Acceptance

Question 1

Acceptance

Answer 1

Must be unequivocal. The parties must agree as to the terms of the contract.

Question 2

Counter-offers

Answer 2

If a party seeks to vary or introduce new terms, this may be a counter-offer.
A counter-offer is not an acceptance.

Question 3

Hyde v Wrench [1840]

Answer 3

A counter-offer will destroy the original offer.
Sometimes parties will exchange counter-offers until they reach agreement.

Question 4

Request for information

Answer 4

A request for information may be seeking clarification of the existing terms.

Question 5

Stevenson v McLean [1880]

Answer 5

A request for information is not a rejection of the original terms, as such it does not destroy the offer.

Question 6

Butler Machine Tool Co v Ex-Cell-O Corp [1979]

Answer 6

The contract was under the defendants conditions. The defendants had the ‘last shot’. The ‘last shot’ prevailed.

Question 7

Acceptance by silence

Answer 7

Silence is not generally effective acceptance.

Question 8

Felthouse v Bindley [1862]

Answer 8

“If I hear no more, I consider the horse mine.”
Held that there was no contract between the parties.

Question 9

Communication of acceptance (case)

Answer 9

The general rule is that acceptance must be effective when it is communicated to the offeror - Entores. However this is not an absolute rule.

Question 10

Entores

Answer 10

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.

Question 10

Acceptance in unilateral contracts.

Answer 10

In unilateral contracts the offeror is seeking performance of an act.

Question 11

Reward cases

Answer 11

Performance = Acceptance

Question 12

Carlill v Carbolic Smokeball

Answer 12

No need to communicate acceptance, the use of the ball as prescribed was the acceptance.

Question 13

Prescribed method of acceptance

Answer 13

If offeror makes clear a particular method of acceptance should be used and no other method will suffice.

Question 14

Eliason v Henshaw [1819]

Answer 14

There may be no contract if another method is used.

Question 15

Acceptance by post

Answer 15

Generally, acceptance is effective when it is communicated.
“the postal rule”.
Acceptance is effective when posted.

Question 16

The case for the postal rule

Answer 16

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.

Question 17

Household Fire Insurance Co v Grant [1879]

Answer 17

The contract was formed upon the posting of the acceptance.

Question 18

Limitations on the postal rule:

Answer 18

1. The letter of acceptance must be properly posted. (Re London and Northern Bank.)
2. The letter must be properly addressed.
3. It must be reasonable to use the post.
4. The postal rule does not apply to ‘instantaneous’ methods of acceptance.
5. Exclusion of the postal rule by the express or implied wording of the offer.
6. Acceptance by email.

Question 19

Contimar’s case [1953]

Answer 19

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.

Question 20

Korbetis v Transgrain Shipping [2004]

Answer 20

The acceptance may be effective at the time least favourable to the party responsible for misdirection. This approach was accepted by this case.

Question 21

Henthorn v Fraser [1892]

Answer 21

The fact that the parties lived some way from one another justified postal acceptance of an oral offer.

Question 22

Instantaneous methods of acceptance (case)

Answer 22

Telephone, telex, fax. Entores v Miles Far Eat Corpn [1955]

Question 23

Lord Wilberforce: “No universal rule can cover all such cases; they must be resolved by:

Answer 23

• The intentions of the parties.
• Sound businesses practice
• Possibly on a judgement as to where the risk would lie.”

Question 24

Lord Fraser:

Answer 24

“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” .

Question 25

Holwell Securities v Hughes [1974]

Answer 25

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.

Question 26

Acceptance by email (cases)

Answer 26

It is likely that the same rules that apply that “instantaneous methods of communication.” will apply to email.
- Entores.
- Brinkibon.