Acceptance

• Author: Franklin G. Snyder, Mark Edwin Burge
• Pages: 95-113

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UNIT 6: ACCEPTANCE 95

Unit 6

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CONTRACT FORMATION

Part Four

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Acceptance

FOCUS OF THIS UNIT

You should now know what qualifies as an offer and when an offer terminates.

The next question in contract formation is whether an open offer as been accepted.

So what exactly do we mean when we talk about contractual “acceptance”?

Offer Controls Acceptance. When we say that the offeror is “master of the

offer,” we mean that the offeror gets to define how the offer must be accepted. For

example, suppose the authors approached you and said, “We will pay you $20 if you

will stand up on one leg in the middle of your Property class, flap your arms like a

bird, and recite the first paragraph of the Preamble to the Communist Manifesto. We

don’t want your promise; we’ll pay you only if you actually do it.”

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Based on that offer,

then the only way you can accept it is by doing exactly what we said. If you say, “I

accept,” you haven’t, in fact, acceptance, because we clearly told you that we didn’t

want your acceptance. There is no contract. You are not obliged to do anything at that

point, and we are free to revoke our offer. If, in fact, you stand on both legs, or you

recite the Preamble to the United States Constitution, you have not accepted the

offer. Being “master of the offer” simply means that the offeror has the power to

specify exactly how an offer can be accepted.

Notice that while our definition of an “offer” does take into account whether

the offeree reasonably believes there is an offer, we do not concern ourselves with

whether he believes he has accepted. Instead, to accomplish the latter, the offeree

must do what the offeror says. Intent is not usually the key. This point may seem

obvious, but problems arise from the fact that in the real world—the world in which

contract law must actually operate—people are not necessarily precise about what

they want or what they are doing. Ordinary people rarely recite, “I hereby accept your

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[We have been adv ised by our counsel to clearly say “Just kidding! ” at this point to prevent

you from suing us for twenty dollars after you embarrass yourself and annoy your Property professor.

But see Leonard v. PepsiCo (holding that an over-the-top joke d id not constitute an offer) – Eds.]

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96 CHAPTER II: CONTRACT FORMATION

offer.” More often, they nod, shake hands, exchange emails, or simply start doing

what the offeror asked. They also don’t necessarily say the word “accept” while

functionally accepting an offer. The fact that regular human beings don’t necessarily

do what lawyers (or law students) would do leads to the question of when a particular

communication counts as an “acceptance.”

Keep in mind that the existence or non-existence of an “acceptance” can have

important legal consequences for an analysis of whether a contract exists under the

common law. If an offeree’s response actually qualifies as an “acceptance,” then we

may have an enforceable contract (subject, of course, to a host of other issues we are

covering in this course). If the offeree’s response to an offer is anything other than an

“acceptance,” then no contract has been formed.

Under the common law of contracts, acceptance must match the offer. The

match must be so complete that the concept is sometimes referred to as the “mirror

image rule.” Acceptance does not, however, require the offeree to recite a magic

formula, like “I hereby accept the offer as stated,” as that would throw a wrench into

business transactions and make contracting so hyper-technical as to be nearly useless

for real life. A mirror-image acceptance can happen in any number of ways. This unit

deals with a few situations that have caused particular difficulties in analyzing

whether an offer-and-acceptance has occurred.

Three Problems to Watch. The first arises from the fact that some situations

are entirely clear as to who is offeror and who is offeree. You have seen that an

advertisement is (usually) not an offer, and that it is the buyer who technically is the

offeror even where the seller’s advertisement is the initial solicitation to enter a

contract. Thus, doing something that the average non-lawyer might consider as

acceptance of an offer, such as ordering merchandise from a catalog, is actually the

offer itself. Exactly who is who in certain transactions can actually be complicated.

A second problem occurs when what the offeror is seeking is not entirely clear.

Is the offeror asking a party to do something (such as performing a task), or to say

something in the form of a promise? The distinction becomes important in what

traditionally are called unilateral and bilateral contracts. You have seen those terms

before by now, but make sure in the readings below that you can understand both the

difference and the consequence of that difference for purposes of contract formation.

You should also be aware that the Restatement (Second) of Contracts dropped the

unilateral-bilateral distinction and terminology—see, e.g., section 30—though it lives

on in many cases, treatises, and bar exam questions.

A third area of confusion is the issue of acceptance by silence. Could, for

example, an offeror say, “I offer to sell you my car for $5,500, and unless I receive a

written rejection from you within 24 hours, you will have accepted my offer.”?

(Actually, we know the offeror could say such a thing, so our real concern is whether

that offer could form a contract by the offeree’s inaction.) In other words, are there