Contracts take varying forms, sizes, and shapes. However, two things that all contracts have in common are that one party offers something and the other accepts it. Without these two actions, no contract can exist. However, there is no particular legal form for the offer and acceptance. They can be anything from a formal business proposal and acceptance letter to the informal: "I'll mow your lawn for $10!" (offer), "Sure, sounds good!" (acceptance).

So if a verbal agreement -- perhaps punctuated by a simple handshake -- can constitute a legally binding contract, what about silence following an offer? We explore the legal nuances of that question below.

Verbal Agreements

If someone offers to replace the engine in your car for $5,000 and you respond in the affirmative ("Sounds great. Let's do it."), then you have just entered into a contract. Most likely, the auto shop would prepare an invoice clearly describing the scope of the work, including the cost of parts and labor. But even without such a document, verbal acceptance carries the same legal significance as signing on the dotted line.

However, the auto shop would prefer a written contract because it's much more enforceable. The offer is written in plain language, the acceptance (the other party's signature) makes it clear that the offer has been accepted, and each party has a copy.

So while verbal agreements and certain promises technically constitute legal contracts, proving the details of the offer and the fact that it was indeed accepted are difficult if not impossible without a written contract. You also should keep in mind that certain types of contracts are in fact required by law to be in writing.

Silence as Acceptance: Overview

Acceptance usually cannot be silent. This rule dates back to England, when one person wrote to a horse trader that if he did not hear back from the horse trader, he'll assume the horse is his. The courts in England did not think that silence could show that there was mutual agreement, and so decided that a contract only exists if there was some affirmative acceptance from the party receiving an offer.

When Silence is Acceptance

To every rule, there is an exception. Silence can be understood as acceptance when both parties had a preexisting relationship before the current contract.

For example, suppose you own a restaurant that makes an acclaimed dish out of pork belly. You form a good relationship with your local pork belly supplier, agree on a delivery schedule and a price, and this continues for years. One year, your supplier's herd unfortunately sickens, and the price of pork belly goes up. Your supplier sends you a letter reflecting the new price, and you do not respond in any way. At this point, you should probably expect that your shipments of pork belly would continue as usual, as your silence could be understood to indicate that you wanted to continue the business arrangement.

In a broader sense, silence can signal acceptance of terms in relationships where silence has been interpreted as such in the past. In addition, actions in the affirmative (such as carrying out one's terms of the offer) also can be construed as acceptance, regardless of whether anything was communicated verbally.

Was Your Offer Accepted? Get Clarity With an Attorney's Help

If you have questions about whether silence signals acceptance of an offer, or any other business contract questions, an attorney can help with details on how to form a lasting, valid contract. Not fully understanding the terms of a contract, or even whether it was accepted, can expose you to costly liabilities. Get started today and find a small business attorney near you.