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Chapter 11 - The Agreement: Acceptance
11-1
CHAPTER 11
THE AGREEMENT: ACCEPTANCE
I. LEARNING OBJECTIVES:
This chapter is intended to familiarize students with the legal issues relating to the second
fundamental step in the contracting process: acceptance of an offer by the offeree. After reading
the chapter and attending class, a student should be able to:
A. Explain the elements of an acceptance under both the UCC and common law
B. Determine how acceptance can be communicated in a given scenario and analyze the time at
which acceptance is likely to be effective.
C. Identify the circumstances under which silence is acceptance.
D. Determine whether an oral acceptance is effective in a situation in which the parties
anticipate putting their contract in writing.
II. ANSWER TO INTRODUCTORY PROBLEM
and communication are satisfied.
B. First Texas suggested or required a particular method of acceptance—completing the entry
C. First Texas’s attempted revocation occurred after Jergins’s acceptance was effective, so it did
III. SUGGESTIONS FOR LECTURE PREPARATION:
A. What is an Acceptance?
Trademark Properties v. A & E Television Networks (p. 361): Davis had an idea for a tv show
director responded, “Okay, okay, I get it.” Other communications followed, but the deal was
Chapter 11 - The Agreement: Acceptance
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House,” which became a hit. Davis was never compensated. He sued for breach of contract.
court enforcing an oral contract. Why does the court focus on Davis’s reaction to the
ambiguous statement, “Okay, okay, I get it,” rather than the ordinary meaning of the words?
Would Davis have a stronger case if he focused on A & E’s conduct as constituting
acceptance?
1. Point out that the idea that an offeror is "the master of his offer" means that the offeror
however, the offeror cannot change any of its terms.
2. Point out why offeree attempts to change the offer's terms in their acceptances are treated
Examples: Problem Case #8.
3. Discuss the common law "mirror image" rule and the courts’ tendency to apply it more
liberally in recent years to avoid finding a counteroffer in the following situations:
a. Inquiries regarding terms.
b. "Grumbling acceptances".
Ct. 1981).
c. Non-material variances in an acceptance.
Pride v. Lewis (p. 363): Lewis offered to buy the Prides’ home, with a stated closing date
counteroffer. The court found that he did not, and reversed the case in favor of Lewis.
Points for Discussion: Ask students which body of law, common law or UCC, applies in
they would construe Lewis’s inaction as acceptance, just as a matter of common sense,
and if not, why not.
Chapter 11 - The Agreement: Acceptance
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4. Discuss section 2-207, the Code "Battle of the Forms" section, and its attempt to
recognize reality in the age of the form contract by dispensing with the common law
"mirror image" rule in some circumstances. Since 2-207 is complicated and somewhat
confusing (one court described it as "a mystery clothed in an enigma"), you may want to
offer to amount to an "expression of acceptance," see Howard Construction Co. v.
Jeff-Cole Quarries, Inc., 669 S.W. 2d 221 (Mo. Ct. App. 1983) [seller alters price
terms in buyer's purchase order: no contract under 2-207(1)]. Even if the offeree's
communication meets the above test, was it made "expressly conditional" on the
2-207(1).
b. If the offeree's communication was a definite and seasonable expression of
acceptance and wasn't made expressly conditional on assent to the new or different
terms, a contract results under 2-207(1).
If a contract results under 2-207(1), proceed to 2-207(2) to determine its terms. If the
what happens to "different" terms. If no contract results under 2-207(1), turn to
2-207(3). Is there conduct by both parties that "recognizes the existence of a
contract?" If so, a contract results and its terms are those upon which the writings of
the parties agree, supplemented by the "gap-filling" terms provided by the Code.
conferred exclusive jurisdiction on South Carolina courts. Duro argued that the
forum selection clause should be excluded from the contract under UCC 2-207(2).
Points for Discussion: Do the parties here have a contract? Ask the students why it
matters that the parties agreed to their status as merchants? What is the standard for
Additional Example: Problem Case #4.
5. Discuss the requirement that acceptances must be communicated to the offeror. Why is
communication necessary?
B. When is Acceptance Communicated?
Chapter 11 - The Agreement: Acceptance
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1. Discuss the concept that offerors are free to stipulate the time or manner of acceptance
under both the common law and the Code. Discuss the outcome of a purported
and the means the offeree must use to communicate acceptance. Only when the offeror
fails to exercise this power does 2-206(1)(a) authorizing acceptance by any "reasonable"
manner and medium come into play.
Example: Problem Case #6.
2. Discuss the rules relating to when an acceptance is effective to create a contract. Note
must actually receive an acceptance before they are bound by it.
3. Discuss the concept of an authorized means of communication and the various ways in
which a given means could become an authorized means at common law: express
The United States Life Insurance Company in the City of New York v. Wilson: The facts
of this case, tragically, present like a law school exam hypothetical. Dr. Griffith had a
life insurance policy through US Life and AMAIA, which required semi-yearly premium
Dr. Griffith died in a bicycle accident. Dr. Griffth’s wife, Elizabeth Wilson, filed a claim
on the policy. AMAIA rejected the claim, so Wilson sued US Life and AMAIA for
breach of contract. Although the timeline is complex, the important issue boils down to
whether Dr. Griffith made payment prior to his death on July 28, because obviously the
policy could not be reinstated after his death.
rule. (The case does a systematic job of walking through the basics.) Ask the students to
explain how the court applied the mailbox rule to the facts. (Make particular note of the
fact that the sending of the check—even though directed electronically—is treated as a
“dispatch” for the purposes of the mailbox rule.)
Chapter 11 - The Agreement: Acceptance
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for mailbox rule to apply, so acceptance was not effective when plaintiff handed envelope
to mail clerk in her office).
circumstances.
1) Discuss those factors a court is likely to consider in determining whether a given
means is "reasonable": the nature of the goods (are they perishable or subject to
rapid fluctuations in value?); the parties' prior dealings (has any normal pattern of
dealing arisen?); and the reliability of the means selected.
modified this rule.
Example: Put the following example on the board and walk students through it to
illustrate the above concepts:
On October 1, 2012, Thomas mails Stephens a letter offering to sell a beach-front
condominium for $120,000.
his offer.
October 5, 2012, at 10:10 a.m. Stephens telegraphs his acceptance of Thomas's offer.
October 5, 2012 at 11:00 a.m. Stephens receives Thomas's revocation. October 5,
2012 at 11:10 a.m. Thomas receives Stephens's acceptance.
1) Under traditional rules: No contract. Stephens has attempted to accept by a
impliedly authorized means). If by some fluke Thomas received Stephens's
acceptance before Stephens received the revocation? Contract.
Chapter 11 - The Agreement: Acceptance
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2) Same facts as example above, but Thomas's offer is to sell machine parts.
Contract? Yes. Code applies (sale of goods). Section 2-206(1)(a) controls.
Telegram is probably a "reasonable" means by which to accept this offer.
Therefore, a contract was created at 10:10 a.m. when Stephens dispatched his
contract on the same reasoning employed under the Code.
C. Special Acceptance Problems
1. Discuss the requirements for acceptance of an offer for a unilateral contract: the offeree
requested promise to accept such an offer.
2. Discuss the requirements for acceptance of an offer for a bilateral contract: the offeree
must make the return promise requested by the offeror. Where this is done expressly, no
property.
b. Even though silence by the offeree generally will not amount to acceptance, there are
some important exceptions to this rule:
combined with the common law "mirror image" rule sets up the so-called "last shot"
principle under common law: offerors who accept performance after receiving a
be that marketers would essentially be placing the time and expense burden on
buyers—without their consent—to take the initiative to communicate with
the ethical analysis.
Chapter 11 - The Agreement: Acceptance
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3. Discuss the problems courts confront in cases where the parties intend to reduce their
agreement to written form. Did they only intend to be bound when a writing was
circumstances.
Cabot Oil & Gas Corporation v. Daugherty Petroleum, Inc.: This case revolves around
whether Cabot and Daughtery based on whether the correspondence between the tow
subsequently memorialize the agreement in writing.
Points for Discussion: Describe the general rule that correspondence is preliminary
negotiation rather than a formal written contract. Ask the students what are the six
enough?
4. Discuss the problem confronting courts when the offer is ambiguous on the question of
whether the offeree can accept by performance (a unilateral contract) or by making a
return promise (a bilateral contract).
performing or making a promise).
b. Note the special variation on this rule contained in UCC section 2-206(1)(b)
pertaining to offers requiring prompt or current shipment. Discuss the Ampex and
notifies the offeror that he's making an "accommodation" (thereby giving the offeror
the opportunity to seek the needed goods elsewhere) can still try to make a sale,
6. The Global Business Environment (p. 376) outlines important differences between the
CISG and U.S. law, both common law and UCC, regarding a number of these special
issues.
IV. RECOMMENDED REFERENCES:
conomy?, 78 WASH. L. REV. 265, 266 (Feb. 2003)
C. James J. White, Contracting under Amended 2-207, 2004 WIS. L. REV. 723 (2004)
(discussing proposed revisions of 2-207).
Rule,” 2004 BAYLOR L. REV. 175 (2004).
Chapter 11 - The Agreement: Acceptance
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V. ANSWERS TO PROBLEMS AND PROBLEM CASES:
1. No. In this case Citibank had made an offer to Wilson about a revised agreement. The court
credit card. Despite the fact that Wilson could have canceled her credit card when she received
2. Yes. PGS customers are bound by the TOS, because they manifest their assent when creating
them sufficient opportunity to read nor requires them to assent. The receiver of the gift would
2014).
3. No. The court decided that the contract was not formed under subsection (1) of 2-207 because
“supplementary terms” under the UCC. The court held that (3) and not (2) was controlling,
Components, Inc., 885 N.E. 2d 751 (Ind. Ct. App. 2008).
4. Yes. UCC section 2-207 applies to this case. The court stated that, “[b]y using the Glassrobots
standard sales agreement as a template and by authorizing a wire transfer of the down
Bent Glass timely paying for it. In sum, Standard Bent Glass’s conduct constituted a definite
and seasonable expression of acceptance that evinced the formation of a contract rather than a
5. No. The court holds that a contract was not formed because it did not give the plaintiffs
6. No. The ads were offers, but Alexander and her son did not accept them. The plaintiffs’
acceptance must have been received by the defendants by the time prescribed in the offer and
3d 1253 (La. Ct. App. 2010).
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7. No. The issue in the case was whether, under the mailbox rule, mail was an authorized mode
held that the use of mail was reasonable in this case and that the contract was indeed formed
884 S.W.2d 565 (Tex. Ct. App. 1994).
8. No. The court applied the mirror image rule to determine that there had been no meeting
otherwise confirm her acceptance of the terms in any other way. As a result, no enforceable
9. No. State Farm’s preaddressed envelope authorized Casto to respond to its offer by mail and
Casto did respond by mail. To be effective upon mailing under the mailbox rule, however, the
10. No. The court held that an employer’s silence in response to the alteration of a written
employment contract by an employee was not acceptance absent some proof that it knew or
284 F. 3d 86 (1st Cir. 2002).
