Acceptance

Question 1

What is the definition of acceptance?

Answer 1

unequivocal expression of consent to the proposal contained in the offer and has the effect of immediately binding both parties to the contract. The contract cannot be varied after that and neither party can abandon their obligations.

• Bilateral: making of a return promise (on the faith of the offer)
• Unilateral: doing of the requested act (on the faith of the offer)

Question 2

What are the three aspects to the assent?

Answer 2

1. Purported acceptance must be on the faith of the offer
2. Offer and acceptance must correspond precisely (“mirror image” rule)
3. Acceptance must actually and unequivocally be communicated to the offeror

Can say there is a 4th criteria - must be made by an appropriate method

Question 3

A mirror image approach requires the acceptance to mirror the offer. If a purported acceptance deviates from the terms of offer in any way, then a binding contract is unlikely to have concluded.

Answer 3

• Counter offer killing original offer
• Battle of forms

Question 4

Counter-offer

Answer 4

• An offeree whose response qualifies the offer may be regarded as having made a counter-offer.
• A counter-offer terminates the original offer and there no offers exist thereafter for acceptance.

Question 5

However, the offeree retains the power to accept the original offer if…

Answer 5

• The original offeror’s rejection of the counter offer includes a renewed offer on the original terms;
• The offeree’s response was not a counter-offer but merely a request for information/clarification about the availability of better terms.

Question 6

Hyde v. Wrench (1840)

Answer 6

• D offered to sell his farm for £1000 but P said that he would only pay £950, which was rejected by D. P then agreed to pay £1000 but D also rejected this.
• HELD: The proposal of £950 amounted to a counter-offer which terminated the original offer and hence P can no longer accept the offer.

Question 7

Stevenson, Jaques & Co v. McLean (1880)

Answer 7

• P inquired with D for further information about the availability of better terms. D then sold the goods to a third party without responding to P. Hearing nothing; P accepted the original offer by telegram before D’s revocation reached P.
• HELD: P merely bade an inquiry and request for information and not a counter-offer, and thus could bind D with his subsequent acceptance.

Question 8

battle of forms

Answer 8

• If parties purport to conclude a contract by an exchange of forms containing incompatible terms, then the conventional answer is that it depends on which party “fired the last shot”.
• The party who presents his terms last without provoking objection from the recipient who then acts on the contract succeeds in binding the recipient to his terms.

Question 9

Brogden v Metropolitan Railway Co (1876-1877)

Answer 9

• D sent P a draft agreement for the supply of coal. P amended the agreement and returned it to D. Nothing else was done to formalise the agreement. D ordered coal for P, supplied and paid for.
• HELD: P’s amendment is counter-offer which D accepted by conduct when D placed the order.

Question 10

Butler v Ex-Cell-O-Corporation (England) Ltd (1979)

Answer 10

• P quoted the price of goods for D on P’s terms with a price variation clause. D then placed an order using D’s own terms without the price variation clause. P signed and returned the form with D’s terms but attached a letter stating that they were supplying the goods on their original terms.
• HELD: P’s original offer was met by D’s counter offer, which P accepted when P signed it. The accompanying letter was not a counter-offer, but simply a means of identifying the order.

Question 11

criticism of the battle of forms approach

Answer 11

allows courts to find a contract even though objectively interpreted, no agreement was ever reached. Furthermore, it may not fit what actually happens. Lastly, it may produce unjust results since it’s a matter of chance which party get’s the “last shot” and the solution will be an “all or nothing” on one party’s terms.

Question 12

what is meant by the requirement of nexus between offer and acceptance?

Answer 12

a valid acceptance must be made to a known offer. An acceptance is therefore ineffective if done without knowledge of the offer, evident in cases of cross-offers and offers of rewards.

Question 13

Tinn v. Hoffman (1893)

Answer 13

• D wrote to P offering to sell him iron. On the same day, P wrote to D offering to buy on the same terms.
• HELD: These are simultaneous cross-offers and are made in ignorance with each other. They do not amount to a contract and will not bind the parties unless or until one is further accepted.

Question 14

rewards and nexus

Answer 14

A person who performs an act in ignorance that a reward has been offered for it cannot claim a contractual right to the reward since there was no nexus.

Question 15

R v. Clarke (1927)

Answer 15

• A reward was offered for information leading to the arrest of certain murderers. D disclosed information without the intention of claiming the award.
• HELD: D cannot claim the reward later since he had no intention to claim it when he performed the act. There was no nexus between the offer of reward and his acceptance in disclosing information.

Question 16

Gibbons v Proctor (1891)

Answer 16

HELD: Police officer was allowed to claim a reward. Although he was ignorant of it when he gave information to another fellow officer, he knew of it by the time the information reached the superintendent after passing through other hands.

Question 17

Williams v Carwardine (1833)

Answer 17

HELD: Allowed the informant to claim cause she “must have known” of the reward even though she did not act from the desire to receive the reward.

Question 18

why are courts are willing to find for meritorious claimants (unlike in R v. Clarke where the claimant was a criminal)?

Answer 18

the offeror has received the benefits he promised to pay for, and claimants who perform beneficial acts should also be encouraged and rewarded for doing so.

Question 19

methods of acceptance

Answer 19

• A valid acceptance must be made in an appropriate way, and the mode of acceptance may be stipulated in the offer.
• If it is not, any words or conduct that objectively evinces the offeree’s intention to accept is enough (question of fact).

Question 20

prescribed modes of acceptance

Answer 20

Stipulated modes of acceptance are generally just permissive, not mandatory.

Question 21

Manchester Diocesan Council for Education v. Commercial and General Investments Ltd (1970)

Answer 21

• P invited tenders and started that a letter will be sent to the address on the successful tender to inform of acceptance. When P accepted D’s tender, he sent it to D’s surveyor instead of to the address.
• HELD: Mode of acceptance is not the sole permitted means of acceptance since D was not disadvantaged by having the notification sent to his surveyor. Furthermore, since it was P who made the stipulation, they could waive strict compliance with it anyway.

Question 22

acceptance cannot be inferred from the offeree’s silence because

Answer 22

• Silence is generally ambiguous – it is often difficult to infer an intention to accept from it.
• Acceptance must be communicated to the offeror so that he knows when the contract is formed and binding.
• This will prevent an offeror from exploiting the offeree’s inertia.

Question 23

Felthouse v. Bindley (1862)

Answer 23

• P offered to buy his nephew’s horse, adding that if he hears no more about him, he would consider the horse to be his at a price. The nephew did not answer the letter but told D, the auctioneer that the horse had been sold. D mistakenly sold the horse and P sued D for conversion.
• HELD: P’s offer to buy the horse cannot be accepted by his nephew’s silence.

Question 24

communication of acceptance

Answer 24

• General rule is that the offeree must communicate his acceptance to the offeror. Only at that moment does the offeror know that he is bound by the contract and each party knows that they can safely rely on the existence of the contract.
• This prevents undue hardship to the offeror who could be bound even without knowing that his offer has been accepted.

Question 25

modes of communication of acceptance

Answer 25

• 2-way instantaneous
• 1-way instantaneous
• postal (non-instantaneous)

Question 26

2-way instantaneous

Answer 26

no delay between sending and receiving of the acceptance. Any failure of communication is usually detectable and rectifiable immediately

Question 27

Brinkibon Ltd v. Stahag Stahl und Stahlwarenhandsels GmbH (1982)

Answer 27

Acceptance takes effect when and where it is actually brought to the attention of the offeror.

Question 28

Entores v. Miles Far East Corp (1953)

Answer 28

Lord Denning’s 3 examples:

• If a face-to-face oral acceptance is drowned out by noise, the offeree must repeat his acceptance once the noise has passed.
• If the telephone goes dead before the acceptance is completed, the offeree must telephone back to complete his acceptance.
• If the offeror does not catch the clear and audible words of acceptance but does not bother to ask for the message to be repeated, then the offeror will be at fault to clarify and sort things out.

But where neither party is blameworthy, the rule requiring actual communication of acceptance will favour the offeror and there will not be any contract.

Question 29

one-way instantaneous

Answer 29

• The condition of simultaneity is not met (faxes, emails). Although the message arrives almost instantaneously, the recipient is not necessarily at the other end ready to receive the message. Hence, a flexible approach is required.
• It is likely that the acceptance will take place when a reasonable offeror would access the message, taking account of all the given circumstances.

Question 30

Tenax SS CO Ltd v. The Brimnes (1975)

Answer 30

• Issue was when is the revocation of an offer communicated by telex?
• HELD: If revocation was communicated to the place of business during ordinary business hours, then the revocation was effective when it was received even if it remains unread.

Question 31

Chwee Kin Keong and ors v. Digilandmall.com Pte Ltd (2004)

Answer 31

VK Rajah JC: “Basic principles of contract law continue to prevail in contracts made on the internet.” However, must consider novel aspects of the Internet and that not all traditional principles can apply.

Question 32

Corinthian Pharmaceutical Systems v. Lederle Laboratories (1989)

Answer 32

• Issue was if there was a contract to sell 1000 vials of vaccines at a particular price?
• HELD: Automated ordering system issuing tracking number does not amount to acceptance.

Question 33

Specht v. Netscape Communications Corp (2001)

Answer 33

• Did P assent to the License Agreement such that they will be bound by the arbitration clause?
• HELD: Shrink-wrap agreements generally recognised. Click-wrap licensing is enforceable. Browse-wrap is not enforceable since there is no purpose of assent when one downloads the software without needing to assent.

Question 34

postal acceptance rule

Answer 34

Adams v. Lindsell (1818): acceptance takes place when offeree posts his acceptance provided it was reasonable to accept by post.

Question 35

Household Fire & Carriage Accident Insurance Co Ltd v. Grant (1879)

Answer 35

• Offeror is bound even before he knows of the acceptance, even if its arrival is delayed and even if he never actually received it.
• This is because the offeror could always specify that the acceptance has to reach him, and the offeror is in the position to make enquiries should the acceptance not reach him

Question 36

Byrne v. Van Tienhoven (1880)

Answer 36

• D sent an offer to sell goods on 1st October. When it arrived on 11th October, P immediately sent an acceptance via post to conclude the contract. However, D sent a letter revoking its offer on 8th October and reached P on 20th October.
• HELD: Contract was concluded on 11th October since postal acceptance rule does not apply to revocations. Revocations only take place not when it was posted, but when it was received and communicated to the offeree. Hence, the revocation was effective only on 20th October, by which a contract was already in existence.

Question 37

justification for postal acceptance rule

Answer 37

• The offeree is less likely to detect that his acceptance letter has gone astray as he would assume his letter to arrive to the offeror in the normal course of events. In contrast, the offeror can make enquiries if he does not hear from the offeree.
• Once the offeree posts his acceptance he cannot know whether and if his letter was brought to the offeror’s notice. The offeree will be disadvantaged because
  
  • The offeror can rely on the existence of a contract while the offeree remains liable to revocation until he knows his acceptance has arrived; and
  • Because the timing is left to the offeror, it could give him the incentive to behave badly.

Question 38

counterargument against postal acceptance rule

Answer 38

unlikely that there are any true justifications. It is becoming obscured in modern times. cf Holwell Securities Ltd v. Hughes

• A contract stipulated that P could accept an option to purchase the property “by notice in writing” to D within 6 months. P’s solicitors sent out the acceptance to D but it never arrived.
• HELD: There was no contract because “notice in writing” was interpreted as requiring D to actually notice the acceptance.
• What is the relevance of the Postal Acceptance rule today?