Contracts: Acceptance

Who may accept

Generally only the person to whom an offer is addressed has the power of acceptance. A member of a class to which an offer is addressed also has the power to accept. Outside of option contracts, an offeree’s power of acceptance cannot be assigned

Knowledge Required

The offeree must know of the offer in order to accept it for both bilateral and unilateral contracts. Thus, if A sends B an offer and B sends A an offer (crossing offers), no contract is formed even if the offers contain the same terms

Acceptance of Offers for Bilateral Contracts

A bilateral contract may be accepted either by a promise to perform or by beginning performance

Bilateral: Acceptance Communicated

Unless the offer provides otherwise, acceptance of an offer for a bilateral contract must be communicated to the offer, and generally silence cannot constitute acceptance

Bilateral: Method of Acceptance

Unless otherwise provided, an offer is construed as inviting acceptance in any reasonable manner and by any medium reasonable under the circumstances. An objective manifestation of the offeree’s counterpromise is usually sufficient

Offers to Buy Goods for Current or Prompt Shipment

Under Article 2, an offer to buy goods for current or prompt shipment is construed as inviting acceptance either by a promise to ship or by current or prompt shipment of conforming or nonconforming goods

Bilateral: Acceptance by unauthorized means

An acceptance transmitted by unauthorized means or improperly transmitted by authorized means may still be effective if it is actually received by the offeror while the offer is still in existence

Unequivocal Acceptance

Traditional contract law insists on an absolute and unequivocal acceptance of each and every term of the offer, known as the mirror image rule. At common law, any different or additional terms make the response a rejection and counteroffer

Acceptance of Offer for Unilateral Contract

A unilateral contract is not accepted until performance is completed, but beginning the performance may make the offer irrevocable. However, the offeree is not obligated to complete performance merely because they started.

Unilateral Acceptance: Notice

Generally, the offeree is not required to give the offeror notice that he has begun the requested performance but is required to notify the offeror within a reasonable time after performance has been completed. No notice is required if: (1) the offeror waived notice; or (2) the offeree’s performance would normally come to the offeror’s attention within a reasonable time

Article 2: Shipment of Nonconforming Goods

The shipment of nonconforming goods is an acceptance creating a bilateral contract as well as a breach of the contract unless the seller reasonably notifies the buyer that a shipment of nonconforming goods is offered only as an accommodation. The buyer is not required to accept accommodation goods and may reject them. If the buyer rejects, the shipper isn’t in breach and may reclaim the accommodation goods.

Article 2 Accommodation and Acceptance by Promise

The accommodation shipment rule applies only when shipment is used as a form of acceptance. If the seller promises to ship and then attempts to ship goods as an accommodation, it is a breach. Since the shipment itself was not the acceptance, accommodation is not possible

Article 2: Moment of Mutual Assent Uncertain

In situations in which it cannot be determined with certainty which specific communication was the offer and which was the acceptance but the parties act as though there is a contract, the UCC considers this a binding contract even though the moment of its making is uncertain

Silence As Acceptance

Generally, silence is not acceptance, but a court may determine this is the case if, because of prior dealings or trade practices, it would be commercially reasonable for the offeror to consider silence an acceptance. If the recipient of services knows or should have known that the services were being rendered with the expectation of confrontation and, by a word, could have prevented the mistake, the recipient may be held to have accepted the offer

Article 2 Battle of the Forms

Article 2 has abandoned the mirror image rule, providing instead that the inclusion of additional or different terms by the offeree in a definite and timely acceptance does not constitute a rejection and counteroffer, but rather is an acceptance unless expressly made conditional on assent to the additional or different terms. Whether the new or different terms are effective depends on whether both parties are merchants

Article 2 Battle of the Forms: Contracts Involving Non-Merchants

If any party to the contract is not a merchant, the additional or different terms are considered to be mere proposals to modify the contract that do not become part of the contract unless the offeror expressly agrees

Battle of the Forms: Merchants

If both parties are merchants, additional terms in the acceptance will be included in the contract unless: (1) they materially alter the original terms of the offer; (2) the offer expressly limits acceptance to the terms of the offer; or (3) the offeror has already objected to the particular terms, or objects within a reasonable time after notice of them is received

Battle of the Forms: Different Terms

Split authority over whether different terms in the acceptance are included in the contract. One approach treats the different terms like additional terms, and uses the merchant test. Other courts follow the “knockout rule” in which conflicting terms in the offer and acceptance are knocked out of the contract and the UCC fills in the gaps if it is able

Merchant’s Confirmatory Memo

A merchant’s memo confirming an oral agreement that contains different or additional terms is also subject to the battle of the forms provisions

The Mailbox Rule

Acceptance by mail or similar means is effective at the moment of dispatch provided that the mail is properly addressed and stamped, unless: (1) the offer stipulates that acceptance is not effective until received; (2) an option contract is involved; (3) the offeree sends a rejection and then sends an acceptance, in which case the first to arrive is effective; or (4) the offeree sends an acceptance and then a rejection, in which case the acceptance is effective unless the rejection arrives first and the offeror detrimentally relies on it

Bilateral Contracts Formed by Performance

If a contract is not formed by the parties’ communications but then begin to perform as if they had formed a contract, a contract is formed.