Draw the Law: Accepting an Offer

So last week’s Draw the Law was all about what is an option, which was very much a part of the offer side of forming a contract. Today is all about acceptance.  I know it sounds easy, right? All you have to do is accept the offer and you are done, you have a contract!

Yes, normally that is the case, but as with anything with the law accepting an offer is not always so straightforward.

What is Acceptance?

Lawyers have a very specific idea of what acceptance is in contract law.  An acceptance is the offeree’s voluntary, communicated asset to the terms and conditions of the offer.  What the heck is assent?  Assent is some kind of act or promise of agreement.  Therefore, generally, a valid acceptance will require that the offeree assents to every material term as what is in the offer (this will make more sense when discussing invoices and counteroffers).

Let's ignore all the legalese, let's use shapes to be the terms of an offer. In order for there to be acceptance by the offeree, there needs to be assent, which basically means each term agreed upon is the same as what was in the offer.

Is there a Proper Way to Accept an Offer?

As with a lot of contract law there are no magic words. You need not say, “I hereby formally accept this agreement from this day henceforth,” or something else as ridiculous. You can say, “It’s a deal.” More importantly, you can send that via mail, e-mail, and fax – it’s so long as your acceptance is done through reasonable means.  The only method not allowed for acceptance is silence, BUT remember that actions can constitute acceptance. Thus you can be speechless, but accept the offeror’s offer by following what the terms were. Often times this leads to implied contracts (as opposed to expressed).

Example of an Implied Contract: Mistaken Invoice

Let’s say you run a shave ice store.  Let’s say that one day you receive a box of slippers and an invoice.  You did not order them.  Typically, you do not have to pay for things you did not order.  There is no contract at this point.

However, you are a shrewd business owner and see an opportunity. You unpack the slippers and display them in your store.  You advertise them as authentic slippers to go with your authentic shave ice to the tourists.

Now, there might be a contract. Why? Clearly, you have accepted the offer of the invoice price of the slipper.  Your actions indicated that you accepted what was sent by the misplaced order.  This is an implied contract, where it seems that whatever they offer was (the price of the slippers) you accepted by using them to sell.

To the reasonable persons (the black stick figures) it appears that the shopkeeper (in red) is selling the slippers. While he never ordered them in the first place, it is implied by his behavior he has accepted the box of slippers, and therefore the list price on the invoice.

Acceptance, Timing is Everything

Due to modern convenience we have forgotten about snail mail.  Yes, e-mail has made our lives easier (and yet complicated).  However, understand that acceptance is controlled by the mailbox rule, which states that: an offer is accepted by mail when you put the letter in the mailbox, NOT when it is received.

Why is this important? Because the mailbox rule also applies to e-mail acceptance. So once you hit “Send” there is no buyer’s remorse argument.  So long as you can show you typed in the correct e-mail address, your acceptance is effective when the e-mail is sent (even if it somehow winds up in the recipient’s spam or junk mail folder).  The true gravity of this rule is not felt until you realize that the offeror can revoke at any time, BUT cannot revoke once the offer has been accepted. There are many court cases where the offeree accepts the offer, but due to delay of receiving the acceptance the offeror invalidly revokes. The offeror must honor the acceptance.

With the mailbox rule the offeree accepts an offer by mail once the acceptance is sent, NOT when the offeror receives it. This rule also applies to faxes and e-mail. To avoid this default rule you need to draft how acceptance is made.

Can you Change That?

Yes, you can control the terms of acceptance. You can direct the method of acceptance and define when acceptance is, the mailbox rule is a default rule, therefore when your document remains silent on these matters a court will rely on it in a contract dispute.

Bottom line: The Offeror controls the Method of Acceptance

Thus the use of options, specifying how acceptance is to be made are all in the offeror’s court.  There is no contract until the offeror gets proper acceptance.  Therefore, time is always ticking (even if an option is taken out, as time is money) for the offeree to figure out what to do with an offer.  While they can accept, they can also reject it and counteroffer, and that is all a part of the negotiating process.  So come back next week for rejection and counteroffer.

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*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

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4 thoughts on “Draw the Law: Accepting an Offer

  1. Pingback: Draw the Law: Consideration is the Cornerstone of Contracts, Part I | The Blawg of Ryan K. Hew, Attorney At Law

  2. Pingback: Draw the Law: Are Invoices Contracts? | The Blawg of Ryan K. Hew, Attorney At Law

  3. Pingback: Draw the Law: Bill of Sale Fusing Contract and Property Law | The Blawg of Ryan K. Hew, Attorney At Law

  4. Pingback: Are Invoices Contracts?: Draw the Law | Aloha StartUps

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