ACCEPTANCE
•Law of Contract
•The Agreement - Offer and Acceptance
•Acceptance
•Acceptance – ‘a final and unqualified expression of assent to the terms of an offer’
–Must be both final and unqualified
–As a general rule, must be communicated
–May be made in writing, orally or by conduct
•Acceptance
•Acceptance by conduct
•Brogden v Metropolitan Rly. Co. (1877) 2 App Cas 666
–B had supplied M with coal for many years though no formal agreement was signed
–B suggested a formal contract; M sent terms of agreement
–B inserted the name of an arbitrator, signed & returned the agreement
–M’s manager put agreement in his desk where it stayed for two years
–M ordered and received coal on the basis of arrangements in the documents
–When a dispute arose, B denied that there was a contract
–Held: inserting the arbitrator’s name by B amounted to a counter-offer
–That acceptance (of the counter-offer) by conduct could be inferred from the parties’ behaviour and that a valid contract was completed either when M first ordered coal following receipt of the agreement or at latest when B supplied the first lot of coal thereafter.
•Acceptance
•Mere silence does not constitute acceptance
•Felthouse v Bindley 142 ER 1037
–Clmt negotiated to buy a horse from his nephew
–Clmt wrote to nephew: “if I hear no more about him, I consider the horse mine at £30 15s.”
–Nephew did not reply but told auctioneer not to sell the horse, as it was already sold
–By mistake, the deft/auctioneer sold the horse to someone else.
–Clmt sued auctioneer for ‘conversion’ – for which he had to prove that the horse was already his at the time of its sale by the auctioneer.
–Held: that the horse had not been sold to clmt
–that although the nephew intended in his own mind that the clmt should have the horse, he had not communicated his intention and had not done anything to bind himself
–that the clmt’s offer stood as an open offer which the clmt himself might have retracted at any time.
•Acceptance
•The ‘Mirror-Image’ rule
•An acceptance must accept the precise terms of the offer – an unqualified expression of assent
•A supposed ‘acceptance’ which varies or attempts to vary the terms of the offer is not an acceptance --- but a counter-offer.
•Acceptance
•The ‘Mirror-Image’ rule
•Hyde v Wrench (1840) 3 Beav 334
–Deft offered to sell his farm to clmt for £1000
–Clmt replied offering to buy it for £950
–Deft refused
–Later, clmt sent letter of “acceptance” to buy it for the original £1000; the deft refused to sell
–Held: there was no contract; the initial response which was a counter-offer had put an end to the offer; clmt could no longer revive the deft’s original offer.
•Acceptance
•The ‘Mirror-Image’ rule and ‘The Battle of the Forms’
•Use of ‘standard forms’ in commercial transactions and effect on formation of contract
•Possible consequences
–No contract
–A contract exists --- but on which terms?
•Acceptance
•The ‘Battle of the Forms’
•Butler Machine Tools etc v Ex-Cell-O Corpn etc [1979] 1 WLR 401
–Sellers offered to sell a machine tool to buyers for £75, 535
–Offer said to be in accordance with sellers’ standard terms which “shall prevail over any terms & conditions in the buyers’ order”
–Sellers’ standard terms included a ‘price variation clause’
–Buyers placed an order but on their own standard terms; buyers terms did not include a price variation clause
–Buyers’ order contained a tear-off acknowledgment slip stating: “we accept your order on the terms & conditions stated thereon”.
–Sellers signed the slip and returned it though with a letter stating that the buyers’ order was being entered in accordance with sellers’ original quotation.
–Sellers claimed an extra sum of £2892 – relying on the ‘price variation clause’
–Held: (Lawton & Bridge LJJ) that the buyers’ order was a counter-offer which the sellers had accepted by completing and returning the acknowledgment; thus the contract had been made on the buyers’ terms without the price variation clause
–(Lord Denning MR) that a better approach to the offer/counter-offer analysis is to look at the correspondence as a whole and see if the parties had agreed on all material points and that often the party who ‘fired the last shot’ would prevail
•Acceptance
•Distinction between a counter-offer and a mere request for information/clarification
•Stevenson etc v McLean (1880) 5 QBD 346
–Defts offered to sell iron to clmts at lowest price of 40s per ton and to keep the offer open till Monday
–On Monday morning, clmts sent telegram: ‘please wire whether you would accept 40 for delivery over two months …”; defts did not reply
–Later same day, clmts sent telegram accepting the defts’ offer
–Defts had already sold the iron to 3rd party
–Held (Lush J): that clmt’s first telegram was merely an inquiry and not a counter-offer --- an inquiry that should have been answered and not treated as a rejection
–that defts’ attempted revocation of the offer after selling the iron to 3rd party was ineffective because it only came to clmts’ notice after clmt had already accepted the offer
–that, accordingly, clmts were entitled to damages for breach of contract
•Acceptance
•Acceptance must be communicated to the offeror
–General rule: acceptance is only effective when it is brought to the attention of the offeror
–Cf. per Lord Denning in Entores v Miles Far East Corpn [1955] 2 QB 327
•Oral statement drowned by over-flying aircraft
•Telephone line goes dead in a phone conversation in which acceptance was being made
•Acceptance
•Prescribed method of acceptance
•As a general rule, offerree must comply with the prescribed method, else there will be no contract
•If prescribed method is not mandatory, any other method of acceptance that is no less advantageous to the offeror may be sufficient
•Manchester Diocesan Council etc v Comm. & Gen. Inv. Ltd [1969] 3 All ER 1593
–Held: posting of acceptance of tender to defts’ surveyors address was sufficient, though tender form stated that such acceptance would be posted to the address given in the tender.
•Acceptance
•The ‘Postal Rule’
•If the post is the agreed or proper method of communicating acceptance, acceptance is complete when the letter of acceptance is posted
•“Where the circumstances are such that it must have been within the contemplation of the parties that, according to ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted.” per Lord Herschell in Henthorn v Fraser [1892] 2 Ch 27
•Acceptance
•The Postal rule
•Adams v Lindsell 106 ER 250
–Defts wrote to Clmts on 2 September offering to sell some wool; they expected an answer by 7th September
–Clmts received the offer on 5th September and posted their acceptance same day.
–On 8th September, defts sold the wool to a 3rd party
–On 9th September, clmts’ acceptance reached the defts
–Held: defts were liable to the clmts for breach of contract;
–that a contract had come into existence on 5th September when clmts posted their acceptance
•Acceptance
•The Postal Rule
•Acceptance properly sent by post is even valid to conclude a contract though it never arrives
•Household Fire etc v Grant (1879) 4 Ex D 216
–defts applied for shares in clmt company
–Clmt allotted the shares to deft and posted the letter of notice to him
–Deft never received the letter
–Held (Thesiger & Baggally LJJ): that there was a valid contract; acceptance was complete when the letter of allotment was posted and it was irrelevant that it was never received by the deft
–Bramwell LJ dissenting: there is no reason to the rule and it is arbitrary
•Acceptance
•Avoiding the Postal rule – by insisting on actual receipt of acceptance
•Holwell Securities v Hughes [1974] 1 WLR 155
–Defts granted an option to clmts to purchase some property
–Option was “exercisable by notice in writing … within six months”
–Within time, clmts wrote to give notice of the exercise of the option but the letter never reached the defts
–Held (Russell LJ): that the language used should be taken to expressly assert that the ordinary/normal rule requiring actual communication was to apply; the language was not consistent with the postal rule
–(Lawton LJ concurring): the postal rule does not apply in all cases where both parties expect the post to be used to communicate acceptance
–that the postal rule does not apply when the express terms of the offer specify that acceptance must reach the offeror
–that the postal rule probably does not apply if its application would produce manifest inconvenience and absurdity.
•Acceptance
•Instantaneous means of (tele)communication
•The postal rule does not apply; acceptance is communicated when ‘received’ by the offeror
•Entores v Miles Far East Corpn [1955] 2 QB 327
–English company received acceptance sent by telex by a Dutch company
–Held: the contract was made in England since the telex of acceptance was received in England
•Acceptance
•Instantaneous means of (tele)communication
•Brinkibon Ltd v Stahag Stahl GmbH [1983] 2 AC 34
–Telex of acceptance sent from London to Vienna
–Held: contract was made in Vienna where the acceptance was received
•What if the acceptance was not seen/’received’ immediately? For example, arrives out of office hours; error/default at recipient’s end; machines operated by 3rd parties etc?
•“No universal rule can cover all such cases; they must be resolved by reference to the intentions of the parties, by sound business practice and in some cases by a judgment where the risk should lie …” Per Lord Wilberforce (obiter)
•The Agreement - Offer and Acceptance
•Acceptance
•Acceptance – ‘a final and unqualified expression of assent to the terms of an offer’
–Must be both final and unqualified
–As a general rule, must be communicated
–May be made in writing, orally or by conduct
•Acceptance
•Acceptance by conduct
•Brogden v Metropolitan Rly. Co. (1877) 2 App Cas 666
–B had supplied M with coal for many years though no formal agreement was signed
–B suggested a formal contract; M sent terms of agreement
–B inserted the name of an arbitrator, signed & returned the agreement
–M’s manager put agreement in his desk where it stayed for two years
–M ordered and received coal on the basis of arrangements in the documents
–When a dispute arose, B denied that there was a contract
–Held: inserting the arbitrator’s name by B amounted to a counter-offer
–That acceptance (of the counter-offer) by conduct could be inferred from the parties’ behaviour and that a valid contract was completed either when M first ordered coal following receipt of the agreement or at latest when B supplied the first lot of coal thereafter.
•Acceptance
•Mere silence does not constitute acceptance
•Felthouse v Bindley 142 ER 1037
–Clmt negotiated to buy a horse from his nephew
–Clmt wrote to nephew: “if I hear no more about him, I consider the horse mine at £30 15s.”
–Nephew did not reply but told auctioneer not to sell the horse, as it was already sold
–By mistake, the deft/auctioneer sold the horse to someone else.
–Clmt sued auctioneer for ‘conversion’ – for which he had to prove that the horse was already his at the time of its sale by the auctioneer.
–Held: that the horse had not been sold to clmt
–that although the nephew intended in his own mind that the clmt should have the horse, he had not communicated his intention and had not done anything to bind himself
–that the clmt’s offer stood as an open offer which the clmt himself might have retracted at any time.
•Acceptance
•The ‘Mirror-Image’ rule
•An acceptance must accept the precise terms of the offer – an unqualified expression of assent
•A supposed ‘acceptance’ which varies or attempts to vary the terms of the offer is not an acceptance --- but a counter-offer.
•Acceptance
•The ‘Mirror-Image’ rule
•Hyde v Wrench (1840) 3 Beav 334
–Deft offered to sell his farm to clmt for £1000
–Clmt replied offering to buy it for £950
–Deft refused
–Later, clmt sent letter of “acceptance” to buy it for the original £1000; the deft refused to sell
–Held: there was no contract; the initial response which was a counter-offer had put an end to the offer; clmt could no longer revive the deft’s original offer.
•Acceptance
•The ‘Mirror-Image’ rule and ‘The Battle of the Forms’
•Use of ‘standard forms’ in commercial transactions and effect on formation of contract
•Possible consequences
–No contract
–A contract exists --- but on which terms?
•Acceptance
•The ‘Battle of the Forms’
•Butler Machine Tools etc v Ex-Cell-O Corpn etc [1979] 1 WLR 401
–Sellers offered to sell a machine tool to buyers for £75, 535
–Offer said to be in accordance with sellers’ standard terms which “shall prevail over any terms & conditions in the buyers’ order”
–Sellers’ standard terms included a ‘price variation clause’
–Buyers placed an order but on their own standard terms; buyers terms did not include a price variation clause
–Buyers’ order contained a tear-off acknowledgment slip stating: “we accept your order on the terms & conditions stated thereon”.
–Sellers signed the slip and returned it though with a letter stating that the buyers’ order was being entered in accordance with sellers’ original quotation.
–Sellers claimed an extra sum of £2892 – relying on the ‘price variation clause’
–Held: (Lawton & Bridge LJJ) that the buyers’ order was a counter-offer which the sellers had accepted by completing and returning the acknowledgment; thus the contract had been made on the buyers’ terms without the price variation clause
–(Lord Denning MR) that a better approach to the offer/counter-offer analysis is to look at the correspondence as a whole and see if the parties had agreed on all material points and that often the party who ‘fired the last shot’ would prevail
•Acceptance
•Distinction between a counter-offer and a mere request for information/clarification
•Stevenson etc v McLean (1880) 5 QBD 346
–Defts offered to sell iron to clmts at lowest price of 40s per ton and to keep the offer open till Monday
–On Monday morning, clmts sent telegram: ‘please wire whether you would accept 40 for delivery over two months …”; defts did not reply
–Later same day, clmts sent telegram accepting the defts’ offer
–Defts had already sold the iron to 3rd party
–Held (Lush J): that clmt’s first telegram was merely an inquiry and not a counter-offer --- an inquiry that should have been answered and not treated as a rejection
–that defts’ attempted revocation of the offer after selling the iron to 3rd party was ineffective because it only came to clmts’ notice after clmt had already accepted the offer
–that, accordingly, clmts were entitled to damages for breach of contract
•Acceptance
•Acceptance must be communicated to the offeror
–General rule: acceptance is only effective when it is brought to the attention of the offeror
–Cf. per Lord Denning in Entores v Miles Far East Corpn [1955] 2 QB 327
•Oral statement drowned by over-flying aircraft
•Telephone line goes dead in a phone conversation in which acceptance was being made
•Acceptance
•Prescribed method of acceptance
•As a general rule, offerree must comply with the prescribed method, else there will be no contract
•If prescribed method is not mandatory, any other method of acceptance that is no less advantageous to the offeror may be sufficient
•Manchester Diocesan Council etc v Comm. & Gen. Inv. Ltd [1969] 3 All ER 1593
–Held: posting of acceptance of tender to defts’ surveyors address was sufficient, though tender form stated that such acceptance would be posted to the address given in the tender.
•Acceptance
•The ‘Postal Rule’
•If the post is the agreed or proper method of communicating acceptance, acceptance is complete when the letter of acceptance is posted
•“Where the circumstances are such that it must have been within the contemplation of the parties that, according to ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted.” per Lord Herschell in Henthorn v Fraser [1892] 2 Ch 27
•Acceptance
•The Postal rule
•Adams v Lindsell 106 ER 250
–Defts wrote to Clmts on 2 September offering to sell some wool; they expected an answer by 7th September
–Clmts received the offer on 5th September and posted their acceptance same day.
–On 8th September, defts sold the wool to a 3rd party
–On 9th September, clmts’ acceptance reached the defts
–Held: defts were liable to the clmts for breach of contract;
–that a contract had come into existence on 5th September when clmts posted their acceptance
•Acceptance
•The Postal Rule
•Acceptance properly sent by post is even valid to conclude a contract though it never arrives
•Household Fire etc v Grant (1879) 4 Ex D 216
–defts applied for shares in clmt company
–Clmt allotted the shares to deft and posted the letter of notice to him
–Deft never received the letter
–Held (Thesiger & Baggally LJJ): that there was a valid contract; acceptance was complete when the letter of allotment was posted and it was irrelevant that it was never received by the deft
–Bramwell LJ dissenting: there is no reason to the rule and it is arbitrary
•Acceptance
•Avoiding the Postal rule – by insisting on actual receipt of acceptance
•Holwell Securities v Hughes [1974] 1 WLR 155
–Defts granted an option to clmts to purchase some property
–Option was “exercisable by notice in writing … within six months”
–Within time, clmts wrote to give notice of the exercise of the option but the letter never reached the defts
–Held (Russell LJ): that the language used should be taken to expressly assert that the ordinary/normal rule requiring actual communication was to apply; the language was not consistent with the postal rule
–(Lawton LJ concurring): the postal rule does not apply in all cases where both parties expect the post to be used to communicate acceptance
–that the postal rule does not apply when the express terms of the offer specify that acceptance must reach the offeror
–that the postal rule probably does not apply if its application would produce manifest inconvenience and absurdity.
•Acceptance
•Instantaneous means of (tele)communication
•The postal rule does not apply; acceptance is communicated when ‘received’ by the offeror
•Entores v Miles Far East Corpn [1955] 2 QB 327
–English company received acceptance sent by telex by a Dutch company
–Held: the contract was made in England since the telex of acceptance was received in England
•Acceptance
•Instantaneous means of (tele)communication
•Brinkibon Ltd v Stahag Stahl GmbH [1983] 2 AC 34
–Telex of acceptance sent from London to Vienna
–Held: contract was made in Vienna where the acceptance was received
•What if the acceptance was not seen/’received’ immediately? For example, arrives out of office hours; error/default at recipient’s end; machines operated by 3rd parties etc?
•“No universal rule can cover all such cases; they must be resolved by reference to the intentions of the parties, by sound business practice and in some cases by a judgment where the risk should lie …” Per Lord Wilberforce (obiter)
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