Contracts Foundations 4 - Acceptance - Who and How

Acceptance

Definition

• Acceptance is the offeree's agreement to be bound by the offer.

• Technically, it's a "manifestation of assent to the terms of the offer."

Who Can Accept?

• Generally, only the party to whom the offer is made can accept it.

• Offers are usually not assignable to third parties.

  • Example: If Joe offers to sell a bike to Tia, Tia cannot assign the offer to her brother Tash.

• The offeree must know of the offer to accept it.

  • This is often tested with hypothetical scenarios.

***Identical Offers Passing in the Night

• Scenario: Priya emails Danny offering to buy his Taurus for 2,500, and at the same time, Danny emails Priya offering to sell his Taurus to her for 2,500.

• Technically, there is no contract because neither party knew of the other's offer and, therefore, could not accept.

• Real-life exception: If parties act like there was a contract, courts will likely give effect to it.

  • Article 2 (law governing the sale of goods) states that a contract for the sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties that recognizes the existence of such a contract.

Reward Situations

• Scenario: Priya places an ad offering a reward of 500 for the safe return of her Pomeranian, Pom Pom. Ari, unaware of the ad, finds Pom Pom and returns him to Priya.

• At common law, Ari is not entitled to the reward because he didn't know of the offer and didn't rescue Pom Pom as part of a bargain.

• Note: Some states have statutes that change this rule, but they are not part of contracts law for bar exam purposes.

How to Accept

• Generally, offers may be accepted in any manner reasonable under the circumstances.

• Typically, offers are accepted in the same manner in which they are made (oral offers via oral acceptance, emailed offers via email, etc.).

• However, the manner of acceptance doesn't necessarily have to be the same unless the offeror specifies how acceptance must occur.

Offeror Stipulates Method

• If the offeror specifies the method of acceptance, that method usually must be followed.

• Example: Amber tells Julia she may accept the order only by turning around three times. Julia sensibly ignores Amber's odd request, rings up the sale on the cash register, says that'll be 6.52. Julie does not accept.

No Method Specified

• If the offer doesn't specify a method of acceptance, any reasonable manner is acceptable.

• Exceptions:

  • Offers seeking performance as acceptance (e.g., reward offers).

    • These can be accepted only through performance.

    • Example: Priya's reward offer for Pom Pom's return can be accepted only by finding and returning Pom Pom.

    • Calling and promising is not valid acceptance.

  • This is a unilateral contract situation (single promise made).

  • In most other cases, an offer can be accepted by making a return promise.

    • This is a bilateral contract situation (two promises).

Article 2 on Acceptance (Sale of Goods)

• An offer to buy goods for current or prompt shipment can be accepted by either:

  • A promise to ship

  • Current or prompt shipment

• Example: If you order a book from Amazon, Amazon may accept your offer by promising to ship the book or by shipping the book. If Amazon ships the wrong book, it simultaneously accepted the offer by performance and breached the contract.

• Exception: If the seller sends a note with the goods that it sent them only as an accommodation, it's treated as a counteroffer, which the buyer can accept or reject.

***Silence as Acceptance

• Generally, silence is not acceptance.

• Dom Defendant example: Sending letters offering gold-plated trinkets for 5,000 with the statement, "Your silence will be taken as assent." This would not be fair.

• Exceptions:

  • Course of dealing: If the offeror and offeree have a history in which silence has been accepted as acceptance.

  • Knowingly taking benefits: If you knowingly and silently stand idle and take the benefits of an offeror's performance, you will be bound.

  • Example: The disembodied voice shows up to trim your trees as agreed. The bill says it's your neighbor's address. You say nothing and allow for the work to be completed. You will be bound.