ACCEPTANCE

Question 1

What is acceptance

Answer 1

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”

Question 2

Subjective theory of acceptance

Answer 2

Parties must be ad idem (of one mind), the intention of the parties is essential to a valid contract

Question 3

Objective theory of acceptance

Answer 3

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

Question 4

Smith v Hughes - Issue

Answer 4

Had Hughes accepted Smith’s offer to buy oats if he believed he was purchasing “old” oats, when in fact they were “new” oats

Question 5

Smith v Hughes - rule

Answer 5

Parties were no ‘ad idem’ - of the same mind: no acceptance

Question 6

Taylor v Johnson - Issue

Answer 6

Did Johnson’s mistake about the price of land allow for her acceptance to be withdrawn

Question 7

Taylor v Johnson - rule

Answer 7

Objective theory used, Johnson’s signing of the contract communicated acceptance
(Contract set aside on the basis of mistake)

Question 8

Fitness First v Chong - issue

Answer 8

Did Chong accept the termination fee when signing the contract to join Fitness First

Question 9

Fitness First v Chong - rule

Answer 9

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

Question 10

Unilateral Contracts - acceptance rule

Answer 10

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

Question 11

Crown v Clarke - issue

Answer 11

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?

Question 12

Crown v Clarke - rule

Answer 12

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

Question 13

Can silence amount to acceptance?

Answer 13

No

Question 14

Can conduct amount to acceptance?

Answer 14

Yes

Question 15

Felthouse v Bindley

Issue

Answer 15

Whether or not the uncle owned the horse, given his letter “if I hear no more about him, I consider the horse mine”?

Question 16

Felthouse v Bindley - rule

Answer 16

No communication of acceptance (silence is not sufficient communication)

Question 17

Empirnall Holdings v Mchon Paull - issue

Answer 17

did Emprinal accept Machon Paull’s terms and conditions of the contract given that they did not sign the contract

Question 18

Empirnall Holdings v Mchon Paull - principle

Answer 18

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

Question 19

Communication of Acceptance

General Rule

Answer 19

Acceptance must be communicated to the offeror

Question 20

Exceptions to general rule of communication of acceptance

Answer 20

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)

Question 21

When/where is communication accepted?

Answer 21

Communication of acceptance is effective when and where it is received by the offeror (Latec Finance, Brinkbon)

Question 22

Exceptions to general rule of when/where communication is accepted?

Answer 22

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

Question 23

Latec Finance v Knight

Issue-

Answer 23

Had Latec Finance accepted Knight’s offer to hire a TV set, even though they had not communicated acceptance to Knight

Question 24

Latec Finance v Knight - rule

Answer 24

Offer not accepted until communicated and actually received by the offeror, signing of the hire purchase form did not communicate acceptance to Knight

Question 25

Instantaneous communications - when is contract formed?

Answer 25

Contract is formed when acceptance is communicated to the offeror, formed when and where the acceptance was received

Question 26

Postal Rule

Answer 26

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)

Question 27

Brinkibon Ltd v Stahag Stahl - issue

Answer 27

Does the postal acceptance rule apply to telex/fax, with reference to acceptance of goods from Vienna to London?

Question 28

Brinkibon Ltd v Stahag Stahl - rule

Answer 28

• Postal rule applies to non-instaneous communications, however instaneous communications, like telex or telephone acceptance occurs at time and place of receipt

Question 29

General rule if electronic address has been designated by the addressee

Answer 29

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)

Question 30

General rule if no electronic address has been designated by the addressee

Answer 30

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

Question 31

Correspondence between offer and acceptance

General rule

Answer 31

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

Question 32

Battle of the forms:

Answer 32

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

Question 33

Butler Machine Tool Co v Ex-Cell-O-Corp

Answer 33

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

Question 34

Agreement without Offer and Acceptance - general rule

Answer 34

If the classical approach can be applied then it should be applied, otherwise the sysnthesis approach will take precedent

Question 35

Brambles Holdings v Bathurst City Council

Issue

Answer 35

Whether or not Brambles was required to pay the council the fees collected for “liquid waste”

Question 36

Brambles Holdings v Bathurst City Council - Rule

Answer 36

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