Acceptance by Silence
General Rule
General Rule: Silence does NOT constitute acceptance. Exception: Silence CAN constitute acceptance when:- The offeree has an opportunity to speak (services performed in their presence)
- The offeree knows or should know the offeror expects compensation
- The offeree avails themselves of valuable services without objection
- There is a reasonable expectation of compensation
Day v. Caton (1876)
Facts: Plaintiff built a party wall on defendant’s property. Defendant Caton knew plaintiff expected payment for half the wall’s value but remained silent and used the wall. Issue: Has a party impliedly accepted an offer if they permit another party to perform valuable services without objection, knowing the other party expects payment? Rule: If a party voluntarily accepts and avails himself of valuable services rendered for his benefit when he has the option to accept or reject them, even without distinct proof they were rendered by his express request, a promise to pay may be inferred. Holding: Defendant had opportunity to reject the wall but didn’t. Defendant knew plaintiff expected payment. Jury could properly find a contract was formed and defendant liable for half the wall’s value. Key Principle: Duty to speak - When services are performed in your presence with reasonable expectation of compensation, failure to object means acceptance. Exam Tip: If someone performs services on your property by mistake (e.g., painting wrong house), you have a duty to speak up. Silence + opportunity to object + knowledge of expectation of payment = potential acceptance.Silence and Family Relationships
Wilhoit v. Beck (1963)
Facts: Blossie Beck Lawrence, a distant cousin, arrived uninvited at Ruth Beck’s home in 1939/1940 and stayed until her death in 1963 (over 20 years). Beck provided room, board, care, and companionship. Beck sued Lawrence’s estate for 11,368. Issue: Was there sufficient evidence to support finding of implied contract between family members? Rules:- Presumption of Gratuity: When there is a family relationship, services are presumed to be gratuitous (gift promise)
- Rebuttal: Presumption can be overcome with substantial evidence showing expectation of payment
- Court defined “family” for purposes of presumption of gratuity
- Evidence showed decedent was “independent person in the extreme”
- Came and went as she pleased
- Took meals alone, entertained guests alone
- No real family relationship existed
- Course of conduct can substitute for express agreement
Prior Course of Dealing and Acceptance by Silence
Hobbs v. Massasoit Whip Co. (1895)
Facts: Plaintiff shipped eel skins to defendant. Previously shipped 4-5 times with payment upon delivery. This time, defendant kept skins for several months without notifying plaintiff or paying. Issue: Does silence constitute acceptance when there is prior course of dealing? Rule: Silence + retention of goods for unreasonable time + prior course of dealing = acceptance. Analysis:- Court could view as series of contracts (buyer making standing offer, seller accepting each time)
- Instead, court found seller is offeror, buyer accepts by silence
- Prior course of dealing established pattern
- Retention for unreasonable time (4 months) supports acceptance
Modern Approach to Manner of Acceptance
Whorton v. Daimler-Chrysler Financial Services (Texas Ct. App.)
Facts: Plaintiff settled prior debt through collection agency. Received letters stating amount to be paid by due date for account to be “paid in full” with credit report corrected within 90 days. Both checks received after due date but accepted by defendant. Issue: When offer fails to specify manner of acceptance, how may offeree accept? Rule (Modern Approach): Unless otherwise indicated, an offer may be accepted in any manner reasonable under the circumstances. (Restatement Second § 30) Analysis:- Offer did not require specific manner of acceptance
- Plaintiff accepted by tendering first payment (even though late)
- Issue of fact concerning waiver - defendant’s long silence showed waiver
- Time between second installment and lawsuit - defendant didn’t pursue funds or inform plaintiff of breach
Acceptance Without Specified Method
Fujimoto v. Rio Grande Pickle Co.
Facts: After threatening to quit without raise, Rio Grande offered Fujimoto and Bravo contracts with 10% profit-sharing bonus. Contracts didn’t specify how to accept. Employees signed contracts, kept them, and continued working 14 months. Rio Grande failed to pay bonuses, claiming contracts never accepted because not delivered back. Issue: Is offer considered accepted when offeree clearly communicates intention to accept where no mode of acceptance is provided? Rule: Where no mode of acceptance is provided by offer, offer is considered accepted when offeree clearly communicates his intention to accept to the offeror. Actual knowledge on part of offeror that offer has been accepted is sufficient to form contract. Analysis:- Contract didn’t specify mode of acceptance (no requirement to sign and return)
- Not necessary to return contract to Rio Grande
- Offer clearly accepted by continuing to work for 14 months
- Rio Grande knew offer had been accepted
The Mailbox Rule
Traditional Rule
Mailbox Rule: Acceptance is effective upon dispatch (when mailed), not upon receipt. Who Controls: The offeror (master of the offer) can modify or eliminate mailbox rule by:- Requiring acceptance be received by specific date
- Requiring payment be deposited/negotiated into account before contract formation
- Specifying “acceptance only if in my office by [date]“
Cantu v. Central Education Agency (1884)
Facts: Maria Cantu hand-delivered resignation letter Saturday, August 18, requesting final paycheck be sent to address 50 miles away. Superintendent (only person authorized to accept resignation) received Monday, August 20. Same day at 5:15 PM, superintendent wrote acceptance letter and deposited in mail. Tuesday, August 21, Cantu hand-delivered withdrawal of resignation. Superintendent then hand-delivered copy of mailed acceptance letter. Issue: Is acceptance of offer effective when mailed, even if offer didn’t explicitly authorize acceptance by mail? Rule:- Acceptance by any medium reasonable under circumstances is effective on dispatch absent contrary indication in offer
- Mailbox rule: Properly addressed letter accepting offer becomes effective when deposited in mailbox, unless alternative method required
- Fact that offer given by particular method does NOT imply offer must be accepted by same method
- Cantu’s resignation didn’t specify particular means of acceptance
- Address for final paycheck was not local (50 miles away)
- Time constraints (proximity to start of school year) made mail reasonable
- Letter properly addressed and deposited BEFORE Cantu’s withdrawal attempt
Termination of Revocable Offers
Ways an Offer Can Become Irrevocable (Review)
Before discussing termination, recall offers become irrevocable through:- Option Contract: Consideration paid for the option
- Merchant Firm Offer: UCC § 2-205
- Unilateral Contract - Start of Performance: Beginning performance makes offer irrevocable for reasonable time
- Promissory Estoppel: When all else fails
Promissory Estoppel Elements
Definition: If promisor made a promise that promisor knew or foresaw (or should have foreseen) that promisee would reasonably rely on, and promisee did in fact reasonably rely on to his detriment, promisor may be held liable under theory of promissory estoppel.Four Required Elements:
- Was a promise made?
- Was it foreseeable that promisee would rely on this promise? (to the promisor)
- Did promisee, in fact, [reasonably] rely on this promise?
- Has promisee suffered a detriment by the reliance?
- Promise made? ✓ (dealer agreed to hold car)
- Foreseeable reliance? ✓ (dealer knew friend traveling from LA)
- Actual reliance? ✓ (flight, hotel, time off work)
- Detriment? ✓ (expenses incurred)
Ways to Terminate Revocable Offer
1. Death of Offeror
Rule: Death of offeror automatically terminates decedent’s revocable offer (applies to both unilateral and bilateral offers). Exception: Does NOT apply if offer was irrevocable (e.g., option contract).2. Insanity of Offeror
Majority Rule: Offer dies automatically when offeror goes insane (whether offeree knows or not). Minority Rule (Swift v. Smigiel): Offer terminates when offeree knows or should have known of offeror’s insanity.Swift v. Smigiel (1971) - New Jersey
Facts: Swift supplied nursing home goods to Smigiel under continuing guarantee contract. Smigiel declared incompetent; son took over business. Son didn’t pay for merchandise in 1967. Swift sued for ~$8,500 unpaid. Issue: Is contract still valid if one party becomes incompetent and other party doesn’t know about it? Rule (Minority View): Continuing guarantee must still go on even if one party is unaware of other party’s incompetency. Since no notice was given of incompetency and they took merchandise, contract deemed still valid. Analysis:- Court narrowly views precedent as only addressing continuing offers of guarantee
- Declares case of first impression
- Attacks reasoning of majority rule
- Bases decision on relative convenience and fairness
- Decisive consideration: presence or absence of knowledge by plaintiff (actual or reasonably imputed)
3. Time
Rule: An offer is open for either:- The time specified by offeror, OR
- If none stated, a reasonable period of time
- Cutting hair: 5 minutes
- Painting 30,000 sq ft home: 2-3 weeks reasonable
- Executing stock trade: 1 minute (5 minutes may be unreasonable)
- Trimming hedges, changing roof: 1 month reasonable, 1 year unreasonable
4. Illegality
Rule: If subject matter of offer becomes illegal after offer was made but prior to acceptance, then offer will be terminated by illegality (operation of law). Example:- Offer to buy 1,000 bottles of Don Julio tequila for store
- Before acceptance, California passes law banning alcohol sale/consumption
- Offer automatically dies
5. Revocation (by Offeror)
Definition: Revocation is the termination of offer by the offeror. Timing: Can only revoke BEFORE acceptance. Once accepted, cannot revoke.6. Rejection (by Offeree)
Definition: Rejection is the termination of offer by the offeree. Effect: Kills the offer. Terminated = dead, cannot revive. Note: Counteroffer = rejection + new offer.7. Counteroffer
While technically a rejection, counteroffer both:- Rejects the original offer (terminates it)
- Makes new offer in return
Mirror Image Rule and Counteroffers
Ardente v. Horan (1984)
Facts: August 1975, Ardente bid 20,000 check and letter dated Sept 8, 1975 stating: “My clients are concerned that following items remain with real estate: dining room set, tapestry wall covering in dining room, fireplace fixtures.” Defendants refused to agree to sell enumerated items, didn’t sign agreement, returned agreement and check. Plaintiff sued for specific performance. Issue: After executing real estate bid, what conditions allow termination? Does buyer’s request for additional items constitute acceptance or counteroffer? Rule (Common Law - Mirror Image Rule):- Acceptance may NOT impose additional conditions on offer
- Acceptance may NOT add limitations
- Acceptance which is equivocal, conditional, or with limitation is a counteroffer
- Counteroffer requires acceptance by original offeror before contractual relationship exists
- Purchase contract contained conditions
- Purchase agreement never executed by defendant
- Plaintiff’s letter with additional requests constituted qualified acceptance = counteroffer
- Not a mirror image of offer
UCC § 2-207: Battle of the Forms
Overview
Purpose: UCC § 2-207 alters the “ribbon-matching” or mirror image rule of common law. Common Law vs. UCC:- Common Law: Acceptance with additional/different terms = rejection + counteroffer. Offeror accepts counteroffer by performing without objection.
- UCC § 2-207: Contract can form even with additional/different terms. Terms determined by whether parties are merchants.
Dorton v. Collins & Aikman Corp. (6th Cir.)
Facts: Over 55 transactions, Carpet Mart telephoned Collins & Aikman’s order department to order carpets. After oral order, C&A checked price against price list and credit. C&A typed info on printed acknowledgment forms bearing legends “Acknowledgment,” “Customer Acknowledgment,” or “Sales Contract.” Key Form Language: “Acceptance of your order is subject to all terms and conditions on face and reverse side hereof, including arbitration, all of which are accepted by buyer…” Arbitration clause on back. In all cases, Carpet Mart took delivery and paid for carpet without objecting to terms in acknowledgment form. Issue: Are arbitration agreements printed on receipts/order paperwork sufficient to be binding contract between parties? UCC § 2-207 Analysis:Subsection (1) - Two Critical Questions:
- Is there a definite and seasonable expression of acceptance?
- Is acceptance expressly made conditional on assent to additional/different terms?
Subsection (2) - Additional Terms Between Merchants:
When both parties are merchants, additional terms become part of contract UNLESS:- Offer expressly limits acceptance to terms of offer only, OR
- Additional terms materially alter contract, OR
- Offeree objects to additional terms
- Reason: Affects substantial rights - no jury trial, no court, only arbitrator
Subsection (3) - Contract by Conduct:
If no contract by communications, may still form contract by conduct of parties (e.g., shipping and accepting goods). Terms of such contract: Those on which forms agree + gap fillers from UCC. Holding: C&A’s acceptance NOT expressly conditional on buyer’s assent to additional terms (didn’t meet § 2-207(1) proviso requirement). Contract recognized under subsection (1). Additional terms (arbitration) treated as proposals under subsection (2). Since both parties merchants, arbitration would become part UNLESS materially alters. Arbitration = material alteration → does NOT become part of contract. Remanded for further findings. Key Principles:- “Expressly conditional” requires clear language: “acceptance conditional on offeror’s assent to these terms” or “take these provisions or nothing”
- Subject to language alone insufficient to meet proviso
- Both parties must be merchants for subsection (2) to apply
- If one party non-merchant, additional terms are mere proposal (must be expressly accepted)
Key Definitions Summary
Unilateral Contract
- Offer seeks: Full performance (not return promise)
- Acceptance: Only by full performance
- Start of performance: Makes offer irrevocable for reasonable time (protects offeree from detrimental reliance)
- 95% completion: NOT acceptance (must complete 100%)
Bilateral Contract
- Offer seeks: Return promise
- Acceptance: By promising to perform
Reasonable Time
- Context-dependent
- Determined by jury or judge based on:
- Type of work/service
- Industry standards
- Expectations of parties
- Circumstances
Revocation vs. Rejection vs. Termination
- Revocation: Offeror kills the offer
- Rejection: Offeree kills the offer
- Termination: Offer is dead (can’t be revived)
Exam Tips
- Silence Cases: Always ask: (1) Opportunity to object? (2) Knowledge of expectation of payment? (3) Availed of benefit? (4) Reasonable?
- Family Relationship: Start with presumption of gratuity, then look for evidence to rebut (course of conduct, lack of real relationship, substantial evidence).
- Manner of Acceptance: Modern approach = any reasonable manner unless offeror specifies otherwise. Offeror is master of offer.
- Mailbox Rule: Effective on dispatch unless offeror requires receipt. Must be prompt/timely.
- Termination: Know all 6-7 ways. If irrevocable offer (option, merchant firm offer, started performance), cannot terminate most ways.
- Promissory Estoppel: Use when all else fails. Must have all 4 elements. Reasonable reliance is key.
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UCC § 2-207: Always analyze all three subsections:
- (1) Is there definite acceptance? Is it expressly conditional?
- (2) Are parties merchants? Material alteration?
- (3) Contract by conduct?
- Mirror Image Rule: Common law = strict. UCC = flexible. Know which applies (goods vs. real property/services).
- Reasonable Time: Always fact-dependent. Think about what ordinary person would consider reasonable in that context.
- Legal Definitions: Must be precise. Missing one element = wrong answer. Not subject to interpretation.