Acceptance

Question 1

Acceptance

Answer 1

Acceptance is the unconditional agreement to all terms of an offer.

Question 2

Brogden v Metropolitan Railway

Answer 2

The claimants were the suppliers of coal to the defendant railway company. They had been dealing for some years on an informal basis with no written contract. The parties agreed that it would be wise to have a formal contract written. The defendant drew up a draft contract and sent it to the claimant. The claimant made some minor amendments and filled in some blanks and sent it back to the defendant. The defendant then simply filed the document and never communicated their acceptance to the contract. Throughout this period the claimants continued to supply the coal. Subsequently a dispute arose and it was questioned whether in fact the written agreement was valid. Held: The written contract was valid despite no communication of the acceptance. The acceptance took place by performing the contract without any objection as to the terms.

Question 3

Acceptance by conduct

Answer 3

This requirement of complete performance. carlill v carbolic smokeball

Question 4

Counter-offers

Answer 4

Since an acceptance must correspond exactly with the terms of the offer in order for it to be valid, it follows that a response that introduces new terms or attempts to vary terms proposed in the offer is not valid. The effect of a counter-offer is to destroy the original offer, that is, it operates as a rejection of the original offer.

Question 5

Hyde v Wrench(Counter-offers)

Answer 5

Wrench offered to sell a farm to Hyde for £1,000. Hyde rejected this price and offered to pay £950. Wrench rejected Hyde’s offer. Wrench then sold the farm to a third party. Hyde attempted to accept the original offered price of £1,000 and sue Wrench for breach of contract when Wrench sold the farm to another party. Hyde’s claim was rejected. The court held that the counter offer of £950 had impliedly rejected the original offer and, since the original offer had been destroyed, it was no longer open for Hyde to accept.

Question 6

conditional offer

Answer 6

A conditional offer is an agreement between two parties that an offer will be made if a specific condition is met. . A conditional offer can also refer to an offer of employment that is contingent on meeting certain conditions.

Question 7

Clarifying the terms of the offer (Requests for information)

Answer 7

A mere request for information is treated differently to a counter offer. Therefore, if a response is made to an offer that does not attempt to vary the terms of the offer it is not a counter offer, since it does not reject the terms of the offer. It is therefore still open to acceptance by the offeree.

Question 8

Stevenson, Jacques & Co v McLean (1880)( Clarifying the terms of the offer )

Answer 8

McLean telegraphed Stevenson offering to sell 3,800 tons of iron ‘at 40 s net cash per ton, open till Monday’. On Monday morning Stevenson telegrammed McLean: ‘Please wire whether you would accept forty for delivery over two months or if not longest limit you would give.’ McLean did not respond and at 1.34 p.m. Stevenson telegrammed again, accepting the original offer. McLean had already sold the iron to a third party of which he advised Stevenson by telegram at 1.25 p.m. That telegram crossed with Stevenson’s second telegram. Stevenson sued for breach of contract. Stevenson’s first telegram was not a counter offer. It was a mere request for information. Consequently, McLean’s offer was still open at 1.34 p.m. It was validly accepted. Therefore, there was a valid contract of which McLean was in breach.

Question 9

Standard form contracts

Answer 9

Problems can arise where one or both parties uses pre-prepared contract forms in relation to the general rule that the acceptance must correspond exactly to the offer.

Question 10

Battle of the forms

Answer 10

The situation that arises where one or both of the parties attempt to rely on their standard terms is often referred to as the battle of the forms.

Question 11

Butler Machine Tool v Ex-Cell-O Corporation

Answer 11

The claimants supplied a quotation and stating that its terms would prevail. The defendants placed an order containing their own terms with tear-of acknowledgement slip. This amounted to a counter-offer which the claimants accepted when they returned the slip that stated “we accept your order on the terms”.

Question 12

British Road Services v Arthur V. Crutchley Ltd [1968]

Answer 12

In British Road Services v Arthur V. Crutchley Ltd [1968] 1 WLR 811 the claimants had delivered a quantity of whisky to the defendants for storage. The delivery driver handed the defendants a delivery note which incorporated the claimants’ ‘conditions of carriage’. This
note was stamped by the defendants as ‘Received under [the defendants’] conditions’. This was held to be a counter offer which the claimants had accepted by handing over the goods and therefore the contract incorporated the defendants’ and not the claimants’ conditions.

Question 13

Communication of acceptance

Answer 13

Generally speaking, an acceptance has no effect until it is communicated to the offeror.

Question 14

Entores v Miles Far East Corporation [1955]

Answer 14

Entores v Miles Far East Corporation, Lord Denning explained the principle as follows: Let me first consider a case where two people make a contract by word of mouth in the presence of one another. Suppose, for instance, that I shout an offer to a man across a river or a courtyard but I do not hear his reply because it is drowned by an aircraft flying overhead. There is no contract at that moment. If he wishes to make a contract, he must wait till the aircraft is gone and then shout back his acceptance so that I can hear what he says. Not until I have his answer am I bound.

Question 15

Silence cannot amount to acceptance

Answer 15

Since acceptance must be communicated, it follows that silence can never constitute acceptance.

Question 16

Silence cases ( Felthouse v Bindley (1863))

Answer 16

An uncle and nephew were negotiating the sale of the nephew’s horse. The uncle had stated that ‘if I hear no more from you I shall consider the horse mine at £30 15/-’. The nephew did not reply but asked an auctioneer to withdraw the horse from an auction. The court held that there was no contract since the nephew has never communicated his intention to accept to his uncle ‘or done anything to bind himself’. The auctioneer forgot the instruction and the horse was sold to another party. In order to claim against the auctioneer, the uncle needed to prove that there was a contract between him and his nephew for the sale of the horse.

Question 17

Acceptance in unilateral contracts

Answer 17

In a unilateral contract, the rule that acceptance must be communicated is waived:
■ The offer can be accepted by fully performing the stipulated act or forbearance (Daulia
Ltd v Four Millbank Nominees Ltd).
■ There is no need to communicate acceptance to the offeror (Carlill v Carbolic Smoke Ball
Company; Bowerman v Association of British Travel Agents [1995] NLJ 1815).
■ The offer can be withdrawn before it is accepted: the offer being accepted only by some
performance.

Question 18

Acceptance by conduct. Acceptance may be inferred from conduct without it being expressly communicated.

Answer 18

Brogden v Metropolitan Railway

Question 19

Postal Rule

Answer 19

● Exception to the general rule meaning acceptance is valid at the time of posting
○ Adams v Lindsell (1818)
■ Acceptance by post must be a reasonable method of acceptance
■ The letter must be correctly stamped, addressed and posted
■ The offeror must not have displaced the rule
● If the postal rule applies, non receipt of the acceptance letter is irrelevant, agreement would be valid from the date of posting
○ Household Fire and Carriage Accidents Insurance Co v Grant (1879)
● Applies only to physical mail. Instantaneous forms of acceptance such as email and fax are valid when received or when reasonably expected to be received.
○ Entores v Miles Far East Corporation (1955)
● Applies only to Acceptance!

Question 20

Adams v Lindsell (1818)

Answer 20

The defendant wrote to the claimant offering to sell them some wool and asking for a reply ‘in the course of post’. The letter was delayed in the post. On receiving the letter the claimant posted a letter of acceptance the same day. However, due to the delay the defendant’s had assumed the claimant was not interested in the wool and sold it on to a third party. The claimant sued for breach of contract. There was a valid contract which came in to existence the moment the letter of acceptance was placed in the post box. This case established the postal rule. This applies where post is the agreed form of communication between the parties and the letter of acceptance is correctly addressed and carries the right postage stamp. The acceptance then becomes effective when the letter is posted

Question 21

Household Fire Insurance v Grant - 1879

Answer 21

The defendant, Mr Grant, applied for shares in the complainant’s company, the Household Fire Insurance. The complainants allotted shares to Mr Grant and they completed this contract by posting him a letter with notice of the allotment. However, this letter never reached Mr Grant and it was lost in the post. Mr Grant never paid for the shares as a consequence. When the Household Fire Insurance company went bankrupt, the liquidator asked the defendant for payment of the shares. Mr grant refused to pay, as he did not believe he was a shareholder nor was there a binding contract in his mind.The appeal was dismissed and it was held that there was a valid contract between the parties for the shares. The postal rule was affirmed, which states that acceptance is effective when it is mailed, as long as the parties consider the post as an acceptable way of communicating. This rule is true even though the letter never arrived to Mr Grant. Lord Justice Thesiger stated that posting acceptance creates a ‘meeting of minds’, which created a binding contract. Lord Justice Bramwell dissented, arguing that the postal rule can hinder transactions and that acceptance should only be effective once the letter arrives.