Silence As Acceptance

Terms:

Improper Exercise of Dominion:
Where the offeree improperly treats goods as if they were his own without first accepting an offer to purchase them.

Late Acceptance of an Offer:
The untimely acceptance of an offer. Such an acceptance is not valid although it does have the legal status of a counteroffer.

The general rule is that silence does not constitute acceptance. See McGlone v. Lacey, 288 F.Supp 662 (D.S.D. 1968). However, there are four major exceptions to this general rule.

First, silence will constitute acceptance if the offeree gives the offeror the impression that silence will be considered an acceptance. See National Union Fire Insurance Co. v. Ehrlich, 122 Misc. 682 (1924). For example:

George is the owner and manager of Babe’s Baseball Memorabilia. George has a vast collection of baseball cards, some of which he sells in his shop and some of which he keeps in a private collection. Over the past few months, George has been looking for any Mickey Mantle cards he can find. However, George is particular about the condition his cards are in and will only buy mint condition cards. George tells Lou, one of his better customers, “You know what I’m looking for. If you find any cards, send them to me with the price you are willing to sell them for. If I don’t return them to you within a week, consider your offer accepted.” Later on, Lou finds a mint condition Mickey Mantle rookie card and he mails it to George with a proposed price of $5,000. George does not return the card to Lou. Under these circumstances, George’s silence is considered acceptance because George, the offeree, gave Lou, the offeror, a clear indication that his silence would be an acceptance of Lou’s offer to sell the card for the proposed price.

Second, silence will constitute acceptance where the offeror has told the offeree that silence will constitute acceptance. For example:

On March 1st, General Motors makes a written offer to the Big Apple Limousine Service to sell Big Apple fifty Cadillac sedans for $10,000 per car. The offer states that General Motors will consider the offer to be accepted if and when the Chief Executive Officer of Big Apple approves of the offer. On March 5th, the C.E.O. of Big Apple receives the offer and approves it. On March 7th, General Motors contacts Big Apple and tries to retract the offer. In this case, General Motors will not be able to retract the offer because the offer became a valid contract on March 5th, when the C.E.O. approved the offer. Therefore, although the C.E.O. did not contact General Motors as to his acceptance, and was in effect "silent" with regard to communicating his acceptance of the offer, a valid contract has been formed.

Third, silence will constitute acceptance where an offeree improperly exercised dominion over goods sent to him for approval or inspection. In such an instance, the offeree is contractually bound to buy the goods at the stated price. The offeree will be forced to buy the goods even if he never had any intention of buying them in the first place. For example:

George is the owner and manager of Babe’s Baseball Memorabilia. Mickey, one of George’s best customers, frequently sells cards to George. Mickey sends George a small box of mint condition 1955 Topps baseball cards along with a note saying “take a look at these and tell me if you are interested in buying them.” George looks through the cards, has them laminated in plastic and mounts them on his wall. In this instance, George is now contractually bound to buy the cards at a reasonable price, even if he never formulated intent to accept Mickey’s offer, because George improperly exercised dominion over the cards. See Louisville Tin & Stove Co., v. Lay 65 S.W.2d 1002 (Ky. 1933).

Please note that mere inspection is not an improper exercise of dominion. That being said, had George looked through the cards to decide if he wanted to buy them, he is not contractually bound to buy the cards.

Fourth, a late acceptance of an offer has the legal weight of a counteroffer. In other words, where an offeror makes an offer to an offeree and the offeree accepts in an untimely manner, that acceptance is not a valid acceptance.

However, it is a counteroffer which the original offeror can either accept or reject. If an offeree sends a late acceptance but the acceptance is sent within a period of time that the offeree could have thought was reasonable, the courts have decided that good faith requires the original offeror to notify the original offeree that the acceptance was too late. If the original offeror does not give such notice, the offeror’s silence will be considered acceptance of the offeree’s late acceptance/counteroffer. Here's an example which illustrates this point:

Anderson’s Auto Body Shop offers to buy two thousand black widgets from the Boston Widget Co. for $1 per widget. Three months later, Boston Widget accepts Anderson’s offer. Anderson does not respond to Boston Widget’s acceptance. In this case, Boston Widget’s acceptance is not valid because it was untimely but it does have the legal weight of a counteroffer. However, because Boston Widget’s acceptance could have been considered timely in their minds, good faith will require that Anderson respond to Boston Widget. Because Anderson did not respond to Boston Widget, Boston Widget can consider their late acceptance/counteroffer as accepted by Anderson's silence.

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