Also known as: acceptance by conduct
Written by attorneys — see sources below.
An acceptance of an offer manifested by rendering or tendering the performance requested by the offer. The beginning of the invited performance or a tender of a beginning of it constitutes acceptance when the offer permits a choice between acceptance by promise and acceptance by performance.
Maple Works emailed Nova Manufacturing an offer to pay $15,000 for 300 steel legs produced to specified dimensions by August 1. Nova did not reply but immediately retooled a production line and began fabricating the legs to the exact specifications. When Maple Works later refused payment, Nova sued for breach. Nova's commencement of the requested fabrication constituted acceptance by performance, forming a contract that bound Maple Works to pay upon tender.
Oaks Properties offered Rivera Construction $200,000 to fully replace a warehouse roof by June 1. Rivera mobilized equipment and began demolishing the old roof the same day but immediately emailed that the work was exploratory only and would not bind the parties absent a later signed agreement. Oaks refused to sign and claimed a contract existed. Rivera's contemporaneous email manifesting an intention not to accept prevented the partial performance from operating as acceptance.
Apex Livestock offered Crown Organic a contract to supply grain silos and stated that beginning fabrication would constitute acceptance. Crown began cutting steel for the silos but gave Apex no notice of that step. After more than a week without communication Apex contracted with another supplier. Crown's commencement of fabrication invited by the offer operated as acceptance by performance even without separate notification.
A consumer ordered a computer from a seller whose website contained no terms beyond price and delivery. The computer arrived with a box containing additional terms including an arbitration clause and a statement that keeping the computer beyond thirty days constituted acceptance. The consumer used the computer for several weeks without returning it. Use of the computer after an opportunity to read the enclosed terms constituted acceptance by performance of the seller's offer.
Rich and Enza Hill ordered a computer from Gateway 2000 by telephone, providing a credit card number for payment. A box containing the computer along with a list of terms arrived at their residence. The Hills kept the computer more than thirty days before complaining about its components and performance. The Hills filed suit in federal court. They argued that the product's shortcomings make Gateway a racketeer, with mail and wire fraud as the predicate offenses, and sought treble damages under RICO for themselves and a class of all other purchasers. Gateway asked the district court to enforce an arbitration clause contained in the list of terms. The district court refused enforcement, writing that the present record is insufficient to support a finding of a valid arbitration agreement between the parties or that the plaintiffs were given adequate notice of the arbitration clause. Gateway took an immediate appeal. The Hills concede that they noticed the statement of terms but deny reading it closely enough to discover the agreement to arbitrate. The box from Gateway was crammed with software, including an operating system without which the computer was useful only as a boat anchor, as well as many application programs. Gateway's advertisements state that their products come with limited warranties and lifetime support.
View caseA buyer purchased retail software whose box stated that opening the package and using the program would bind the buyer to an enclosed license agreement prohibiting resale. The buyer opened the package, installed the software, and then resold copies. The buyer's act of installing and using the software after an opportunity to review the license terms constituted acceptance by performance of the seller's offer.
ProCD, Inc. compiled information from more than 3,000 telephone directories into a computer database. The database cost more than $10 million to compile and is expensive to keep current. ProCD sells a version of the database called SelectPhone on CD-ROM discs. The company sold the database to the general public for personal use at a low price of approximately $150 for the set of five discs while selling information to the trade for a higher price. Every box containing its consumer product declares that the software comes with restrictions stated in an enclosed license. This license is encoded on the CD-ROM disks as well as printed in the manual and appears on a user's screen every time the software runs. The license limits use of the application program and listings to noncommercial purposes. Matthew Zeidenberg bought a consumer package of SelectPhone in 1994 from a retail outlet in Madison, Wisconsin. He formed Silken Mountain Web Services, Inc. to resell the information in the SelectPhone database. Zeidenberg purchased two additional SelectPhone packages, each with an updated version of the database. He made the latest information available over the World Wide Web for a price through his corporation. ProCD filed this suit seeking an injunction against further dissemination that exceeds the rights specified in the licenses. The district court held the licenses ineffectual because their terms do not appear on the outside of the packages. The court added that the second and third licenses stand no different from the first because they might have been different.
View caseNo. If the offeree contemporaneously manifests an intention not to accept, the performance does not operate as acceptance even when the offer invites that mode.
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Notification is unnecessary unless the offer requests it or the offeree has reason to know the offeror lacks adequate means of learning of the performance.
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The tender or beginning of the invited performance constitutes acceptance by performance and operates as a promise to complete performance.
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Yes. An offeree who learns of an offer after rendering part of the performance may accept by completing the requested performance unless the offeror has manifested a contrary intention.
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No. Acceptance by performance requires only that at least part of what the offer requests be performed or tendered. It does not require completing every act needed for a promissory acceptance.
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…Although this is one way a contract could be formed, it is not the only way: "A vendor, as master of the offer, may invite acceptance by conduct, and may propose limitations on the kind of conduct that constitutes acceptance. A buyer may accept by performing the acts the vendor proposes to treat as acceptance." Id. at 1452.…