Formation: Acceptance

The Second Element of Mutual Assent

Mutual assent = Offer + Acceptance. Last week established what constitutes a valid offer. This week answers: when does an offeree's response create a binding contract?

The threshold question: Did the offeree communicate unconditional assent to the offer's terms?

Requirements of a Valid Acceptance

1. Made by the offeree (the person to whom the offer is directed) 2. Unconditional assent to the terms of the offer 3. Communicated to the offeror 4. In the manner requested by the offeror (if specified)

The Mirror Image Rule (Common Law)

Under common law, an acceptance must mirror the offer exactly. Any material change creates a counteroffer, not an acceptance.

How It Works

| Offeree's Response | Legal Effect | |-------------------|-------------| | "I accept" | Acceptance — contract formed | | "I accept, but delivery must be by Friday" | Counteroffer (rejection + new offer) | | "I accept on condition that you also include..." | Counteroffer | | "I accept. By the way, I hope you can deliver by Friday" | Acceptance (precatory language, not a condition) |

The Critical Distinction

- Conditional language ("I accept IF...", "I accept PROVIDED THAT...") = counteroffer - Precatory/wishful language ("I accept. I'd prefer...", "I hope you can...") = acceptance

UCC section 2-207: Battle of the Forms

The UCC rejects the mirror image rule for sales of goods because commercial reality involves standardized forms that rarely match perfectly.

The Three-Step Analysis

Step 1: Is there a contract? A definite and seasonable expression of acceptance operates as acceptance, EVEN with additional or different terms, UNLESS acceptance is expressly conditioned on assent to the new terms.

Step 2: What are the terms? - Between merchants: Additional terms become part of the contract unless they (a) materially alter it, (b) the offer limits acceptance to its terms, or (c) offeror timely objects. - Between non-merchants (or merchant + non-merchant): Additional terms are mere proposals that do not become part of the contract unless specifically accepted.

Step 3: What about different terms? Courts are split: - Knockout rule (majority): Conflicting terms cancel each other out; UCC gap-fillers apply - Offeror prevails: The offer's terms control over different terms in the acceptance

Material vs. Immaterial Alterations

| Material (NOT included) | Immaterial (included between merchants) | |------------------------|----------------------------------------| | Arbitration clauses | Minor shipping variations | | Warranty disclaimers | Standard credit terms | | Limitation of remedies | Inspection procedures | | Indemnification clauses | Interest on overdue accounts |

The Mailbox Rule

General Rule

Acceptance is effective upon dispatch (the moment the offeree puts it in the mail, sends the email, etc.) — NOT upon receipt by the offeror.

Rationale

Protects the offeree — once they've dispatched acceptance, they should be able to rely on the contract's existence without worrying about what happens to the letter in transit.

Exceptions

1. Offer specifies otherwise — "Acceptance must be received by Friday" = effective on receipt 2. Option contracts — Acceptance effective on receipt (to prevent speculation at offeror's expense) 3. Rejection sent first — If offeree sends rejection THEN sends acceptance: - Whichever arrives first controls (not the mailbox rule) 4. Acceptance sent first, then rejection — Acceptance is effective on dispatch; if rejection arrives first and offeror detrimentally relies, estoppel may apply

The Crossing Communications Problem

| Offeree sends... | Then sends... | Result | |-----------------|--------------|--------| | Acceptance | Rejection | Contract formed (acceptance effective on dispatch) | | Rejection | Acceptance | First to arrive controls |

Acceptance by Promise vs. Performance

Bilateral Contracts (most common)

- Accepted by return promise ("I promise to deliver the goods") - Contract formed when promise is communicated - Both parties are immediately bound

Unilateral Contracts

- Accepted by complete performance (not a promise) - Contract formed when performance is completed - The offeror cannot revoke once performance has begun (modern rule)

The Beginning-of-Performance Problem

Under the Restatement (Second) section 45: Once the offeree begins performance on a unilateral contract: - An option contract is created - The offer becomes irrevocable for a reasonable time to complete - But the offeree is NOT obligated to complete — only the offeror is bound

Classic example: "I'll pay $100 to anyone who walks across the Brooklyn Bridge." Once someone begins walking, the offer cannot be revoked. But the walker can stop anytime.

Silence as Acceptance

General rule: Silence does NOT constitute acceptance. The offeror cannot impose a duty to speak.

Exceptions (silence = acceptance):

1. Prior course of dealing — parties have previously treated silence as acceptance 2. Retention of benefit — offeree accepts services with opportunity to reject and reason to know compensation is expected 3. Dominion over goods — offeree exercises ownership rights over unsolicited goods (using, modifying, or selling them) 4. Express agreement — parties previously agreed that silence constitutes acceptance

The Moment of Contract Formation

Pinpointing exactly WHEN the contract forms matters for: - Risk of loss (especially under UCC) - Which terms govern - Whether revocation was timely - Statute of limitations

| Method | Formation Moment | |--------|-----------------| | Oral acceptance | When communicated | | Written acceptance (mailbox) | When dispatched | | Acceptance by performance (bilateral) | When performance begins | | Acceptance by performance (unilateral) | When performance is completed | | Click-wrap / browse-wrap | When user clicks "I agree" or uses the site |

Baby Bar Connection

Acceptance issues appear frequently on the California FYLSX: - Mirror image rule vs. counteroffer is a classic exam trap - The mailbox rule timing question is commonly tested - Silence as acceptance (and its exceptions) regularly appears - UCC 2-207 is less likely on the Baby Bar but essential for 1L exams and the full bar

Exam Strategy: When you identify an acceptance issue, ask: (1) Was the acceptance unconditional? (2) Was it timely? (3) Was it communicated in the proper manner? (4) At what moment was the contract formed?