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Contract Basics

Acceptance of an Offer

Acceptance indicates assent to the offer as presented, in the manner stated in the offer. For an offer to be valid, the accepting party must know the offer terms, show acceptance or intention to accept, and express the acceptance of the offer's terms without condition.

Once a valid offer is made, it will become a binding contract—one that is enforceable—as soon as the other party makes a valid acceptance of it. Acceptance indicates agreement with the offer as described and stated in the offer.

To be valid, an acceptance must fulfill three conditions.

First, the accepting party must know the offer terms. If a party is negotiating but does not understand the offer and all its terms, then that party is not able to indicate assent or acceptance of the offer. For example, Myra wants to sell Logan a car. She says, "I will sell you my car, and you can pick it up from my house this fall." Logan agrees. Logan does not know the offer. The specifics of price and when he will receive the car have not been determined.

Second, the party must show an acceptance or intention to accept the offer. Attorneys often call this a "meeting of the minds." This means essentially that the parties understand and agree with each other. One party has made an offer with certain terms, the second party has accepted the exact same offer, and both understand what the bargain or deal actually is. An example of meeting of the minds would be "I offer you $1,000 to buy your car. I will pay in three days and take title at that time." The response would be "Yes, I agree to all terms of your offer."

Finally, the acceptance must be expressed in a manner that accepts the offer and all its terms without condition or contingency. For example, if Logan receives an offer that contains 10 terms, one of which is price, it is not a valid acceptance to say that he agrees to the price. He must agree to all the terms.

In addition, parties may not condition the acceptance on any condition or contingency. For example, Logan cannot say, "I accept the offer to buy your car provided I am able to get financing." This condition needs to be built into a counteroffer—that is, a response that has additional or different terms from the original offer—and then accepted for there to be a binding contract.

Once there is an acceptance of an offer, this creates the meeting of the minds necessary to form a binding contract. While a valid offer and acceptance establish a meeting of the minds, there are some other elements that still need to be present for a contract to be valid, such as consideration and legal intent.