Define: Acceptance Of Offer

Acceptance of an offer is a crucial element in contract formation, where the offeree (the party to whom the offer is made) communicates their agreement to the terms of the offer. Acceptance typically requires that the offeree unequivocally assents to the offer’s terms as presented, without any modifications or conditions. The acceptance must also be communicated to the offeror (the party making the offer) in a manner prescribed or implied by the offer, such as through words, conduct, or performance. Once acceptance occurs, a legally binding contract is formed, and the parties are obligated to fulfill their respective promises or obligations as outlined in the contract. It’s important to note that acceptance must mirror the terms of the offer, and any attempt to modify the offer constitutes a counteroffer, which may terminate the original offer. Acceptance of an offer can be made expressly, by clearly indicating agreement, or impliedly, through conduct that demonstrates acceptance of the offer’s terms.

In English law, for an agreement (see: contract) to be valid, there must be mutuality: an offer and a corresponding acceptance’. The offerer must receive communication from the acceptor, either verbally or in writing, or, in some cases, through conduct. Under certain circumstances, silence can be accepted as a means of communication.

A valid acceptance must agree in all particulars with the offer; otherwise, it is a counter-offer, not an acceptance at all. In particular, if the offer states terms for acceptance (e.g., that it be in writing), then the acceptor must comply for the contract to be valid. For example, in Neale v. Merrit, an offer stipulated full payment upon acceptance; the acceptor purported to accept and enclosed part payment and a promise to pay the rest in instalments. This was not a true acceptance, and the contract was declared void.

It has been held that where the offeror is prepared to bear the risks of non-communication, acceptance can be effective by the offeree’s acting as though the contract were accepted.

Postal Rule: It is permissible for a written acceptance to be made by post, and the usual ruling is that acceptance occurs at the moment of posting, not of receipt, which can lead to anomalies.

Instantaneous communication: If communication is “instantaneous” (e.g., telephone, telex), then acceptance does not occur when the communication is made, but only when it is received. Although these events are legally contemporaneous, it is possible for communication to breakdown during acceptance, and in general, no one should be required to abide by an acceptance that he has not heard. However, there are no universal rules that may be applied to all these cases; each case must be analysed on the basis of who should bear the risk of ineffective communication.

Silence as a means of communication: If an offer is accepted `subject to contract’, this is merely an indication that the parties intend to contract formally at some later stage. This is usually used in sales of land and property to allow the parties to signal their strong intention to contract but not to be formally bound. An agreement `subject to contract’ is not binding on anyone, and neither party needs to proceed with a formal contract. On the other hand, courts might still deem a contract with ambiguous provisions about provisionality to be binding. For this reason, use precise language.

In a contract for the sale of goods, title to the goods passes from the seller to the buyer in the manner set out in the contract. If the contract contains no such provision, then the title is usually deemed to pass at the moment the offer is accepted.

Finally, an acceptance of an offer cannot usually occur in ignorance (see Acceptance in Ignorance), which may be contention in a unilateral contract.

This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 10th April, 2024.