Acceptance Flashcards
(11 cards)
Acceptance
Communicated assent to the terms made in the offer, in the manner required by the offer.
Mirror Image Rule
Acceptance must mirror the terms of the offer exactly. Any different or additional terms in the acceptance make the response a rejection and counteroffer
Exception: Minor changes that don’t substantially alter the performance obligations (immaterial changes) don’t affect the acceptance
How Long to Accept?
Offeree has power of acceptance until offer is terminated or lapse of time
Who can Accept?
Offeree; any member of class of people who were given the offer
Unaware of Offer
Can’t accept an offer you don’t know about (did performance without knowing there was an offer/reward). If you start performance, and then learn of offer before performance is complete, you can accept offer.
Acceptance By Silence
Acceptance must be communicated; generally speaking silence is not acceptance
Exceptions
Unjust Enrichment-Offeree never expressly agrees, but benefits from offeror completing deal without ever objecting
Offeror Agrees-Offeror has given offeree reason to believe that his silence is acceptance
Relationship Exception-Relationship and previous dealings between the parties indicates silence is reasonable
Unilateral Contract
Common Law: No acceptance until FULL performance
Restatement: Once offeror has begun performance, the offer is irrevocable and the offeree has a reasonable period of time to complete performance
Notice: No notice required because a return promise is not what is sought in the offer
i. Exception-Notice is required if the offeree knows the offeror has no other physical way to know that performance has been done.
Performance: Once performance begins pursuant to a unilateral contract, an option contract results and the offer becomes irrevocable. Acceptance does not happen until the performance is complete. The performance that is started must be part of the actual performance invited in order to preclude revocation.
Performance v. Preparation: Preparation are the things needing to be done to prepare for the performance, but are not part of the actual performance. To constitute partial performance under K, what is begun or tendered must be part of the actual performance invited.
Bilateral Contract
Common Law A promise for a promise
Notice YES, notice of acceptance must be given to offeror. Must be accepted in the way the offeror requires (Offeror is King).
MAILBOX RULE Acceptance is upon dispatch NOT upon receipt (unlike rejections and revocations). Only applies if offer doesn’t express a mode and means of acceptance
Acceptance followed by rejection – Once the offeree has dispatched his acceptance, he cannot thereafter change his mind and send a rejection, even if the rejection is received by the offeror before the acceptance is received.
Misdirection of Acceptance – If an unreasonable means of communicating acceptance is used, or the acceptance is misaddressed, it is still effective when dispatched if it is received within the time in which a properly dispatched acceptance would normally have arrived.
Acceptance Lost in Transmission – If acceptance is properly dispatched, the mailbox rule applies, and the acceptance is effective at the time of dispatch even if it is lost and never received by the offeror at all.
Loss of Acceptance May Discharge Offer – Although the acceptance becomes effective upon a proper dispatch, even if it reaches the offeror, courts will frequently discharge the latter from his contractual obligation if he never receives notice of the acceptance.
Exceptions to Mailbox Rule
Schizophrenic Acceptance – If rejection is mailed first then the acceptance is mailed second, the first one that arrives wins.
Option Contract – Offeree needs to make sure acceptance is actually received by offeror; mailbox rule doesn’t apply.
Unauthorized Means – If offeror says to accept via Fed Ex, and offeree sends via snail mail—mailbox rule doesn’t apply & acceptance is effective upon receipt
Imperfect Acceptance
THREE TYPES OF IMPERFECT ACCEPTANCES
- A counteroffer is an implied rejection as well as an imperfect acceptance.
- An acceptance with a condition.
- A response that adds a new or different term, but does not condition acceptance on the new term
Ways to Terminate Power of Acceptance
Rejection, Revocation, Lapse, Death or incompetence
1.REJECTION – Offeree rejects the offer given.
Counter Offers – Indirect Rejection. Rejection plus a new offer. They terminate original offer.When terms are added to the offer, a new offer is made. Violation of the “mirror image” rule. Creates a rejection / counter-offer.
Conditional Acceptance – I accept so long as you do X, Y, Z (basically an indirect rejection)
- Rejection can be expressed (“No deal”) or implied (counteroffer)
- Once rejected, offer is dead and Offeree can’t change his mind
- Must be rejected prior to acceptance
Notice Required - Rejection MUST BE RECEIVED by offeror in order to be effective
2. REVOCATION – Offeror terminates the offer. The offeror retains full control and mastery over her offer including the right to modify or terminate the offer.
Direct Revocation – affirmative / expressed statement by the offeror to the offeree expressly withdrawing the offer
Indirect Revocation – Offeror takes definitive action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect (i.e., reliable 3rd party indicates to offeree that offeror revokes).
Notice Required - Revocation MUST BE RECEIVED by offeree prior to acceptance
No revocation if:
Option Contract – if there is an option contract you can’t revoke the offer
Detrimental Reliance – offeree incorporates offer into larger contract which offeree relies on to their detriment (contractor uses subcontractor bid)
Performance begun under unilateral contract – beginning performance suspends ability to revoke.
3. LAPSE – An offeree’s power of acceptance is terminated at the time specified in the offer, or, if no time is specified, at the end of a reasonable time.
- The intention and understanding of the parties governs.
- If no definite time is stated, one must determine what time is rational to suppose the parties contemplated; the law will decide this to be that time which as rational men they ought to have understood each other to have had in mind
4. DEATH OR INCOMPETENCE - If the offeror dies or becomes mentally incapacitated, the offer is terminated. Automatically, immediately, with or without the offeree’s knowledge of the offeror’s death.
- Option contract survives death (separate contract already binding)
- If there has been acceptance, the estate must still perform
