 Hello, it's Waylon Chow and this is Law of Contract Formation, Module 2A, Part D. In this part, we're going to look at the legal rules regarding acceptance and also the special rules about making an offer and acceptance electronically as set out in the Electronic Commerce Act. We're going to be looking at four different aspects of acceptance. First, what is acceptance? How can acceptance be given? How can acceptance be communicated? And lastly, when does acceptance occur? Back with Daria and Jamal. So we're back with Daria asking Jamal, do you want to buy my Apple laptop for $500? Jamal responds, yes, but only if it includes your iPad. So the question is, is there an agreement specifically has Jamal accepted Daria's offer? What is an acceptance? The legal definition is that an acceptance is a statement or action by the offeree signifying a wish to form a contract on terms contained in the offer. An acceptance has to be communicated to the offeror by the offeree in order to be a valid acceptance. A valid acceptance has to be a full and unconditional acceptance of all the terms of the offer. So it has to be a full acceptance of everything that's in the offer. If it's not a full and unconditional acceptance, it is not a valid acceptance. It is instead considered to be a counter offer. In responding to Daria's offer, Jamal has accepted her price of $500, but he has added a condition of including Daria's iPad to his acceptance of that offer. Therefore, there really is no acceptance because it's not full and unconditional. Therefore, Jamal has only made a counter offer to Daria. How can acceptance be given? It can be given by either the making of a promise or by performing what is required by the terms of an offer. For acceptance by promise, an offer is accepted by making a promise. So what is formed is called a bilateral contract where the parties are exchanging promises. Each party is making a promise to the other. For example, by accepting Daria's offer, Jamal promises to pay $500 in exchange for Daria's promise to give him the laptop. For acceptance by performance, an offer is accepted by the other party performing what is required by the offer. This is called a unilateral contract where one party makes a promise in an offer while the other party performs a requested act that is set out by the terms of the offer. A classic example is when someone loses a pet, like a cat, they put up a sign saying, I'll pay you $100 or in this case $1,000 to anyone who finds my lost cat. So when you put up that sign, you are making an offer to whoever reads that sign. That you will pay them $1,000. You promise to pay $1,000 in exchange for the performance, which is the other person going out and finding and returning your cat. So the contract is created once that requested act, the finding and returning of the cat is performed. The classic case of a unilateral contract is called carlill versus carbolex smoltball. You can read about that case in the textbook materials. How can acceptance be communicated? Acceptance may be communicated in a number of different ways. The most obvious one is in words, where words are either spoken verbally by one person to another, signifying acceptance, or words are put into writing and that written document is sent from one person to the other. Another way of signifying acceptance is by conduct, by the way you act. Some very obvious conduct may signify acceptance, such as a handshake between two people. Silence sometimes may be considered to be acceptance. What we mean by silence is when an offer is sent to another person, the offere, the person who received the offer, doesn't respond. Can we consider that person by a certain date to have accepted the offer? The law here says that you can't do that automatically, at least you cannot consider that to automatically be acceptance. That silence can only be considered acceptance if there is some prior agreement which says that that silence can be considered to be acceptance. For example, if there is an agreement between the two parties that when an offer is made, that offer is considered to be accepted if the other party has not responded within, let's say, five days. So if the agreement says that, then sending that offer, waiting five days, if nothing is said, there's no response, then the recipient can be considered to have accepted the offer. When does acceptance occur? First of all, why do we even care about when an acceptance occurs? We care because most offers have a specific deadline at which the offer expires. So it's important to know when the other party has actually given their acceptance to determine if they've met that deadline or not. In other words, is there an agreement or is there no agreement? Now, when an acceptance occurs depends on the type of communication. The first type is called instantaneous communication. That's where there is little or no delay in the interaction between two parties. The most obvious or most instantaneous type of communication is a live face-to-face meeting. You have two people physically together in the same room talking to each other. Another type of instantaneous communication is by telephone. Fax is also considered to be instantaneous. Also, a more modern type of face-to-face could be Skype or FaceTiming. The legal rule in terms of when acceptance occurs with instantaneous communication is that acceptance is effective when and where it is received by the offeror. When the offeror actually hears the acceptance, when they're talking face-to-face, when they hear it over the phone or they see it over the fax or over Skype, that's when acceptance is considered to have occurred. The other type of communication is non-instantaneous. The biggest example of non-instantaneous communication is regular mail or also known as snail mail. So the courts have developed a specific rule dealing with snail mail. It's called the postal rule. The postal rule says that acceptance is effective where and when the offeror sends it. So even if the letter has not been received yet, the acceptance is effective where and when the offeror sends it. Or in other words, when the offeror drops the letter that is the acceptance into the mailbox or drops it off at the post office, that's when acceptance is deemed to have occurred, not when the letter is actually received by the offeror. The third type of communication is electronic. So there are specific rules that on electronic communication that are set out in the Ontario Electronic Commerce Act, which we'll talk about on the next slide. There are specific legislative rules dealing with contracts formed electronically. So when we're talking about electronic contracts, it can include contracts that are formed via email communication, but it can also most typically include contracts formed through websites or specifically e-commerce websites. Whenever you go onto an e-commerce website and purchase something, you are forming an electronic contract. Every province in Canada has a piece of legislation called the Electronic Commerce Act, so including Ontario. And that Electronic Commerce Act is based on a model piece of legislation called the Uniform Electronic Commerce Act. In the Electronic Commerce Act, it says that an offer and acceptance can be communicated electronically. For example, if you make an offer or communicate an acceptance by email, the Electronic Commerce Act saying that's a valid way of doing it. Or if you click I agree or some other type of button on a website to signify an offer or an acceptance, that's also considered to be legally valid as well. The Electronic Commerce Act confirms that electronic contracts can be valid contracts. They still have to meet all of the various rules regarding what is a valid contract, such as the three essential elements of a contract, which are an agreement, an intention to form legal relations, and consideration. So all those other rules still apply. But the Electronic Commerce Act just confirms that just because a contract is formed electronically does not in and of itself make it invalid. There is a specific rule to determine when a message is sent. So if you're sending an offer or acceptance electronically, the time that it's sent is considered when or once, when you send a message, once it enters an information system beyond the sender's control. So what does that mean? So if you're sending an email, you're sending that electronic message from your computer up into the server of your internet service provider. It goes through various routers and other servers in the internet before it reaches the recipient. So once you've sent that message out of your computer into this thing that we call the internet, the message is no longer within your control. So once you've pressed sent on your computer, that email or that, if it's an offer or acceptance, is considered to have been sent at that particular time. When is an electronic message received? Now this is a little bit more complicated. If the person that you're sending the message to uses a particular information system for forming contracts. So the best example of that is that if you are using an e-commerce website, that is a particular system that the recipient has set up to form contracts. Then that, you know, that message that you're sending, that message could be pressing a button saying, you know, I agree to this contract. That message is deemed to be received when it enters the system. So in other words, when you press that button and that electronic signal leaves your computer and enters the internet and into that e-commerce website, then that is the time that the offer or the acceptance is deemed to be received. Now the other situation is where the recipient of the message does not use a particular system for forming contracts. So an example of this could be where if you are sending, let's say an acceptance via email, and the email for this person is used for many different purposes and is used for everyday communication. So that email may not be considered to be a particular system for forming contracts. It's used for lots of different things, not necessarily for forming contracts. So if that's the case, then the rule is that the message is considered to be received when the recipient becomes aware that the message has entered one of its systems into the email system and is capable of being retrieved. So what does that mean? So if you're sending that email, it could mean when that email reaches that person's server, it may not have reached his or her phone yet, but a notification has been sent to his or her phone or computer saying that they have a new message. So then at that point in time they become aware that there is that message and it is capable of being retrieved. If they touch on that message on their phone screen or if they click on that message on their PC, they can retrieve it. So at that point in time the message is considered to be retrieved.