ACCEPTANC

E OF AN
OFFER
Chapter 3
Learning objectives

1. explain what a valid acceptance is (and is not)

2. illustrate the necessity of communicating the acceptance
3. indicate what the exceptions are to the necessity of
communicating the acceptance
4. explain what occurs when the offeror stipulates a certain
method of acceptance
5. state what happens to an offer which is not accepted
6. illustrate when an offer expires
Acceptance
Powell v Lee

• An unqualified assent to all the terms of the offer.

• The assent by the offeree must be communicated to

the offeror.

• The assent must be a positive act.

• Silence cannot amount to an acceptance, unless

offeree waives his right.
Acceptance

• Acceptance must be an unqualified assent

to all the terms of the offer:
• Butler v Excell o Corp
• Sellers, Butler offered to sell machine tool
to buyers
• Offer made on B’s Standard terms of
business which included a price variation
clause.
• Buyer sent order for machine tool on their
OWN S.T.B which made no provision for a
price variation clause and stated price fixed.
• Buyers order form contained tear off
acknowledgement slip stating ‘we [the
sellers] accept your order on the terms and
conditions stated thereon’
 • Sellers signed and returned slip
together with letter stating they
were carrying out order on terms of
Acceptance original offer.
• After constructing machine tool but
prior to delivery, sellers sought to
invoke PVC in original offer and
claimed additional 2,892.
• Buyers refused to pay claiming not
contractually bound to do so.
COA
• Not entitled to recover additional
sum - contract concluded on buyers'
term with no PVC.
• Applied mirror image rule.
 Acceptance must be communicated
Powell v Lee
Acceptance • The managers of a school passed a
resolution appointing plaintiff who
had applied for the post to the
position of headmaster, but the
decision at which they had arrived
was not communicated to plaintiff:
• Held: the passing of the resolution
without communication to plaintiff
did not constitute a contract to
appoint him to the post for the
breach of which plaintiff was
entitled to sue.
 • Brogden v Metropolitan Railway
Acceptance, • L. Blackburn:
• Simple acceptance in your own
must be mind without any intimation to the
communicated other party and expressed by a
mere private act such as putting a
or can be letter in a drawer does not complete
a contract.
implied from • However where both parties have
conduct acted upon the draft, they will be
bound by it.
 Felthouse v Bindley

• C and nephew entered negotiations for sale of

nephews' horse.
• C made an offer and stated if he heard nothing
Can silence further, he would consider the horse his at that
price.
of the • Nephew did not respond but told def
auctioneer to remove horse as it was already
offeree sold.
• Auctioneer mistakenly sold horse
amount to • C sued auctioneer in conversion

acceptance • Auctioneer argued he had no title to sue as he

was not the owner
• Offer to buy had not been accepted by the
nephew.
 • Court upheld this view - silence did
not amount to an acceptance.
• Re Selectmove
Acceptance • S owed Inland revenue large sums of
income tax and national insurance.
• Director suggested not in anyone's
interests for co. to be put in
compulsory liquidation and proposed
co. would pay tax and insurance as it
fell due and arrears of 1000 a month
from Feb1.
• Tax collector said he would seek
approval from the Revenue and come
back if the proposal was unacceptable.
• S made two payments under alleged agreement.
• S heard nothing more from the Revenue until Oct 9th when they
demanded arrears of 24,650
• Was the proposal in July a binding agreement???
• Gibson LJ said that authorities for general rule that acceptance
cannot be inferred from silence are cases where an offeror sought
to impose a term that silence would amount to acceptance.
• Where the offeree himself indicates that an offer is to be taken as
accepted if he does not indicate the contrary by an ascertainable
time he is understanding to speak if he does not want the
agreement to be concluded.
Offeror cannot • Acceptance cannot be implied
by mere silence of the offeree.
impose silence • Offeror cannot impose a
as means of contractual obligation upon
offeree that unless he expressly
communication rejects the offer, he will be held
of acceptance to accept it.
Reason
• Unfair to put a burden on the
offeree to avoid imposition of
unwanted contractual
obligations.
• Is there an exception to this
rule?
Acceptance
Can I accept in ignorance of offer
• The preferred view
• Trietel cites with approval:
• R v Clarke (Aust)
• Fitch v Snedaker (US)
• Acceptance requires presence
of mind.
• Contract is about consensus ad
idem.
• The contentious view
• Gibbons v Proctor (UK)
• Factual benefit
• Voluntary assumption of
responsibility
• Social responsibility
 R v Clarke
• A reward was publicly offered by the Government
of Western Australia for information leading to
arrest and conviction of the person or persons
Preferred who committed the murders of two police officers.
• C gave information that led to the arrest and the
View conviction of one person and arrest of another for
the murder of one of those officers.
• However at the time of the purported acceptance
the offer of reward had ‘passed from his mind’
Held
• unless petitioner had performed the condition of
the offer acting on the faith of or in reliance upon
the offer, there was no acceptance of the offer,
and, therefore, no contract between the parties.
 • Fitch v Snedaker was cited in Clarke as
being the correct approach.
Preferred
view is • Woodruff J: ‘The motive inducing consent
may be immaterial, but the CONSENT IS
based in VITAL without that there is no contract .

consensus ad • How then can there be consent or assent to

idem that of which the parties has never heard’.
 • Williams v Cawardine
• Def offered for reward to any
person giving info leading to
discovery of a particular murderer.
• Subsequently, the Plt had been
Preferred severely beaten by Williams,
view, should believing she had not got long to
live and to ease her conscience she
consensus be gave info leading to his arrest &
conviction for murder.
a • HELD: Motive irrelevant provided
requirement? that the act was done with
knowledge of the reward.
• Therefore distinguished from Clarke.
 • Gibbons v Proctor
Contentious • Policeman was held to be entitled to a
reward offered in a leaflet for info given to
view, did it the Super Intendant of police which led to an
arrest and conviction.
ignore • The policeman was unaware of the leaflet
before he sent on the relevant information
consensus via his agents.
• Similarly the leaflet had not reached the
ad idem? Super Intendant.
• Suggests that a man can accept an offered
contract before he knows that there is an
offer - that knowledge of the offer is
immaterial to the existence of a contract.
Contentious View

• When did the claimant know about the reward?

• Must he know before he commences on the act?

• Can tie it down to doctrine of voluntary assumption of responsibility?

• Should good moral deed be rewarded?

• Did the D receive a factual benefit?

• Should the C be entitled to at least reliance loss if not expectation

losses?
 Unilateral promises
Carlil’s Case
The performance of the conduct constitutes
acceptance.
Exceptions to
rule of Postal Rule
Adams v Lindsell
communication the contract is concluded on proof of posting.
of acceptance
Fault of offeror
Entores v Miles Far East Corporation, the offeree
must prove the offeror’s deliberate wrongdoing.
 Adams v Lindsell
• A by letter offered to sell to B certain specified
goods, if he received an answer by return of post.
Postal rule, • The offer letter was misdirected, thus the answer
notifying acceptance of the offer arrived two days
acceptance deemed later than it ought to have done.

communicated upon • On the day following that when acceptance

should have arrived, A sold the goods to a third
posting person:
• Held: there was a contract binding the parties,
from the moment the offer was accepted, and B
was entitled to recover against A in an action for
not completing his contract.
 Justification
1. Post office is agent of the offeror and thus
receipt of letter by the agent is equivalent to
receipt by offeror.
Rationale 2. Offeror has started negotiations via post so the
risk of delay/loss should be borne by him
of postal 3. Offeree should not be prejudiced once he has
dispatched acceptance + he should be able to rely
rule on efficacy of acceptance.
4. Public perception of the postal service in the
19th C.
5. Letter once posted would reach destination
without further subvention from outside system.
 Household fire Insurance v Grant
Does • The acceptance is still effective
from moment it is posted.
postal rule Reason: LJ Thesiger:

apply of “in practice a contract complete

upon acceptance of an offer being
letter is posted but liable to be put to an
end by an accident in the post
lost in the would be more mischievous than a
contract binding upon the parties
post? to it upon acceptance actually
reaching the offeror”.
 Brogden v Metropolitan Rly
How can • Lord Blackburn
postal rule • Where a person writes a letter
of offer and he expressly or
be impliedly says if you agree
with me send me an answer
excluded? by post there as soon as he
has sent his letter by post and
put it out of his control and
done an extraneous act which
clenches the matter then the
contract is concluded.
 • However:
• L J Korbetis v Transgrain Shipping BV
• Where letter of acceptance has been

Limitation wrongly addressed by the offeree

• Acceptance does NOT take place on

of Postal
posting
• Reason:

Rule
• While the offeror may take the risk of
delay or loss in the post he does not
take the risk of carelessness of the
Offeree.
• See also Re London & Northern Bank
Offeree must prove correct address.
 • Henthorn v Fraser
• It must be REASONABLE for the offeree
to use post.

Postal
• Offeror can avoid the rule by specifying
that acceptance will only be effective
when it actually reaches him.

Rule • Holwell Securities Ltd v Hughes

• Suggested that Postal rule ought not to
apply where it would lead to /manifest
inconvenience and absurdity’.
 • Manchester Diocesan Council v C & E
Investments.
• It may be that an offeror who by the
terms of his offer insists on a particular
method of acceptance is entitled to
insist that he is not bound unless the
Postal acceptance is made in that way.
However

Rule • If the offeror prescribes a method of

acceptance but does not do so in terms
insisting that only that mode will be
binding then:-
• Acceptance communicated by any other
mode which is no less advantageous will
be binding on him.
 • Company in London in communication with a
Entores Ltd Dutch co. (acting as agent for an American
principal) by Telex, a message typed by one
v Miles Far company's clerk was simultaneously and
automatically typed out on paper by the

East Corpn
other's machine. The English company received
an offer of goods from the Dutch co. by Telex
and made a counter-offer which the Dutch co.
accepted by Telex. The English co. applied for
leave to serve notice of the writ in an action for
damages for breach of the contract on the
American principal out of the jurisdiction.
Held
• the contract was made at the place where the
English company received the acceptance,
which in this case was London.
Analysis
• Denning LJ:
• Communications made by
telephone/telex virtually instantaneous
therefore on different footing to Post.
• 1. Word of mouth in presence of one
another.
• I shout offer to a man across the river
BUT I do not hear his reply as it is
drowned out by aircraft flying overhead.
• No Contract.
• If he wished to make a contract he must
REPEAT acceptance so that I can hear it.
• Not until I hear his answer am I bound.
 • 2. Contract made by telephone
• I make offer by phone in middle
of reply the line goes dead so
that I do not hear acceptance.
• = No contract made.
Analysis • Offeree may not know precise
moment when line failed but he
will know conversation ended
abruptly therefore in order to
make a contract he must go
through again to make sure he
is heard.
 3. Contract by telephone where
the reply indistinct.

So that I do not catch what he

says, I ask him to repeat it and I
hear acceptance.
Analysis
Contract made only on the
second time when I do hear.

If he does not repeat = No

Contract.
 • 4. Telex - Line goes dead in the middle
of sentence of acceptance.
• = No Contract
• Offeree must send complete sentence
again.

Analysis • In all above circumstances offeree

knows or has reason to know
acceptance not received.
• So he must repeat it.

• BUT ALTERNATIVELY:
 5. Offeree reasonably believes acceptance has got
through.

E.g Listener does not catch word of acceptance but

does not ask for them to be repeated OR

Ink on teleprinter fails at receiving end but clerk

does not ask for it to be repeated

Analysis Offeror = CLEARLY BOUND

estopped from saying he did not receive message of

acceptance.

However, if the Offeror without any fault on his part

does not receive acceptance and Offeree reasonably
believe he has = No Contract.
 Brinkibon v Stahag Stahl
• Buyers an English co. sent by telex from
London to Vienna an acceptance of the
terms of sale offered by the sellers an
Austrian Co.
Instantaneous • Held: Where there was instantaneous
communication between the offeror and
Communication the offeree the formation of a contract
between the parties was governed by
the general rule that a contract was
concluded where and when acceptance
of the offer was RECEIVED by the offeror.
Instantaneous Communication

• L. Wilberforce identified potential issues with instantaneous communications

• message may not reach intended recipient immediately
• may be sent out of office hours/ at night with intention/assumption read later.
• may be error /default at recipients end which prevents receipt at the time
contemplated and believed by sender
• message may be sent/received by machines operated by third parties.
• Result: No universal rule can cover all such cases, Must be resolved by -
intention of parties, sound business practice, judgment as to where risk
should lie.