Acceptance

Rules of acceptance

1) Acceptance must be unequivocal and unqualified 2) Acceptance must mirror the terms of the offer (otherwise it is a counter-offer or a request for information) Most importantly, 3) Acceptance must be COMMUNICATED to the offeror

Counter - Offers

Definition of counter offer: "new offer made where the offeree changes the terms of the offer" - Hyde v Wrench (1840)

Acceptance must be communicated

An acceptance does not usually take effect until it is communicated to the offeror. - Entores Ltd v Miles Far East Corporation (1955): Lord Denning explained, if A shout an offer to B across a river but, just as B yells back an acceptance, noisy aircraft flies over, preventing A from hearing B's acceptance before it can take effect. The same would apply if the contract was made by telephone, and A failed to catch what B said because of interference on the line; there is no contract until A knows that B is accepting the offer. The principle reason for this rule is that, without it, people might be bound by a contract without knowing that their offer had been accepted, which could obviously create difficulties in all kinds of situations. Where parties negotiate face to face, communication of acceptance is unlikely to be a problem; any difficulties tend to arise where the parties are communication at a distance, for example by post, telephone, telegram, telex, fax or message

Exceptions to the postal rule

An offeror may avoid the postal rule by making it a term of their offer that acceptance will only take effect when it is communicated to them. - Holwell Securities Ltd v Hughes (1974): the court held that 'notice' meant communication, and therefore it would not be appropriate to apply the postal rule. When an acceptance is made by an instant mode of communication, such as telephone or telex, the postal rule does not apply. In such cases the acceptor will usually know at once that they have not managed to communicate with the offeror, and will need to try again. - Entores v Miles Far East Corporation (1955) the Court of Appeal held that: because telex allows almost instant communication, the parties were in the same position as if they were negotiated in each other's presence or over the telephone, so the postal rule did not apply and an acceptance did not take effect until it had been received by the claiments. Because the acceptance had been received in London, the contract was deemed to have been made there, and so legal action could go ahead. This approach was approved by the House of Lords in - Brinkibon v Stahag Stahl (1983) the facts here were similar, except that the offer was made by telex from Vienna to London, and accepted by a telex from London to Vienna. The House of Lords held that: contract was therefore made in Vienna. In both cases the telex machines were in the offices of the parties, and the message were received inside normal working hours. - Brinkibon the House of Lords said that a telex message sent outside working hours would not be considered instantaneous, so the time and place in which the contract was completed would be determined by the intentions of the parties, standard business practice and, if possible, by analysing where the risk should most fairly lie. - Mondial Shipping v Astarte [1995] If message arrives outside office hours, acceptance is first thing next working day - Thomas v BPE Solicitors (2010) the High Court stated that: the postal rule would not apply to a contract made by e-mail. This statement was obiter because it was not actually part of the reasoning for the decision itself and thus it is not a binding precedent on the point, but purely guidance on how the judges are likely to approach this issue in the future. E-mail were treated as similar to telex messages which were considered in Entores v Miles Far East Corporation. So the ordinary rules of offer and acceptance apply and the contract will be formed when the acceptance is received. In looking at when the acceptance is received, the High Court in Thomas referred to Brinkibon v Stahag Stahl. It concluded that an e-mail sent and received at 18:00 was an effective acceptance as in the context in which it was sent, this was not outside working hours; it was available to be read at the point of receipt, even though the potential recipient had actually gone home at 17:45.

Acceptance

Definition: "The final and unqualified assent to the terms of the offer" Characteristics: It must match the terms of the offer exactly, or be the "mirror image" of the offer Effect: the offer is now ended and the parties are bound by the contract. Acceptance of an offer means unconditional agreement to all the terms of that offer. Acceptance will often be oral or in writing, but in some cases an offeree may accept an offer by doing something, such as delivering goods in response to an offer to buy. The courts will only interpret conduct as indicating acceptance if it seems reasonable to infer that the offeree acted with the intention of accepting the offer.

The Postal Rule

The general rule for acceptances by post is that they take effect when they are posted, rather than when they are communicated. The main reason for this rule is historical, since it dates from a time when communication through the post was even slower and less reliable than it is today. Even now, there is some practical purpose for the rule, in that it is easier to prove that a letter has been posted than to prove that it has been received or bought to the attention of the offeror. - Adams v Lindsell (1818) the legal principle of this case: An acceptance by postal rule takes place when it is posted, rather than when it is communicated. - Holwell Securities v Hughes [1974]: the application of the postal rule must not lead to "manifest inconvenience or absurdity" The traditional title 'postal rule' has become slightly misleading because the rule does not only apply to the post but could also potentially apply to certain other non-instantaneous modes of communication. - Cowan v O'Connor (1888) where it was held that: an acceptance came into effect when the telegram was placed with the Post Office. These days the Post Office in England no longer offers a telegram service, but the same rule will apply to the tele-message service which replaced it. Use of the postal service must be reasonable. Only when it is reasonable to use the post to indicate acceptance can the postal rule apply. If the offer does not dictate a method of acceptance, appropriate methods can be inferred from the means used to make the offer. An offer made by post may generally be accepted by post, but it may be reasonable to accept by post even though the offer was delivered in some other way. - Henthorn v Fraser (1892) it was held that: despite the offer having been hand over in person, acceptance by post was reasonable because the parties were based in different towns. Where an offer is made by an instant method of communication, such as telex, fax or telephone, an acceptance by post would not usually be reasonable. Where a letter of acceptance is lost or delayed because the offeree has wrongly or incompletely addressed it though their own careless, it seems reasonable that the postal rule should not apply, although there is no precise authority to this effect. Treitel, a leading contract law academic, suggests that a better rule might be that if a badly addressed acceptance takes effect at all, it should do so at the time which is least advantageous to the party responsible for the misdirection. Effect of the postal rule The postal rule has three main practical consequences: 1. A postal acceptance can take effect when it is posted, even if it gets lost in the post and never reaches the offeror. - Household Fire Insurance v Grant (1879) it was held that: Grant was bound to pay the balance, because the contract had been completed when the company's letter was posted. It is likely that the same rule applies where the letter eventually arrives, but is delayed by postal problems. 2. Where an acceptance is posted after the offeror posts a revocation of the offer, but before that revocation has been received, the acceptance will be binding (posted acceptances take effect on posting, posted revocations on communication). This point is illustrated by the cases of - Byrne v Van Tienhoven (1880) and; - Henthorn v Fraser (1892). 3. Where the postal rule applies, it seems unlikely that an offeree could revoke a postal acceptance by phone (or some other instant means of communication) before it arrives, though there is no English case on the point. A Scottish case, - Dunmore v Alexander (1830), does appear to allow such a revocation, but the court's views were only obiter on this point.

Specified methods of acceptance

If an offeror states that his or her offer must be accepted in a particular way, then only acceptance by that method or an equally effective one will be binding. To be considered equally effective, a mode of acceptance should not be slower than the method specified in the offer, nor have any disadvantage for the offeror. - Tinn v Hoffman (1873) that: where the offeree was asked to reply 'by return of post', any method which would arrive before return of post would be sufficient. - Financings v Stimson [1962]: Unless the offeror has specified a particular method - then using any other method will mean acceptance not valid. Where a specified method of acceptance has been included for the offeree's own benefit, however, the offeree is not obliged to accept in that way. In - Yates Building Co Ltd v R J Pulleyn and Son (York) Ltd (1975) the court held that: the acceptance was still effective. The requirement of registered or recorded delivery was for the benefit of the offeree rather than the offeror (as it ensured that their acceptance was received and that they had proof of their acceptance) and was not therefore mandatory. - Felthouse v Bindley (1862) shows that: although the offeror can stipulate how the acceptance is to be made, he or she cannot stipulate that silence shall amount to acceptance. In the same way, if the offeror states that the performance of certain acts by the offeree will amount to an acceptance, and the offeree performs those acts, there will only be an acceptance if the offeree was aware of the terms of the offer and objectively intended their acts to amount to an acceptance. - Inland Revenue Commission v Fry (2001) the High Court held that: the Inland Revenuce was entitled to the full amount of tax which it had claimed. The Court explained that it was fundamental to the existence of a binding contract that there was a meeting of minds. An offer prescribing a mode of acceptance could be accepted by an offeree acting in accordance with that mode of acceptance. However, the Inland Revenue received thousands of cheques each day and there was no evidence that, when it cashed the cheque from Mrs Fry, it knew of the offer. The cashing of the cheque gave rise to no more than a rebuttable presumption of acceptance of the terms of the offer in accompanying letter. On the evidence, that presumption had been rebutted, as a reasonable observer would not have assumed that the cheque was banked with the intention of accepting the offer in the letter. An offeror who has requested the offeree to use a particular method of acceptance can always waive the right to insist on that method.

Silence will not amount to acceptance

Merely remaining silent cannot amount to an acceptance, unless it is absolutely clear that acceptance was intended. - Felthouse v Bindley (1862) the legal principle of this case is 'merely remaining silent cannot amount to an acceptance, unless it is absolutely clear that acceptance was intended'. It has been pointed out by the Court of Appeal in - Re Selectmove Ltd (1995) that: an acceptance by silence could be sufficient if it was the offeree who suggested that their silence would be sufficient. Thus in Felthouse, if the nephew had been the one to say that if his uncle heard nothing more he could treat the offer as accepted, there would have been a contract. Unilateral contracts are usually accepted by conduct. If I offer £100 to anyone who finds my lost dog, finding the dog will be an acceptance of the offer, making my promise binding - it is not necessary for anyone to contact me and say that they intend to take up my offer and find the dog. There is no acceptance until the relevant act has been completely performed - so if Ann says to Ben that she will give Ben that she will give Ben £5 if Ben washes her car, Ben would not be entitled to the money until the job is finished, and could not wash half the car and ask for £2.50. Offeree must make sure offeror has actual knowledge of his acceptance Powell v Lee (1908): Offeree or someone with his authority can communicate the acceptance Acceptance takes place when the communication is actually received

Request for Information

Request for information is not a counter offer and DOES NOT DESTROY THE OFFER - Stevenson, Jacques v McClean (1880)

The Receipt Rule

Sometimes faxes don't arrive, emails don't get opened, voice-mail message is inaudible... yet the receipt rule applies, so contract not made. This could be harsh on the offeree who thinks he has accepted the offer. An offeror who fails to receive an acceptance through their own fault may be prevented from claiming that the non-communication means they should not be bound by the contract. - Entores v Miles [1955] it was suggested that this principle could apply where an offer was accepted by telephone, and the offeror did not catch the words of acceptance, but failed to ask for them to be repeated. Lord Denning stated in this case: - if sender knows communication not achieved, then his responsibility to send again - if sender does NOT know, then depends whose fault it was that communication not achieved - if nobody's fault, then acceptance has not taken place as communication not achieved - Brimnes (1975): withdrawal sent during ordinary business hours could be regarded as communicated. Megaw LJ: .. if a notice arrives at the address of the person to be notified, at such a time and by such a means of communication that it would in the normal course of business come to the attention of that person on its arrival, that person cannot rely on some failure of himself or his servants to act in a normal businesslike manner in respect of taking cognisance of the communication, so as to postpone the effective time of the notice until some later time when it in fact came to his attention...

Exception to communication rule

There are some circumstances in which an acceptance may take effect without being communicated to the offeror An offer may state or imply that acceptance need not be communicated to the offeror, although, as - Felthouse v Bindley (1862) shows, it is not possible to state that the offeree will be bound unless he or she indicates that the offer is not accepted (in other words that silence will be taken as acceptance). This means that offerors are free to expose themselves to the risk unknowingly incurring an obligation, but may not impose that risk on someone else. It seems to follow from this that if the horse in Felthouse v Bindley had been kept out of the sale for the uncle, and the uncle had then refused to buy it, the nephew could have sued his uncle, who would have been unable to rely on the fact that acceptance was not communicated to him. unilateral contracts do not usually require acceptance to be communicated to the offeror. - Carlill v Carbolic Smoke Ball Co (1893) the court held that: such a unilateral offer implied that performance of the terms of the offer would be enough to amount to acceptance. - Brogden v Metropolitan Rail Co (1877): House of Lords decided that an acceptance by conduct could be inferred from the parties' behaviour, and a valid contract was completed either when the company first ordered coal after receiving the draft agreement from Brogden, or at the latest when he supplied the first lot of coal.

Battle of the Form

Where parties carry on a long process of negotiation, it may be difficult to pinpoint exactly when an offer has been made and accepted. In such cases the courts will look at the whole course of negotiations to decide whether the parties have in fact reached agreement at all and, if so, when. This process can be particularly difficult where the so-called 'battle of the forms' arises. Rather than negotiating terms each time a contract is made, many businesses try to save time and money by contracting on standard terms, which will be printed on company stationery such as order forms and delivery notes. The 'battle of the forms' occurs where one party sends a form stating that the contract is on their standard terms of business, and the other party responds by returning their own form and stating that the contract is on their terms. The general rule in such cases is that the 'last shot' wins the battle. Each new form issued is treated as a counter-offer, so that when one party performs its obligation under the contract (by delivering goods for example), that action will be seen as acceptance by conduct of the offer in the last form. - British Road Service v Arthur V Crutchley and Co Ltd (1968) the court held that: stamping the delivery note in this way amounted to a counter-offer, which BRS accepted by handing over the goods. The contract therefore incorporated Crutchleys conditions, rather than those of BRS. However, a more recent case shows that the 'last shot' will not always succeed. - Butler Machine Toot Ltd v Ex-Cell-O Corp (England) Ltd (1979)the Court of Appeal held that: the buyers' replay to the quotation was not an unconditional acceptance, and therefore constituted a counter-offer. The seller had accepted that counter-offer by returning the acknowledgement slip, which referred back to the buyers' conditions. The sellers pointed out that they had stated in their accompanying letter that the order was booked in accordance with the earlier quotation, but this was interpreted by the Court of Appeal as referring back to the type and price of the machine tool, rather than to the terms listed on the back of the sellers' document. It merely confirmed that the machine in question was the one originally quoted for, and did not modify the conditions of the contract. The contract was therefore made under the buyers' conditions. The Court of Appeal also contemplated what the legal position would have been if the slip had not been returned by the sellers. The majority thought that the usual rules of offer and counter-offer would have to be applied, which in many cases would mean that there was no contract until the goods were delivered and accepted by the buyer, with either party being free to withdraw before that the courts should take a much less rigid approach and decide whether the parties thought they had made a binding contract, and if it appeared that they did, the court should go on to examine the document as a whole to find out what the content of their agreement might be. A recent case on the 'battle of the forms' is - GHSP Incorporated v AB Electronic Ltd (2010) the High Court held that: although the parties had entered into a contract, the terms of the contract were not to be found in either of the parties' respective standard terms of business. The negotiations between the parties made clear that neither party was willing to contract on the other's terms. Rather than conclude that no contract had been entered into, it was held that a contract had been concluded and the parties had acted under the contract by the goods being manufactured, delivered and paid for. But the contract was neither on the defendant's standard terms nor the claimant's standard terms. Instead, it was an unwritten contract containing the term implied by the Sale of Goods Act 1979. In particular, section 14(2) of that Act implies a term that the goods supplied will be of a satisfactory quality. There is no implied term limiting liability so this decision favoured the claimant. While it is no surprise that these terms were implied into the contract, what is surprising is that the contract consisted purely of these terms. This case seems to fit within Lords Denning's proposed approach to this type of case.