ACCEPTANCE

An acceptance is a final and unqualified expression of assent to the terms of an offer. Unqualified acceptance If the offeree attempts to vary the terms offered this will be treated as a counter-offer. However, a counter-offer may be accepted by the original offeror in which case a binding contract will be created.

Case: Butter Machine Co v Ex-Cell-O Corp. Facts : The plaintiffs offered to supply a machine tool to the defendants for 75,535. However, the quotation included a term which would entitle the sellers to increase this price (price-variation clause). The defendants accepted the offer on their own standard terms which did not provide for any variation of their quoted price. The plaintiffs acknowledged the order. When the machine was delivered, the plaintiffs claimed an extra 2892 which the defendants refused to pay.
Held: The Court of Appeal held that the defendants had made a counter-offer which had been accepted by the plaintiffs. The defendants terms governed the contract. The plaintiffs action to recover the increase in price, therefore, failed. Note: A request for information is not considered as a counter-offer and will not reject an offer. 1 Communication of acceptance The general rule is that an acceptance has no effect until communicated to the offeror, either by the offeree himself or by someone authorized by the offeree.

Case: Powell v Lee Facts: The plaintiff applied for a post as a headmaster and after a series of interviews the school management passed a resolution appointing him; however, no decision was made as to how the appointment was to be communicated. Without authorisation, the plaintiff was informed of the appointment by one of the managers. Later, it was decided to give the post to someone else. The plaintiff sued for breach of contract.
Held: He failed in his action for breach of contract since communication of acceptance was unauthorised, there was no valid agreement and hence no contract. 2 Effect of silence An acceptance may take any form. It can be given orally or in writing but silence cannot normally amount to an acceptance. Case: Felthouse v Bindley Facts: The plaintiff had been negotiating to buy his nephews horse. He eventually wrote to his nephew: if I hear no more about him, I shall consider the horse is mine at 30 15s. The nephew did not reply to this letter but he did ask the auctioneer, who had been engaged to sell all his farming, to keep the horse out of the sale as he had sold it to his uncle. The auctioneer by mistake included the horse in the sale and was sued by the uncle in the tort of conversion. The basis of the uncles claim was that the auctioneer had sold his property. Held: The court held that the uncle had no claim. Although the nephew had mentally accepted the offer, some form of positive action was required for a valid acceptance. Since there was no contract between the uncle and the nephew, owner ship of the horse had not passed to the uncle. Comment: This case established the offerees silence or failure to act cannot constitute a valid acceptance.

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Acceptance by conduct

Felthouse v Bindley would seem to suggest that only an oral or written acceptance will be valid. However, acceptance may be implied from a persons conduct.

Case: Brogden v Metropolitan Railway Co. Facts: Brogden had supplied the railway company with coal for many years without the benefit of a formal agreement. Eventually the parties decided to put their relationship on a firmer footing. A draft agreement was drawn up by the companys agent and sent to Brogden. Brogden filled in some blanks, including the name of an arbitrator, marked it as approved and returned it to the companys agent who put it in his drawer. Coal was ordered and supplied in accordance with the terms of the agreement. However, a dispute arose between the parties and brogden refused to supply to supply the coal to the company, denying the existence of a binding contract between them.
Held: The House of Lords held that a contract had been concluded. Brogdens amendments to the draft agreement amounted to an offer which was accepted by the company either when the first order was placed under the terms of the agreement or at the latest when the coal was supplied. By their conduct the parties had indicated their approval of the agreement. In reward cases similarly acceptance is by conduct, while in unilateral contract performing prescribed acts will amount to acceptance. 4 Prescribed mode of communication Where the offeror state that acceptance must be in a particular mode, the offerors wishes should be respected. However unless he specifies that the prescribed mode is the only method of acceptance, then an equally expeditious mode would constitute a valid acceptance.

Case: Yates Building Co Ltd v R. J. Pulleyn & Sons (York) Ltd Facts: The offer called for acceptance by registered or recorded delivery letter. The offeree sent an ordinary letter which arrived without delay Held: The offeror had suffered no disadvantage and had not stipulated that acceptance must be made in this way only. The acceptance was valid. 5 The Postal Rule

Where the anticipated method of communication between the parties to accept is post, then the general rule is that acceptance is effective when the letter of acceptance is posted ( Adams v Lindsell ). Provided the letter is properly stamped, addressed and posted, the contract is formed on posting, even if the letter is delayed or never reaches its destination. Note: A letter is posted when it is in the control of the Post Office, or one of its employees authorised to receive letters: Handing a letter to a postman is not posting. An acceptance by telegram similarly takes effect when the telegram is communicated to a person authorised to receive it for transmission to the addressee; and it seems that this rule apply to tele-messages which have replaced inland telegrams. Clearly the postal rule are a potential problem for an offeror: if the letter of acceptance is lost in the post, he may be unaware that a binding contract has been formed. An offeror can protect himself by specifically stating that the acceptance is only complete when received on or before a certain date

Case: Holwell Securities Ltd v Hughes. Facts: Hughes granted to the plaintiff an option to purchase land to be exercised by notice in writing. A letter giving notice of the exercise of the option was lost in the post . Held: the words notice in writing must mean notice actually received by the vendor: hence the notice had not been given to accept the offer (the option).

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Intention to use the post for communicating acceptance may be deduced from the circumstances without express statement to the effect. Case: Household Fire & Carriage Accident Insurance Co v Grant Facts: Grant deposited an application for shares at the plaintiff Cos agent in Swansea with the intention that it should be posted to the company in London. A letter of allotment was posted but Grant never received it. The company went into liquidation and as a shareholder Grant was asked to contribute the amount still outstanding on the shares he held. Held: The Court of Appeal held that Grant was a shareholder of the Co. A contract was formed when the letter of allotment (acceptance) was posted. Note: 1. The postal rules have been applied to acceptances by telegram but not to more instantaneous methods of communication such as telex and telephone.

Case: Entores v Miles Far East Corp. Facts: The plaintiffs, a London company, made an offer to the defendants agents in Amsterdam by means of a Telex message. The Dutch agents accepted the offer by the same method. The plaintiffs later alleged that that the defendants had broken their contract and wished to serve a writ on them, which they could do if the contract was made in England.
Held: The Court of Appeal held in favour of the plaintiffs. The decision of the court was expressed as follows: So far as Telex messages are concerned, though the despatch and receipt of a message is not completely instantaneous, the parties are to all intents and purposes in each others presence just as if they were in telephonic communication, and I can see no reason for departing from the general rule that there is no binding contract until notice of the acceptance is received by the offeror. That being so, and since the offer was made by the plaintiffs in London and notification of the acceptance was received by them in London, the contract resulting therefrom was made in London. 2. The postal rules only apply to the communication of acceptances: offers and revocation of offers must be communicated to be effective.

Conclusion:
Acceptance is necessary for the formation of a contract. Once the offeree has accepted the terms offered, a contract comes into effect. Both parties are bound: the offeror can no longer withdraw their offer, nor can the offeree withdraw their acceptance. (i) Acceptance must correspond with the terms of the offer. Thus, the offeree must not seek to introduce new contractual terms into their acceptance (Neale v Merrett (1930)). (ii) A counter-offer does not constitute acceptance Hyde v Wrench. Analogously, a conditional acceptance cannot create a contract relationship (Winn v Bull (1877)). (iii) Acceptance may be in the form of express words, either oral or written. Alternatively acceptance may be implied from conduct (Brogden v Metropolitan Railway Co (1877). (iv) Generally, acceptance must be communicated to the offeror. Consequently, silence cannot amount to acceptance (Felthouse v Bindley (1863)). (v) Communication of acceptance is not necessary, however, where the offeror has waived the right to receive communication. Thus in unilateral contracts, such as Carlill v Carbolic Smoke Ball Co (1893), acceptance occurred when the offeree performed the required act. Thus, in the Carlill case, Mrs Carlill did not have to inform the Smoke Ball Co that she had used their treatment.

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