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Acceptance

Previous: Offers

Acceptance is the absolute and unconditional assent to the offeror’s offer or proposal and is the last step in forming a contract. It must be demonstrated, though it need not be verbal; it must not be done in private, the other person must know of it and if the offeree does not intend to accept the offer, acceptance may not be claimed.

An acceptance with new terms is merely a counter offer, and does not constitute acceptance, as was declared in Jones v Daniel [1894]. In addition to this, if an offer is rejected, it cannot then be later accepted: an offer is killed by rejection. This was declared in Hyde v Wrench [1840]. Furthermore, as was found in Tin v Hoffman & Co [1873], two identical crossing offers do not amount to a binding contract, there must be an assent by one to the other’s offer.

Unilateral acceptance

When is a unilateral offer accepted? Can it be accepted without knowledge of the offer? If you return my dog through your own good will when I have promised to the world £100 to whoever returns it, do I owe you the £100 if you later find out that a reward was being offered? The case of Williams v Cawardine [1833] says that the motive is irrelevant to receiving a unilateral reward, however the more recent case of R v Clarke [1927] says that you must now be aware of the unilateral offer to be able to accept it. It is debatable as to what amounts to awareness though. Need you be thinking of, or actively attempting to fulfil my offer? That is debatable.

Bilateral acceptance

Bilateral offers cause yet more controversy than their unilateral counterparts. The general rule, from Entores v Miles Far East Corporation [1955], is that acceptance has no effect until it is communicated to the offeror. Brinkibon v Stahag Stahl [1983] ruled that a contract is made when and where the acceptance was received according to Lord Wilberforce. Furthermore, Apple Corps v Apple Computers [2004] showed that a contract can even be formed in 2 different jurisdictions at the same time.

Silence

As a general rule, silence cannot constitute acceptance. In Felthouse v Bindley [1862], this was declared: the buyer of a horse could not assume the horse was his and that his offer had been accepted. However, according to Rust v Abbey Life Insurance Co [1979], acceptance can be inferred from conduct. Furthermore, in order to give effect to temporary insurance cover notices, Taylor v Allen [1966] rules that if there would be intent to accept, there may be acceptance, as controversial as this may sound.

Battle of the forms

An issue therefore arises when each party has standard terms upon which it contracts. The acceptance will be accompanied with these terms, as will any previous offers. If both parties have standard terms attached to their communications, a contract can still be made. This is known as a ‘battle of the forms’ and it is commonly accepted that whoever fires the last shot, providing the final offer, wins the battle, and the accepting party contracts on their terms. This is evidenced in British Road Services v Crutchley [1968]. A different approach was taken in Butler Machine Tool Co v Ex-cello-corp [1979], where the documents of negotiation can allegedly be ‘construed as a whole’ when deciding who’s terms prevail. However, the ‘last-shot’ rule was still apparent.

Acceptance by fax

The general rule for acceptance, that of communication to the offeror, applies in fax communications. Assuming we are happy to liken Telex to fax machines, the aforementioned cases of Entores v Miles Far East Corporation [1955] and Brinkibon v Stahag Stahl [1983] apply. The acceptance must have been bought to the attention of the offeror if a contract is to be formed.

The postal rule

Acceptance by post is the only exception to the general rule of acceptance. Initially in Adams v Lindsell [1818], postal acceptance was ruled to be complete upon posting. This rule, known as the ‘postal rule’, still exists today. However, it does not apply, according to Holwell Securities v Hughes [1974], where “notice in writing” is required, or where imposition of such a rule would lead to “manifest inconvenience or absurdity”. The postal rule is also ousted where the letter is wrongly addressed, as in Korbetis v Transgrain Shipping [2005], however it does still apply where acceptance is never received, as was shown in Household Fire Insurance Co v Grant [1879], where there was a postal error not due to the fault of either of the parties. The case of Dunmore v Alexander [1830] suggests that the postal rule can be ousted when there is revocation by speedier means. Whether any more recent confirmations of the postal rule overrules this suggestion is uncertain. Be aware that the postal rule applies to acceptance only, and not to revocation of offers, and will only apply where postal acceptance could be reasonably expected, according to Henthorn v Fraser [1892].

Acceptance by electronic means

There is no authority for whether the postal rule applies to email transactions or not. The recipient losing control of the delivery of the acceptance might suggest the postal rule should apply, but if we can class email as instantaneous communication, it is submitted that the general (recipient) rule would apply. What is certain is that in e-commerce (website shop) transactions, the transaction is made in the supplier’s jurisdiction.

Next: Withdrawal of offers

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