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Chapter 1: Acceptance
Acceptance:
Acceptance of an offer means unconditional agreement to all terms and
conditions of the offer. Acceptance can be oral, written or expressed through
conduct.
A purported acceptance which does not accept all the terms and conditions
proposed by the offeror but the which in fact introduces new terms is not an
acceptance but a counter-offer.
The acceptance should mirror the offer. This means that if offer states price for
1200 Tonnes of Iron at certain terms, the offeree cannot accept the price for 800
Tonnes.
Case: Tinn v Hoffman (1873)
There are two basic checks for an acceptance to hold valid:
A: unconditional assent to the terms of the offeror
B: Communication of acceptance to the offeror
Acceptance of a Unilateral Contract
In unilateral contracts, performance of act in response to the offer constitute as
its acceptance as well as its consideration. A promise in return of a unilateral
offer would convert it into a bilateral contract.
There is no acceptance until the relevant act has been completely performed.
Counter Offer :
If when responding in a form purporting to be an acceptance, the offeree alters
the terms contained in the offer or adds a new term, that response will constitute
a counter-offer. The following are the key rules regarding counter-offer:
A: Counter-offer is considered as an offer on revised terms being made by
the offeree, agreement will result only if there is acceptance of the
counter-offer by the original offeror.
B: Counter-offer operates in the same way as a rejection, namely to cause
the original offer to lapse and prevent the original offeree from changing
its mind and accepting that original offer.
Case: Hyde v Wrench (1840)
A offered to sell land to B for 1000. B replied offering 950. Clearly that was not
an acceptance but a counter-offer. A rejected the counter-offer, whereupon B
purported to accept the original offer of 1000. A denied that any contract had
been made and the court agreed. It was not open to B to revive As offer unless A
was willing to revert to those terms.

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Notes: Where the variation by offeree in the counter-offer is in relation to
something less central, it is common for the reply to the offer to be described as
an acceptance.
Request for Information:
If offerees communication is no more than a request for further information, the
offer will remain available for acceptance.
Case: Stenvenson, Jacques & Co. v McLean (1880)
The defendant had offered to sell at a price of 40s net cash per ton. The
claimants had replied asking whether the defendant would accept 40 for
delivery over 2 months, or if not, the longest limit you could give. It was held
that this reply did not operate to reject the defendants offer but was an inquiry
to determine whether there was any flexibility in the offer terms. Therefore, it
remained possible for the claimant to accept that offer.
How to distinguish between Counter-offers and Request for
Information:
There are two key factors in making the distinction between Counter-offers and
Request for Information:
A: Is the offeree purporting to accept but at the same time changing the terms
(counter-offer) or is he trying to decide whether he can accept by seeking to
negotiate on the offer terms (request for further information)?
B: How certain is the language used in the response?
For example (class exercise):
1: A offers to sell B his car for 1500. B replies: I agree but I am only prepared to
pay 1400 (Counter-offer)
2: A offers to sell B his car for 1500. B replies by asking whether A would be
prepared to accept 1400? (RoI)
Negotiation and Battle of Forms:
Battle of forms refers to the problem resulting from increasing use of often
conflicting standard terms of business. Each party to a sale or supply contract
will send its own terms in an effort to ensure that those terms and conditions
prevail. The question in such a case is to determine whose terms govern in this
battle of forms.
The general rule in such cases is that the last shot wins the battle. Each new
form issued is treated as a counter-offer, so that when one party perform its
obligation under the contract (by delivering goods for example), that action will
be seen as acceptance by conduct of the offer in the last form.
Case: British Road Services v Arthur Crutchley & Co Ltd. (1968)

The claimants delivered some goods to the defendant for storage.

The BRS driver handed the defendants a delivery note, which listed his
companys condition of carriage.
Crutchleys employee stamped the note Received under (our) conditions
and handed it back to the driver.
The court held that stamping the delivery note in this way amounted to a
counter-offer. Which BRS accepted by handing over the goods. The
contract therefore incorporated Crutchleys conditions rather than those of
BRS.

There are exception to this general rule where court has not let the last shot
succeed.
Case: Butler Machine Tool Ltd. v Ex-Cell-O Corp (1979)

Claimants supplied a quotation containing standard terms and stating the

that these terms would prevail, which included price variation
clause(offer)
Defendants placed an order containing their own terms and conditions
with tear-off acknowledgement slip (counter-offer)
Claimants returned tear-off acknowledgement slip which stated we accept
your order on the terms and conditions [on the order form]. Also sent
letter stating order accepted in accordance with the earlier quote
(Acceptance)
Claimants delivered goods.

Communication of Acceptance:
Specific Methods of Accpetance:
If the offeror stipulates in his offer a specific method of communication for
acceptance, general rule is that acceptance by that method only or an equally
effective one will be binding.
The following approach is adopted by courts, which is generally considered a
pragmatic approach towards law:
A: Explicit words are required in order for a stipulated method to be considered
mandatory e.g., an explicit statement that the prescribed method must be
followed and that no other will suffice.
B: In Manchester Diocesan Council of Education v Commercial & General
Investments Ltd (1970) Buckley J stated that where the offeror has not made it
very clear that the stipulated method is mandatory and that no other will suffice,
following principles applied so that the acceptance might nevertheless be valid:

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i: Any equally efficacious method of acceptance will be valid if it fulfils the
purpose in prescribing the method. For example, if the offeror wants a
quick response and prescribes acceptance by fax, then as long as this
method is not mandatory, any acceptance that is just as quick as a fax
acceptance will suffice.
ii: Alternatively, if the method was prescribed in order to benefit the offere,
the offeree can waive a stipulation for his benefit and use a different
method as long as this method does not disadvantage the offeror. In Yates
Building Co. Ltd v Pulleyn & Sons (York) Ltd (1975) the offer stipulated that
the acceptance should be sent by registered or recorded post. This was
intended to enable the offeree to prove that the acceptance had been
posted. Accordingly the offeree could waive the requirement and take the
risk of the ordinary post.
Knowledge of Offer before Acceptance:
It is necessary in a reward (unilateral) contract to have knowledge of the offer to
claim the reward. In cases of bilateral contract, where same offers are sent
simultaneously be each party (cross-offers) the contract is not formed.
The rule that acceptance must be in response to, and with knowledge of the
offer, has a number of unfortunate consequences:
A: It may leave parties without a contract despite the fact they are subjectively
agreed on all matters, if they cannot objectively be shown to have gone through
the process of agreement.
If two parties both make offers to each other more or less simultaneously (i.e.
before receiving others offer) then even if the offers are made in identical terms
there is no contract. The offers may correspond but there is no agreement
because there is no acceptance made in response to the others offer. Tim v
Hoffman (1873). It should be noted that a small act of performance should be
considered as acceptance.
B: An offeror could obtain the benefit of performance of an act and yet not have
to pay the reward simply because the particular offeree happended not to see
the offered reward. Gibbons v Hudson (1968)
Silence as Acceptance in Bilateral Contracts:
In standard bilateral negotiations, the general rule is that the oferror cannot
waive the need for communication and stipulate that silence that silence will
constitute acceptance.
Case: Felthouse v Bindley (1862)
An uncle and nephew had been negotiating the sale of the nephews horse to his
uncle, but they could n ot agree on the price. In the end the uncle had written,
saying that if he heard no more he would assume that the nephew agreed to his
proposal of a price of 30 15s. The nephew appears to have been satisfied with

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this arrangement, since he instructed an auctioneer to withdraw the horse in
question from a sale. However, he did not communicate this fact to his uncle.
When the auctioneer mistakenly sold the horse, the uncle sued him for
conversion, claiming to be the owner of the horse under a contract with his
nephew. The court did not accept his claim.
The decision has been termed incorrect and has been criticized on the following
grounds:
A: Silence principle is said to protect offerees from contracts where they had no
intention to accept. However, the nephews conduct of instructing his auctioneer
not to include the horse in the auction sale would appear that there was an
intention to accept.
Inertia Selling:
When an offeror, without any previous course of dealing, seeks to force an
offeror to reply in order to avoid the formation of a contract, that contract is
known as Inertia selling/contract.
There are three exceptions to the silence principles:
1: If there has been a course of dealing where the offeree has taken the benefit
of services offered, the offerees silence (or conduct) can constitute acceptance.
2: IF it is the offeree who is attempting to hold the offeror to the offerors
stipulation that silence will constitute acceptance
3: If it was the offeree, rather than the offeror, who initiated the proposal that the
offerees silence would constitute acceptance.
Postal Rule of Acceptance:
The postal rule of Acceptance state that when the acceptance is communicated
by post the contract is formed as soon as the letter is sent, without need for it
ever to reach the offeror. The rule was established through Adams v Lindsell
(1818)
Case: Adams v Lindsell (1818):
The defendants offered to sell wool to the claimants, asking for a reply in course
of post. The defendants letter was misdirected, so that the claimants reply was
delayed beyond the normal course of post, and the defendants sold the wool to
someone else. Nevertheless, the claimant had sent a letter of acceptance on the
same day that they had received the offer, and they claimed that there was an
enforceable contract. The court upheld claimants claim and the postal rule of
acceptance came into existence.
Justification for the Postal Rule of Acceptance:

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1: Without such a rule offerees would never know whether a contract had been
formed. Offerees will have to wait until they receive a written notification that
their acceptance has reached the offeror.
2: The postal rule prevents offerees from speculating by posting an acceptance
and then (if the market changes) withdrawing it by speedier means.
3: The offeror, unlike the offeree, will not be prejudiced by delays or loss in the
post, since the offeror is expecting a response and will check if a reply is not
received.
4: If the offeror has indicated that use of the post is permissible, then it is the
offeror who should bear the risks of that system. Postal rule is applicable only
where it was reasonable in all the circumstances for the offeree to have used the
post; such would most obviously be the case where the offer had been sent by
post.
The postal rule of acceptance is a rule of convenience adopted in the interests of
certainty. The basic argument is that offerors should know the risks inherent in
use of the post and can protect themselves if they wish to do so. Indeed, the fact
that the postal rule can be avoided in practice is often used as a reason to justify
its existence.
Criticism of Postal Rule:
1: Where a postal acceptance has been lost in the post, the offeror may believe
that, since no reply has been received, the offeree does not wish to accept.
Avoiding the Postal Rule:
The Postal Rule can be easily avoided by the following two means:
1: By specifying the means of communication (other than post) required for
acceptance, thus not bearing risk involved in using post.
2: By wording the offer to require actual communication of any acceptance. (Let
me know or notice in writing to accept can avoid postal rule.
Case: Holwell Securities Ltd. Hughes (1974)
The defendant granted the claimant an option for the purchase of certain land,
which was said to be exercisable by notice in writing to the defendant at a given
address within six months. The claimant posted a letter accepting the offer in
question within the six-month period, it failed to arrive. The Court of Appeal held
that the option had not been validly exercised and, accordingly, there was no
contract. The main finding was that the mere words notice in writing to were
sufficient to oust the postal rule. These words amounted instead to a stipulation
that notice must reach the offeror, thus reinstating the general principle of actual
communication.
Retraction of (or overtaking) a postal acceptance

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There is no English case authority addressing this issue. However, academics
have discussed this issue at length. There are the following two positions on the
issue:
1: It is not possible to retract (or overtake) a postal rule.
2: It is possible to retract (or overtake) a postal acceptance where the offeror is
not disadvantaged.