#4604 - Acceptance - GDL Contract Law

Requirements:

• Acceptance must be unqualified

• Acceptance must be unqualified correspond exactly with terms of the offer : Hyde v Wrench – “the mirror image rule” (counter-offer: Hyde killed original offer when he offered 950 rather than 1000)

• Examination of the communication btw the parties

  • Court will examine whether at any one time, one party may be deemed to have assented to all the terms, express and implied, of a firm offer by another party

  • Objective test – Smith v Hughes

• Must be made in response to the offer

• No valid acceptance can be made by someone who is not an offeree: Boulton v Jones

• R v Clarke : offeree must act on the faith of /in reliance upon the offer – no valid contract if offeree did not know of the offer when they performed the act (unilateral contract)

• When a unilateral offer is made to the world at large – valid acceptance can be by anyone with notice of the offer – their motivation for performing the act is irrelevant

  • Williams v Carwardine

    • Williams was dying + feared the possibility of eternal damnation unless she confessed her sin

    • She knew who had killed Carwadine + also knew of 20 reward for information

    • Held – she was entitled to reward despite ulterior motive

• Gibbons v Proctor – Seems like exception – but isn’t

  • Handbills distributed 29 May offering reward money for information leading to arrest

  • Before he knew of reward Gibbons had passed information

  • One of his ‘agents’ informed the Superintendent after the distribution

  • Gibbons was entitled to reward – ‘agents’ – info reaching Superintendent is acceptance of the offer –at which point Gibbons did know about the offer

• Criticism of the rule – can penalise an individual who gives information out of moral duty – whilst rewarding those who do it for monetary reward + may allow offeror to refuse legal consequence of his offer

• Acceptance must be communicated

• Applies from the moment it is communicated – mental assent is insufficient

• Offeror cannot stipulate that he will take silence as acceptance

• Felthouse v Bindley: F offered to buy his nephew’s horse – wrote ‘If I hear no more about him. I consider the horse mine at 30 15s’ – nephew didn’t reply – there was no contract (although by telling the auctioneer that it was sold – acceptance by conduct?) (no written evidence of the contract which was required at the time under the Statute of Frauds 1677)

  • Rule that silence cannot amount to acceptance makes sense because otherwise the offeror would not know if they were bound – places unnecessary burden of offeror

  • Cannot impose positive obligation on the offeree to reject the offer

• Communication by conduct

  • Some occasions where silence constitutes acceptance if it can be discerned from conduct (Taylor v Allen)

  • Brogden v Metropolitan Railway Company: Counter offer accepted by conduct

    • Appellant had supplied coal for a long time to the defendant – they decided to have a more-long term agreement – the appellant approved a draft – sent it to the defendant who merely signed it – acceptance by conduct

    • Parties commenced performance of the agreement which HL interpreted as an acceptance by conduct

  • Intense Investments Ltd v Development Ventures - lender’s action of transferring 340,000 in loan monies to the borrower was deemed sufficient conduct to constitute acceptance of the repayment terms offered by the borrower

• Third party communication of acceptance

  • Can be accepted by third parties – where they inform the offeror of the fact of acceptance – but only with the authority of the offeree (Powell v Lee)

Exceptions to the rule of communication

• Unilateral Contracts

  • Need for communication waived /implied in conduct – Carlill v Carbolic Smoke Ball Co. – advert amounted to an offer open to acceptance

  • Daulia Ltd v Four Millbank Nominees acceptance requires complete performance – offeror may revoke at any time up to the point it has been fully performed – but implied obligation not to prevent the performance

• Conduct of the offeror

  • If it is the offeror’s own fault that he didn’t receive acceptance

  • E.g. ‘a telex of acceptance is sent during office hours but is simply not read by anyone in the offeror’s office when it is there transcribed on his machine’ – The Brimnes

  • Or – Entores v Miles Far East Corp – ‘if the ink on the teleprinter fails at the receiving end, but the clerk does not ask for the message to be repeated’ – offeror may be deemed to have received communication

• The postal rule

• Adams v Lindshell: where post is the mode of acceptance, then acceptance occurs as soon as the letter is posted

• Posted when it is put in a letter box or given to an employee of the Post Office who is authorised to deliver mail (Re London and Northern Bank ex p Jones)

• Henthorn v Fraser: F (representing building society) offered in writing to sell certain houses to H – offer open for 14 days – H received offer in person – the next day the building society posted a letter to H revoking the offer (at midday) – but at 1550 H posted a letter to the society accepting offer - 1700 H received the society’s revocation. Held – contract was made at 1550 when H posted his letter of acceptance

• Household Fire and Carriage Accident Insurance Co v Grant: rule still applied if acceptance is delayed/lost in the post, as long as there is no fault on the part of the offeree

• Hpwever: rule may be displaced if acceptance is incorrectly addressed (Getreide-Import Gesellschaft v Contimar )

  • Misdirected acceptance takes effect at the time which is least favourable to the party responsible for the misdirection

• Henthorn v Fraser: rule only applies where it was contemplated that post would be used and where it is reasonable to use post – not where there is an implied condition that prompt acceptance is required (as was the case in Quendauaine v Cole)

• Rule will not be applied where it would lead to a ‘a manifest inconvenience and absurdity’ – Holwell Securities v Hughes

  • Ousting the postal rule:

    • Open to the offeror to redress imbalance of the postal rule by requiring actual communication, so he will only be bound if the posted acceptance reaches him, not the moment it is properly posted

  • Household Fire Insurance v Grant when he stated that the postal rule could be avoided by the prudent offeror saying ‘your answer by post is only to bind if it reaches me’

  • Holwell Securities v Hughes: plaintiff granted an option by the defendant ‘exercisable by notice in writing to the defendant at any time within six months from the date hereof’

    • Hughes offers Holwell an option contract (mini contracts – parties contracting to enter into next contract) to purchase a property – said that ‘acceptance will bind me on notice’

    • Holwell gave notice of exercise but it didn’t arrive – sought specific performance of the option agreement

    • HELD: option had not been validly exercised because actual communication was required by the use of the phrase ‘by notice…to’

  • Byrne v Van Tienhoven

    • Shows problem of postal rule

    • Cardiff/New York – Byrne in Cardiff – send offer to NY on ship – 8 days letter change mind and send letter of revocation - but in the meantime VT send telegraph of acceptance – contract stood

• Revocation of postal acceptance

  • There has been discussion of whether a postal acceptance can be revoked before it has reached the offeror – this seems to be against the principle of the postal rule

  • Gives the offeree the best of both worlds – can post an acceptance and then change their mind

  • Scottish authority - Dunmore v Alexander suggests that this was possible – but commonwealth authorities (Weenkheimv Arndt) say there is no scope for such a rule

  • Dunmore v Alexander disproved by later Scottish case – Thompson v James

  • Can they revoke offer before acceptance reaches offeror? – seems to be vs. the postal rule

Instantaneous communications

• When an acceptance is made by instantaneous mode of communication – actual communication required and postal rule doesn’t apply - acceptance by telex/telephone – offeree will know at once that the acceptance hasn’t been communicate and will be able to make a new communication (not like post where you cannot tell it has been misplaced)

• Entores v Miles Far East Corp: “The receipt rule” (Lord Denning)

  • Used...