Acceptance

Notes: Acceptanceacceptance.ppt  Contract Notescontractnotesmhage-1.doc

Acceptance is the final expression of agreement (assent) to the terms of an offer.

There are six key points regarding a valid acceptance of an offer:

 

 

 

  1. Once an offer is accepted there is a contract between the person making the offer and the person accepting it, provided the other essentials of formation of consideration and legal intention are present.


  2. The acceptance has to be positive and unqualified. In other words it is responding to the offer by saying ‘Yes' and not ‘Yes, but' or ‘Yes, if'.


  3. Acceptance can be by conduct, in other words by doing something


  4. However, it cannot usually be by doing nothing.


  5. Acceptance must usually be communicated to the person making the offer.

 

 

 

Methods of communicating an acceptance of an offer

 

 

 

There are four main methods of communicating acceptance:

 

  1. Words/spoken acceptance: A verbal statement that is clearly heard and understood fulfils the requirements.
  2. Conduct: In general silence or inaction cannot be an acceptance as some positive act is needed. Positive conduct can be acceptance where that is a method of communication set out in the offer. This can be implied in the offer, for example, starting to use goods sent on approval; see Carlill v Carbolic smoke Ball Co.
  3. Postal rules: The postal rules developed during the 19th century as the postal service became reliable and the main means of communication between businesses that were at a distance from each other. The following rules were set out in the case of Adams v Lindsell:

    a. The postal rules only apply to letters of acceptance, not to offers, revocation of offers or counter- offers.

    b.The postal rules only apply if the post is the usual method of communication between the parties involved in the contract or is specifically stated as the only or an accepted method of communication of acceptance.

    c.Acceptance takes place when a correctly stamped and addressed letter is posted (the principle is based on the fact that once a letter is posted it cannot be got back).

    d.The claimant must be able to prove the letter was posted. This is reflected in a certificate of posting from a post office or a signed statement by the person putting the letter in the letterbox.

  4. Electronic and instantaneous forms of communication: e.g. fax, e-mail. It is accepted that telephone is instant verbal communication, just as though the parties were in each other's presence. If the call was not heard because of a fault it appears there would be no communication of acceptance. This is also the law when communication of acceptance is by telex or fax. For all other methods of electronic communications they are legally received when the person to whom they are addressed are able to access them. This covers all contracts made with Internet companies. IF THE SITUATION IS A PHONE CALL THIS IS TREATED JUST LIKE A FACE TO FACE CONVERSATION. So acceptance takes place when the person accepting the offer tells the person making the offer clearly (Entores v Miles).

Email acceptance: Thomas v BPE Solicitors (A Firm): There is no authority to say whether an email acceptance is effective when it arrives or at the time when the offeree could reasonably have been expected to read it. The question must be resolved by reference to the intentions of the parties, sound business practice and in some cases by where the risks should lie. In the present case, the email acceptance of a solicitor’s undertaking sent at 1800 on Friday evening was effective upon its receipt soon afterwards. In the context of a corporate transaction, 1800 was not outside working hours and the email was available to be read then despite the fact that the recipient had gone home.

Method of communication

Case Name/Act of Parliament

Facts

Legal point

Conduct

Felthouse v Bindley

Sale of a horse was being negotiated by letter and message. Eventually Felthouse wrote saying that if he heard nothing further he would consider the horse sold to him for a stated price.

A statement that if nothing further was heard then a contract would be made was not sufficient to be the positive act required for acceptance.

The court decided that this was just another offer that the seller could accept or reject and was not an acceptance, as acceptance required positive conduct.

Method of communication

Case Name/Act of Parliament

Facts

Legal point

By Post

 

Adams v Lindsell

The facts:

  • 2 September: Lindsell wrote to Adams offering to sell some wool asking for a reply ‘in the course of post’.
  • 5 September: Adams received the letter and sent a letter of acceptance.
  • 8 September: Lindsell sold the wool to someone else.
  • 9 September: Lindsell received Adams' acceptance letter.

The court set out the postal rules and decided that the offer for the sale of the wool had been accepted by Lindsell on 5 September when Adams posted his letter of acceptance and there was a contract. Postal rules:

  1. The postal rules only apply to letters of acceptance, not to offers, revocation of offers or counter- offers.
  2. The postal rules only apply if the post is the usual method of communication between the parties involved in the contract or is specifically stated as the only or an accepted method of communication of acceptance.
  3. Acceptance takes place when a correctly stamped and addressed letter is posted (the principle is based on the fact that once a letter is posted it cannot be got back).
  4. The claimant must be able to prove the letter was posted. This is reflected in a certificate of posting from a post office or a signed statement by the person putting the letter in the letter box.

Electronic and instantaneous

communication

Entores v Miles Far East Corporation

In this case the question was when a telex machine communication was made. The case also resolved the rules on phone acceptance.

The court decided that the acceptance by telex took place when it was sent, as long as the receiver was able to receive the message. This is the same for fax, e-mail(but see Thomas) and text.

 

For phone calls acceptance operates in the same way as face to face contact, ie as long as there is clear acceptance straight away.

Acceptance by the offer or a reward

Carlill v Carbolic smoke Ball Co

The offer was made to the whole world through the advert – called a unilateral offer. By following the instructions for the product this was the acceptance of the offer by the C by being rewarded with a protection from influenza.

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