ACCEPTANCE Flashcards
What is acceptance
Unqualified assent to the terms of an offer”
“A manifestation of willingness to be bound by the terms of an offer made in a manner invited or required by the offer”
Subjective theory of acceptance
Parties must be ad idem (of one mind), the intention of the parties is essential to a valid contract
Objective theory of acceptance
Law not concerned with the intentions of the parties, but with the actions or conduct they take
General rule- Person who signs a document which is known by that person to contain contractual terms and to affect legal relations is bound by those terms and it does not matter that they have not read the document
Most often used to determine acceptance
Smith v Hughes - Issue
Had Hughes accepted Smith’s offer to buy oats if he believed he was purchasing “old” oats, when in fact they were “new” oats
Smith v Hughes - rule
Parties were no ‘ad idem’ - of the same mind: no acceptance
Taylor v Johnson - Issue
Did Johnson’s mistake about the price of land allow for her acceptance to be withdrawn
Taylor v Johnson - rule
Objective theory used, Johnson’s signing of the contract communicated acceptance
(Contract set aside on the basis of mistake)
Fitness First v Chong - issue
Did Chong accept the termination fee when signing the contract to join Fitness First
Fitness First v Chong - rule
Objective theory used, signing of the contract communicated acceptance
No need for the parties to be of the same mind, or for each to fully understand the terms of the agreement
Unilateral Contracts - acceptance rule
Subjective intention of the offeree is relevant in unilateral contracts, external conduct of acceptance is conclusive as being acceptance
Acceptance must be in response to the offer, performance must be in direct response to the offer
Crown v Clarke - issue
Clarke claims reward for giving information that leads to conviction of man responsible for murder. Gave information to defend himself, not in response to the reward - has he accepted the offer for reward?
Crown v Clarke - rule
Clarke did not act in reliance of the offer. He fulfilled the conditions but not in direct response to the offer - no acceptance: acceptance of a unilateral contract must be in response to the offer
Can silence amount to acceptance?
No
Can conduct amount to acceptance?
Yes
Felthouse v Bindley
Issue
Whether or not the uncle owned the horse, given his letter “if I hear no more about him, I consider the horse mine”?
Felthouse v Bindley - rule
No communication of acceptance (silence is not sufficient communication)
Empirnall Holdings v Mchon Paull - issue
did Emprinal accept Machon Paull’s terms and conditions of the contract given that they did not sign the contract
Empirnall Holdings v Mchon Paull - principle
Silence in conjunction with other circumstances may indicate that the offer has been accepted
Conduct may amount to acceptance- accepting benefit of services with knowledge of the terms and conditions on which it was offered
Communication of Acceptance
General Rule
Acceptance must be communicated to the offeror
Exceptions to general rule of communication of acceptance
Silence and conduct (Empirnall Holdings)
Acceptance is effective upon performance by the offeree- Unilateral contracts
Offeror may dispense with need to communicate- many unilateral contracts (Carlill v Carbolic Smoke Ball)
When/where is communication accepted?
Communication of acceptance is effective when and where it is received by the offeror (Latec Finance, Brinkbon)
Exceptions to general rule of when/where communication is accepted?
Postal Acceptance Rule- Acceptance effective as soon as it is posted, even though the offeror may not receive that acceptance for a number of days (Adams v Lindsell)
Electronic communications
Latec Finance v Knight
Issue-
Had Latec Finance accepted Knight’s offer to hire a TV set, even though they had not communicated acceptance to Knight
Latec Finance v Knight - rule
Offer not accepted until communicated and actually received by the offeror, signing of the hire purchase form did not communicate acceptance to Knight
Instantaneous communications - when is contract formed?
Contract is formed when acceptance is communicated to the offeror, formed when and where the acceptance was received
Postal Rule
Acceptance is effective as soon as the offeree posts it, as long as the offeror contemplated post as a means of acceptance (Adams v Lindsell)
Brinkibon Ltd v Stahag Stahl - issue
Does the postal acceptance rule apply to telex/fax, with reference to acceptance of goods from Vienna to London?
Brinkibon Ltd v Stahag Stahl - rule
- Postal rule applies to non-instaneous communications, however instaneous communications, like telex or telephone acceptance occurs at time and place of receipt
General rule if electronic address has been designated by the addressee
Acceptance occurs at the time the electronic communication of acceptance can be retrieved by the addressee (when the email arrives in the offeror’s inbox)
General rule if no electronic address has been designated by the addressee
Acceptance occurs at the time when the electronic communication becomes capable of being retrieved and the addressee has become aware that the electronic communication has been sent to that address (when the email arrives in the offeror’s inbox, and they are aware they have been sent an email to that address
Correspondence between offer and acceptance
General rule
Acceptance must correspond with the offer
Offeree can only accept or reject the terms proposed by offeror
If the offeree attempts to vary the terms of the offer then the acceptance is a “counter-offer” and the original offer is terminated
Battle of the forms:
In business, unlikely that both parties will reject or accept an initial offer in its entirety
Common practice where parties exchange their “standard terms” of contracting, so documents are passed back and forth, some terms accepted and some new ones proposed
In most cases the battle is won by whoever fires the last shot- who puts forward the latest terms, and, if not objected to, the other party Is taken to have agreed to them
In some cases the battle is won by whoever gets in first
Butler Machine Tool Co v Ex-Cell-O-Corp
The second form acts as a counter offer and kills the original offer. In conflict the second offer will prevail.
(last resort) In some cases, the terms of both documents should be construed together to give a meeting of the minds
In some cases: the original offeror should not be disadvantaged by the alteration of some terms; the second offer will only be valid if the offeror makes clear any materially different terms
Agreement without Offer and Acceptance - general rule
If the classical approach can be applied then it should be applied, otherwise the sysnthesis approach will take precedent
Brambles Holdings v Bathurst City Council
Issue
Whether or not Brambles was required to pay the council the fees collected for “liquid waste”
Brambles Holdings v Bathurst City Council - Rule
Agreement can be formed without offer and acceptance if:
• An agreement can be inferred in all the circumstances
• Mutual assent has been manifested
• A reasonable person would think there was a concluded bargain
