Contract: Acceptance

Acceptance

Acceptance must take place whilst the offer is open. It must be an absolute and unqualified acceptance. Acceptance may take the form of words, spoken, or written or implied by conduct. It must be unqualified and precisely match the terms of the offer as seen in the case of Jones v Daniel.

R v Clarke [1927] (Australian Case): There was an offer of a reward to anyone who provided information to catch a killer. Clarke was arrested for the murder, in order to save himself he gave information on the true murderer. Clarke then tried to claim the reward. The courts held that his motive was not accepting the offer but rather to save himself and therefore he was not eligible to claim the reward.

Williams v Cowardine [1833]:  A leaflet was published by Cowardine’s family to find his killer. Williams lived with the murderer, she hated him, in order to get back at him she gave the information leading to his arrest and conviction. She then claimed the reward. The defence argued that her motive was relevant as she gave the information to rid herself of the man, not claim the reward. The courts held that the motive for the arrest was irrelevant.

Powell and Lee [1908]: An application to a board for a teaching role. She had no formal acceptance letter given to her. One of the interviewing panels, outside of the panel’s authority, told her that she had got the job, the panel did not formally notify her. Eventually the panel decided not to send an acceptance letter. She sued for breach of contract. He claim failed as she had not been formally told of her acceptance.

Brogden v Metropolitan Railway Company [1877]: Parties regularly dealt with one another, they wanted to be on a more regular footing, the railway company send them a contract, Brogden made changes to the contract, and he inserted an arbitration clause and sent it back to the railway company. The Clark at the railway company didn’t notice the change and put it away in his desk. Both parties then acted as though the contract was in existence. A dispute arose. Brogden argued that they never accepted his counter-offer. The courts held that there was acceptance via conduct.

Northern Foods v Focal Foods: Held the offer was accepted through the conduct of the continued delivery of the goods.

Acceptance must be made in the manner expressly or impliedly by the offeree

Felthouse v Bindley [1863]: An uncle offered to buy his nephews horse. He put in his letter ‘If I hear no more I will consider the horse mine at that price’. The nephew mentally accepted. The horse had been placed with an auctioneer, he told the auctioneer to withdraw the horse from sale. The auctioneer forgot and the horse was sold to a third party. The uncle sued the auctioneer under tort (conversion). There is only a claim if he can prove that this is his property. The courts held that the uncle had no contract as silence cannot amount to acceptance.

Errington v Errington [1952]: Held a promise of a house in return for their acts of instalments could not be revoked by him once the couple had embarked on performance of the act, but it would cease to bind him if they had left it incomplete and unperformed, which they have not done.

Acceptance must be unqualified

This means without stipulations for stipulations would amount to a counter offer and must conform exactly to the offer. This creates problems in the modern business world.

Butler Machine Tools v Excell – O-Corporation [1979]: Ex-Cell-O wished to purchase a machine from Butler. Butler sent out a quotation of £75,535 along with a copy of their standard terms of sale. The terms included a price variation clause and a term that the seller's terms would prevail over any terms submitted by a purchaser. The machine would be delivered in 10 months. Ex-Cell-O put in an order for the machine at the stated price and sent a set of their terms which did not include the price variation clause. The order contained an acknowledgement slip which required a signature by Butler and was to be returned to Ex-Cell-O. This slip stated that the contract would be subject to the terms stated overleaf. Butler duly signed the slip and returned it. The machines were then delivered and Butler sought to enforce the price variation clause and demanded an extra £2,893. Ex-Cell-O refused to pay. Held, the offer to sell the machine on terms provided by Butler was destroyed by the counter offer made by Ex-Cell-O. Therefore the price variation clause was not part of the contract. The contract was concluded on Ex-Cell-O's terms since Butler signed the acknowledgement slip accepting those terms. Where there is a battle of the forms whereby each party submits their own terms the last shot rule applies whereby a contract is concluded on the terms submitted by the party who is the last to communicate those terms before performance of the contract commences. 

Postal Rule

An offer has no effect until it reaches the offeree. Where an offer is made by post it is communicated when it reaches the offeree not when the letter is posted. Where an offer is made and accepted by letters the contract is made the moment the letter accepting the offer is posted even if it does not reach its destination. Revocation of an offer is communicated when the letter of revocation is received and read by the offeree. It is not enough to give the letter to some other person to post or even to hand it to the postman. It must be put into the hands of the postal authorities in the normal way.

Adams v Lindsell [1818]: The defendant wrote to the claimant offering to sell them some wool and asking for a reply ‘in the course of post’. The letter was delayed in the post. On receiving the letter the claimant posted a letter of acceptance the same day. However, due to the delay the defendant had assumed the claimant was not interested in the wool and sold it on to a third party. The claimant sued for breach of contract. Held, there was a valid contract which came into existence the moment the letter of acceptance was placed in the post box.

Entores v Miles Far East Corporation [1955]: A telex sent from Amsterdam to London accepting an offer was held to be effective only when it arrived in London, so the contract being made in England could be brought before the English courts.

Household Fire Insurance v Grant [1879]: Grant applied for shares in the Household Fire Insurance Company. The company allotted shares to him, they put his name on the register of shareholders. They wrote to him saying that the shares had been allotted to him, the letter was lost in the post. The company went bust, the liquidator notices that Grant had only partially paid for his shares and owes the company money. Grant alleges that there has been no acceptance of his offer and no contract exists. Grant lost the case as they had posted the letter of acceptance and the postal rules apply.

Henthorn v Fraser [1892]:  The claimant was based in Birkenhead he was made an offer in person in Liverpool. The offer was an offer to sell land. The defendant changed his mind and sent a letter withdrawing the offer but the claimant had already sent a letter accepting the offer by post. Held, the claimant was reasonable to presume that the post would be used as the claimant and the defendant lived in different towns.

Howell Securities v Hughes [1974]: The case involved the exercise of options to buy shares. The options had to be exercised by “notice in writing”. Does notice in writing mean that the postal rules apply? The court held, that notice in writing excluded the postal rules, actual notice must be given. Excluding the postal rules. The postal rules should not apply where it would lead to “manifest inconvenience and absurdity”.

Brinkibon Ltd v Stahag Stahl etc [1983]: The postal rules do not apply to instantaneous communications.

Re London and Northern Bank [1900]: In terms of the postal rule it is not good enough to give the postman, it must be given to the postal authorities.

Brimmes [1975]: Involved the withdrawal of an offer. A notice of a withdrawal of an offer was sent and received within office hours. Staff didn’t listen to the answer machine until the next day. They deemed to have accepted the offer before the withdrawal. The courts held that if the withdrawal in office hours then it should have been read and therefore there was no contract. The courts said it would be reasonable to presume that the message received on a machine in office hours would be dealt with by office staff.

Offers Conditional on Circumstances

Financings Ltd v Stimson [1962]: The defendant signed an "offer to buy" a car on hire-purchase from a finance company. The document had been given to him by the car dealer. The document had a clause which said that the agreement would not be binding until it had been accepted by the finance company. D paid the first instalment, insured the car and took it away. Being unhappy with its performance, he returned the car to the dealer and cancelled his insurance. The car was stolen from the dealers and damaged. Not knowing of this the finance company then accepted the written offer which had been sent to them. D refused to pay the charges and the Co sued him for breach of the hire purchase agreement. Held, D's offer was subject to an implied condition that the car should continue in its undamaged state and that on the failure of that condition, the offer lapsed.

Manchester Diocesan Council v Commercial Investments Ltd [1969]: The person who makes the offer can stipulate any form of acceptance, however, if it is only a prescribed method any other mode of acceptance no less disadvantageous will conclude the contract. In this case, he asked for an acceptance by return of post. Held, that does not exclusively mean a reply by post, you may reply by telegram or by a verbal message or by any other means “not later than a letter written and sent by post”.

Carlill v Carbolic Smoke Ball Company [1893]: An offer can be open to anybody willing to accept it. The defendants, Carbolic Smoke Ball Co placed an advertisement stating that if people purchased their product, used it as directed and still contracted influenza then they would award them £100. The claimant, Mrs Carlill, purchased the smoke balls, used them as directed and still contracted influenza and she wished to claim the £100. The defendants refused to pay the claimant the £100 as they claimed that this was not an offer but ‘mere puff’ used for marketing purposes. The Court of Appeal held that the advertisement was a unilateral offer which was made to everyone who purchased the smoke balls and used them as directed. If they then contracted influenza they would be eligible to claim the reward.

Tinn v Hoffman [1873]: P wrote to D asking for a price on 800 tons of iron. D offered the iron at 69s [69 shillings, or £3.45]per ton and asked for a reply "by return". It was conceded that since the offer was not in fact accepted by return of post there was no contract, but Honeyman J said obiter that a telegram or verbal message or any other means at least as fast as a letter written by return of post would have been sufficient.