Acceptance Flashcards
Acceptance
Must be unequivocal. The parties must agree as to the terms of the contract.
Counter-offers
If a party seeks to vary or introduce new terms, this may be a counter-offer.
A counter-offer is not an acceptance.
Hyde v Wrench [1840]
A counter-offer will destroy the original offer.
Sometimes parties will exchange counter-offers until they reach agreement.
Request for information
A request for information may be seeking clarification of the existing terms.
Stevenson v McLean [1880]
A request for information is not a rejection of the original terms, as such it does not destroy the offer.
Butler Machine Tool Co v Ex-Cell-O Corp [1979]
The contract was under the defendants conditions. The defendants had the ‘last shot’. The ‘last shot’ prevailed.
Acceptance by silence
Silence is not generally effective acceptance.
Felthouse v Bindley [1862]
“If I hear no more, I consider the horse mine.”
Held that there was no contract between the parties.
Communication of acceptance (case)
The general rule is that acceptance must be effective when it is communicated to the offeror - Entores. However this is not an absolute rule.
Entores
The importance of fault.
The offeror may be barred (‘estopped’) from denying the existence of a contract where it is his fault that he did not receive it.
Acceptance in unilateral contracts.
In unilateral contracts the offeror is seeking performance of an act.
Reward cases
Performance = Acceptance
Carlill v Carbolic Smokeball
No need to communicate acceptance, the use of the ball as prescribed was the acceptance.
Prescribed method of acceptance
If offeror makes clear a particular method of acceptance should be used and no other method will suffice.
Eliason v Henshaw [1819]
There may be no contract if another method is used.
Acceptance by post
Generally, acceptance is effective when it is communicated.
“the postal rule”.
Acceptance is effective when posted.
The case for the postal rule
Adam v Lindsell [1818]
Held that the claimants acceptance was effective when posted. Defendants therefore in breach of the contract when they sold the wool to the third party.
Household Fire Insurance Co v Grant [1879]
The contract was formed upon the posting of the acceptance.
Limitations on the postal rule:
- The letter of acceptance must be properly posted. (Re London and Northern Bank.)
- The letter must be properly addressed.
- It must be reasonable to use the post.
- The postal rule does not apply to ‘instantaneous’ methods of acceptance.
- Exclusion of the postal rule by the express or implied wording of the offer.
- Acceptance by email.
Contimar’s case [1953]
A misaddressed letter could not rely on a rule similar to the postal rule in contract. In this case contract law suggests that there should be no absolute rule.
Korbetis v Transgrain Shipping [2004]
The acceptance may be effective at the time least favourable to the party responsible for misdirection. This approach was accepted by this case.
Henthorn v Fraser [1892]
The fact that the parties lived some way from one another justified postal acceptance of an oral offer.
Instantaneous methods of acceptance (case)
Telephone, telex, fax. Entores v Miles Far Eat Corpn [1955]
Lord Wilberforce: “No universal rule can cover all such cases; they must be resolved by:
- The intentions of the parties.
- Sound businesses practice
- Possibly on a judgement as to where the risk would lie.”
Lord Fraser:
“Once a message is received on the offeror’s telex machine, not unreasonable to treat it as delivered to the offeror as it is his responsibility to arrange the prompt handling of messages in his own office” .
Holwell Securities v Hughes [1974]
An offer to sell land required acceptance “by notice in writing”. A letter of acceptance was posted but never arrived.
Held that the requirement of notice had displayed the application of the postal rule.
Acceptance by email (cases)
It is likely that the same rules that apply that “instantaneous methods of communication.” will apply to email.
- Entores.
- Brinkibon.
