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Free Dos and Don'ts Guide

Forming a Contract: I Accepted the Offer, Didn’t I?

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When it looks like a contract and reads like a contract, is it really a contract? Maybe not!

We learned in law school that the creation of a contract requires an offer, the acceptance of that offer and some type of consideration. My recollection is that we spent quite a bit of time learning what constitutes an offer and what amounts to an acceptance. 

My feeling at the time was that the existence of an offer and the acceptance of that offer must be fairly obvious, despite my professor’s constant attempts to confuse the issues. Not so, even if I did not realize it then. While offers may lean on the obvious side, just when you have an enforceable acceptance remains an active litigation question even 30 years after I completed my contracts course.

As stated, to form an enforceable contract, there must be an offer and acceptance. When there is an offer made, quite commonly the response to that offer is not a simple “yes.” Rather, responses often come in the form of some type of counter-proposal. That counter proposal, or “counter-offer,” requires an acceptance from the original offeror – the tables have turned so to speak. 

Michigan law provides that unless a response to an offer unambiguously accepts it, and that acceptance is in strict conformity with the offer as made, no contract is formed. It’s only when the offer does not require a particular type of response that an “acceptance” can be implied by one’s later conduct.

For example, offers and counter offers often provide that to constitute an acceptance, the offeree must sign the offer and return it to the offeror by a specified date. Similarly, the offer may provide that any acceptance must be signed, all modified provisions initialed and the entire document with original signatures returned by certified mail. Sometimes an offer requires that the acceptance must be signed and returned with some amount of money that will constitute a deposit. 

It doesn’t matter. The offeror controls the offer and can place any requirements to be satisfied before there can be a valid acceptance and the formation of an enforceable contract. It sounds simple, but it is often a complex point of dispute, particularly with multi-party agreements or when numerous offers and counter-offers are exchanged.

Assumptions mean little when the existence of a contract is being disputed. Be sure by calling us first.

Tags: Commercial Liability, Contracts

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