What is the definition of acceptance?
unequivocal expression of consent to the proposal contained in the offer and has the effect of immediately binding both parties to the contract. The contract cannot be varied after that and neither party can abandon their obligations.
- Bilateral: making of a return promise (on the faith of the offer)
- Unilateral: doing of the requested act (on the faith of the offer)
What are the three aspects to the assent?
- Purported acceptance must be on the faith of the offer
- Offer and acceptance must correspond precisely (“mirror image” rule)
- Acceptance must actually and unequivocally be communicated to the offeror
Can say there is a 4th criteria - must be made by an appropriate method
A mirror image approach requires the acceptance to mirror the offer. If a purported acceptance deviates from the terms of offer in any way, then a binding contract is unlikely to have concluded.
- Counter offer killing original offer
- Battle of forms
Counter-offer
- An offeree whose response qualifies the offer may be regarded as having made a counter-offer.
- A counter-offer terminates the original offer and there no offers exist thereafter for acceptance.
However, the offeree retains the power to accept the original offer if…
- The original offeror’s rejection of the counter offer includes a renewed offer on the original terms;
- The offeree’s response was not a counter-offer but merely a request for information/clarification about the availability of better terms.
Hyde v. Wrench (1840)
- D offered to sell his farm for £1000 but P said that he would only pay £950, which was rejected by D. P then agreed to pay £1000 but D also rejected this.
- HELD: The proposal of £950 amounted to a counter-offer which terminated the original offer and hence P can no longer accept the offer.
Stevenson, Jaques & Co v. McLean (1880)
- P inquired with D for further information about the availability of better terms. D then sold the goods to a third party without responding to P. Hearing nothing; P accepted the original offer by telegram before D’s revocation reached P.
- HELD: P merely bade an inquiry and request for information and not a counter-offer, and thus could bind D with his subsequent acceptance.
battle of forms
- If parties purport to conclude a contract by an exchange of forms containing incompatible terms, then the conventional answer is that it depends on which party “fired the last shot”.
- The party who presents his terms last without provoking objection from the recipient who then acts on the contract succeeds in binding the recipient to his terms.
Brogden v Metropolitan Railway Co (1876-1877)
- D sent P a draft agreement for the supply of coal. P amended the agreement and returned it to D. Nothing else was done to formalise the agreement. D ordered coal for P, supplied and paid for.
- HELD: P’s amendment is counter-offer which D accepted by conduct when D placed the order.
Butler v Ex-Cell-O-Corporation (England) Ltd (1979)
- P quoted the price of goods for D on P’s terms with a price variation clause. D then placed an order using D’s own terms without the price variation clause. P signed and returned the form with D’s terms but attached a letter stating that they were supplying the goods on their original terms.
- HELD: P’s original offer was met by D’s counter offer, which P accepted when P signed it. The accompanying letter was not a counter-offer, but simply a means of identifying the order.
criticism of the battle of forms approach
allows courts to find a contract even though objectively interpreted, no agreement was ever reached. Furthermore, it may not fit what actually happens. Lastly, it may produce unjust results since it’s a matter of chance which party get’s the “last shot” and the solution will be an “all or nothing” on one party’s terms.
what is meant by the requirement of nexus between offer and acceptance?
a valid acceptance must be made to a known offer. An acceptance is therefore ineffective if done without knowledge of the offer, evident in cases of cross-offers and offers of rewards.
Tinn v. Hoffman (1893)
- D wrote to P offering to sell him iron. On the same day, P wrote to D offering to buy on the same terms.
- HELD: These are simultaneous cross-offers and are made in ignorance with each other. They do not amount to a contract and will not bind the parties unless or until one is further accepted.
rewards and nexus
A person who performs an act in ignorance that a reward has been offered for it cannot claim a contractual right to the reward since there was no nexus.
R v. Clarke (1927)
- A reward was offered for information leading to the arrest of certain murderers. D disclosed information without the intention of claiming the award.
- HELD: D cannot claim the reward later since he had no intention to claim it when he performed the act. There was no nexus between the offer of reward and his acceptance in disclosing information.
Gibbons v Proctor (1891)
HELD: Police officer was allowed to claim a reward. Although he was ignorant of it when he gave information to another fellow officer, he knew of it by the time the information reached the superintendent after passing through other hands.
Williams v Carwardine (1833)
HELD: Allowed the informant to claim cause she “must have known” of the reward even though she did not act from the desire to receive the reward.
why are courts are willing to find for meritorious claimants (unlike in R v. Clarke where the claimant was a criminal)?
the offeror has received the benefits he promised to pay for, and claimants who perform beneficial acts should also be encouraged and rewarded for doing so.
methods of acceptance
- A valid acceptance must be made in an appropriate way, and the mode of acceptance may be stipulated in the offer.
- If it is not, any words or conduct that objectively evinces the offeree’s intention to accept is enough (question of fact).
prescribed modes of acceptance
Stipulated modes of acceptance are generally just permissive, not mandatory.
Manchester Diocesan Council for Education v. Commercial and General Investments Ltd (1970)
- P invited tenders and started that a letter will be sent to the address on the successful tender to inform of acceptance. When P accepted D’s tender, he sent it to D’s surveyor instead of to the address.
- HELD: Mode of acceptance is not the sole permitted means of acceptance since D was not disadvantaged by having the notification sent to his surveyor. Furthermore, since it was P who made the stipulation, they could waive strict compliance with it anyway.
acceptance cannot be inferred from the offeree’s silence because
- Silence is generally ambiguous – it is often difficult to infer an intention to accept from it.
- Acceptance must be communicated to the offeror so that he knows when the contract is formed and binding.
- This will prevent an offeror from exploiting the offeree’s inertia.
Felthouse v. Bindley (1862)
- P offered to buy his nephew’s horse, adding that if he hears no more about him, he would consider the horse to be his at a price. The nephew did not answer the letter but told D, the auctioneer that the horse had been sold. D mistakenly sold the horse and P sued D for conversion.
- HELD: P’s offer to buy the horse cannot be accepted by his nephew’s silence.
communication of acceptance
- General rule is that the offeree must communicate his acceptance to the offeror. Only at that moment does the offeror know that he is bound by the contract and each party knows that they can safely rely on the existence of the contract.
- This prevents undue hardship to the offeror who could be bound even without knowing that his offer has been accepted.
