Certified Professional Public Buyer (CPPB) Practice Test

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What is the definition of acceptance in contract law?

A. indication that an offer is rejected
B. indication that an offeree is bound by the terms of the offer
C. the act of creating a new offer
D. revocation of previous terms

The correct answer is: B. indication that an offeree is bound by the terms of the offer

Acceptance in contract law is defined as an indication by the offeree that they agree to the terms set forth in the offer, thus establishing a binding agreement. This agreement reflects the offeree's understanding and acceptance of the offeror's terms without modifications. When acceptance occurs, the offeree communicates their willingness to enter into the contract, which creates a legal obligation for both parties as outlined in the terms of the offer. This highlights the significance of mutual consent in forming a contract, as both parties must clearly understand and accept the agreement for it to be legally enforceable. The other options do not accurately capture the essence of acceptance. Indicating rejection does not constitute acceptance; instead, it terminates the offer. Creating a new offer describes a counteroffer, which alters the original terms rather than accepting them. Revocation of previous terms refers to the withdrawal of an offer before it is accepted, which does not align with the concept of acceptance where the focus is on mutually agreeing to the existing terms of the offer.