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What does acceptance mean in contract law?
How does it work?
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What Is Acceptance In Contract Law
In essence, when there is acceptance in contract law, a party’s “offer” becomes a legally binding “contract”.
For example, John offers to repair Mary’s kitchen for a total sum of $5,000 by providing Mary with a draft contract.
In this case, John is the offeror and Mary is the offeree.
If Mary accepts the terms and conditions found in John’s draft contract, then John’s offer becomes a legally binding contract.
Acceptance Definition Law
Let’s look at the definition of acceptance both in the English language and in contracts.
Acceptance Definition In English
According to the Merriam-Webster dictionary, acceptance in English means:
The act of accepting something or someone
This definition is not too far from the legal definition of acceptance in contracts.
Let’s look at that now.
Acceptance Definition In Contract Law
According to the Legal Information Institute, acceptance in contract law is defined as follows:
Assent to the terms of an offer
In other words, there is acceptance when a party agrees to be bound by the terms of an offer.
The courts will consider the acceptance from an objective standard.
When the offeree accepts the offer in the manner stipulated in the offer and within the timeline, there is a formal acceptance of an offer.
In some situations, an offer may be accepted implicitly where the offree does not clearly express his or her intention to accept the offer but acts in a manner that makes it clear that the offer was accepted.
When evaluating the conduct of the offeree, the courts will objectively consider if the offeree’s conduct shows an intention to accept the offer.
When Do You Have An Acceptance
In some cases, it’s clear that an offer was accepted.
However, there are other situations when the acceptance may not be as clear-cut.
When do you actually have acceptance?
In legal terms, you have acceptance when:
- A person or entity makes an offer to another person or entity
- The receiving person or entity accepts the entire content of the offer
- The receiving person or entity communicates its acceptance to the offeror within the stipulated delay contained in the offer
You do not have acceptance when:
- The receiving party does not communicate back to the offeror within the stipulated timeline
- The receiving party communicates back within the stipulated timeline but requests changes to the offer
- The receiving party communicates back to the offeror and indicates that the offer is not accepted
Elements of Valid Acceptance
What are the key elements to a valid acceptance?
For an offer to be accepted and a contract to be legally formed, you will need to respect the specific contract formation rules in the jurisdiction where the contract is being formed or based on the applicable laws.
In general, you can consider the following elements in contract law principles:
- The offeror must submit an offer containing all the essential elements of a contract to be formed
- The offeror must agree to be bound by the terms of the acceptance when the offer is accepted
- The offeror must not have terminated the offer before the offeree’s acceptance
- The offeree must accept all of the terms of the offer (this is referred to as the Mirror Image Rule)
- The offeree can only accept the offer made by the offeror
- The offeree must refer to the offer
- The offeree communicates his or her acceptance of the offer back to the offeror
- The offer must be accepted within the timeline stipulated in the offer
For an offer to be accepted, the offer must be in effect and the offeree’s acceptance must be communicated before the deadline stipulated in the offer.
In some cases, the offeror can revoke the offer by notifying the offeree that the offer is revoked.
If the offeree receives the notice of revocation of offer before having accepted the offer, then there could no longer be an acceptance.
However, if the offeree had already communicated his or her acceptance and received the revocation notice right after, there is acceptance as the offeree accepted the offer before knowing that it was revoked (this is called the Mailbox Rule).
It’s also important to note that a counteroffer is not acceptance in contract law.
In essence, when there’s a counteroffer, the offeree rejects the offer, makes a new offer (and becomes the new offeror) and the original offeror becomes the new offeree.
Type of Acceptance In Contract Law
Acceptance in contract law can be given in different ways.
The main types of acceptance in contract law are the following:
- Express acceptance
- Implied acceptance
- Conditional acceptance
Let’s look at each of these in more detail.
Express acceptance is when a person or entity clearly and without any ambiguity accepts another party’s offer.
For example, a website developper provides a client with a written offer to develop a website for $2,000 and the client signs the offer and returns it back to the developper.
In this case, the client’s acceptance is express as the signature on the offer and the act of returning it to the developer leaves no doubt that the client accepted the offer.
Implied acceptance is when the offeree’s acceptance is not expressly stated but is clearly apparent in the offeree’s actions and conduct.
For example, a John offers to mow his neighbor’s law for $50 and the neighbor does not clearly accept this offer but instead gives John the keys to his house so John can bring his equipment and get started.
In this case, although the client did not sign a contract or expressly state that he accepts John offer to mow the law, by giving John the keys to the house and allowing John bring his equipment, the client has implicitly accepted John’s offer.
Conditional acceptance is when an offeree accepts parts of an offer and requests that other parts of the offer be adjusted.
Depending on the extent of the adjustments required, a conditional acceptance can be considered as either an “acceptance” in contract law thereby forming a contract or a counteroffer.
If the adjustment or condition is very minor, then there’s acceptance.
However, if the condition or adjustment is relatively important, then there’s no acceptance but there’s a partial acceptance and counteroffer.
Offer And Acceptance In Business Law
Let’s look at how offer and acceptance works in business law to better understand the concept.
Offer and acceptance is a fundamental rule in contract law stating that for a contract to be legally formed and binding, there must be an “offer” and then an “acceptance”.
In other words, one party must offer to bind himself or herself to a contract and another party must accept the terms and conditions of the exchange.
The party making an offer to contract is considered to be the “offeror” whereas the party receiving an offer for acceptance is the “offeree”.
The offer sets forth the terms and conditions based on which it proposes that the parties bind themselves in a contract and the offeree, by accepting the offer, formalizes the contract.
A contract can be legally formed either orally or in writing.
As a result, an offer can be made orally or in writing as well.
For example, if John orally offers to help Mary move out of her apartment for $500 and she accepts, you have a legally binding oral contract.
On the other hand, if John offers to help Mary move and has her sign a document establishing the terms and conditions of the service, and Mary accepts, then you have a legally binding written contract.
Acceptance of A Contract Takeaways
So there you have it folks!
Legal Meaning of Contract Acceptance
Acceptance in contract law refers to a party’s manifestation of assent or agreement with the terms of an offer in the manner required as per the terms of the offer.
This means that you have legally accepted an offer when the offeree submitted an offer to the offree intending to be legally bound by its terms if accepted, the offeree accepts the terms of the offer, and the offeree communicates his or her acceptance back to the offeror.
Now that you know what is acceptance in contract law, what constitutes a valid acceptance, the different types of offers, and more, good luck in negotiating your contract.
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