Lecture 4A - Agreement (Accept & Com of Offer)_3

7/28/2019 Lecture 4A - Agreement (Accept & Com of Offer)_3

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Lecture 4A

AGREEMENT

ACCEPTANCE

COMMUNICATION OF ACCEPTANCE

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Formation of a Contract: AGREEMENT

ACCEPTANCE ACCEPTANCE

An acceptance is the unqualified

agreement to the terms of theoffer. To make a binding

contract, the acceptance mustexactly match the offer.

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ACCEPTANCE BY CONDUCT ACCEPTANCE BY CONDUCT

Acceptance will often be oral or in

wr ng. may a so e y ac on .e.by conduct.

Case example:Brogden v Metropolitan Railway (MRC), 1877

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Merely remaining silent cannot

,unless it is absolutely clear

that acceptance wasintended.

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Silence as Acceptance?Silence as Acceptance?

Felthouse v Bindley (1862)The facts; The plaintiff discussed buying a horse from his nephew and wrote to him

" ", …

reply but wanted to sell the horse to the plaintiff, and when he was having a saletold the defendant auctioneer not to sell the horse. By mistake the defendantsold the horse. The plaintiff sued the defendant in the tort of conversion butcould only succeed if he could show that the horse was his.

Decision: It was held that the uncle had no right to impose upon the nephew a saleof his horse unless he chose to comply with the condition of writing to repudiatethe offer. It was clear that the nephew intended his uncle to have the horse buthe had not communicated his intention to his uncle, or done anything to bindhimself. Nothing, therefore, had been done to vest the property in the horse in

the plaintiff. There had been no bargain to pass the property in the horse to theplaintiff, and therefore he had no right to complain of the sale. 5




COUNTER OFFER COUNTER OFFER If in his reply to an offer, the offeree introducesintroduces a

new term or varies the terms of the offer, thenthat reply cannotcannot amount to an acceptance.

Instead, the reply is treated as a "counter offer",which the original offeror is freefree to accept orreject.

A counter-offer also amounts to a rejection of the originaloffer which cannot then be subsequently accepted

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CONDITIONAL ACCEPTANCECONDITIONAL ACCEPTANCE

If the offeree uts a conditioncondition

in the acceptance, then it willnot be binding.

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ACCEPTANCE MUST BE ACCEPTANCE MUST BECOMMUNICATEDCOMMUNICATED

The general rule is that an acceptance must be.

acceptance is communicated, no contract comesinto existence.

The acceptance must be communicated by the offeree orsomeone authorised by the offeree. If someone acceptson behalf of the offeree, without authorisation, this willnot be a valid acceptance

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EXCEPTIONS TO THEEXCEPTIONS TO THECOMMUNICATION RULECOMMUNICATION RULE

1. Terms of the Offer

2. Conduct of the offeror

3. The Postal Rule

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Exception to the communication rule

1. TERMS1. TERMS OF THE OFFER OF THE OFFER

An offer may state or imply that acceptance

.

For unilateral contract, (in Carlill v Carbolic Smoke Ball Co

1893), it was held that it was sufficient for the claimant toact on the offer withoutwithout previously notifying heracceptance.

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2. CONDUCT2. CONDUCT OF THE OFFEROR OF THE OFFEROR

An offeror who failsfails to receive an acceptancethrough their own faultown fault may be prevented

from claiming that the non-communicationmeans they should not be bound by thecontract.

The Brimnes (1975), where the acceptance is sent by telexduring business hours, but is simply not read by anyone in

the offeror’s office. 11




3. THE3. THE POSTAL RULEPOSTAL RULE

Where acceptance by post has been requested orwhere it is an appropriate and reasonable means of

communication between the parties, then acceptanceis complete as soon as the letter of acceptance isposted, even if the letter is delayed, destroyed or lostin the post so that it never reaches the offeror.

Case example:

Adams v Lindsell (1818)

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Formation of a Contract: AGREEMENTFormation of a Contract: AGREEMENT

EFFECT OF THE POSTAL RULEEFFECT OF THE POSTAL RULE

A postal acceptance cancan take,

gets lost in the post and neverreaches the offeror.

Case example:

Household Fire and Carriage Accident Insurance Co v Grant 1879

.

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EFFECT OF THE POSTAL RULE (cont’d…)EFFECT OF THE POSTAL RULE (cont’d…)

Same rule appliesapplies where theletter eventually arrives, but is

delayed by postal problems.Where an acceptance is posted after the offeror posts a revocation of the

offer, but before that revocation has been received, the acceptance willbe binding (posted acceptances take effect on posting posted revocationson communication). This point is illustrated by the cases of Byrne v LeonVan Tiehoven (1880) and Henthorn v Fraser (1892)

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EFFECT OF THE POSTAL RULE (cont’d…)EFFECT OF THE POSTAL RULE (cont’d…)

Where the postal rule applies, itseems unlikelunlikel that an offeree could

revoke a postal acceptance byphone (or some other instant means

of communication, e.g. fax or email)before it arrives.

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EXCEPTIONS TO THE POSTAL RULEEXCEPTIONS TO THE POSTAL RULE

An offeror may avoid avoid the postal ruleby making it a term of their offer that

acceptance will only take effectwhen it is communicated to them.

Case example:

Holwell Securities Ltd v Huges, 1974

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EXCEPTIONS TO THE POSTALEXCEPTIONS TO THE POSTAL RULE (Cont’d…)RULE (Cont’d…)

Acceptance of an offer may only bemade by a person authorisedauthorised to do

so. s usua y e e o eree or sauthorised agents.

Case example:Powell v Lee 1908

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IGNORANCE OF THE OFFERIGNORANCE OF THE OFFER

A person cannotcannot accept an offer of whichthey are unawareunaware because in order to

create a binding contract, the partiesmust reach agreement.

If their wishes merely happen to coincide, that may bevery convenient for both, but it does notdoes not constitute acontract and cannot legally bind them.

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IGNORANCE OF THE OFFER (cont’d…)IGNORANCE OF THE OFFER (cont’d…)

Thus, if Ann advertises a reward for the return of a lostcat and Ben, not having seen or heard of the

’, ,

address on its collar and takes it back to Ann, is Annbound to pay Ben the reward? On general principles,

Ben is probably unable to claim the reward.

Case example:

R v Clarke 1927

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Lecture 4A - Agreement (Accept & Com of Offer)_3