2.

ACCEPTANCE

1
DEFINITION

Section 2(b) of the Contract Act 1950

“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”

According to Section 2(c), the person who making proposal is called the
promisor and the person accepting the proposal is called the promisee. The
‘promisor’ is also known as a ‘proposer’ or an ‘offeror’. A ‘promisee’ is also
referred to as an ‘acceptor’ or ‘offeree’.
CONDITIONS/REQUIREMENTS
1) Section 7(a)
 The acceptance must be absolute &
unqualified
 According to Oxford Advanced
Learner’s Dictionary, absolute means
definite and without any doubt or
confusion, while unqualified means
having the right knowledge.
2) Section 7(b)
 Acceptance must be expressed in
usual & reasonable manner unless
specify by offeror.
 Example: Sani offers to sell a bicycle
to John who lives next door to Sani.
It is reasonable for John to accept the
offer orally & not by post.
 ISSUES

1)
COUNTER 2)
OFFER/ SILENC
PROPOSAL E

Sec 7(a) Sec 7(b)

 COUNTER OFFER /PROPOSAL

 Rejection/revocation of an original offer.

 when A makes a proposal to B, B has the choice to accept or to reject it. But, if B makes a
new proposal by changing a vital terms of the contract, B is said to have made a counter
offer.
 Example : Firdaus(A) makes an offer to buy Danish’s(B) notebook for RM1100. But,
Danish request for higher price amounting to RM1300 (counter offer exist). Thus, the final
price agreed on the contract for that sale is depend on Firdaus either he accept Danish’s
counter offer or reject & stay with own price.
 Effect:
1) A’s original offer is destroyed.
2) A has become the acceptor while B has become the proposer.
3) A has the choice either to accept or to reject B’s proposal (ie, counter offer)
 Hyde v. Wrench
Facts : D(defendant) offered to sell a piece of land to P(Plaintiff) for ₤1000
on 6th of June. P then made a counter-offer to purchase at ₤950 on 8th of
June. However, D refused to accept the new price. P then immediately
wrote to D accepting the original offer of ₤1000 on 27th of June.

Held : There was no acceptance bcz the plaintiff’s letter on 8 th of June had
rejected the original offer and not to be revived. Therefore, there was no
valid contract.

https://www.youtube.com/watch?v=4k2Wr-9ezeA
Tan Geok Khoon & Gerard Francis Robless
v Paya Terubong Sdn Bhd (1988) 2 MLJ 672
Issue : The issue is about counter-offer relating to the sale of a price of
land between the deceased and the defendant. The plaintiff were the
executors and trustees of the deceased’s estate.

Held : There was a contract bcz the deceased accepted defendant’s

counter-offer by paying the balance of the price. The defendant has
accepted the payment and issued a receipt on its notepaper signed by one
of its directors acknowledging the payment.
 SILENCE
 Silence does not constitute a valid acceptance. It requires a
positive act of acceptance. (Sec 2(b), CA 1950)
 An offeree should react either express or implied for
acceptance. If the offeree keep silent due to the offer, law
provides NO acceptance was exist.
 Felthouse v Bindley
Facts : Plaintiff, the uncle write to his nephew offering to buy a
horse saying “If I hear no more about him, I consider him mine”.
The nephew not reply but told the auctioneer, the defendant, not to
sell the horse. The defendant sold by mistakes and the plaintiff sued
the defendant for conversion.

Held: There could be no conversion bcz there was no contract

between the plaintiff and his nephew since the letter did not
communicated his acceptance to the plaintiff’s offer. Silence is not
acceptance.
Felthouse + Nephew

BINDLEY
https://www.youtube.com/watch?v=GJEdMn1CpoQ
COMMUNICATION OF
ACCEPTANCE

RULE : Acceptance Must Be

Communicated

EXCEPTION : Acceptance Through Post

(POSTAL RULE)
 ACCEPTANCE MUST BE
COMMUNICATED via TWO TYPES:

Instantaneous
Communication Letter By Post

 It must come to the actual knowledge of the offeror.
 Eg ; via telephone, facsimile & telex machine.
 Issue : when & where the communication of
acceptance should be effective.
Entores Ltd v Miles Far East Corp.
Held: Acceptance takes place where it is received
 Sec 4(2)(a) : Communication of
acceptance is complete against the
OFFEROR if the OFFEREE posts
the acceptance letter(LOA)
 Means : Acceptance is complete
upon posting @ at mail box.
 Case for POSTAL RULE

Adam v Lindsell
https://www.youtube.com
/watch?v=JVgwhBHXB_o

 Facts : The Defendant sent a letter to the plaintiff offering wool for sale
and asked for reply through post. The letter was misdirected by the
defendant and arrived late. The plaintiff replied at once accepting but
defendant has sold it elsewhere having decided that bcz of delay, the
plaintiff was not going to accept. The plaintiff sued for breach of contract.
 Held : The offeror was bound to a contract without being aware that this
delay has happened. The rule is that a posted acceptance is complete on
posting.
Entores Ltd v Miles Far East Corporation
(1955) 2 QB 327

Held: An acceptance is complete when it is put into the

mail box bcz it is the place where contract is made
(Lord Denning)
“ 1) It only applies to acceptance and not other types of
communication such as offer, counter-offer and
revocation.

2)Apply where it was reasonable for the acceptance

to be sent by post.

3)The rule can always be replaced by the offeror.

”

POSTAL RULE LIMITATIONS

 Henthorn v Fraser (1892) 2 Ch. 27

It only applies where it was reasonable for the acceptance to

be sent by post.

Holwell Securities Ltd v Hughes (1974) 1 WLR 155

If the offeror wants to be sure that the postal rule will not
operate, this should be made explicit in the offer.
 REVOCATION OF
ACCEPTANCE
 Revocation refers to withdrawal of proposal by the proposer or
withdrawal of acceptance by the acceptor.
 Requirements of a valid revocation

It must be communicated Time of revocation

 At any time before the communication

 The communication of a revocation
of its acceptance is complete as against
is complete as against the :
the acceptor, but not afterwards. (Sec
a) Person who makes it – when it is 5(2), CA1950)
communicated to the other person
(Sec 4(3)(a), CA 1950)
b) Person who receives it – when
comes to his knowledge (Sec 4(3)
(b), CA 1950)

https://www.youtube.com/watch?v=3a6j2uK6Jog
 Sec 4(2)(b),CA 1950

The communication of acceptance is complete against the

acceptor when the offeror receives the acceptance letter.
Revocation letter must come first in order to make the
revocation effective.
 POSTAL RULE

21/6 – Offeror post offer letter(LO)

28/6 – LO received by offeree

1/7- Offeree sent LOA(letter of acceptance)

8/7 – Offeree sent ROA(revocation of acceptance)

15/7 – ROA received to Offeror

20/7 – LOA received by offeror