Chapter 2: Acceptance Flashcards
What completes the first essential element of a valid contract?
Acceptance is the second part of the agreement; together with the offer the acceptance completes the first essential element of a valid contract.
Acceptance is the unequivocal and unconditional assent to all the terms of the offer.
How can acceptance be expressed?
The acceptance can be express or implied by the conduct of the offeree (Carlill case). If an offeror stipulates the type of acceptance, then that form of acceptance must be used. If a mode of acceptance is merely requested, then other reasonable methods can form a binding contract.
Communication of Acceptance
As a general rule acceptance must always be communicated to the
offeror. Acceptance is not effective until this happens.
Communication of Acceptance via Email
The law is unclear as to when a communication by e-mail is received but there
seems little reason to distinguish between this form and other types of instantaneous
communication such as fax or telex. The contract will be formed when the
acceptance is received by the offeror’s e-mail system and is available to be read.
Communication of Acceptance via Fax
If a ‘fax’ is received during normal business hours, then it is
communicated when received. If a fax is received outside of normal
business hours, it is communicated once the business opens.
Act of Acceptance
There must be some act to indicate acceptance; silence cannot be presumed to
amount to acceptance.
Felthouse v Bindley 1862
Facts of ‘Felthouse v Bindley (1862)’
The claimant wrote to his nephew offering to buy his horse. In his offer he stated ‘If I hear no more about him, I consider the horse to be mine’. The nephew did not reply.
Held in ‘Felthouse v Bindley (1862)’
The offer had not been accepted as the nephew’s silence was not sufficient to give acceptance.
What is the exception to the rule that acceptance must always be communicated?
The Postal Rule
What is the postal rule?
The postal rule states that acceptance is complete as soon as the letter is posted.
When is the postal rule applied?
The rule only applies where the letter is properly stamped and addressed and if it
would not be unreasonable to use the post (it would be unreasonable, for example,
during a postal strike).
The postal rule applies even if the letter is never received by the offeror but not if the
offeror states he or she must actually receive acceptance.
When does the postal rule not apply?
The postal rule does not apply if on making the offer the offeror states he or she must
have ‘notice in writing’ of acceptance as this suggests the letter of acceptance must
be received to be binding.
