Acceptance

Question 1

What is acceptance?

Answer 1

An acceptance is a manifestation of assent to the terms of an offer

Question 2

Who may accept an offer?

Answer 2

Generally, only the person to whom and offer is addressed, has the power of acceptance. A member of a class to which an offer has been directed also has the power to accept.

Generally, an offeree’s power of acceptance cannot be assigned. But, if the offeree paid consideration to keep the offer open, the right to accept is transferable.

Question 3

Offeree must know of the offer

Answer 3

The offeree must know if the offer in order to accept it, and this is true whether the offer is for a bilateral or unilateral contract.

Question 4

Acceptance of offer for bilateral contracts - general rule

Answer 4

Unless an offer specifically provides that it may be accepted only through performance, it will be construed as an offer to enter a bilateral contract and may be accepted either by promised to perform or by the beginning of performance.

Question 5

Acceptance of offer for bilateral contracts - acceptance must be communicated

Answer 5

Unless the offer provides otherwise, acceptance of an offer to enter into a bilateral contract must be communicated to the offeror.

Question 6

Acceptance of an offer for bilateral contracts - silence as acceptance

Answer 6

Generally, an offeree can’t be forced to speak or have their silence treated as acceptance. However, a court may find silence works as an exception if, because of prior dealings or trade practices, it would be commercially reasonable for the offeror to consider silence and acceptance. Also, if the recipient of services knows or should have known that the services were being rendered with the expectation of compensation and, by a word, could’ve prevented the mistake, the recipient may be held to have accepted the offer if they failed to speak.

Question 7

Acceptance of an offer for bilateral contracts - Method of acceptance

Answer 7

Unless otherwise provided, and offer is construed as inviting acceptance in any reasonable manner, and by any medium reasonable under the circumstances. Any objective manifestation of the offeree’s counterpromise is usually sufficient. 

Question 8

Acceptance of an offer for bilateral contracts - offers to buy goods for current or prompt shipment

Answer 8

Under article 2, an offer to buy goods for current or prompt shipment is construed as inviting acceptance either by a promise to ship or by current or prompt shipment of conforming or nonconforming goods.

Question 9

Acceptance of an offer for bilateral contracts - unequivocal

Answer 9

Traditional contract law insist on an absolute and unequivocal acceptance of each and every term of the offer, otherwise known as the mirror image rule. At Common law, any different or additional terms in the acceptance makes the response a rejection and counter offer.

Question 10

Acceptance of an offer for unilateral contracts - completion of performance

Answer 10

Unilateral contract is not accepted until performance is completed. Beginning of performance may create an option so that the offer is irrevocable. However, the offeree is not obligated to complete performance merely because they have begun performance, as only complete performance constitute and acceptance of the offer. 

Question 11

Knowledge of the offer - rewards

Answer 11

The offeree of a unilateral contract must know of the offer to accept it. If the person acts without knowledge and learns of the offer later, their acts were not an acceptance. So if you find your friends watch and return it without knowledge of your friends reward offer for the watch, your friend has no obligation to pay you the reward.

Question 12

Acceptance of an offer for unilateral contracts - notice

Answer 12

Generally, the offeree is not required to give the offeror notice that he has begun the requested performance, but is required to notify the offeror within a reasonable time after performance has been completed. However, no notice is required If: the offeror waived notice or the offeree’s performance would normally come to the offeror’s attention within a reasonable time.

Question 13

Acceptance under article 2 - shipment of non-conforming goods

Answer 13

The shipment of non-conforming goods is an acceptance creating a bilateral contract as well as a breach of the contract unless the seller seasonably notifies the buyer that a shipment of non-conforming goods is offered only as an accommodation.

The buyer is not required to accept accommodation goods and may reject them. If the buyer rejects, the shipper isn’t in breach and may reclaim the accommodation goods, because the tender does not constitute an acceptance of the buyers original offer.

Question 14

Acceptance under article 2 - accommodations

Answer 14

The accommodation shipment rule applies only when shipment is used as a form of acceptance. Watch out for a fact pattern in which a party accepts an order by promising to ship. The seller then discovers, they lack the specified goods and ship non-conforming goods as an accommodation. This is a breach, not an accommodation. There was a contract at the promised ship. Thus, the shipment was not an acceptance and accommodation is not possible. 

Question 15

Acceptance under article 2 - battle of the forms - mirror image not required

Answer 15

Article 2 has abandoned the mirror image rule, providing instead that the inclusion of additional or different terms by the offeree in a definite and timely acceptance does not constitute a rejection encounter offer, but rather is effective as an acceptance, unless the acceptance is expressly made conditional on a sent to the additional or different terms. Whether the additional or different terms become part of the contract, depends on whether or not both parties are merchants.

Question 16

Acceptance under article 2 - battle of the forms - terms included - generally

Answer 16

Because article 2 provides that a contract can be formed, even though the terms of the acceptance don’t match the terms of the offer, article 2, also has specific rules for determining what terms are included in the contract in such a case. These rules are dependent on whether both parties to the transaction are merchants.

Question 17

Acceptance under article 2 - battle of the forms - terms included - contracts involving non-merchants

Answer 17

If any party to the contract is not merchant, the additional or different terms are considered to be mere proposals to modify the contract that do not become part of the contract unless the offeror expressly agrees.

Question 18

Acceptance under article 2 - battle of the forms - additional terms included - contracts between merchants

Answer 18

If both parties are, the contract are merchants, additional terms in the acceptance will be included in the contract, unless:

The material alter the original terms of the offer, such as by changing a parties risk or the remedies available

The offer expressly limits acceptance to the terms of the offer, or

The offeror has already objected to the particular terms, or objects within a reasonable time after notice of them is received.

Additional terms only. See card for different terms

Question 19

Acceptance under article 2 - battle of the forms - different terms - contracts between merchants

Answer 19

There is a split of authority over whether terms in the acceptance that are different from the terms, and the offer will become part of the contract. Some courts treat different terms like additional terms, and follow the test set out for additional terms. Other chords follow the knockout rule, which states that conflicting terms in the offer and acceptance are knocked out of the contract, because each party is assumed to object to the inclusion of terms in the contract. Gaps left by knocked out terms are filled by the UCC.

Question 20

Acceptance under article 2 - battle of the forms - terms included- merchant’s confirmatory memo

Answer 20

A Merchant’s memo, confirming an order agreement that contains different or additional terms is also subject to the battle of the forms provisions.

Watch for an exam question in which merchant parties have come to an oral agreement, and a confirmatory memo is sent with additional or different terms. Despite the fact that there’s already a contract at the time the memo is sent, the memo is put through the battle of the forms provisions as if it were an acceptance.

Question 21

Acceptance under article 2 - battle of the forms - moment of mutual assent uncertain

Answer 21

In situations in which it cannot be determined with certainty which specific communication was the offer, and which was the acceptance, but the parties act as though there is a contract, the UCC considers this a binding contract, even though the moment of it making is uncertain.

Question 22

Acceptance effective - mailbox rule

Answer 22

Acceptance by mayo or similar means is effective at the moment of dispatch, provided that the mail is properly addressed and stamped, unless one of these exceptions applies:

The offer states that acceptance is not effective until received

An option is involved (acceptance under an option contract is effective upon receipt)

The offeree sends a rejection, and then sends an acceptance, in which case, whichever arrives first is effective

The offeree sends an acceptance, and then a rejection, in which case acceptance is effective unless the rejection arrives first and the offeror detrimentally relies on it .

Question 23

Bilateral contracts formed by performance

Answer 23

If a contract is not formed by the parties, communications, but they begin to perform as if they formed a contract, a contract is formed by their conduct.

Question 24

Auction contracts

Answer 24

The ECC contains some special rules, regulating auction sales. A sale by auction is complete when the auctioneer is so announces by the fall of the hammer or in another customary manner.

The auction sale is with reserve, unless the goods are explicitly put up without reserve. With reserve means the auction may withdraw the goods at any time until he announces completion of the sale.