LAW OF CONTRACT:
ELEMENTS OF CONTRACT
(ACCEPTANCE)
Prepared by:
NURUL NASIHIN ARIFFIN
KPMBP
Definition
• It is a final expression of assent to the terms of
a proposal
• S2(b) of CA provides definition for acceptance
• Also decides that only whom the proposal
• The person accepting the proposal is called
the ‘promisee’ or the ‘acceptor’.
Cont…
• As with the proposal, acceptance can be made
in writing, or orally or by conduct or by a
combination of these methods.
• General rule, acceptance must be
communicated to the proposer.
Terms of acceptance
• In order to convert an offer into a promise, the
acceptance must fulfill an order as in sec 7(a)
and sec 7(b).
1. Absolute and unqualified- sec 7(a)
- if an offer is accepted by the introduction of
a new term, then the acceptance is void and
automatically will destroying the original
offer.
- the offeree does not make an acceptance,
but is making a counter-offer.
case: Hyde v Wrench
Cont…
2. Be expressed in some usual and reasonable manner -sec
7(b)
- every acceptance must be made in some usual and
reasonable manner, unless the proposal prescribes the
manner in which it is to be accepted.
case: Ignatius v Bell
D give option to P to buy D estate before or on 20 August
1912 and acceptance must be in writing. P wrote
acceptance letter and post it on 16 August 1912, but D
receives the letter on 25 August 1912. P sued D when he
refused to honour the contract.
held: D is bind by the contract since parties to the contract
agree to use postal service as manner of acceptance.
Cont…
- usual n reasonable manner can be described
by referring to:
case: Lee See Heng v The Guardian Assurance
Co. Ltd.
Court in this case held that cancellation of P
insurance policy by letter is valid since postal
service is the most usual manner at the place
where P lives and is commonly use while P
holds the insurance policy.
Cont…
• IS SILENCE CAN BE TREATED AS ACCEPTANCE TO AN OFFER?
- silence is a situation when offeree refuse to give answer an offer.
- the law has decided that silence CANNOT be treated as an
acceptance to an offer.
Case: Felthouse v Bindley
D who is an auctioneer, is under duty to auction J.Felthouse
property. P, J Felthouse uncle interested to buy a horse that is
supposed to be auction. He wrote a letter to his nephew that reads,
“ If I receives no news from you, I will consider the horse to be mine
at the price of 30 pound. J felthouse does not answer the letter but
has instructed the D to pull away the horse from being auction. By
mistake the D sold the horse. P filed a claim.
Held: it is true acceptance may be made according to prescribed
manner. But someone has no right to prescribe silence as an
acceptance.
Cont…
- however, there is a situation where a silence
can be treated as a valid acceptance.
case: Weatherby v Banham
where silence after received and reads a
magazine after a the expired date of
subscription is consider to be a valid
acceptance.
Types of acceptance
• An express acceptance can be made by express
or implied.
express
by verbal or in writing
implied
by one’s action or behavior.
case for implied: Western Electric v Welsh Dev.
Agency.
Communication of acceptance
• Generally, communication of an acceptance
completes when it comes to the knowledge of
offeror.
• Eg; if A make an offer to B from the other side of
river and A fails to hear acceptance by B
because of the noise from the boat’s engine that
passing the river, B’s acceptance is not valid.
• But, if the offeror prescribed that doing some
action is enough to show acceptance to him.
• When letter and telegrammed are use as the
manner of communication, a special rule will be
used. The rule is ‘The Postal Rule’.
Postal Rule
• The manner of acceptance for a letter or a telegrammed.
• It is because the communication of an acceptance
completes as against the offeror and against the offeree at
a different time.
• Sec 4(1)- the communication is complete when the offeree
knows about the offer/proposal.
• Sec 4(2)(a) , communication of an acceptance completes as
against the offeror when offeree put the acceptance letter
in a course of transmission, so as to be out of the power of
the offeree.
• Sec 4(2)(b), communication of an acceptance completes as
against the offeree, when it comes to the knowledge of the
offeror.
Cont…
• Eg; A wants to sell his house to B for RM200
thousand. A sent an offer letter to B on 1 July
2000. B received the letter on 4 July 2000. on
6 July 2000, B put acceptance letter in a post
box at the post office. The acceptance letter
received by A on 10 July 2000.
• Before TPR introduced, a lot of questions
arise. It might be unjust to the acceptor when
the prescribe manner of acceptance is by post
but then the acceptance letter has been
delivered later than it supposed to be
delivered or lost in post.
Cont…
• However, if acceptance completes when acceptance letter is put
in a course of transmission that would be unfair to the offeror.
He has no knowledge of the acceptance, he fails to perform
according to the contract, but later find out that he is
responsible for a breach of contract.
• Therefore, the postal rule is introduced.
case: Household Fire Insurance v Grant
The D has made an offer to buy shares in P company. P accepted
the offer and sent the acceptance letter by post. The acceptance
letter is lost in post. When P asked the money from D, D refused
to pay and claims that there was no acceptance.
held that there was acceptance as it completes when the
acceptance letter is put in a course of transmission to him.
Cont…
• TPR is appropriate in the sense that it is easier
to obtain the sending proof rather than to
obtain the receiving proof.
• The acceptance letter consider put in a course
of transmission to the offeror when it is put in
to a post box or surrender to the post officer
who has power to do so.
• An offeree cannot easily accept a proposal by
letter then claims that the acceptance
completes.
Cont…
• TPR applies only if the offeror prescribed the
manner of acceptance is by post or when it is
the most usual and reasonable manner to use.
• Normally if the offer is made by post, the
acceptance will be by post, unless the offer
prescribed other manner of acceptance.
• For the acceptance using facsimile machine, it is
more to an express communication, therefore,
it is consider as telephone conversation.
*what if the facsimile delivering after office hour?
Revocation of acceptance &
communication of acceptance
• Sec 5(2)- acceptance may be revoked at any time
BEFORE the communication of the acceptance is
complete as against the offeree, but not
afterwards.
• Case: Dunmore (Countess of) v Alexander.
Held: if the revocation letter delivered together with the
acceptance letter, the revocation is effective.
Sec 4(3)(a) the communication of revocation of either an
offer or acceptance, is complete as against the person
who make the revocation when he put the notice of
revocation in a course of transmission, so as to be out
of the power of the sender.
Cont…
• Under sec 4(3)(b)- the communication of revocation is
complete as against the person to whom it is made,
when it comes to his knowledge.
• Illustration:
1) A offers to sell his house to B for RM 200,000 by a
letter that send by post.
Sec 4(1)- communication of an offer completes as
against A and B when B receives the letter.
2) B accept A’s offer by sending an acceptance letter
through post.
Sec 4(2)(a) & Sec 4(2)(b)
Cont…
3) A revokes his offer by a telegrammed.
sec 5(1), sec 4(3)(a) & Sec 4(3)(b)
4) B revokes his acceptance by a telegrammed
Sec 5(2), Sec 4(3)(a) & Sec 4(3)(b)
END
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