This creates a reasonable expectation that silence will be anacceptance, then also silence can be considered acceptance.

For anacceptance to be valid, it generally must be identical to the offer.[11] This is commonly referredto as the mirror image rule. If theacceptance is not a mirror image of the offer, it is considered a rejection anda counteroffer that can be accepted by the original offeror. For example, Ericasks, “Dan, will you agree to paint my fence blue for $150?” and Dan replies,“Green is a better color. If I paint it green, will you pay me $150?” Ericsays, “Okay, I will pay you $150 to paint my fence green,” there’s a bindingcontract. In this case, Dan did not accept Eric’s first offer, instead herejected it and made a counter offer, which Eric accepted.

However,the mirror image rule applies only when referring to services or real estatecontracts. Contracts for the sale of goods, however, are governed by theUniform Commercial Code, which is a series of rules written by experts incontract law and have been adopted (in whole or in part) in all 50 states. TheUCC changes the “mirror image” rule in the cases of contracts for the sales ofgoods. The UCC structure is more complex and is the subject of a differentpresentation, but just keep in mind that the mirror image rule does not applyin cases involving contracts for the sale of goods.

TheMailbox Rule

The mailbox ruledetermines when a written acceptance is effective. The mailbox rule providesthat when an acceptance is delivered to the postal service or is sent through asimilar reasonable medium, such as email, it is effective when dispatched.[12] Other communications thatare involved in contract formation, such as offers, rejections and revocations,are effective only upon receipt by the recipient of the communications.

Thepractical effect is that after the acceptance has been sent, the offeror cannotrevoke the offer. For example, if Eric writes to Alex “Alex, if you agree to paintmy fence blue, then I will pay you $150.” Alex writes and mails a letter toEric that says, “Yes, I will paint your fence blue for $150.” Alex has acceptedthe offer when he mails the letter. At this point, Eric can no longer revokethe offer.

Althoughthe speed of modern communications has decreased the importance of this rule,it should be noted for cases in which emails are delayed in cyberspace (orsimilar occurrences) that the mailbox rule applies to electronic communicationsas well.

Acceptanceis the second stage in contract formation. Always remember that acceptance andpotential complications created by acceptance will differ depending on the typeof contract created.

Footnotes