ACCEPTANCE

◦ What is an acceptance?
◦ S.2(b) Contracts Act 1950

◦ How do you make an acceptance

◦ S.3 Contracts Act 1950

◦ Conditions of an acceptance
◦ S.7 Contracts Act 1950

◦ When is acceptance complete

◦ S.4(2) Contracts Act 1950

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 What is an Acceptance?

S.2(b) Contracts Act

When the person to whom the proposal is made signifies his

assent thereto, the proposal is said to be accepted: a
proposal, when accepted, becomes a promise”

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How?
s.3 Contracts Act 1950:

“The communication of … the acceptance … are

deemed to be made by any act or omission of the
party … accepting … by which he intends to
communicate the … acceptance … or which has the
effect of communicating it”
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i. An ‘act’
 Express act
 Conduct
 Manner prescribed by the proposer
 Fulfilling the conditions in the offer

◦ Expressly stated: section 9

◦ So far as the proposal or acceptance of any promise is made in words, the promise
is said to be express. So far as the proposal or acceptance is made otherwise than in
words, the promise is said to be implied.
◦ Words
◦ Spoken i.e. phone or face-to-face, through letters

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◦ Via conduct: section 8
◦ Acceptance by performing conditions, or receiving consideration
◦ Performance of the conditions of a proposal, or the acceptance of any
consideration for a reciprocal promise which may be offered with a proposal, is
an acceptance of the proposal.
◦ An acceptor may by his conduct indicate his intention whether he has or has not
accepted an offer.

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◦ Woon Yoke Lin v. United Estate Projects Berhad [1998] 4 AMR 4052
◦ Decision: the defendants, by their conduct had accepted the plaintiff ’s
offer to rent a kiosk in Subang Parade which was owned by the
defendants.
◦ The court referred to the following expressions of conduct of the
defendants:
◦ 1. They did not reply within 14days

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◦ (Terms in the booking form: the deposit will be refunded if the
application is not accepted)
◦ 2. They accepted the booking fees and paid the sum into their own
account.
◦ 3. They didn’t return this sum of money within 14 days
◦ 4. Instead of rejecting the plaintiff ’s offer, they negotiated with the
plaintiff to relocate.

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◦ S.7(b) i.e. in the manner prescribed by the proposer

◦ be expressed in some usual and reasonable manner, unless the

proposal prescribes the manner in which it is to be accepted. If the
proposal prescribes a manner in which it is to be accepted, and the
acceptance is not made in that manner, the proposer may, within a
reasonable time after the acceptance is communicated to him, insist
that his proposal shall be accepted in the prescribed manner, and not
otherwise; but, if he fails to do so, he accepts the acceptance.
◦ Holwell Securities Ltd v Hughes
◦ “it shall be exercisable by notice in writing to the [defendant]…”

◦ The defendant gave the plaintiff the option to purchase his house for
£45,000. It was stated that this option was exercisable ‘by notice in
writing’ within six months. The plaintiff posted a letter agreeing to
this option.
◦ The letter was posted five days before the six-month expiry. However,
this agreement letter was lost in the post and it never reached the
defendant.
◦ The plaintiff claimed specific performance of the contract when the defendant
refused to complete the sale of his house.
◦ This claim was originally dismissed by the court, the plaintiff appealed.
◦ The issue in the appeal concerned whether the postal rule applied and if there
were any exceptions to this rule.
◦ The plaintiff argued that the postal rule meant that acceptance was in effect when
the letter was posted, which was before the six-month expiration date.
◦ The appeal was dismissed.
◦ It was stated by the court that the postal rule does not automatically apply in
every case, despite the post being an acceptable means of communication in
transactions or business proposals.
◦ It is important to look at all the circumstances of the case to see what the parties
intended, which may mean a binding agreement does not apply until it is
communicated.
◦ In this case, the defendant stated the option was exercisable ‘by notice in writing’
within six months, which meant that he would have to receive the communication
in writing before a valid contract would be created. This specification meant that
the postal rule did not apply.
◦ Fulfilling conditions in the offer
◦ Carlill v Carbolic Smoke Ball
◦ Held: Mrs Carlill had indicated her acceptance by performing the
conditions set out in the advertisement. Mrs Carlill still suffered
from influenza after using the smoke balls in the manner
specified in the advertisement.
◦ The defendants’ submission that Mrs Carlill did not inform them
of her intention to accept her offer of the reward was rejected
by the court.
◦ Mrs Carlill had accepted the offer by performing the conditions
stated in the offer.
 ii. An ‘omission’

s.3 Contracts Act 1950:

“The communication of … the acceptance … are deemed

to be made by any act or omission of the party …
accepting … by which he intends to communicate the …
acceptance … or which has the effect of communicating
it”
Acceptance 14
◦ Not an ‘act’
◦ However, does not mean ‘silence’
◦ Felthouse v Bindley
◦ The plaintiff wrote to his nephew offering to buy the nephew’s horse and adding
that; if I hear no more about him, I consider the horse mine. The nephew did not
reply and no money was paid. The horse remained in the nephew’s possession.
◦ The issue in this case was whether silence or a failure to reject an offer amount to
acceptance.
◦ The defendant argued that there was no valid contract for the horse, since the
nephew had not communicated his acceptance of the plaintiff ’s offer.
◦ It was held that there was no contract for the horse between the
plaintiff and his nephew.
◦ There had not been an acceptance of the offer; silence did not
amount to acceptance and an obligation cannot be imposed by
another.
◦ Any acceptance of an offer must be communicated clearly.
◦ Thus, the nephew’s failure to respond to the complainant did not
amount to an acceptance of his offer.
◦ 3 grounds

◦ i) silence is ambiguous, will not be able to infer from it an intention

to accept.
◦ ii) acceptance must be communicated to the offeror so that he
knows when a contract binds the party.
◦ iii) prevents offeror from exploiting the offeree.

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◦But, silence may be interpreted as such in exceptional
circumstances.
◦There are cases where courts have decided that silence
may have legal consequences.
◦ In recent years, courts have giving views that silence could be interpreted as
acceptance in exceptional circumtances.

◦ Re Selectmove Ltd [1995]2 All ER531

◦ “Where the offeree himself indicates that an offer is to be taken as accepted if he
does not indicate to the contrary by an ascertainable time, he is undertaking to
speak if he does not want an agreement to be concluded. I see no reason in
principle why that should not be an exceptional circumstance such as that the
offer can be accepted by silence”

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◦ Weatherby v Banham

◦ The plaintiffs were publishers of the Racing Calendar. For many

years they had supplied a copy of the Racing Calendar to one Mr.
Westbrook. After the death of Mr. Westbrook, the defendant
succeed to his property and went to live in his house. Not knowing
about Mr. Westbrook’s death, plaintiff continued sending the Racing
Calendars, defendants received them, no attempts to return them
either.

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◦Court decided:

◦“if the defendant received the books and used them, I

think that the action is maintainable. These books come
addressed to the deceased, whose estate has come to the
defendants, and he keeps the books, therefore
defendant is clearly liable.”

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◦ Section 7: Acceptance must be absolute and unqualified
In order to convert a proposal into a promise the acceptance must—
(a) be absolute and unqualified;
◦ An acceptance is a final and unqualified expression of assent to the
terms of the offer.
◦ It must correspond and made in response to the offer
(b) Made in manner prescribed by proposer.

Acceptance 22
• Situations when it is not an absolute and unqualified acceptance:

i. Counter-offer
ii. Terms of the offer amended
iii. ‘Subject to contract’ or condition precedent
◦ i. Counter offer
◦ An acceptance is a final and unqualified expression of assent to the terms of the
offer.
◦ But if the reply is qualified or attempts to vary the terms or attempts to accept
the offer on new terms.
◦ Then, there is no communication of acceptance but only a rejection
accompanied by a counter offer.
◦ Hyde v Wrench
◦ The defendant, Mr Wrench, offered to sell the farm he owned to the plaintiff, Mr
Hyde. He offered to sell the property for £1,200, but this was declined by Mr
Hyde. The defendant offered £1,000. He made it clear that this would be his final
offer regarding the property. In response, Mr Hyde offered £950 for the farm in
his letter. This was refused by Mr Wrench and he confirmed this with the
complainant. Mr Hyde then agreed to buy the farm for £1,000, which was the
sum that had previously been offered. However, Mr Wrench refused to sell his
farm. The plaintiff claimed for specific performance.
◦ Was there was a valid contract between the parties?
◦ The court dismissed the claim.
◦ There was no binding contract for the farm between Mr Hyde and Mr Wrench.
◦ When a counter offer is made, this supersedes and destroys the original offer; the
original offer is no longer available.
◦ In this case, when Mr Hyde offered £950, he destroyed the £1,000 offer.
 ◦ Malayan Flour Mills Bhd v Saw Eng Chee (Administrator of the estate of Saw
Cheng Chor, deceased) & Anor [1997] 1 MLJ 763.
◦ The offeree's intention to accept must be conclusive and he must not treat the
negotiation between the parties as still open to the process of bargaining. He
must unreservedly assent to the exact terms of the offeror. If while purporting
to accept the offer as a whole, he introduces a new term which the offeror has
not the chance of examining, he is in fact making a counter-offer. The effect of
this in the eyes of the law is to destroy the original offer.
◦ A counter offer not only fails as an acceptance, it also amounts to a rejection of
the original offer, which therefore cannot subsequently be accepted.
◦ Counter offer: introduction by the offeree of a material variation of the terms
of an offer of the same subject matter.

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◦However, counter offer must be distinguished from ‘request
for more information’.
◦Counter offer: a material variation of the terms of the offer
◦Request for more information: a mere enquiry

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◦Stevenson v McLean
◦Defendant set 40s per ton, nett cash
◦Plaintiff telegraphed to Defendant “Please wire whether
you would accept forty for delivery over two months, or if
not, longest limit you could give”.
◦Please wire whether you would accept forty for delivery
over two months, or if not, longest limit you could give v I
offer forty for delivery over two months.
ii. Terms of the offer amended
Brogden v Metropolitan Railway Co
• Terms of agreement drawn up by the plaintiff ’s agents and sent to the defendant.
The defendant then filled in the blank parts, inserted name of the proposed
arbitrator, wrote “approved” at the end of the page and signed it. Returned to the
plaintiff ’s agent who put it in his desk.
• The House of Lords: There was a valid contract between the parties. The draft
contract that was amended constituted a counter offer, which was accepted by the
conduct of the parties. The prices agreed in the draft contract were paid and coal
was delivered. Although there had been no communication of acceptance,
performing the contract without any objections was enough.

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◦ iii. “subject to contract”
◦ Common to have acceptance stating, “subject to contract”, “without
prejudice”, “formal agreement would be prepared and executed”
◦ Two meanings:
◦ There is no contract until the formal document is signed, or
◦ A binding contract is already entered into and the execution of the
document is a formality.

Acceptance 31
 Daiman Development Sdn Bhd v Mathew Lui Chin Tech & Anor Appeal

The purpose of the construction is to determine (i)whether the parties

intend to be bound to each other or (ii) whether, no matter how
complete their arrangement might appear to be, they do not so intend
until the occurrence of some further event …
◦ The questions is one as to be expressed intention and is not
answered by … any particular form of words

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◦ Kam Mah Theatre Sdn Bhd v Tan Lay Soon
◦ “subject to contract” gives rise to a strong presumption of the necessity of a further
formal contract and it requires cogent evidence to displace this strong presumption

◦ Lim Chia Min v Cheah Sang Ngeow & Anor

◦ “proposed that a formal agreement would be prepared and executed” means exactly
that.

◦ Charles Grenier Sdn Bhd v Lau Wing Hong

◦ “subject to the sale and purchase agreement” did NOT mean no contract until then.
◦ The parties, property & essential terms were identified with sufficient clarity.

Acceptance. 33
Lee Chin Kok v Jasmin Arunthuthu Allegakoen & Ors [2000] 4 MLJ 481

Referred to Charles Grenier’s case:

The phrase ‘subject to the sales and purchase agreement’ did not point to an
intention that no contract was to come into existence until a formal sales and
purchase agreement had been prepared and executed.

Rather, when read in the context of the correspondence and the objective aim of
the transaction : was it indication of an intention to merely formalise the agreement
already concluded between the parties?

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Here:
◦Respondents never signed the building approval plans
◦No sales and purchase agreement entered into
◦The RM3,000 deposit had been refunded

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◦Subject to contract:

◦i) in a state of negotiations

◦ii)do not intend to be bound
◦iii)until & unless a formal contract is exchanged

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◦ The court will have to determine whether the parties had already
entered into a legally binding contract.

◦ What else must be considered?

◦ - the interpretation of the phrase “subject to contract”

◦ -look-out for the intention of the parties

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ACCEPTANCE

Definition: sec. 2(b):

‘…when the person to whom the proposal is made….accepts the offer…’

Hyde v
Conditions: Wrench SEC. 7(a) v.
1.Absolute & Unqualified sec. 7(a) COUNTER OFFER
Stevenson Jaques v. McLean ‘Modification of original offer’
2.Communicated in Usual & Reasonable Manner sec. 7(b)

Effect: rejection of original offer

Acceptance
• sec. 2(b):
• ‘…when the person to whom the proposal is made….accepts the
Definition: offer…’

• Absolute & Unqualified sec. 7(a)

Conditions
1: • Hyde v WrenchCOUNTER OFFER

• Communicated in Usual & Reasonable Manner sec. 7(b)

Conditions • SEC. 7(a) Stevenson Jaques v. McLean
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◦ 1. Esso Standard Malaya Bhd v Southern Cross Airways (Malaysia)
Bhd [1972] 1 MLJ168
◦ 2. Yap Eng Thong & Anor v Faber Union Ltd [1973] 1MLJ 191
◦ 3.Air Hitam Tin Dredging Malaysia Bhd v. YC Chin Enterprise Sdn
Bhd [1994] 2MLJ754
◦ 4.Lee Chin Kok v. Jasmin Arunthuthu Allegakoen & Ors [2000] 4
CLJ305;[2000]4AMR4635;[2000]4MLJ481 (FC)

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