welcome to the second lesson in the contract law module in this lesson we will discuss what constitutes acceptance of an offer an offer creates a power of acceptance in the offeree once the offer is accepted the contract is clinched what this means is that provided the other requirements of contract formation are met a legally enforceable contract is formed once the offer is accepted for a communication to constitute acceptance of an offer it must be clear and unconditional it must be made in response to the offer it must be communicated to the offer or in compliance with the terms stated in the offer and it must be made with knowledge of the offer consider these requirements as we discuss the cases that follow for acceptance of an offer to be valid it is normally necessary for the offeree to communicate that acceptance to the offer or the requirement to notify the offeror of acceptance is illustrated in larkin and gardner in that case larkin retained a real estate agent to sell her property the agent was approached by gardner with an offer of hundred dollars the agent took the written offer to larkin which larkin agreed to and signed the agent took no steps to communicate larkin's acceptance of the offer to gardner a few hours later gardner gave notice to the agent that he had withdrawn his offer the court was asked to determine if there was acceptance prior to withdrawal of the offer the court held that larkin's acceptance was not valid in reaching this conclusion the court stated that contracts are not formed on the basis of subjective mutual consent but rather upon the objective interpretation of externally manifested action a contract will not be formed until the acceptance of the offer has been communicated to the offeror furthermore for acceptance to be valid the acceptance must be communicated prior to the revocation or withdrawal of the offer what about the place of acceptance can the offeror require the acceptance of an offer be communicated in a specific way or at a specific place in ellison and henshaw ellison offered to purchase flour from henshaw in the offer ellison stipulated that the acceptance had to be made by return wagon which was headed to harper's ferry henshaw purported to accept the offer by sending an acceptance to ellison at georgetown although ellison did receive the acceptance he denied that a contract had been made on the basis that the terms as to acceptance had not been complied with the court held that the acceptance was not valid in reaching this conclusion the court confirmed that the offer or is the master of the offer and may insist on acceptance in any way including acceptance at a particular place as such failure to accept on the terms specified in the offer invalidates the acceptance although the court in ellison and henshaw found as a general rule that to be valid in acceptance must strictly comply with the terms of the offer this rule has been relaxed by later cases in the manchester diocesan council case the court found that notification may come through any means provided the offeror is notified of the acceptance as such even if the offer provides for a specific means of acceptance the courts will generally find that any means of acceptance that is no less advantageous to the offer or will create a contract however where the terms of the offer make it abundantly clear that only one means of acceptance is permitted for example by post and by no other means then the courts will enforce the specific terms of the offer and acceptance will be limited to that means what happens if the offeree does not accept the offer on identical terms but communicates their acceptance provided certain terms are changed generally when an offeree purports to accept on different terms this is treated as a counteroffer for example in livingstone and evans evans offered to sell land to livingstone for eighteen hundred dollars livingstone responded by telegram saying send lowest cash price will give sixteen hundred dollars cash evans answered livingstone by telegram stating cannot reduce price livingstone wrote accepting the original offer to sell the land for eighteen hundred dollars and evans refused to sell the court was asked to determine if there was a valid contract between livingstone and evans more specifically the court had to determine whether livingstone had accepted evan's offer evans argued that there was no contract because livingstone's agreement to pay sixteen hundred dollars was not on the same terms as the offer and therefore could not constitute acceptance livingstone had instead made a counteroffer which evans did not accept as a general rule a counteroffer kills the original offer and therefore evans argued it was not possible for livingstone to accept evan's original offer to sell for eighteen hundred dollars the court found that livingstone's acceptance of evan's original offer was valid although the court agreed that livingstone's counter offer had killed evan's original offer when evans responded cannot reduce price this revived the original offer which livingstone accepted what if the terms of an offer state that you are deemed to have accepted it unless you notify the offer or that you have not does the offeree's silence constitute acceptance of the offer the answer to this question is generally no for example in felt house and bindley felthouse thought he had reached an agreement to purchase a horse from his nephew for 30 pounds however the nephew informed felt house that the agreed price was 30 guineas which was the equivalent of 30 pounds and 30 shillings in response to this felt house made a new offer of 30 pounds 15 shillings saying if i hear no more about him i consider the horse mine at 30 pounds 15 shillings following this exchange the nephew's farming stock including the horse was sold at auction the nephew had informed the auctioneer that the horse should not be included but the auctioneer still sold the horse at auction after the horse had been sold felthouse received a letter from his nephew acknowledging acceptance of his offer to buy the horse felthouse sued the auctioneer for selling the horse in order to be successful in his lawsuit against the auctioneer it was necessary to establish that felt house had a right to the horse at the time it was sold the court was therefore asked to determine at what point was there a valid contract between felt house and his nephew the court found that at best the contract was formed when felt house received the letter from the nephew which was after the horse was sold at auction the court reached this conclusion because as a rule a contract is only formed when the offeree communicates their acceptance to the offer or as such a condition in an offer that the offery's inaction or silence will constitute acceptance is generally not valid this common-law rule has been further codified in section 13 of the consumer protection act if the terms of an agreement are not sufficiently certain and definitive there will be no contract courts will however attempt to find a contract through reasonable and just interpretation and where possible give effect to any clause that the parties reasonably understood and intended was to have legal effect for example in the scamal case austin agreed to purchase a van from scamal scamal agreed to take austin's 1935 bedford van in trade with the remaining purchase price to be paid by a higher purchase agreement scamal notified austin that the van would be ready for pickup in a few days subject to the mutual acceptance of a higher purchase agreement before the higher purchase agreement was entered into scammel refused to proceed with the sale the court was asked to determine if there was a contract for the sale and purchase of the van the court held that a contract was not created in reaching this conclusion the court found that the language used in the agreement was obscure and incapable of any precise meaning and that in order to be binding an agreement must be sufficiently definite to enable the court to give it a practical meaning although a court may read terms into an agreement it cannot make an entire agreement for the parties here the parties had not reached agreement on the terms of the hire purchase agreement and given that a higher purchase agreement is a complex arrangement it was not possible for the court to reasonably determine what agreement the parties had reached the party's agreement to agree on the terms of a higher purchase agreement was not a contract the final issue that we will discuss in this lesson is the question of when an offer is terminated in general an offer is terminated when the offer stipulates that it must be accepted by a particular time and that time has passed in the case of an offer that does not stipulate a particular time for acceptance after a reasonable time has passed and upon the revocation of the offer by the offer or generally the revocation of an offer does not occur until the offeror has notified the offeree that the offer has been revoked this however may not always be necessary for example in dickinson and dogs dogs offered to sell a house to dickinson the offer was stated to be open until 9 00 am on friday at some point dickinson decided to buy the house but did not make this known to dodds since he believed that he had until friday to accept however before friday dickinson heard from someone else that dodds had sold the house to another person before the deadline for acceptance dickinson found odds at the train station and attempted to hand dodd's acceptance of the offer dodds told dickinson that he could not accept because the house had already been sold dickinson sued dodds and the court was asked to determine if dickinson's acceptance was valid the court held that the acceptance was not valid in reaching this conclusion the court stated that an offer is a naked promise which could be revoked at any time prior to acceptance and that knowledge which is sufficient to indicate revocation to the reasonable person even if such knowledge is obtained indirectly invalidates the power of acceptance but what about the fact that dodds had promised to keep the offer open until friday the court found that a promise to hold an offer open for a certain time is unenforceable unless there is consideration for the promise and that dickinson had not provided any consideration for the promise we will be covering the doctrine of consideration in the next lesson once you have reviewed the lesson ask yourself why the court reached this conclusion this concludes the lesson on acceptance thank you for listening make sure to answer the knowledge check questions at the end of this lesson before moving on to lesson three if you have any questions please post them to the owl discussion forum your questions may be answered in writing on the discussion forum or during the weekly question and answer session