When does contract formation occur?

Contract formation occurs when acceptance is communicated and acknowledged. This principle is grounded in the basics of contract law, which requires that for a contract to be legally binding, there must be a clear offer and an unequivocal acceptance of that offer by the parties involved.

In this context, simply making a payment does not constitute acceptance of an offer unless it is accompanied by an acknowledgment of the specific terms being agreed upon. A handshake, while sometimes seen as a sign of agreement, does not meet the legal criteria for acceptance unless it is paired with intentions to create a legal obligation. Sending an offer via email represents the initiation of the contract process, but it is the communication of acceptance—typically a clear response from the offeree that they agree to the terms outlined in the offer—that solidifies the formation of a contract.

Thus, the communication and acknowledgment of acceptance are essential components of contract formation, making it the correct answer.