Contract: Acceptance

Acceptance

Bilateral Contracts

What is an Acceptance?

An acceptance is any words/conduct which objectively indicates that the offeree intends to be bound by the offer’s terms. The offeree’s motives for accepting the contract are not relevant: Williams v Carwardine (1833) 110 ER 590.

If the offeree’s statement does not mirror the offer’s terms, then it is a counter-offer and not an acceptance: Jones v Daniel (1894) 2 Ch 332. This can lead to a ‘battle of the forms’ where different offers and counter-offers are exchanged until there is a match: Butler Machine Tool v Ex-Cell-O Corporation [1979] 1 WLR 401. 

Asking for clarification or information about the offer is neither an acceptance nor a counter-offer: Stevenson, Jacques & Co v McLean (1880) 5 QBD 346. Clarification and information requests have no special legal effect.  

Communication of Acceptance

Acceptance must be communicated to the offeror before it is valid: Entores Ltd v Miles Far East Corporation [1955] EWCA Civ 3. The following rules apply to the communication of acceptances: 

Mode of Acceptance
shaking hands, contract agreement

Acceptance can be communicated by words or conduct: Brogden v Metropolitan Co (1877) 2 App Cas 666. Silence without any conduct cannot normally amount to acceptance: Felthouse v Bindley [1862] EWHC CP J35. There are some exceptions to this, however: Re Selectmove [1995] 1 WLR 474.

Specified Modes
mode of acceptance, handwritten

If the offer specifies a mode of acceptance, only compliant acceptances are valid. E.g. if an offer asks for acceptances to be by fax,  acceptance by letter will not do: Holwell Securities v Hughes [1974] 1 WLR 155. The exception is where the method specified is designed to fulfil a particular purpose, such as speed. In such a case, any equally efficient method will do: Tinn v Hoffman (1873) 29 LT 271.

Signatures
signature on document

If the offer states that a signature is needed for acceptance, the courts will normally uphold an acceptance without a signature unless it prejudices the offeror: Reveille Independent LLC v Anotech International (UK) Ltd [2016] EWCA Civ 443. This is because where a prescribed mode of acceptance is meant to be for the benefit of the offeree, they can waive it. 

The Postal Rule
The postal rule, letter

An acceptance which is sent by post is deemed to be communicated the moment it is posted through the post box, even if the mail never arrives, arrives late or is only read later: Adams v Lindsell (1818) 106 ER 250; Household Fire & Carriage Accident Insurance v Grant (1878-79) LR 4 Ex D 216. The offer cannot be revoked after posting as a result: Re Imperial Land Company of Marseilles, ex parte Harris (1872) 7 Ch App 587.

Excluding the Postal Rule
Exclusion

The Postal Rule does not apply if the offer explicitly excludes the application of the postal rule: Holwell Securities v Hughes [1974] 1 WLR 155. It also does not apply if it is the offeree’s fault that the mail never arrives (such as because the offeree put the wrong address on the envelope): LJ Korbetis v Transgrain Shipping BV [2005] EWHC 1345.

Instantaneous Communication
Email, laptop

The postal rule does not apply to ‘instantaneous communication’ such as email, telex or answering machine: Brinkibon Ltd v Stahag Stahl GmbH [1983] 2 AC 34; Thomas v BPE Solicitors [2010] EWHC 306 (Ch). Instead, acceptance takes place as soon as the message is received, or on the next business day if the message is received outside of business hours. 

Unilateral Contracts

What is a Unilateral Contract?

A unilateral contract can arise if the offeror makes an offer where he promises to do something if any person does a particular act: Carlill v Carbolic Smoke Ball [1893] 1 QB 256. For example, a seriously-intended poster offering £3000 to the first person to walk from London to Newcastle is a unilateral offer.  

Accepting a Unilateral Offer

Accepting a unilateral offer does not require communication. Rather, it requires the offeree to do the act requested in the offer: Carlill v Carbolic Smoke Ball [1893] 1 QB 256. 

Only complete performance constitutes an acceptance. A person who has started performing is not bound by contract to continue: British Steel Corp v Cleveland Bridge and Engineering Co Ltd [1984] 1 All ER 504.

Once an offeree begins to perform, the offeror can no longer revoke the offer: Errington v Errington Woods [1952] 1 KB 290. This is so unless the context makes it inappropriate to imply into the offer a promise not to revoke: Luxor (Eastbourne) v Cooper [1941] AC 108. The offeror is also not allowed to impede or prevent full performance once the offeree has started: Daulia Ltd v Four Millbank Nominees Ltd [1978] Ch 231.

Does the Offeree Need to be Aware of the Offer?

It is possible that an offeree will engage in conduct which looks like acceptance, without knowing the offer exists. Is it possible for a contract to arise by ‘accident’ like this?

Some reports of Gibbons v Proctor [1891] 64 LT 594 suggest that the court decided the offeree does not need to know about the offer to validly accept it. However, other reports suggest that the offeree in that case was aware of the offer when they accepted. If so, any such remarks would be obiter. No other English case has explicitly addressed this issue, though the court in Tinn v Hoffman denied that two ‘cross offers’ (coincidentally identical offers sent in ignorance of the other) could form a valid contract.

In Australia, the courts decided that the offeree must know about the offer at the time of acceptance: R v Clarke (1927) 40 CLR 227. 

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Contract Formation Quiz

Test yourself on the principles which determine when a contract is formed.

1 / 42

Rod advertises on a website saying he is looking to pay someone to look after his hamster for the weekend. Rosie responds, agreeing. The two draw up a written agreement, which includes a clause saying that it is binding in honour only. Is this agreement a valid contract?

 

2 / 42

Which two of the following factors are relevant to whether a statement is an offer?

3 / 42

Annabelle tells the swim team she is coaching that she will give £500 to the first member of the team that swims the English Channel. Ricardo, one of the team members, is not present. The next day he decides to swim the English Channel for fun, not knowing about Annabelle's offer. If he completes the challenge, is Annabelle bound to pay him the money?

 

4 / 42

Rod advertises on a website saying he is looking to pay someone to look after his hamster for the weekend. Rosie responds, asking if they can meet up to negotiate terms. The two meet up and reach a written agreement, but the document states that it is 'subject to contract'. Is this agreement a valid contract?

 

5 / 42

Jubedul lets his office know that he is selling his pet cat Bianca for £50, and that if anyone would like to buy her they should let him know. Liz, his co-worker, immediately calls his work phone and leaves a message on his answering machine saying she will buy the cat. Jubedul never listens to the message. An hour later, Micah tells Jubedul in person that she will buy the cat. Who has validly accepted Jubedul's offer to buy Bianca?

6 / 42

John is a Government official who is under a duty to give a license to anyone who fills out the proper application form. Paul fills in the form and offers to give John £300 if he gets a license. John agrees. Have both parties provided consideration?

 

7 / 42

On Saturday, Roger offers to sell Tyrone a car. He asks him to respond by next Thursday if he accepts. Tyrone sends Roger a letter by post on Monday agreeing to the deal, but it does not arrive until Friday. Has Tyrone accepted the offer?

 

8 / 42

Bob offers to sell Arthur a wedding dress for $400. Arthur responds by asking if the veil is included for that price. What is the legal nature of Arthur's response?

9 / 42

What four factors indicate that family members or friends intended to be legally bound by their agreements?

10 / 42

Bob offers to sell a wedding dress to Arthur for $400. Arthur says he is willing to buy the dress for $400, but only if Bob also includes a veil. Has Arthur accepted Bob's offer?

11 / 42

For the purposes of demonstrating consideration under the rule in Williams v Roffey Bros, which of the following constitute a practical benefit?

12 / 42

The parties have reached an agreement, but have not agreed on an important term such as the price. Is the contract void for uncertainty?

13 / 42

On Saturday, Roger offers to sell Tyrone a car. He asks him to respond by next Thursday if he accepts. Tyrone sends Roger a letter by post on Monday agreeing to the deal, but it is lost in the post and never arrives. Has Tyrone accepted the offer?

 

14 / 42

Dennis owes Maureen £1000. He asks her if she will discharge the debt if he pays her £500. Taking pity on him, Maureen agrees. Has Dennis provided consideration for Maureen's promise to accept the lesser amount?

15 / 42

Annabelle tells the swim team she is coaching that she will give £500 to the first of them that swims the English Channel. Ricardo begins swimming the English Channel the next day, but before he can finish Annabelle changes her mind and says she will not pay. Has Annabelle revoked her unilateral offer?

 

16 / 42

Annabelle tells the swim team she is coaching that she will give £500 to the first of them that swims the English Channel. Ricardo swims the English Channel the next day, and then calls Annabelle asking for the money. Is Annabelle obliged to pay him?

 

17 / 42

Dennis owes Maureen £1000. He asks her if she will discharge the debt if he pays her £500. Maureen agrees, because she needs the money to avoid being liable to a third-party and therefore thinks the arrangement is practically beneficial. Has Dennis provided consideration for Maureen's promise to accept the lesser amount?

18 / 42

Dennis owes Maureen £1000. He asks her if she will discharge the debt if he gives her his car, which is worth £800. Maureen agrees because she loves the car. Has Dennis provided consideration for Maureen's promise to discharge the debt?

19 / 42

Kayleigh offers to sell Tom a crate of tomatoes. She asks him to respond by letter with his signature if he accepts. Tom sends Kayleigh a letter accepting the tomatoes, but does not sign it. Is this a valid acceptance?

 

20 / 42

How can an offeror validly withdraw their offer?

21 / 42

Julie offers to pay Ophelia a £1000 allowance in exchange for her continued affection. Ophelia agrees. Have both parties provided consideration?

 

22 / 42

The parties in a case reached an agreement for the claimant to do some work, but that agreement was stated to be subject to contract. Despite a written contract never being signed, the parties have begun performing as if there were a contract. Do the terms of the 'subject to contract' agreement apply?

23 / 42

Erica is a software programmer who was contracted to develop systems for Herbert's business. She begins to have money troubles, and asks Herbert for the extra £100 she needs to complete the project on time. Herbert accepts, because if delivery is late he will be liable to pay damages to a third-party. Has Erica provided consideration for the extra money?

 

24 / 42

Phil makes a contract with Ingrid for his old shed to be torn down in exchange for £200. His next-door neighbour Andrew, who thinks the shed is an eye-sore, says he will pay Ingrid an extra £100 for taking down Phil's shed. Ingrid accepts and takes down the shed. Has Ingrid provided consideration for Andrew's promise?

25 / 42

Jubedul lets his office know that he is selling his pet cat Bianca for £50, and that if anyone would like to buy her they should let him know. Liz, his co-worker, sends him a letter containing £50, saying that she will buy Bianca. However, she puts the wrong address on the envelope and the letter never arrives. Has Liz accepted Jubedul's offer?

 

26 / 42

Does the postal rule apply to cases where an offeror is seeking to withdraw his offer?

 

27 / 42

Stephen is struggling to find a venue for his up-coming book signing. Jameel decides to help him on his own initiative. Jameel finds the perfect place, and out of gratitude Stephen offers to give him £100 as a reward. He later changes his mind. Is Stephen bound to pay the money?

 

28 / 42

Specific proof is required to demonstrate intention to be legally bound where the parties have a business or commercial relationship. True or false?

 

29 / 42

In what four circumstances is an offer terminated without the offeror having to withdraw it?

30 / 42

Frederick is Manuel's employee. One day, Frederick is told by Manuel that he needs him to take on some work which goes beyond his employment duties. Frederick is reluctant, but Manuel tells him that if he does it, Manuel will pay Frederick double. Frederick accepts. Has Frederick provided consideration for the extra payment?

 

31 / 42

Shira is seriously injured as a result of Quen's negligence. She tells them that if they give her their car, she will not sue. Quen agrees. Have both parties provided consideration?

32 / 42

Clarence offers to sell Pam a table and chairs set for $300. He adds that if Pam does not respond to him within the week, he will assume that she has accepted. Pam does not respond within the week, nor does she positively indicate acceptance in any other way. Has Pam accepted the offer?

 

33 / 42

Sean offers to sell his collection of nerdy T-Shirts to Chris, for £40. Chris accepts, saying that his father will provide the money. Have Sean and Chris both provided consideration?

 

34 / 42

Stephen asks Jameel to help him find a venue for his up-coming book signing. Jameel finds the perfect place, and out of gratitude Stephen offers to give him £100 as a reward. He later changes his mind. Is Stephen bound to pay the money?

 

35 / 42

Specific proof is required to demonstrate intention to be legally bound where the parties have a family or social relationship. True or false?

 

36 / 42

Which four of the following scenarios normally involve an invitation to treat and not an offer?

37 / 42

Dennis owes Maureen £1000. Dennis asks Maureen if she will discharge the debt if his sister Dee pays her £600. Maureen agrees. Has Dennis provided consideration for Maureen's promise to discharge the debt?

38 / 42

Dennis owes Maureen £1000, and is obligated to pay by the 1st of June. He asks her if she will discharge the debt for £600, if he pays by the 1st of May. Maureen agrees. Has Dennis provided consideration for Maureen's promise to discharge the debt?

39 / 42

When can an offer be revoked?

40 / 42

Fatima is looking to sell an antique doll, which is worth £3000. Paul offers to buy it for £5. Fatima accepts, as she is in a hurry to get rid of the doll as it spooks her. Have both parties provided consideration?

41 / 42

Kayleigh offers to sell Tom a crate of tomatoes. She asks him to respond by telephone if he accepts. Tom sends Kayleigh a letter accepting the tomatoes. Is this a valid acceptance?

 

42 / 42

What two conditions must be met for an agreement to be sufficiently certain to form a contract?

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