1. Definition of Acceptance
2. Establishment of Acceptance
3. Types of Acceptance

The meaning of acceptance in law is the agreement of an offer and its terms by an individual or group.

Definition of Acceptance

An individual demonstrates acceptance when he or she creates a binding contract by speaking or acting in agreement with an offer and its suggested or required terms. According to Section 2(b) of the Indian Contract Act, an acceptance of an offer forms a promise. For instance, by accepting a proposal of employment, an employee is agreeing to receive the salary and benefits offered in the proposal.

The individual receiving an offer typically has two options:

  • Accept the offer
  • Counter the offer

If an individual chooses to counter an offer, the opposite individual or group must choose to either accept it or develop an additional counter-proposal.

There are a total of three essential elements needed to validate a common law contract:

  1. Offer
  2. Consideration
  3. Acceptance

A contract, or lawful pact made between two groups or individuals, is formed when an individual or group agrees to the terms of a proposal. Further definitions state the following:

  • An acceptance of an offer indicates that the offeree agrees to be subject to the terms stated in the offer.
  • Acceptance is the last expression made in agreeing to the conditions of a proposal.
  • Acceptance indicates an individual or group's compliance in establishing a contract.
  • A contract cannot exist if there has not been acceptance.

An offer is a display of readiness by one individual or group to form a contract with another party, whereas acceptance indicates readiness by the second party to agree to the offer and the creation of a contract.

Establishment of Acceptance

Acceptance occurs when a contract is created. Occasionally, proposals and agreements use the phrase "subject to contract" to inform others that the individuals or groups will only be legally committed after preparing and signing a formal contract. Sometimes acceptance can be established through an action such as a handshake, rather than orally or in writing.

Additionally, individuals or groups may not know the precise time that acceptance was established. However, this does not warrant the avoidance of a contract's terms as long as acceptance has been noted or implied.

In other words, if it can be established that a contract was purposefully created, individuals or groups do not need to know the exact time at which acceptance happened. According to Section 2-204(2) of the Uniform Commercial Code, any acceptance that forms a contract is known even if the timing of it is not known.

Types of Acceptance

It is important to note that according to sale law, a purchaser is not considered to have accepted products until he or she has had adequate time to inspect them, because once acceptance has been made, the purchaser may not reject the goods. The opportunity of inspecting products prior to accepting them is required to be given upon request by the purchaser.

Specifically, the Sale of Goods Act lists three different ways that acceptance can be established:

  1. When, after inspecting the products, the purchaser indicates that he or she has accepted them.
  2. When, aside from seller repairs or sub-sales, the purchaser treats the products in a way that is conflicting with the seller's rights.
  3. When the purchaser still holds the products after a fair amount of time has passed, including the time it takes to inspect the products, and has not informed the seller that he or she is refusing them.

On a documentary credit, which is a document legally agreeing to a bill of exchange, acceptance is implied after signing below the word "Accepted." If an individual or group signs a bill of exchange that does not clearly include the accepting party's name, he or she is considered responsible for any unpaid amount.

Additional types of acceptance include the following:

  • Under contract law, acceptance is established when an individual agrees to the conditions of a proposal made by the offerer.
  • Acceptance is established in insurance law when the insurer accepts an individual's request for insurance and agrees to provide the applicant with protection from risks.
  • An individual who retains a gift offered to him or her establishes acceptance of the gift.

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