Can Silence Signal Acceptance?

There is no general rule for a contract. The only requirements are an offer and acceptance. There are no legal rules for what the offer and acceptance must look like. An acceptance of a contract may be a formal business letter or a handshake to the kid next door.

A contract may be verbal or written. What is a legally binding contract? What is legal acceptance of an offer? Can silence be acceptance? This article will examine the "sound of silence" in contract law.

Contract Law: An Overview

All business owners know the three terms of a contract: offer, acceptance, and consideration. Any changes to the offer become counteroffers. The changes and counteroffers continue until both parties agree upon the terms of the contract and formalize their agreement in a final contract.

Verbal Agreements

A verbal agreement can be as binding as a written contract. If the kid next door offers to mow your lawn Saturday for ten dollars, and you accept, you now have a contract. If he shows up and mows your lawn, he has performed on the contract and can ask for payment.

Written Agreements

A written contract takes the verbal agreement and puts it into writing. Written contracts are easier to enforce in court since they spell out the terms of the contract. The parties must sign their agreement. If there is a breach of contract, showing a written contract proves both parties agreed to the terms, and one side is now in breach.

Some types of contracts must be in writing to be legal contracts. Real estate, contracts for the sale of goods over $500, and any contract lasting over one year must all be in writing.

Acceptance of the Offer

Contract law is one of the most complex areas of law. This is because "offer" and "acceptance" are not legally defined terms. In some cases, an advertisement may be an offer. In other cases, saying, "I will mow your lawn for $10.00," may not be an offer.

To be an offer, the offeror must clearly state the terms of intent under which they agree to be bound. "I will mow your lawn on Saturday for $10.00," is a clear statement of intent.

Acceptance of the offer must also be a clear statement of assent to all terms. The offeree must make it clear they agree to all the terms and not say anything that changes the terms of the offer. "Yes, you may mow my lawn Saturday, and I will pay you $10.00," is an acceptance. "I won't be here Saturday. Can you come Sunday?" is not an acceptance but a counteroffer.

Without a clear acceptance, there is no contract. What about saying nothing?

Silence as Assent

Under common law, silence could not assent to a contract. A party could not be bound to a contract without a clear acceptance of all terms. Some of the restrictions on acceptance include:

• You cannot unknowingly accept a contract
• No one else can accept for you (in business law, there are exceptions made for a business owner's agent)
• You must communicate your acceptance directly to the offeror
• The offeror cannot take silence for acceptance

Every rule has an exception. The Uniform Commercial Code (UCC), which governs contracts for the sale of goods, allows merchants to create terms of contracts that as seems best to them. In business relationships where silence has been an assent in previous situations, the UCC allows merchants to continue to operate as such.

For instance, suppose a producer sends fifty pallets of widgets to a store every month. The contract requires the store to send a notice of acceptance if the widgets are of good quality. The store never does because the widgets always conform. In this case, "silence gives assent" because the producer and the store have become accustomed to doing business this way.

Another company that sends a shipment of widgets to the store cannot expect silence as acceptance. If the new company's next shipment depends on the store's notice of acceptance, the company may treat the store's failure to send a notice as a breach of contract.

Was Your Offer Accepted? Get Clarity With an Attorney's Help

If you have questions about whether silence signals acceptance of an offer or any other business contract questions, a contract attorney can help. Learning details on forming a lasting, valid contract saves money. Failing to understand contract law can expose you to costly liabilities. Get started today and find a small business attorney near you.