UNIT 4

Acceptance
2.4.1 Objectives

At the end of this Unit you should be able to:

Define what the term acceptance means;

Describe the characteristics of an acceptance;

Explain the general rule and exceptions regarding the communication of

acceptance; and

Distinguish between an acceptance, a counter offer and a request for

information.

2.4.2 Reading

Prescribed Reading:

Corrin Care pp 40-50

Poole pp36-63

Srivastava DK, Case Note on Tonolei Development Corporation Ltd v Lucas

Waka (1983) 10 (1&2) MLJ 175 (PLM)

OShea and Skeahan Acceptance of Postal Offers by E-Mail How Far should
the Postal Rule Extend? (1997) 13 QUT Law Journal 247 (on Reserve Laucala)

Prescribed Cases:

Rasul v Native Land Trust Board, unreported, Supreme Court, Fiji Islands, Civ
Cas 91/1975, 17 June 1977 (PLM)

Fielder Industries (SI) Ltd v Solwest Trading Company Limited, unreported, High
Court, Solomon Islands, cc 153/93, 21 February 1996 (PLM)

Further Reading:

Furmston pp37 - 44 & 47 57

2.4.3 Definition
Beatson defines acceptance as:

Acceptance of an offer is the expression, by words or conduct, of assent to the

terms of the offer in the manner prescribed or indicated by the offeror.

(Beatson, J, Ansons Law of Contract, 27th ed, 1998, Oxford University Press, p38)

Stone defines acceptance more simply stating that acceptance is:

an unconditional assent to a definite offer i[i]

?Define the term acceptance in your own words

2.4.4 Offer and Acceptance must Correspond

An acceptance must mirror the terms of the offer. If an offerees response to the offeror
does not match the offer he or she may have made a counter-offer.

A counter-offer is a response to an offer that introduces new terms or conditions.

Example

Sally offers to buy 3 sacks of flour from Sam for 2000v. Sam agrees but requires Sally
to pay 2200v.

This is a counter-offer. Sam can no longer accept Sallys original offer and for a
contract to be formed Sally needs to accept Sams offer.

? Think of your own example of someone making a counter-offer.

2.4.5 Knowledge of an offer required

Acceptance requires the offeree to be aware of the offer and of their acceptance of it.
Ignorance is not enough to amount to acceptance. Gibbons v Proctor (1891) 64 LT 594,
Poole 41 provides an exception to this rule. However, this decision has not been
followed in any later case, and must be regarded as being of doubtful authority.

2.4.6 Motive for Accepting an Offer

Another issue arises where the offeree when performing an act in a unilateral contract
has previously heard of the offer, but has another motive in performing the action apart
from accepting the offer.
In the Australian case of R v Clarke [1927] 40 CLR 227, Poole 41 it was held that a
person who had known of the offer, but was at the same time acting purely to avoid
danger to himself, should be treated as acting in ignorance of the offer. On the other
hand, in Williams v Cowardine [1833] 5 C&P 566, Poole 41 it was held that acting for
mixed motives, did not preclude a valid acceptance of an offer. Therefore, there is no
fixed rule on this point. Although, most legal theorists hold that the motivation of the
offeree in accepting the offer is irrelevant.

2.4.7 Communication of Acceptance

The general rule is that an acceptance must be communicated either by the offeree or
someone on behalf of the offeree. To be effective the offeree must accept by the
method stipulated by the offeror. If no method of acceptance is stipulated, the offeree
can accept in a reasonable manner. This may include the acceptance being made in a
written or oral form or by some form of conduct. All of which could be delivered to the
offeror in person, by post, or by some other technological means such as telephone,
telex, fax or email.

? Read Srivastava DK, Case Note on Tonolei Development Corporation Ltd v

Lucas Waka (1983) 10 (1&2) MLJ 175. In this case was the placing of an
acceptance letter on the desk of the Ministers personal secretary sufficient
communication of acceptance?

ANSWER

An exception to the need for communication is where the offeror either expressly or
implicitly waives the requirement for communication. In these situations an act or
forbearance will suffice as an indication that a party wishes to accept the offer. The act
or forbearance required will usually be stipulated by the offeror. Carlill v Carbolic Smoke
Ball Company is an example of a case that contains an implied waiver of the need to
communicate acceptance.

? What amounted to the acceptance in Carlill?

ANSWER

? Re-read Bowen LJs judgment in Carlill focussing on his example about the
advertisement for the lost dog. This example highlights the
unreasonableness of a person having to notify an advertiser of the
intention to accept in a unilateral offer.

Leading on from this point it can be seen that Carlill is also an authority for the
proposition that when the offer is unilateral the need for communication will be waived
unless there has been an express indication that notification is required.
2.4.8 Silence as Communication

However, as held in Felthouse v Bindley (1862) 142 ER 1037, Poole 44, although the
offeror can waive the requirement for communication he or she cannot completely waive
the requirement of some outward manifestation of consent. This is connected to the
point that an offeree must be aware of the offer and knowingly accept it. If silence alone
was enough the requirement of knowledge and intention to accept could be bypassed.

Pause now to read Felthouse v Bindley. As you have read in the case, the question
was whether silence could amount to consent. What was the main policy reason behind
the courts finding that the nephew could not accept by silence?

ANSWER

Therefore, after Felthouse v Bindley an offeree can only have a contract enforced
against him or her where they have remained silent if:

(i) the offeror has stated that silence would indicate acceptance; and

(ii) if the party has displayed some outward manifestation of consent.

Interestingly, the court in Felthouse v Bindleys application of this law has been criticised
as many see that the nephew did perform an action that amounted to an outward
manifestation of consent.

? What was the potential outward manifestation of consent by the nephew in

Felthouse v Bindley?

ANSWER

? Note that this rule in Felthouse v Bindley is only described as applying

when the offeror attempts to enforce the contract against the offeree.
Consider whether you think that it would be fair for the offeree to enforce
the contract against the offeror if he or she had followed the instruction to
remain silent. Be prepared to discuss this in your workshop.

One situation which sometimes occurs involving an offeror providing that silence is
enough is unsolicited goods. This situation arises, for example, when unsolicited goods
are sent through the mail with a statement that unless they are returned they must be
paid for. In Fiji Islands, ss71-73 of the Fair Trading Decree 1992, provide that, in certain
circumstances, unsolicited goods may be treated as a gift, and that threats and
demands may render the supplier guilty of a criminal offence. The Unsolicited Goods
and Services Act 1971(UK), which makes similar provision may apply in Vanuatu and
Tonga.
2.4.9 The Postal Acceptance Rule

The postal acceptance rule is another exception to the rule that acceptance is not
communicated until it is received by the offeror. This rule was established in Adams v
Lindsell (1818) 106 ER 250 (KB), Poole 44. Under this rule, if the post is the proper
method to communicate acceptance, then the acceptance is deemed complete as soon
as the offeree posts the letter.

Note that this rule only applies to posted acceptances. It does not apply to the
revocation of offers that are posted.

? Consider Srivastava DK, Case Note on Tonolei Development Corporation

Ltd v Lucas Waka (1983) 10 (1&2) MLJ 175. In this case Pratt J incorrectly
states the postal acceptance rule. Make sure you can identify how the
judge misstated the postal acceptance rule.

With the advance of technology the issue has been raised whether telex, fax and email
acceptances are also subject to the postal acceptance rule. The developing law in this
area has indicated that this is not the case. Instead, it appears that when an
acceptance is instantaneous, in comparison to post which can often take several days,
actual communication is required. Pause now to read OShea and Skeahan,
Acceptance of Postal Offers by E-Mail How Far should the Postal Rule Extend?
(1997) 13 QUT Law Journal 247.

2.4.10 Requests for Information

A request for information may often appear similar to an acceptance or a counter-offer

but it is quite distinct. A request for information neither accepts the offer nor suggests
new terms, but attempts to clarify the terms of the contract.

In comparison to a counter-offer, a request for information has no effect on the original

offer.

Example

Jo offers to sell Isaac his video player. Isaac asks whether cash is required or whether
a cheque is acceptable.

2.4.11 Retraction of Acceptance

As soon as an acceptance is made, providing the legal requirements of a contract are

present, both parties are bound. Therefore, generally retraction or revocation of an
acceptance will be impossible. However, this general rule has been modified in relation
to certain types of consumer contracts, where it has been deemed desirable that the
consumer should have a cooling off period following the formation of the contract. For
example, the Door to Door Sales Act 1967 (NZ) which applies in the Tokelau Islands.

? SELF ASSESSMENT

1. Joseph offers to buy Tasis jacket for 2000v. Tasi thinks it sounds like a good deal.
He checks though whether Joseph means his red or blue jacket.

Has Tasi accepted Josephs offer? If not, why not?

2. Later Joseph offers to buy Tasis sandals for 500v. Tasi says yes but only if
Joseph pays 600v. Joseph says no. Tasi then says okay, I accept your original
offer. Is there valid offer and acceptance in this example? If not, why not?

3. Sally writes to Tom asking him if he would like a job gardening at her house. Tom
receives the letter on a Monday and decides to take the job. He writes a letter to
Sally accepting the job and posts it at the post office on Tuesday. Meanwhile, on
Tuesday night Sallys son comes home from university and she realises that he
could do the gardening. That night Sally writes to Tom revoking her offer, she
posts the letter on Wednesday before she receives Toms acceptance. Is there a
valid revocation in this example? What if Sally had said in her letter that Tom
should ring and tell her whether or not he wanted the job?

4. Raoul writes a letter to Tana offering to sell him 100 shares in his company for
10,000v. He says that if he doesnt hear from Tana by that Friday he will assume
Tana agrees. Tana receives the letter from Raoul on Wednesday and does
nothing. Has Tana accepted Raouls offer? Would it make any difference if Tana
had gone to the bank and got out 10,000v?

5. Think back to the case of Donley Beti v Peter Aufiu, unreported, High Court,
Solomon Islands, cc170/90, 9 May 1991. Why was there no acceptance in this
case?
i