Contracts are the very backbone of a business, both with negotiations within a company and a company's relationship with suppliers, customers and vendors. Without them, the business world would be in complete chaos. But what exactly constitutes a contract? Two things: offer and acceptance. One party must offer something and the other must accept it. This leads to an obvious question: how do you determine what acceptance is?
Let's say someone offers to clean your business's gutter for $100. You say, "Great deal. Let's do it." That's a contract because there was an offer and a clear acceptance of the offer. So what about silence? Can no response be a response in itself? Generally speaking, the answer to this is "no."
This idea began back in England; a man wrote a letter to a horse trader implying that if the horse trader said nothing, he would just assume that the horse in question now belonged to him. The British courts didn't go for it, indicating that the accepting party must demonstrate a clear affirmation of the offer.
There are cases, however, when silence can serve as acceptance. This occurs when both parties already have a relationship. Using our previous example, let's say that this one particular company cleans your gutters every year for 10 years. They send out a letter letting you know that the price has gone up. If you don't respond in any way, this could be seen as an acceptance of the new price.
As you can see, contracts are a complicated matter. If you are drafting a contract or think perhaps a breach of contract has taken place, you may want to speak with an attorney.