Acceptance
Acceptance
By the end of this lecture you should:
1. Have understood what acceptance is;
2. How acceptance can be made; and
3. When acceptance will be valid.
Acceptance
The formalities of a contract are:
•
•
•
•
Offer;
Acceptance;
Consideration; and
An intention to create legally binding
relations.
Definition of Acceptance
Acceptance can be defined as:
the unconditional assent to all the terms
of the offer
No acceptance
Acceptance will not occur when:
1.The acceptance amounts to a counter
offer
2.The words ‘subject to contract’ are used
Acceptance
Acceptance can occur either:
1.
Expressly; or
2.
Impliedly.
Implied acceptance
Brogden v Metropolitan Railway Co.
(1877) 2 App Cas 666 HL
Silence is not acceptance
Felthouse v Bindley
(1862) 11 CBNS 869
Entores Ltd v Miles Far East Corporation
[1955] 2 All ER 493
Lord Denning said : ~
Suppose, for instance, that I shout an offer to a man
across a river ... but I do not hear his reply because it
is drowned by an aircraft flying overhead. There is
no contract at that moment. If he wishes to make a
contract, he must wait until the aircraft is gone and
then shout back his acceptance so that I can hear
what he says.
Powell v Lee
(1908) 99 L. T. 284
Channell J said:
There must be notice of acceptance from the
contracting party in some way, and the mere fact that
the managers did not authorise such a
communication, which is the usual course adopted,
implies that they meant to reserve the power to
reconsider the decision at which they had arrived.
Valid Acceptance
In order for acceptance to be valid we
have seen that acceptance must be: ~
1. Communicated to the offeror; and
2. If a body is represented, made by a
person who is authorised to accept.
Exceptions
There are some exceptions to the
normal rules that apply to acceptance.
These exceptions can be found in: ~
1. The postal rule; and
2. Unilateral contracts.
The Postal Rule
What is the postal rule?
The Postal Rule
Adams v Lindsell
(1818) 106 ER 250
The Postal Rule
Cross reference Adams v Lindsell with
Byrne and Co v Van Tienhoven and Co
(1880)
The Postal Rule
Holwell Securities v Hughes
[1974] 1 All ER 161 CA
Holwell Securities v Hughes
Russell LJ said: ~
The relevant language here is, ‘the said option shall be
exercisable by notice in writing to the intending Vendor ... ’ a
very common phrase in an option agreement.
There is, of
course, nothing in that phrase to suggest that notification to the
defendant could not be made by post. But the requirement of
‘notice ... to’, in my judgement, is language which should be
taken expressly to assert the ordinary situation in law that
acceptance requires to be communicated or notified to the
offeror, and is inconsistent with the theory that acceptance can
be constituted by the act of posting ... as acceptance without
notification.
Holwell Securities v Hughes
Russell LJ said: ~
The answer might well be that in the circumstances
the defendant had impliedly invited communication by
use of an orifice in his front door designed to receive
communications.
Acceptance & the postal
rule
Re London and Northern Bank ex parte Jones
[1900] 1 Ch. 220
Prescribed methods of
communication
Yates Building Co. Ltd v Pulleyn & Sons (York) Ltd
(1975) 119 SJ 370
Unilateral Contracts
Carlill v Carbolic Smoke Ball Company
[1893] 1 QB 256
Summary
1.
2.
3.
4.
5.
When the words subject to contract are used, or if the
acceptance inserts new terms into a contract, so as to amount
to a Counter Offer, no acceptance will occur.
Acceptance can occur either expressly or impliedly through
conduct.
Silence cannot constitute acceptance
The postal rule states, when it is applicable, that acceptance
will be deemed effective when the letter of acceptance is
posted.
Acceptance will not be valid until it is communicated to the
offeror unless the postal rule is valid, or the offer was made
unilaterally.