After an offer to enter into a contract has been made, the other party must accept the offer before a contract is formed. There are several rules regarding the acceptance of an offer to enter into a contract:

• The acceptance must be communicated.  Silence cannot usually be considered acceptance.
• The offer must be accepted without modifications, otherwise it is a counter-offer.
• Until an offer is accepted it may be revoked.  The exception to this is an option contract.
• Only the person to whom the offer is made can accept.
• Acceptance will be judged by an objective standard.  This means that if an average person making an offer would have thought the other person accepted, there is a contract, even if the person did not mean to accept.

At What Point Does the Contract Become Binding?

The general rule is that a contract is formed once the acceptance is communicated. At that point, both parties are bound by the contract. The exception to this is known as the mailbox rule, which says that an acceptance sent by mail becomes effective when mailed, not when received.  This rule applies to contract acceptance only. This means that once a letter of acceptance has been mailed, the offer cannot be revoked even if the offeror has not yet received the acceptance.

Does E-Mail Fall Under the Mailbox Rule?

The courts have not clearly decided whether an acceptance by e-mail becomes valid when sent or when received. Instantaneous forms of communication such as faxes and telex communications do not fall under the mailbox rule, so acceptance by these methods is only valid when received.

What If the Offeree Acts on the Contract Instead of Communicating Acceptance?

If a party acts on the contract, or performs the contract, rather than merely saying “yes,” then the performance is considered acceptance as long as performance represents the intentions of both parties. For example, suppose that A offers to pay B $10 if B will mow A’s lawn. B mows the lawn rather than saying “yes.” B’s performance is implicitly considered acceptance of the agreement despite the fact that B never explicitly consented.

What If the Offer Requires That a Certain Mode of Acceptance Be Made?

If the offer itself declares only one type of acceptance is valid, than that type of acceptance must be used or there is no acceptance. For example, suppose that an offer says “there is only acceptance if you mail your response.” In that case, only a mailed acceptance can be legally recognized as acceptance. Phone calls, e-mail, or any other type of communication will not be binding as an acceptance if the offer itself states that only mail is valid acceptance.

What If the Offer Was an Offer To the General Public?

Offers to the public at large, such as advertisements, contests, or competitions, can still be considered valid contracts despite the fact that there is typically no notice of acceptance. When the offer is public, performance is enough to satisfy acceptance. For example, if a company offers to give a prize to the winner of a basketball tournament, there is a valid contract between the company and the winner of the basketball tournament.

The exception is if the public offer would somehow violate public policy. For example, if the offer involves gambling and gambling is illegal in the state, then the offer would be void.

What If the Other Party Mislead Me Into Believing a Contract Existed?

If one party leads another to believe that a contract exists when in fact a contract does not exist, there is still no acceptance. Instead, another legal doctrine, promissory estoppel, will control the case.

Does E-Mail Fall Under the Mailbox Rule?

The courts have not clearly decided whether an acceptance by e-mail becomes valid when sent or when received. Instantaneous forms of communication such as faxes and telex communications do not fall under the mailbox rule, so acceptance by these methods is only valid when received.

What If the Other Party Mislead Me Into Believing a Contract Existed?

If one party leads another to believe that a contract exists when in fact a contract does not exist, there is still no acceptance. Instead, another legal doctrine, promissory estoppel, will control the case.

Do I Need a Lawyer?

The rules of contracts often vary from state to state. If you have questions about whether there has been a valid acceptance of an offer or feel there has been a breach of contract, a contract lawyers familiar with contract law and contract drafting and review can help.