Accepting a Contract: Everything You Need to Know
Accepting a contract is a necessary part of making an agreement legal and binding.3 min read
2. Conduct and Actions
3. General Rules Concerning Contract Acceptance
Accepting a contract is a necessary part of making an agreement legal and binding. There are different ways to signify acceptance. Without acceptance, there is no contract.
What Constitutes Acceptance of a Contract?
A contract isn't valid until one party accepts the other's offer. Sometimes, disputes arise over whether one party actually accepted an offer. What defines reasonable acceptance varies, depending on the contract.
Some offers are only accepted by the performance or non-performance of a specific action. These agreements are referred to as unilateral contracts.
Other offers are accepted upon a return promise of performance by the party that accepts the offer. These are referred to as bilateral contracts.
Problems may come up when it's not clear what constitutes acceptance: performance or a return promise.
The mailbox rule applies to contract acceptance. The rule states that when someone mails an acceptance, it's effective when it's mailed, not when it's received. Once the acceptance is mailed, the offer can't be revoked.
Courts are still debating rules surrounding email acceptance and if it's valid upon sending or receipt. Fax and telex — or instant forms of communication — don't fall under the mailbox rule. When a person offers or accepts using these forms of communication, acceptance is valid when received.
Conduct and Actions
In certain circumstances, one party's conduct may imply acceptance.
For example, someone orders a personal computer with exact specifications for its hard drive, central processing unit, and memory. When the consumer receives the computer, he finds that it doesn't match the specs. If he goes ahead and pays the full amount on the invoice without protesting, he's effectively communicated his legally binding acceptance.
However, one party's inaction or silence doesn't generally imply acceptance. An exception to this rule may occur when two parties have dealt with each other in the past. During those dealings, the offeror has been led to believe that the offeree will accept all goods the offeror ships unless the offeree gives notice stating otherwise.
In this case, silence or inaction on the part of the offeree constitutes acceptance that the offeror can rely on.
General Rules Concerning Contract Acceptance
In general, the following apply to what's considered acceptance of an offer to enter into an agreement:
- Acceptance has to be communicated. In most instances, silence doesn't equal acceptance.
- No modifications can be made to the offer upon acceptance. Otherwise, it's considered a counteroffer.
- An offer may be revoked until the time it's accepted. Option contracts are an exception to this.
- The only person who can accept the offer is the one to whom it's made.
- Acceptance will be judged objectively, meaning that if the average person makes an offer that he believes the other party accepted, then a contract exists, even if the other party didn't mean to accept.
The “mirror image rule” says that if one party accepts an offer, it must accept it as-is, with no modifications. If the party changes the offer in any way, the original offer is killed by this counteroffer. However, merely asking for information isn't a counteroffer. It's possible to draft such requests that keep the original offer on the table, while adding to the contract terms.
Generally, acceptance does not happen in the following instances:
- A party's response to another's offer doesn't communicate it's ready to be bound by terms: “Sounds okay, let me think on it.”
- The response comes with conditions: “I'll do it if you'll pay me an additional $10,000.”
- Lies form the basis of the offer: “You told me you had the car's title.”
In addition, when the party making the offer indicates specific conditions for acceptance, the other party has to accept under those conditions to create a contract. For example, if the offeror tells the offeree, “Call me by Saturday with your response,” accepting on Sunday does not create a contract.
There are different ways to enter into an agreement with another party. Signing on a line isn't the only way to accept a contract. Understanding what constitutes acceptance and what doesn't can help you recognize when you're part of a valid agreement. If you're not sure, you should ask for clarification before agreeing to any terms and conditions.
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