Acceptance Flashcards
What is acceptance?
A final + unqualified expression of assent to the terms of an offer
Provides intention to be bound by the terms of an offer, which then becomes an agreement
What must the acceptance match?
The offer - must be unconditional
Mirror image rule
Must acceptance be communicated?
Bilateral contracts - Yes
Unilateral contracts - No
What is the mirror image rule?
Principle that a valid acceptance must correspond exactly with the terms of the offer
Hyde v Wrench (1840)
D offered to sell a farm to the H for £1,000
H offered to buy the farm for £900
D rejected the offer
H later accepted the offer of £1000
D refused to go through with the sale, selling the farm to a 3rd party
H sought specific performance
Held: the plaintiff’s offer of £900 was a counter offer
the formal communication was not acceptance of the original offer but a further offer to buy the farm for £1000
If a new term is introduced, it is no longer acceptance, but a counter-offer
What is the effect of intruding a new term?
There is not acceptance but a counter offer
Due to the fact that the acceptance wouldn’t match the offer
What effect does a counter offer have on the original offer?
What case illustrates this?
= a rejection of the original offer
It destroys it, tendering it incapable of subsequent acceptance
- Hyde v Wrench
Are requests for information treated as counter offers?
No if they are not:
- changing the terms of the offer/ introducing new terms
- changing the material terms in the offer
Stevenson, Jaques + Co v McLean (1880)
D offered to sell some iron for 40 shillings
But didn’t indicate a delivery time
S replied: ‘please wire whether you would accept 40 for delivery over 2 months, or if not, the longest time you would give
S subsequently accepted the offer
D has already sold the iron to another party
S sued for a breach of contract
Held: S’s 1st letter was not a counter offer, it was a mere request for information
S’s acceptance was valid
What is a battle of the forms?
Situation arises where 1/both of the parties attempt to rely on their standard terms
What are standard terms/ standard form contracts?
Terms which are not individual/ shaped for the individual
Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (England) Ltd (1979)
Seller’s offer was made on their standard terms
Contained a price variation clause
Buyer responded with an offer on their own standard terms - didn’t include a price variation clause
Buyer also included a tear-off acknowledgement slip stating: ‘we accept your order on the T+Cs stated therein’
Seller included a covering letter - trying to revise their original terms
Seller signed + returned the acknowledgement slip together with the covering letter
Seller subsequently tried to enforce the price variation clause
CA: the acknowledgement slip was a counter-offer, which was accepted by the seller
the covering letter was not sufficiently specific to revive the earlier terms
CA found in favour of the buyer
What did Lord Denning say in the Butler Machines case?
‘In most cases when there his a ‘battle of the forms’, there is a contract as soon as the last of the forms is sent + received without objection being taken to it… the difficulty is to decide which form, or which part of which form, is a term or condition of the contract. In some cases, the battle is won by the man who fires the last shot… There are some cases where the battle depends on the shots being fired on both sides. There is a concluded contract but the forms vary. If they are mutually contradictory… then the conflicting terms may have been scrapped + replaced by a reasonable implication’
RTS Flexible Systems Ltd v Molkerei (2010)
Parties were in negotiations
Work started on the basis of the letter of intent (not an actual agreement) that later expired
There was an agreement on many terms including the price
No written contract was ever finalised
SCt: looked at the overall communications + actions between the parties
Held: there was a contract + it was intended to be governed by the terms agreed during the negotiations
Ct had been flexible, using the letter
Contract existed without the specific need to find O+A
Reflective of Lord Denning’s approach in Gibson case
The reasoning + ruling in the case of RTS Flexible Systems Ltd v Molkerei (2010) is reflective of what the approach taken in what earlier case?
Reflective of Lord Denning’s approach in Gibson v Manchester City Council
Does the acceptance of a tender always result in a binding contract?
No, despite the tender being an offer
When WILL the acceptance of a tender result in a binding contract? (2)
- where the tender is submitted for supplying goods/ services on a specific date
- where the tender is submitted for supplying a specific quantity of goods over a specified period of time
When WON’T the acceptance of a tender result in a binding contract? (1)
Where the tender is submitted for indefinite subject matter such as ‘such quantities as you may order’ or ‘as and when required’
Acceptance occurs when an order is placed
The party who submitted the tender is then bound
Tekdata Interconnections Ltd v Amphenol (2009)
buyer offered goods on forms setting out its T+Cs
Seller acknowledged the order
BUT stated that its own T+Cs applied
Goods were then supplied + accepted by the buyer
Held: buyer’s terms applied
CA: disagreed
Straightforward O+A analysis should be used
On this basis, the seller’s statement was a counter-offer
This was accepted by the buyer when it took the delivery of the goods - accepted by conduct
Can conduct amount to acceptance
What case illustrates this?
Yes
Brogden v Metropolitan Railway (1877)
- coal + agreement in the drawer case
Brogden v Metropolitan Railway (1877)
D sent B a draft agreement for the supply of coal (invitation to treat)
B completed it + sent it back (offer)
D however, put the agreement into a drawer + forgot about it
Coal = ordered + delivered on the terms of the agreement
B contended that the D had not accepted the offer
HL: there had to be some external manifestation of acceptance
In this case - was the D placing orders on the basis of the agreement
There was acceptance via conduct
Can silence amount to acceptance?
What case illustrates this?
No, not for bilateral contract
- Law hinges on the +ve actions / conduct of parties
Felthouse v Bindley (1862)
Felthouse v Bindley (1862)
Plaintiff had previously discussed purchasing his nephew’s horse
Uncle wrote: ‘if I hear no more about him, I consider him mine’
Horse = mistakenly sold by the D at an auction
Uncle brought action against the D for the conversion of the horse
Q = was there a valid contract between the plaintiff + the nephew
Held: nephew had not communicated his acceptance to his uncle’s offer
= no contract between them - silence cannot amount to acceptance
Are there any exceptions as to when silence can amount to acceptance?
Case?
Yes - Re Selectmove (1955) Tax collector (offeree) suggested that the company (offeror) could assume that he accepted if they heard nothing more from him
What did LJ Gibson state in Re Selectmove (1955)?
(Obiter)
In principle, an offeree’s silence could amount to acceptance if the offeree undertakes to accept the offer conditional on his not speaking before the end of the ascertained time
BUT THE OFFEROR CANNOT IMPOSE SILENCE AS ACCEPTANCE
How are unilateral contract accepted?
By fully performing the stipulated act
There is no need for the acceptance to be communicated
Does the method of acceptance matter?
Yes
Where the offer stipulates a particular method of acceptance, the if the offeree uses a different method there may not be a contract if the offer clearly Staes that only the stipulated method of acceptance will be sufficient
What is the postal rule?
What case established this?
Acceptance become effective upon posting
Adams v Lindsell (1818)
Adams v Lindsell (1818)
L made an offer to A to sell some wool
Asked for a reply in the post
A replied his acceptance as soon as he received the letter
By the time that the acceptance letter had arrived, L had sold the wool to another party, assuming that the offer had been rejected
A claimed for a breach of contract
Held: the contract was made at the time the letter was posted
What are the 5 thing that need to happen for the postal rule to be applied?
- Acceptance by post must be requested by the offeror, or acceptance by post must be normal/ reasonable (Henthorn v Fraser (1892))
- Letter must be properly stamped + addressed (Re London + Northern Bank ex part Jones (1990))
- Letter must be posted - in control of the Post Office (LNB ex p. J - letter was handed to a postman, held not to have been posted)
- Postal rule must not have been excluded in the offer (Howell Securities v Hughes (1974))
- Use of the postal rule must not create ‘manifest inconveniences/ absurdity’ (HS v H)
Does the postal rule still apply if the acceptance letter is received after not of revocation of the offer has been sent?
Case?
Yes
Henthorn v Fraser (1892)
Does the postal rule apply is the letter was never delivered?
Case?
Yes
Household Fire Insurance v Grant (1879)
Does the postal rule apply to the revocation of offers?
No
The rule doesn’t apply to making offers, revocation of offers or any other elements in contractual negotiations
What did Lord Herschell say in the case of Henthorn v Fraser (1892) about the postal rule?
‘It must have been within the reasonable contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer’
What does ‘notice in writing’ mean?
Case?
Means that actual communication of acceptance must reach the offeror
Howell Securities v Hughes (1974)
- Claimants could not rely on the postal rule to assert the existence of the contract
Can an offeror exclude the postal rule?
Case?
Yes
Quenerduaine v Cole (1883)
Brinkibon v Stahag Stahl (1983)
B = based in London
= buying steel from Ds, = sellers based in Austria
B sent acceptance by Telex
B later wanted to sue Ds for breach of contract
Issue = where the contract was formed (depended what law would deal with the breach)
Held: contract created in Austria
CA: dismissed the appeal
Held: contract was formed when the acceptance was received by Telex in Austria
Ct reaffirmed Entores - postal rule did not apply to instantaneous communication
BUT also stated: = no universal rule
Each case would have to be resolved by looking at the intention of the parties + sound business practice (Lord Wilberforce)
