Contracts 101: What is a Contract, and How Does It Operate?
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Step 2: Acceptance
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The concept of acceptance does not apply unless two things have happened. First, someone must have made an offer to another person that was definite and certain. Second, the offer must have been made and communicated to the person who is meant to accept the offer. In other words, once the offer has been made to the appropriate party, the power of acceptance has been created in that person, and they now have the right and ability to accept the offer if they so choose.

In order to accept an offer that is made to you, you must accept all of the terms that were stated in that specific offer. If you only choose to accept some of the terms, and even go so far as to suggest the addition, subtraction, or alteration of other terms, then you have now made a counteroffer to the person who made the original offer. Confused? Let’s back up and use an example to flesh this out.

Adam offers Betsy $400 if she’ll paint his house. If Betsy agrees to paint Adam’s house for $400, or if she begins painting his house, then she has accepted the offer. However, if Adam makes that same offer to Betsy, and she says that she will paint his house for $500, then Betsy did not accept the offer. Instead, Betsy made a counteroffer, and Adam can either accept or reject this suggestion.

Another important aspect of acceptance is the idea that, like the offer, it must be communicated to the person who made the offer. Generally speaking, acceptance of an offer can be done through any "medium reasonable in the circumstances" (U.C.C. §2-206). However, there is one major exception to this principle: if the person making the offer states that the offer must be accepted in a certain manner (e.g. through a signed letter in the mail), then that is how one must accept that particular offer.

One of the most common methods of acceptance (aside from just telling the person making the offer that you accept) is acceptance by mail. When one accepts an offer by mailing a letter to the person who made the offer, acceptance of that offer is effective when the letter is sent, provided that it was properly stamped and sent to the correct address. This is legally known as the "Mailbox Rule."

Lastly, let’s discuss the third step in forming a contract.