Next Article: Mailbox Rule for Contracts
Back to: Contract Law
What is “acceptance” of an offer?
Acceptance of a contract is the assent of the offeree to the demands contained in the offeror’s offer. Acceptance of the contract varies depending upon whether the contract is unilateral or bilateral. An offeree accepts a bilateral contract by making the return promise demanded by the offeror. An offeree accepts a unilateral contact by undertaking the performance demanded by the offeror. The acceptance of an offer must meet a specific standard based upon the type of contract and the governing law. The standards that a specific type of contract must meet are as follows:
Silence with Regard to Offer – Failing to reply to an offer is not acceptance in most cases. This is true even if the offer says silence will be considered acceptance. There are, however, exceptions to this rule. If the relationship between the parties is such that it is not expected that the offeree reply, silence by the offeree may constitute acceptance. Another exception would be where the offeree readily understands that silence or a failure to respond means acceptance of the offer. This generally only arises in situations where the offeror and offeree have a history of prior dealings. Lastly, in the case of contracts between merchants under the UCC, silence may constitute acceptance of an offer. In some instances, a merchant is required to expressly reject goods that are delivered; otherwise, her silence constitutes acceptance of the contract.
- Example: I offer to paint your house for $100. If you do not respond to my offer, there is no acceptance. If, however, I specifically state that, “If I do not hear anything from you by Friday, I will assume you agree to my offer.” You reply, “That sounds good.” You now realize that silence become acceptance on Friday. Changing the scenario a bit, you are a contractor and I routinely provide you quotes on houses. You expect me to paint all of your houses. If our routine practice is that I provide a quote and am expected to paint the house if you do not object, silence may be acceptance.
- Example: If we are both merchants dealing in expensive bicycles. You make a monthly order with me for the same inventory. One month, I send a shipment of inventory without receiving an order from you. If the goods arrive and you do not reject them for two weeks, your silence constitutes acceptance.
Discussion: How do you feel about the idea that, in some instances, an individual can accept and offer simply by failing to respond? Are you convinced that the applicable exceptions are justified? Why or why not?
Practice Question: Eric enters his email address to receive offers from a CD of the month club. The next week, Eric receives a CD in the mail with instructions stating that he must return them within 10 days or he incurs an obligation to purchase the CD. What is the likely result?
The general rule under contract law is that silence on the part of the offeree does not communicate to acceptance of the offer made by the offeror. However, there are exceptions to this general rule and they include;
- Where the offeree gives the offeror the impression that silence is acceptance of the offer. See the court’s decision in National Union Fire Insurance Co. v Ehrlich, 122 Misc. 682 (N.Y App. Div. 1924)
- Silence amounts to acceptance if the offeror communicates the same to the offeree and he offeree accepts that premise.
- Silence will amount to acceptance if, upon receiving the goods, the offeree starts acting in a manner to suggest that the offer has been accepted.
- Silence may amount to acceptance where the contract is between merchants.
In this case, Eric does not accept the seller’s offer by failing to return the CDs. He has not agreed to anything in the offer, much less the duty to return a product he does not want. If, however, Eric keeps the CDs and starts watching or using them without communicating the same to the offeror, then his actions would amount to the acceptance of the offer.