Acceptance Flashcards
Define Acceptance
Acceptance
Memorize
An acceptance is an unequivocal assent to the terms of an offer.
Acceptance with Additional Terms - Common Law?
Acceptance
Memorize
Common law requires that the acceptance be a “mirror-image” of the offer. Any additional or different terms would result in a rejection and counter-offer.
What is the Last Shot Rule under Common Law?
Acceptance
Memorize
Under the Last Shot Rule, the last expression before performance controls.
If parties exchange rejections and counter-offers and one party does not return a rejection and counter-offer but instead performs, then the courts find an implied acceptance by performance.
Acceptance with Additional or Different Terms under the UCC?
UCC 2-207(1) - Acceptance
Memorize
Under the UCC, an acceptance with additional or different terms is a valid acceptance.
Acceptance with Additional Terms Between Merchants?
UCC 2-207(2) - Acceptance
Memorize
As between merchants, the additional terms become part of the contract unless (1) the offer limits acceptance to the terms of the offer (2) the offeror objects, or (3) the terms materially alter the contract.
Is an Arbitration Clause a material term?
Acceptance with Additional Terms Between Merchants
UCC 2-207(2) - Acceptance
Memorize
An additional term is said to be material if its incorporation into the contract without express awareness by either party would result in a surprise or hardship.
Here, many courts find an arbitration clause is not a material term because arbitration clauses are so commonplace in commercial contracts that they do not constitute a surprise or hardship.
Therefore, because the arbitration clause will not be considered material, it will become part of the contract and the dispute must be settled through arbitration.
Is a Disclaimer of Warranties a material term?
Acceptance with Additional Terms Between Merchants
UCC 2-207(2) - Acceptance
Memorize
An additional term is said to be material if its incorporation into the contract without express awareness by either party would result in a surprise or hardship.
As such, a disclaimer of warranties is always considered a material term.
A disclaimer of warranties is an “as-is” clause.
Non-Merchant Acceptance with Additional Terms?
Acceptance - UCC
Memorize
If at least one party is a non-merchant, the additional terms will be ignored and will not become part of the contract.
In addition, if the term does not become part of the contract, then the term results in a proposal for the additional term that requires express assent.
Acceptance with Different Terms?
Acceptance - UCC
Memorize
The majority rule is that the different terms get “knocked-out” and replaced by gap fillers, custom and usage, and course of dealing or performance.
Remember
Because UCC 2-207(2) only refers to additional terms, the majority of courts believe that 2-207(2) does not apply to different terms.
No Last Shot Rule under UCC?
UCC 2-207(3) - Acceptance
Memorize
When parties exchange rejections and counter-offers, and one party does not return a rejection and counter-offer but instead performs, the UCC does not imply an acceptance by performance.
What is a Conditional Acceptance?
Acceptance
Memorize
Under both the UCC and Common Law, a conditional acceptance is not an acceptance but a rejection and counter-offer.
A conditional acceptance must contain express conditional language.
Is “Subject To” a Conditional Acceptance?
Acceptance
Memorize
Here, the words “subject to” would not be considered express conditional language. The words simply mean that the offeree will take the contract with the terms that follow “subject to.”
Courts have held that “subject to” was, at most, implied conditional language.
Acceptance by Promise to Ship?
UCC 2-206 - Acceptance
Memorize
Under the UCC, an acceptance may occur by promise to ship, shipment of conforming goods, or shipment of non-conforming goods.
A shipment of non-conforming goods is generally considered both an acceptance and breach.
However, if the buyer seasonably notifies the seller that the shipment is offered only as an accommodation to the buyer, and this notification includes a letter of accommodation, then the shipment of non-conforming goods does not constitute an acceptance and breach but rather a counter-offer.
Manner of Acceptance?
Acceptance
Memorize
The manner of acceptance must be that required by the offer.
Remember
If no manner is required or stated, then acceptance may be accomplished by any reasonable manner. A reasonable manner of acceptance generally includes a means fast or faster than that used by the offeror (or) the same manner in which the offer was sent.
Under UCC 2-206, an acceptance may be accomplished in any manner and by any medium reasonable under the circumstances.
Timely Acceptance?
Acceptance
Memorize
Acceptance must be within a reasonable time or within the time required by the offer.
Silence as Acceptance?
Acceptance
Memorize
The general rule is that the offeror is master over this area of the offer and acceptance cannot be accomplished by silence.
Exceptions - Silence may be construed as acceptance where:
- Implied-in-fact contracts where the conduct of the offeree manifests assent to the offer.
- When the offeree takes the benefit of goods or services that are given with the expectation of payment.
- Past dealings among parties.
Crossing Offers?
Acceptance
Memorize
Crossing offers that contain identical information do not result in mutual assent and will not result in the formation of a contract.
Remember
The offeree must be aware of the offer in order to accept the offer and to form a contract.
What is the Mailbox Rule?
Acceptance
Memorize
Under the mailbox rule, an acceptance will be effective upon dispatch.
Dispatch occurs when the acceptance is out of the possession of the offeree (generally given to the post office, Fed-Ex, etc. NOT to a driver or agent of the offeree).
IMPORTANT: Acceptance is effective on dispatch (when sent) regardless of whether it EVER reaches the offeror (because it is lost in the mail) or reaches the offeror months later (because it is misplaced).
Exceptions to the mailbox rule:
- If the offer provides otherwise
- If acceptance is not made in a manner and by a medium invited by the offer
- Under an option contract
The offeror can contract out of the mailbox rule and make the acceptance effective upon receipt.
*Watch for: “You must accept by this date (mail box rule apples) v. I must know of/receive your acceptance/decision by this date (contracted out of mailbox rule).
Where the dispatch is sent without proper postage or is improperly addressed, acceptance is effective on receipt.
Where the dispatch is sent in an unauthorized (unreasonable) manner (because no manner was prescribed in the offer - reasonable is either by the same means in which the offer was communciated or an “as fast/faster” means, i.e. if offer sent two day mail and acceptance sent media mail) then the acceptance will be effective upon receipt.
Post-Rejection Acceptance - Acceptance is taken out of the mailbox rule by operation of law and whichever gets to the offeror first - rejection or acceptance - is effective on receipt.
Post Acceptance Rejection - Mailbox rule applies to acceptance. However, if rejection is received first and the offeror relies on the rejection, he can raise estoppel if the offeree wants to enforce the contract (as an example, if I mail an acceptance and then call the offeror and reject, there is a valid contract but because my rejection was received first, he can raise estoppel).
Where the acceptance is not sent in the manner REQUIRED by the offer (offer is specific as to how to accept…”call me to accept”, “must accept by telegram”, “must accept by overnight mail”, “must accept using Fed Ex” regardless of dispatch by mail or the mailbox rule, there is NO VALID ACCEPTANCE.
The mailbox rule does not apply to option contracts and acceptance will be effective upon receipt.
*Remember
Where the mailbox rule applies, an acceptance LOST in the mail will NOT terminate for lapse of time or timely acceptance because it has already been accepted.
However, REMEMBER that there still needs to be a timely acceptance - if I drop an acceptance in the mail beyond a reasonable time (or the time specified by the offer), regardless of the mailbox rule, that is NOT a timely acceptance.
Lastly:
When an offeror mails an offer and doesn’t specify how acceptance is to be communicated, then, by default, the offeror has chosen the post office to act as his agent and receive the acceptance on his behalf. The post office receiving the acceptance is then the same as the offeror receiving the acceptance himself. This is why it is effective on dispatch (receipt by post office).
When an acceptance under the mailbox rule is lost in the mail, because the offeror (by default) has chosen the post office as his agent, it is at the risk of the offeror, not the offeree. Once dispatched, under the mailbox rule, acceptance is effective. No matter if it is ever received.
What happens in a Post - Acceptance Rejection (PAR)?
Mailbox Rule - Acceptance
Memorize
In a post-acceptance rejection, the mailbox rule applies and there is a valid contract.
However, if the rejection is received first and the offeror detrimentally relies on that rejection, then the offeree will be estopped from enforcing the contract.
What happens in a Post - Rejection Acceptance (PRA)?
Mailbox Rule - Acceptance
Memorize
A post-rejection acceptance takes the acceptance out of the mailbox rule and whichever gets to the offeror first – rejection of acceptance - will be effective upon receipt.
Under the Common law, can there be an acceptance with additional or different terms?
No, under the common law, the acceptance must be a “mirror image” of the offer.
What happens to additional or different terms under the Common law?
Any additional or different terms would result in a rejection and counter-offer.
