What is contract acceptance?

Explainer
September 16, 2022
min

Acceptance is one of the essential elements of a legally binding contract – in fact, without it a contract can’t exist. But what does that actually look like in practice? Today we’re going to take a look at the different types of acceptance in contract law.

What is contract acceptance?

Contract acceptance is the act of agreeing to form a legally binding agreement based on an offer provided by the other party. It is an essential element of a contract, and without it, a contract will not be valid or binding. 

To form a contract, one party must make an offer that another one accepts – e.g. “Can I buy your car for $1,500?” “Yes, I accept your offer to buy my car for $1,500.” 

How they accept that offer isn’t actually set in stone though. 

Lots of offers are considered accepted when a contract is signed, whether that’s with a wet ink signature or an electronic signature. However, what many people forget is that when you hand over your cash in a shop, say “yes” on the phone to a quote for building work, or click the “order” button on a website, you’re actually accepting an offer to enter into a contract, without a signature in sight. 

This is because there are different types of contract acceptance. If you’re a little confused, don’t worry. We’re going to explore these different types of acceptance together in a moment. But first, let's quickly cover the importance of acceptance in contract law.

Why is contract acceptance important?

Before we delve into what contract acceptance looks like in practice, let's quickly recap why it matters in the first place.

As we just discussed, contract acceptance is an essential element of a contract, and without it, the contract won't exist. But there are also a few, more specific reasons why acceptance matters in contract law.

Firstly, the acceptance of a contract ensures that all parties are on the same page. If one party makes an offer and the other party hasn't accepted it, the contract won't exist. This is because both parties need to consent to the contract being created, and to do that, an offer needs to be accepted. This rule prevents parties from ending up in legal agreements that they aren't willing to be a part of.

However, the need for contract acceptance also protects the party that makes the offer. This is because it ensures that they are made aware if their offer has been taken up.

Imagine if you offer to give someone 500 oranges and deliver them on a certain date. Now imagine that the person you're offering them to never responds, but later attempts to sue you for breach of contract when you don't deliver the oranges on that date.

Without contract acceptance, there will be no contract. This means that the offeror will not be in breach since there was no contract or agreement to begin with.

Sounds simple, right? However, understanding exactly what constitutes contract acceptance that's the tricky part.

What are the different types of acceptance?

There are three main types of acceptance when it comes to contracts:

  1. Express
  2. Conditional
  3. Implied

Let's go through them one by one.

1. Express acceptance

Express acceptance occurs when someone explicitly agrees, either verbally or in writing, to accept the offer you’ve made them. 

This one’s nice and straightforward – it’s when you clearly say “yes” to an offer, exactly as it is. So, for example, if someone offers to buy your house for $500,000 and you send them an email saying “yes, you can buy my house for $500,000”, you’ve expressly accepted their offer.

This type of acceptance should be clear and shouldn’t involve requesting any changes to the original offer. Otherwise, it isn’t a form of express acceptance. 

2. Conditional acceptance

Sometimes called “qualified acceptance”, conditional acceptance is when you say you’re willing to agree to the original offer but only with some changes. This is also called a counteroffer. 

Imagine you’re signing a rental agreement for a flat. You say you’ll sign the agreement as long as the owner fixes the leaky window before you move in. That’s an example of conditional acceptance.

The person making the offer must accept your counteroffer before you can form a contract. 

When someone makes a counteroffer, the original offer (in our example, to move into the flat with rain still coming into that window) no longer exists. This is called the mirror image rule.

3. Implied acceptance

Implied acceptance is when you don’t directly say “yes” to an offer verbally or in writing, but you do something which implies you will. Implied acceptance can create an implied contract.

If your actions clearly indicate that you have accepted their offer, but you haven’t vocalized this acceptance, it still counts. 

Let’s look at an example. If you buy a cake from a supermarket, paying for it implies you’re happy to accept the price (i.e. the offer) that the supermarket’s charging for that chocolate gateau. You don’t necessarily have to voice to the cashier that you accept the offer, picking it up, taking it to the till, and then paying for it makes this acceptance clear enough. 

Can silence be a type of contract acceptance? 

Generally speaking, silence will not constitute valid acceptance when it comes to contracts. 

This can seem confusing at first since we just discussed how contract acceptance doesn’t necessarily have to be verbal. But fear not. We’re going to explain what this rule means, as well as when it applies in more detail now. 

But first, let’s start with where the rule began. 

The story goes all the way back to a 19th-century English case – Felthouse v. Bingley – in which a man offered to buy a horse from his uncle. He said that unless he heard something different from his uncle by the weekend he’d “consider the horse mine.” 

The horse was then mistakenly sold at auction, and the uncle tried to sue the auctioneer. But the court decided that no valid contract existed between the uncle and his nephew. This is because the uncle’s silence didn’t constitute acceptance of an offer. 

There are, of course, some exceptions to this. Like if the parties involved already have an understanding about something similar, or a history of forming contracts without an explicit acceptance. 

Another good example is if you have a regular order with a supplier that’s the same every month. As long as you accept the goods when they arrive and don’t return them, you’re accepting their offer. Even though you haven’t explicitly said “yes, I accept your offer”, or signed anything.

You don’t always need to have a pre-existing relationship with someone to form a contract without explicit acceptance though. Let’s say you book someone to come to paint your house. You have an email conversation in which your house painter says: “If I don’t hear from you by 2 March, I’ll assume you’re happy for me to start the job on 8 March.” Not replying here would constitute acceptance. 

But if the painter says “Let me know you’re happy for me to start the painting on 8 March” to which you don’t reply, there’s no acceptance. So no contract is formed.

Need help agreeing contracts?

If you want to make agreeing contracts simpler, all-in-one contract automation could be the answer. Juro’s all-in-one contract automation software enables all teams to streamline the creation, execution, and management of routine contracts at scale. To find out more, fill out the form below. 

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