Acceptance/Counter Offer/Communication Flashcards
What is the effect of accepting an offer?
Accepting an offer terminates the offer, and replaces it with a binding contract.
What is the definition of “acceptance” [of an offer]?
Acceptance can be defined as the:
“positive, unqualified assent to all of the terms of the offer”
What is a qualified acceptance/counter offer?
If an offeree attempts to accept an offer BUT adds a new term of their own (qualified acceptance), then there is no valid acceptance of the offer.
If an offeree accepts the offer but changes the terms, then this amounts to a COUNTER OFFER.
A counter offer terminates/rejects the original offer.
Counter offer
Which is the leading case on counter offer?
Hyde v Wrench (1840)
Offer to sell land for £1,000
Offeree responded offering £950
The offer was rejected.
Offeree tried to accept the original offer of £1,000.
Court held that the original offer had bene destroyed and was incapable of acceptance.
Does a request for further information amount to a counter offer?
No, a request for further information does not amount to a counter offer.
Stevenson Jacques & Co v McLean (1880)
D offered to sell iron at 40 shillings per ton, with offer to remain open until Monday.
C responded asking if payment could be spread over two months. No reply was received.
Same day, C responded to accept the original offer.
D had sold the iron to another party.
Held that the question regarding payment was not a counter offer but a request for further information, and should have been answered.
Battle of the Forms
The courts tend to adopt the “last shot” rule.
Where conflicting terms are exchanged during a negotiation, each is seen as a counter offer, with the prevailing terms of the last document being the contractual terms used,
Butler Machine Tool Co Ltd v Ex-cell-O Corporation Ltd (1979)
Offer to sell a machine, the offer included a price variation clause.
Buyer replied on their own standard terms that did not have a price variation clause.
Buyers from had a tear off slip which the sellers returned; it contained the wording “we accept your order on the terms and conditions therein”.
Court held that the contract was based on the buyers terms, so the seller could not claim for the price increase.
Communication of Acceptance
Generally, acceptance must be communicated to the offeror.
The offer must be HEARD by the offeror.
Entores v Miles Far East Corporation (1955)
It was stated:
“If an oral communication is drowned out by an aircraft flying overhead so the offeror does not hear it, there may be no contract”.
Can silence to an offer impose contractual liability?
Silence cannot be deemed as consent to an offer.
Felthouse v Bindley (1862)
- D selling animals, C offered £30.
- C wrote to D stating “if I hear no more about it, I consider the horse mine at £30”.
- D didn’t respond and sold the animals at auction.
- C said the auctioneer sold the horse by mistake and sued.
Action failed as acceptance of the offer was not communicated.
What is the “postal rule”?
The postal rule means that a postal acceptance is deemed communicated as soon as it is placed in the post, NOT WHEN IT IS RECEIVED.
Does the postal rule apply to acceptances and revocations?
No, the postal rule only applies to acceptances.
It DOES NOT apply to revocations which are only binding upon receipt.
What is the leading case law on the “postal rule”?
Adams v Lindsell (1818)
D made offer to sell wool to C.
Offer could only be accepted by post.
D misaddressed the letter so it was not delivered until three days later.
C posted acceptance on the same day the offer was received (5 September); this was received on 9 September.
D sold the wool to another party on 8 September.
Court held that a binding agreement between C and D was made on 5 September when the acceptance was posted.
What limitations apply to the postal rule?
- It only applies to acceptances, not revocations.
- It only applies where it is reasonable to use the post.
- The letter must be correctly stamped and addressed.
- the offeror can exclude the use of the post.
What is the justification for the “postal rule”?
- It provides certainty as to when the offer has been accepted.
- If the offeror has agreed acceptance by post, it is reasonable that they bear the risk of using a third party carrier for delivery.
What rules apply regarding acceptance by email?
The general receipt rule will apply to emails to provide legal and commercial certainty.
This means that the acceptance is made when the email is received, NOT when it is read.
