11-1 Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

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3•Introduction to Contracts•The Agreement: Offer

•The Agreement: Acceptance•Consideration

•Reality of Consent

Contracts

PA

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T

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3•Capacity to Contract

•Illegality•Writing

•Rights of Third Parties•Performance and Remedies

Contracts

PA

R

T

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The Agreement: Acceptance

PA ET RHC 11

Make your bargain before beginning to plow.

Arab proverb

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Learning Objectives

• Explain elements of acceptance under common law and the UCC

• Determine how acceptance can be communicated, including by silence

• Determine when oral acceptance is effective

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• Acceptance must be by clear expression by offeree of intent to be bound by terms of offer and communicated to offeror– Only offeree may accept offer– If offer calls for performance, then

performance is acceptance– Offeror may specify manner of

acceptance• Example: “notify of acceptance in writing”

Requirements for Acceptance

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• Traditional contract law rule required acceptance to be the mirror image of the offer– Example: Pride v. Lewis

• Currently, judges hold that only material variances between an offer and an alleged acceptance result in an implied rejection of the offer

Mirror Image Rule

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• UCC 2–207 allows contract formation even when there is some variance between terms of offer and terms of acceptance– A definite and timely expression of acceptance

creates a contract, even if it includes terms different from those stated in offer or if it states additional terms offer did not address [2–207(1)]

– Belden v. American Electric Components, Inc.

The UCC & Variance of Terms

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• With instantaneous forms of communication, knowing when acceptance occurs is easy– Non-instantaneous forms (postal mail) more

difficult

• Mailbox rule makes acceptance effective upon dispatch when the offeree used a manner of communication expressly or impliedly authorized (invited) by the offeror

• Okosa v. Hall illustrates operation of the rule

Communicating Acceptance

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• Courts today allow communication of acceptance by any reasonable means of communication

Communicating Acceptance

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• General rule is that an offeree’s silence, without more, is not an acceptance

• Circumstances may impose duty on offeree to reject offer affirmatively or be bound

• Includes cases in which offeree’s silence objectively indicates an intent to accept– Example: McGurn v. Bell Microproducts,

Inc.

Silence as Acceptance

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OFFER + ACCEPTANCE AGREEMENT

Effect of Acceptance

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Thought Questions

• Do you read clickwrap agreements when purchasing goods through a website?

• Should you be bound by click agreements if purchasing via the internet?