Contract Law 2

7/30/2019 Contract Law 2

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CONTRACT LAW - ACCEPTANCE OF

OFFERS

At the end of this lecture you should

have an understanding of:

the mirror-image rule of acceptance

the operation of counter-offers

the effect of requests for information

other issues surrounding acceptances

of offers


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Acceptance - basics

Generally for bilateral contracts an

acceptance of an offer must be:

in response to an offer

an acceptance of the offer without any

modifications - mirror imageor

unconditional acceptance

communicatedto the offeror


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Warning about the rules of

acceptanceCheshire, Fifoot and Furmstons Law of

Contract 14th edition page 40:

It must again be emphasised that thephrase offer and acceptance though

hallowed by a century and a half of

judicial usage, is not to be applied as atalismanrevealing the presence of a

contract (PTO )


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The rules which the judges have

elaborated from the premise of offer and

acceptance are only presumptions

drawn from experience, to be applied INSO FAR as they SERVE THE

ULTIMATE OBJECT of establishing the

phenomena of AGREEMENT.


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When an offer has been made by the

offeror, the offeree may do either of 4things:

Accept the Offer Make what amounts Make a request Do

nothing

exactly - the to a counter-offer for further

mirror image information

rule


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Counter-offers

If the offeree in any way modifies the offerand tries to say that this is an acceptance,then it is NOT. Such behaviour has 2 effects:

it actually CANCELS OUT or REVOKES theoriginal offer such that it cannot be accepted

later on, and it represents a counter-offer to the original

offer


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A offer Bofferor can do 1 of 4 things

IF what B does

amounts to a

A counter-offer counter-offer

can do 1 of 4 things because it is not a

mirror image

acceptance


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Hyde v Wrench 1840

In this case when the defendant offered tosell his farm to the plaintiff for 1000, theplaintiff replied that he would give 950 forthe farm. The defendant refused this and

when the plaintiff then replied that he wouldgive the 1000, the defendant refused to sell.It was held that there was no contractbetween the two because when the plaintiff

had stated that he would give 950 for thefarm, this amounted to a counter-offer andcancelled out the original offer.


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Counter-offers: acceptance by

behaviourThe original offeror may impliedly accept

a counter-offer by his behaviour as

was determined in the cases of:

Brogden v Metropolitan Railway Co 1877

Confetti Records and others v Warner

Music UK Ltd2003


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Counter-offers: covering letters

What if A makes an offer to B who

accepts it according to the mirror-image

rule, BUT, B attaches a covering letter?

This question arose in The Society of

Lloyds v Twinn 2000.


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How can the judge decide if the offeree

has made a counter offer or merelyASKED FOR MORE INFORMATION,

thus leaving the original offer still open?

This is not an easy task as shown in

STEVENSON v McLEAN1880.


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The effect of common phrases

often used in acceptances:

- subject to contract - Confetti Records

vWarner Music UK Ltd2003

- provisional agreement- Branca vCobarro 1947


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The effect of other phrases

Here we can see the attitude of the

courts to phrases in contracts in the

contrasting cases of:

Hillas and Co Ltd v Arcos Ltd1932

Scammell v Ouston 1941


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Now we can consideracceptances with meaninglessphrases in them.

The case ofNICOLENE LTD v SIMMONDS1953 demonstrates how judges will IGNORE

MEANINGLESS PHRASES in contracts if the2 parties are in agreement on the

ESSENTIALS in the contract.


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Acceptance - Battle of the Forms

When businesses trade on their ownStandard Form Contracts which set of

terms and conditions is to prevail - that

of the buyers or the sellers?

A key case is

Butler Machine Tool Co Ltd v Ex-Cell-OCorporation (England) Ltd1979


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Battle of the Forms continued

In the Court of Appeal Lord JusticesLawton and Bridge took the traditional

approach and analysed the case interms of offer and acceptance.

Lord Denning however took a differentapproach and used the Battle of theForms method of analysis.


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Communication of the acceptance

Can be considered under 5 broad headings:

1. With respect to electronic communication

2. When the offeree simply remains silent3. Acceptance and unilateral contracts

4. When the mode of acceptance is specified

5. The postal rule of acceptance


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Electronic methods of

communicationFor these methods of communication, the

general receipt rule applies. Key cases are:

Entores v Miles Far Eastern Corp 1955

Brinkibon v Stahag Stahl und Stahl Waren

Handels GMBH 1983

Tenax Steamship Co Ltd v The Brimnes 1975


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When the offeree remains silent

The general rule here is that silence by

the offeree does not amount to

acceptance of an offer. Key cases are:

Felthouse v Bindley 1862

Re Selectmove Ltd 1995


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Unilateral contracts and acceptance

In a unilateral contract the performanceof the act specified may be seen as the

acceptance of the offer. However, thereare issues regarding:

1. When the acceptance comes intoeffect

2. The point at which the offer can be

revoked


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Where the offeror specifies the mode

of acceptanceTo enforce one method only ofacceptance the offeror must use very

specific language.

A key case is:

Manchester Diocesan Council forEducation v Commercial & GeneralInvestments Ltd1969


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The postal or dispatch rule of

acceptanceThe postal rule is basically the opposite

of the receipt rule. Key cases are:

Henthorn v Fraser1892

Adams v Lindsell1818

Holwell Securities v Hughes 1974

Yates Building Co Ltd v Pulleyn & Sons

Ltd1975

Documents

Contract Law 2