This is the second in a series focusing on the basics of contracts. Hopefully this will give my readers a more fundamental understanding of the rest of the items and concepts posted on Pro and Contracts, and provide some context for understanding contractual situations in their own lives.
Please remember: I am a lawyer, but I am not your lawyer, and this is not legal advice. If you find yourself in a situation to which these posts apply, please contact me and I will see if I can help.
Contract Basics Part II: Acceptance
Acceptance is the second of the three most basic necessities for forming a contract, the first being the Offer, and the third being Consideration. The Acceptance is generally considered to be much simpler to execute than the Offer, but like Offers there can be pitfalls to Acceptance that will void the Offer or fail to complete the agreement.
At its heart, an Acceptance is merely a response to an Offer that fully affirms the conditions presented by the offeror (i.e., the person making the Offer), and shows that the offeree (the person to whom the Offer is directed) intends to be part of the agreement. Typical examples of an Acceptance are “Yes,” or “I accept.” For instance, to continue with the example used in Contract Basics Part I, if a person said to you, “I will pay you $20 to babysit my child,” you could complete the contract simply by stating “I accept.” The Offer had been made, and when you accepted it the Contract was formed. (Consideration is Part III, so for now you’ll have to trust me that it was present.)
Aside from intent, one of the most important requirements of Acceptance is that it provides a “mirror image” of the Offer. The mirror image principle helps distinguish Acceptances from Counter-Offers, the latter of which actually dismisses the initial Offer and proposes a brand new Offer. For an Acceptance to be valid, it must mirror the offer on all the material provisions (i.e., important points). So the Acceptance in the example of the previous paragraph is a mirror image because it does not alter the Offer in any way. In essence, stating “I accept” is a short way of responding with “I will babysit for child for $20.” Either response would work as an Acceptance–the latter would just make you sound like a robot.
An interesting point to keep in mind is that Acceptance does not need to be written or spoken; Acceptance can be given through action as well. If the offeror from the example said, “I will pay you $20 to babysit my child at 8:00 pm on Friday,” and you showed up at the offeror’s house at 8:00 pm on Friday, you could claim that you had accepted the Offer by acting on it and that you have a claim on babysitting the offeror’s child for $20. That is true unless the offeror rescinds the offer prior to your Acceptance.
An Offer is valid until one of three things happens: (1) it is accepted, (2) it is rejected, or (3) it is rescinded. This is the problem with Acceptance by action (at least in cases where you want to Accept the Offer). If you had simply stated that you agreed to babysit the offeror’s child at 8:00 pm on Friday for $20, then the agreement would be formed and there would be no chance for the Offer to become void. By waiting until 8:00 pm on Friday, however, you give the offeror time to rescind the offer and either change the terms or offer the same deal to another person. Acceptances by statement or action are equally valid, but they are not necessarily equally strategic.
The lesson then is that if you are interested in ensuring that an offeror is bound to you to complete the Offer, accept as soon as possible. On the other hand, if you are not interested in being bound by an Offer, make it clear that you reject the Offer and do not act in a way that could be considered Acceptance by action. This is because if there is adequate Consideration, a valid Acceptance will automatically complete the contract and bind you and the offeror to the Agreement.
Here ends the lesson.
The next installment in Contract Basics will address Consideration. Also look for forthcoming posts on Breaching a Contract, Unilateral Contracts, Mistakes in Contracts, and more. If you have a particular Contractual concept you would like addressed, please let me know in the comments. I will take all suggestions into consideration, but need to make sure that (at least for a while) these posts address broad concepts.
About Graham Martin
Graham Martin is a solo practitioner focusing on Contract law (including drafting, review, and litigation). He operates Martin Legal Services, LLC in the Minneapolis-St. Paul area.
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