Lecture 3-Acceptance

Question 1

Acceptance

Answer 1

Acceptance of the offer is a clear indication of the offeree’s unqualified agreement to the terms of the offer in the manner set out in the offer.

Principle of objective intention applies.

Would it appear to reasonable person in offeror’s position that the offeree was accepting the offer?

Question 2

Key Characteristics

Answer 2

it must respond to the offer

must be unconditional,

and must correspond precisely with the offer’s terms. (mirror-image)

Question 3

Communication

Answer 3

Acceptance has no legal effect until communicated.

Question 4

Prescribed modes of acceptance

Answer 4

Manchester DCE v Commercial and General Investments
If an offeror stipulates by the terms of his offer that it may, or that it shall, be accepted in a particular manner a contract results as soon as the offeree does the stipulated act, whether it has come to the notice of the offeror or not

Question 5

Silence

Answer 5

FELTHOUSE V BINDLEY (1862)
A silent acceptance which is not communicated is not ordinarily a valid acceptance in law, and a provision in an offer stating that silence will be treated as acceptance will have no effect.

The logic behind this is that because a contract is a consensual instrument, offers must be voluntarily accepted

Question 6

Silence Exception

Answer 6

Re Selectmove [1995]
The Court of Appeal suggested (without conclusively deciding) that if the offeree himself indicated that the offer should be taken as accepted ‘if he does not indicate to the contrary by an ascertainable time’, that might also be an exceptional case in which silence could constitute acceptance.

Question 7

Acceptance ends with

Answer 7

1.Revocation
2.Conduct
3.Counter-offers
4.Lapse of time
5.Death of offeror
6.Postal methods
7.Instantenous methods
8.Unilateral acceptance

Question 8

Revocation

Answer 8

Revocation cannot take place after a valid acceptance.

BUT an offeror can withdraw an offer at any time before it is accepted

The revocation of the offer must be communicated clearly.

Question 9

Revocation Communication

Answer 9

A third party-Dickinson v Dodds

Question 10

Time periods

Answer 10

What would be considered reasonable if no fixed time period. If there is a fixed time period, then the offer lapses after that time.
Ramsgate Victoria Hotel v Montefiore

Question 11

Death of offeror

Answer 11

Depends on the nature of the contract- if it involves a specific type of personal service that cannot be performed by anybody else, then the offer will usually lapse. If it is more of a general supply contract, then the offeror’s representatives could supply a substitute and make arrangements, thus the offer need not lapse.

Question 12

Revoking Acceptance

Answer 12

The rule is generally taken to be that acceptances cannot be revoked.

Question 13

Counter-offers

Answer 13

HYDE V WRENCH (1840)
The impact of a counter offer extinguishes the original offer (it is not a mirror-image)

Question 14

Acceptance by Conduct

Answer 14

BROGDEN V METROPOLITAN RAILWAY (1877)
The court found that even though the form had not been signed and technically required acceptance, they found that acceptance was valid through performing the contract without alternating any terms.

Question 15

Postal Rule

Answer 15

Adams v Lindsell (1818)
If an offer is accepted by post, the general rule is that acceptance is taken to have occurred as soon as the communication is posted.

Question 16

Extension

Answer 16

Household Insurance v Grant
The postal rule applies even when the letter of acceptance is lost in the post and never delivered.

Question 17

Postal Rule does not apply to

Answer 17

It only applies to letters posted- not delivered by hand or by currier.

The Postal Rule does not apply to revocation of an offer.
Henthorn v Fraser [1892]

Question 18

‘Absurd Outcome’

Answer 18

Holwell Securities Ltd v Hughes [1974]
First, it does not apply when the express terms of the offer specify that the acceptance must reach the offeror.

Secondly, it probably does not operate if its application would produce manifest inconvenience and absurdity

Question 19

Instantaneous Methods

Answer 19

Entores Ltd v Miles Far East Corp [1955]
Postal rule DOES NOT apply and telex only effective only on receipt.

The court held that in cases of instantaneous communication, as it held telexes to be, the contract was complete when the acceptance was received, rather than when it was sent.

Question 20

Entores Affirmed by

Answer 20

Brinkibon Ltd v Stahag Stahl [1982]
The effect that the rule would not necessarily apply in all circumstances—for example, where messages were sent out of office hours or to persons without authority to act upon them. Cases must, therefore, ‘be resolved by reference to the intentions of the parties, by sound business practice and in some cases by a judgement where the risks should lie’

Question 21

Current Authority

Answer 21

THOMAS V BPE SOLICITORS [2010]
Blair J held that the Entores rules did apply to email. The general rule, he said, ‘is that the acceptance of an offer is not effective until communicated to the offeror’. The postal rule is ‘an anomalous exception …, which is limited to its particular circumstances’.

An emailed communication was received if it was available to be read, subject to the qualifications relating to office hours and authority set out by Lord Wilberforce in Brinkibon.

Question 22

Unilateral Contracts

Answer 22

They are often referred to as ‘if contracts’.

Great Northern Railway Company v Witham (1873)

Question 23

Types

Answer 23

1.Offer made to an individual

Great Northern Railway Company v Witham (1873)

2.Offer made to the public at large

Classic example – offer of a reward for the performance of some service.

Carlill v Carbolic Smoke Ball Co [1893]

Question 24

Revocation

Answer 24

Potentially open to offeror to revoke the offer any time before completion of performance arises – even if an individual had commenced performance because no acceptance until fully performed

Question 25

Estoppel

Answer 25

Equitable Approach whereby the courts deem it unfair for a party to go back on their promise

Question 26

Case Authority

Answer 26

ERRINGTON V ERRINGTON [1952]
A unilateral contract cannot be revoked once the party has entered on the performance of the act required.
Equitable principles apply

Question 27

Collateral Contracts

Answer 27

Collateral contracts sit alongside the main contract, and are typically made to support some aspect of that contract.

Question 28

Arguing collateral contracts

Answer 28

The primary unilateral contract – completed in the usual manner.

An additional collateral contract – an implied promise not to revoke the main offer once the offeree has commenced performance.

Auctions-an implied promise to sell to the highest bidder.

Question 29

Tenders

Answer 29

The documents that accompany the invitation to tender are frequently treated as creating a collateral contract between the parties, which regulates the process of contract formation in much the same way as do the conditions of sale that are attached to auctions.

Question 30

Battle of the forms

Answer 30

The implication of British Road Services is that contract formation in a battle of the forms situation follows what has been called the ‘last shot rule’, under which whoever gets in the last shot before performance will have their terms govern the contract. In a contract for the sale of goods, this will usually be the buyer.

Question 31

Case Authority

Answer 31

BUTLER V EX-CELL-O CORP LTD [1979]

The person who fires the last shot gets the contract’ (determining acceptance to a valid offer)-Denning