Offer and acceptance: when is a contract a contract?
"If an entrepreneur has received from a person with whom he is in permanent business relations an offer to conclude a contract within the scope of his activity, the lack of immediate reply shall be considered acceptance."
- Art. 68(2) Polish Civil Code. .
With what appears to be increasing frequency, I receive on almost a daily basis, by email, phone and post, unsolicited offers from both strangers and acquaintances to sell me everything imaginable, ranging from a one month supply of the newest diet pills to the latest off-shore investment scheme located on some exotic island. Telephone solicitations I am able to quickly decline. However, offers sent by email and post I simply ignore. But am I taking a risk that my silence may be interpreted as acceptance, as provided for in Art. 68(2)? My gut reaction is no. The legal answer, however, could be quite different, depending on the nature of my business relationship with the sender of the offer.
When can silence be construed as acceptance, and hence lead to the creation of a contract? Art. 68(2) limits such possibility to those offers made to an entrepreneur by a person who regularly conducts business with that entrepreneur. Moreover, such offer, in order for silence to create a contract, must be within the scope of the parties' business relationship. In other words, unsolicited offers to consumers are not covered by Art. 68(2). I can continue to delete unwanted offers to sell me diet pills from my email without fear of creating a contract. However, an offer made by a supplier of ink jet cartridges, for instance, to a retailer of computer equipment could very well be construed as a valid contract, provided the retailer does not immediately reject the offer and the nature of their business relationship includes the periodic supply of such cartridges.
Creation of a contract by silence represents just one of the exceptions to the general concept of 'offer and acceptance.' Performance, as opposed to written acceptance, may also create a valid contract. Specifically, Art. 69 provides that "if, in accordance with the custom established within given relations or in accordance with the contents of the offer, it is not required that the maker of the offer receive from the other party the declaration of its acceptance... the contract shall be effective if the other party in due time proceeds to carry it out..." This provision, in particular, applies to the service sector. A general contractor, for instance, may order crushed stone from a local quarry. The quarry may, in turn, supply the requested stone to the general contractor, thereby creating a valid contract by performance, without actually signing the contract. Once the quarry has delivered the stone, the general contractor may not revoke the offer.
Another exception to the general concept of offer and acceptance applies to amendments made to an offer between business entities. Generally, an amendment made to an offer between two or more business entities is considered to be a counter-proposal and hence a new offer, subject to acceptance by the original sender. Art. 68 tends to support this general understanding, stating that "acceptance of an offer made with the stipulation of a change or completion of its contents shall be considered as a new offer."
But be careful. Art. 68(1) goes on to say that, with respect to creation of a contractual obligation between business entities, "a reply to an offer made with a stipulation of changing or supplementing the offer in a way that does not change its contents substantially shall be deemed acceptance," which means that one party may be able to introduce certain changes to the agreement, creating a valid contract, without the affirmative consent of the other party. Of course, such changes may be rejected, but only if the terms and conditions of the original offer specify that acceptance is contingent upon the offer being accepted with no changes, or if the other party immediately objects to the introduction of such changes. Again, the concept of 'acceptance by silence' comes into play.
In contrast to Art. 68, which provides for acceptance (creation of a contract) even if one party introduces changes to the original offer, Art. 72 specifies that in the case of negotiations, acceptance will not be recognized until "the parties have reached agreement on all provisions which have been the subject matter of negotiations."
Further, with respect to certain defined statutory legal requirements, acceptance of an offer will not be deemed to create a valid contract unless such acceptance is in written form, signed by all parties. For instance, in order to convey ownership title or a perpetual usufruct right in real estate, Art. 158 requires the contract of sale to be in written form, signed by all parties, and prepared in the form of a notarial deed. Acceptance by silence or performance is not sufficient. Additionally, the sale or lease of an enterprise must also be in written form, signed by all parties as authenticated by a notary.
And finally, a short 'legal notice' to all those senders of unsolicited offers to my email address. Stop it! Failure to comply will subject you to an automatic fine of zł.1,000 per offense, payable upon demand to my bank account.
Paul Fogo is a senior attorney with Miller Canfield W. Babicki & Partners.
- Art. 68(2) Polish Civil Code. .
With what appears to be increasing frequency, I receive on almost a daily basis, by email, phone and post, unsolicited offers from both strangers and acquaintances to sell me everything imaginable, ranging from a one month supply of the newest diet pills to the latest off-shore investment scheme located on some exotic island. Telephone solicitations I am able to quickly decline. However, offers sent by email and post I simply ignore. But am I taking a risk that my silence may be interpreted as acceptance, as provided for in Art. 68(2)? My gut reaction is no. The legal answer, however, could be quite different, depending on the nature of my business relationship with the sender of the offer.
When can silence be construed as acceptance, and hence lead to the creation of a contract? Art. 68(2) limits such possibility to those offers made to an entrepreneur by a person who regularly conducts business with that entrepreneur. Moreover, such offer, in order for silence to create a contract, must be within the scope of the parties' business relationship. In other words, unsolicited offers to consumers are not covered by Art. 68(2). I can continue to delete unwanted offers to sell me diet pills from my email without fear of creating a contract. However, an offer made by a supplier of ink jet cartridges, for instance, to a retailer of computer equipment could very well be construed as a valid contract, provided the retailer does not immediately reject the offer and the nature of their business relationship includes the periodic supply of such cartridges.
Creation of a contract by silence represents just one of the exceptions to the general concept of 'offer and acceptance.' Performance, as opposed to written acceptance, may also create a valid contract. Specifically, Art. 69 provides that "if, in accordance with the custom established within given relations or in accordance with the contents of the offer, it is not required that the maker of the offer receive from the other party the declaration of its acceptance... the contract shall be effective if the other party in due time proceeds to carry it out..." This provision, in particular, applies to the service sector. A general contractor, for instance, may order crushed stone from a local quarry. The quarry may, in turn, supply the requested stone to the general contractor, thereby creating a valid contract by performance, without actually signing the contract. Once the quarry has delivered the stone, the general contractor may not revoke the offer.
Another exception to the general concept of offer and acceptance applies to amendments made to an offer between business entities. Generally, an amendment made to an offer between two or more business entities is considered to be a counter-proposal and hence a new offer, subject to acceptance by the original sender. Art. 68 tends to support this general understanding, stating that "acceptance of an offer made with the stipulation of a change or completion of its contents shall be considered as a new offer."
But be careful. Art. 68(1) goes on to say that, with respect to creation of a contractual obligation between business entities, "a reply to an offer made with a stipulation of changing or supplementing the offer in a way that does not change its contents substantially shall be deemed acceptance," which means that one party may be able to introduce certain changes to the agreement, creating a valid contract, without the affirmative consent of the other party. Of course, such changes may be rejected, but only if the terms and conditions of the original offer specify that acceptance is contingent upon the offer being accepted with no changes, or if the other party immediately objects to the introduction of such changes. Again, the concept of 'acceptance by silence' comes into play.
In contrast to Art. 68, which provides for acceptance (creation of a contract) even if one party introduces changes to the original offer, Art. 72 specifies that in the case of negotiations, acceptance will not be recognized until "the parties have reached agreement on all provisions which have been the subject matter of negotiations."
Further, with respect to certain defined statutory legal requirements, acceptance of an offer will not be deemed to create a valid contract unless such acceptance is in written form, signed by all parties. For instance, in order to convey ownership title or a perpetual usufruct right in real estate, Art. 158 requires the contract of sale to be in written form, signed by all parties, and prepared in the form of a notarial deed. Acceptance by silence or performance is not sufficient. Additionally, the sale or lease of an enterprise must also be in written form, signed by all parties as authenticated by a notary.
And finally, a short 'legal notice' to all those senders of unsolicited offers to my email address. Stop it! Failure to comply will subject you to an automatic fine of zł.1,000 per offense, payable upon demand to my bank account.
Paul Fogo is a senior attorney with Miller Canfield W. Babicki & Partners.
