Script for Contracts—Acceptances

Once we determine that a live offer exists giving the Offeree power of acceptance, and he
accepts, we have jumped the Offer and Acceptance hurdle. If the other hurdles we have no yet
discussed are also jumped, then we will have a valid enforceable contract.

So what does it take to make an acceptance? It requires three things.

Change (1. Voluntary words/conduct by the Offeree)

First, an acceptance requires voluntary words and/or conduct by the offeree.

Offers are considered to be inherently personal to the Offeree. In other words, only the specific
Offeree to whom the offer was directed has power of acceptance. If I made an offer to you and
just then Tom comes around the corner and says: “I accept” having heard my offer, has the offer
and acceptance hurdle been jumped between me and Tom? No. My offer was personal to you
and only you had the power of acceptance. What Tom said only amounts to an offer on his part
to me which requires some sort of affirmative acceptance on my part before Tom and I could be
bound in contract.

Public offers are deemed to be made to the entire public, so anyone would have power of
acceptance so long as they knew about the offer and were motivated by it. For example, let’s say
I lost my dog, posted signs offering a $100 reward, and then my neighbor found my dog and
returned him to me but did not ask for the reward because he didn’t know about it. He was just
being a good neighbor, recognized my dog out in the neighborhood, and as a gesture of
neighborliness and kindness, returned the dog to me. Then he saw one of my posters offering a
reward on a telephone pole, and said: “I didn’t know you were offering a reward for the return of
your dog. Since I returned your dog, I would like the $100 reward.”

If I was a good neighbor, I would give him the $100, but would I have to under the law of
contracts? No, since he did not know of my offer when he returned my dog and was not
motivated by it, so his actions did not legally amount to an acceptance of that pubic offer.

By the way, public offers can be revoked by the same method through which they were created
in the first place.

Not only are option contracts an exception to the general rule that offers are freely revocable any
time prior to effective acceptance, they are also an exception to the general rule that offers are
inherently personal to the offeree. The Offeree can sell or assign his option contract to
somebody else and they would then have the legal power of acceptance as per the terms of the
option contract. The thinking here is that it shouldn’t matter who exercises the option, so long as
the offeror got what he bargained for.

Generally, silence or inaction is not allowed to serve as a means of effective acceptance of an

(1) Implied-in-fact contracts discussed in an earlier lecture.

For example, you see an advertisement for a CD of the month offer whereby you will receive a
different CD every month to see if you like it. The advertisement says that you can keep the CD
for a 15-day trial period and send it back with no obligation to purchase on your part so long as
you return it within that 15-day trial period. If you hold it longer than 15 days, then you will be
obligated to purchase it. The ad requires you to send in an order form to get the program started.

Since you solicited this running offer by turning in the order form, your silence or inaction
regarding each received CD for the entirety of its applicable 15-day trial period, would
effectively amount to an acceptance of the contractual offer regarding that CD.

If the program did not commit you to buy so many CDs, then you could write to the company
and ask them to stop sending you CDs at any time. Once they had sufficient time to act upon
your request, any CDs sent to you after that point would probably be deemed to be unsolicited
merchandise falling within the Postal Reorganization Act of 1970 (39 U.S.C. 3009). Under that
act, if unsolicited merchandise is sent through the U.S. Mail from a profit-seeking organization,
the recipient is free to keep the merchandise with no legal obligation to pay for it.

Change (2. Expressing Unequivocal assent)

The second requirement for an effective acceptance is that the voluntary words and/or conduct
by the offeree mentioned in the first requirement, must express unequivocal assent to the offer.

Under the mirror image rule, the acceptance must mirror the terms of the offer. This does not
mean that the offeree has to express total satisfaction or happiness with all the terms. The
offeree can give a grumbling acceptance. The key is whether or not he reasonably appears to the
court to have accepted all of the terms offered without conditioning his acceptance on any
additional terms. If he adds any mandatory terms, then his statement will probably be
interpreted as a counter-offer which will kill the first offer.
Change (3. Communicated)

The third general requirement for an acceptance, is that it be communicated to the Offeror.

Up until this point, all communications had to be received before they could become legally
effective. But we give an advantage to acceptances through what is known as the “mailbox rule”
or “dispatch rule.”

Under this rule, an acceptance is deemed effective upon sending if the same or faster means of
communication is used to communicate the acceptance as was used to communicate the offer, or
if the communication is made through the method specifically set forth in the offer.

If the mailbox rule applies, the acceptance will be deemed to have been effectively made even if
it never actually arrives.

Remember, the Mailbox rule only applies to acceptances.

Next Slide (Exceptions to the Mailbox Rule)

The following are exceptions to the mailbox rule:

Change (Offer nullifies it)

First, the offeror could nullify the mailbox rule by the way he expresses his offer. For example,
he could say: “Your acceptance is good upon receipt.” An offeror might do this to avoid the
potential problem of mis-delivery. As I said before, if the mailbox rule applies, the acceptance
becomes legally effective upon mailing or dispatch, even if it never actually arrives. That could
prove to be a very uncomfortable position for the offeror to be in—he could be bound in contract
without even knowing it.

Change (Improper addressing)

Second, the mailbox or dispatch rule will not apply when the envelope was mis-addressed or had
insufficient postage attached to it.

Change (Offeree first sends a rejection)

If the offeree first sends a rejection and then changes his mind and sends an acceptance, the
mailbox or dispatch rule will not apply to the acceptance. In this case, whichever one arrives
first will become legally effective.
Now let’s consider some examples to see how things work.

My jumping in to buy the Idaho cabin.

The Olivers and Southworths.

High View & Low View