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Acceptance: Topics You Will Cover

- Acceptance is required to form a contract and can be expressed verbally, in writing, or through conduct. Acceptance must communicate exact agreement with the offer and be final and unconditional (Case: BROGDEN v METROPOLITAN RAILWAY CO.). - Conflicting standard contract terms between two parties are resolved by the "last shot rule" where the last party to send terms prevails (Case: BUTLER MACHINE TOOL v EX-CELL-O CORP. LTD.). - Silence is not acceptance unless explicitly agreed to by the offeror. Acceptance must be communicated to the offeror to be valid (Case: FELTHOUSE v BINDLEY).

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56 views

Acceptance: Topics You Will Cover

- Acceptance is required to form a contract and can be expressed verbally, in writing, or through conduct. Acceptance must communicate exact agreement with the offer and be final and unconditional (Case: BROGDEN v METROPOLITAN RAILWAY CO.). - Conflicting standard contract terms between two parties are resolved by the "last shot rule" where the last party to send terms prevails (Case: BUTLER MACHINE TOOL v EX-CELL-O CORP. LTD.). - Silence is not acceptance unless explicitly agreed to by the offeror. Acceptance must be communicated to the offeror to be valid (Case: FELTHOUSE v BINDLEY).

Uploaded by

Khadija
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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ACCEPTANCE

Topics you will cover:


- Acceptance
- Ways it can be conveyed
- Battle of Forms
- Communicating acceptance
- Silence as acceptance
- Method of acceptance
- Who can convey acceptance?
- Not communicated until recieved
- Acceptance by post
- Factors reducing hardship to the rule

Cases included in this chapter:


Case #1: BROGDEN v METROPOLITAN RAILWAY CO.
Case #2: BUTLER MACHINE TOOL v EX-CELL-O CORP. LTD.
Case #3: FELTHOUSE v BINDLEY
Case #4: ELIASON v HENSHAW
Case #5: POWELL v LEE
Case #6: ENTORES v MILES FAR EAST CORP.
Case #7: YATES BUILDING COTTED v R.J. POLLEYN & SONS
Case #8: HOUSEHOLD FIRE INSURANCE v GRANT
Case #9: HOLWELL SECURITIES LTD. v HUGHES

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- Acceptance:
• There is no contract until the offer is accepted.

- Ways it can be conveyed:


• Acceptance may be expressed orally, in writing or it may be
inferred from conduct.
• If one party without expressing anything in words starts to
behave as if he has accepted the offer, the court will assume
he/she has accepted.
• Acceptance by conduct is illustrated by the case of BROGDEN
v METROPOLITAN RAILWAY CO. [1877] , in which the House of
Lords found that, although the terms of the draft element
between the parties had not been formally accepted, a contract
had been agreed.
This could be inferred from the fact that both parties acting
accordance with the terms of the draft.

Battle of Forms:
• The concept of the Battle of Forms may arise problems,
where two have their terms/conditions and both try to impose
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them on each other. The general rule is that the last one to
rend his/her terms wins.
• BUTLER MACHINE TOOL CO. v EX-CELL-O CORP. LTD. [1977],
in which there was a series of offers and counter-offers which
passed between the two parties. Each containing standard
contracting terms of the relevant party.
The seller's (claimant) terms had a price variation clause and
the buyers (defendant) terms did not. The buyers took awhile
before they took delivery and therfore the price variation
clause was invoked by the seller's.
The main issue was whether the contract was made with or
without the clause.
The court held there to be no price variation clause. As the
buyer's "fired the last shot", by sending the final offer which
the seller's had accepted. As such, the contract was made on
the buyer's terms, without a price variation clause.
Lord Denning stated that "the documents should be
'constructed as a whole' though this appears to me to be
somewhat irrelevant."

- Communicating acceptance:
• Acceptance must be communicated corresponding exactly
with the terms of the offer.
• It must final and unconditional.
• Acceptance must be communicated to the offer party. It is
not enough that the offeree has decided to accept the offer;
he/she must inform the offeror that he/she has decided to
accept.

- Silence as acceptance:
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• It follows that the offeror may not take silence for acceptance
without the prior agreement of the offer.
• In the case of FELTHOUSE v BINDLEY [1862], a nephew had
been seen negotiating the sale of his horse to his uncle. The
uncle, Felthouse wrote and offered to buy the horse saying, "If I
hear no more about it, I consider the horse mine at £30.
The nephew decided to sell at that price and instructed his
auctioneer, Bindley who was about to sell the horse, to refrain
from doing so.
The auctioneer still sold the horse by mistake. And the uncle
proceeded on suing the auctioneer for selling his horse,
claiming that the sale to him by his nephew was completed
before the horse was sold by the auctioneer.
The court found that there was no completed contract between
Felthouse and nephew because his nephew had not
communicated acceptance to his uncle.

- Method of acceptance:
• In the case of ELIASON v HENSHAW [1819], where it was
stipulated that acceptance should be sent by wagon. Unless the
offeror makes it clear that the only one method of acceptance
will do, another equally quick or satisfactory method will be
acceptable.

- Who can convey acceptance?


• Acceptance must be made by someone who is authorized to
accept.
• In POWELL v LEE [1908], the plaintiff went for an interview
and was told by the clerk to the interviewing panel that he had
got the job. The panel later changed it's decision and sued for
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breach of contract. It was held that acceptance was not valid as
the clerk had no authority to make the offer, and therefore ther
was no contract.

- Not communicated until recieved:


• Generally, acceptance is not communicated until the offeror
has actually recieved it.
• In ENTORES v MILES FAR EAST CORP. [1955], that an
acceptance sent by Telex (instant messaging service) is valid
and the contract is made, when and where it is recieved.
The same would apply to acceptance made by telephone.

- Acceptance by post:
• In the case of YATES BUILDING CO. LTD. v R.J. PULLEYN &
SONS [1975], it was held that acceptance by ordinary post was
sufficient to form a valid contract because it fulfilled the sellers
requirement that he should recieve a written notice of
acceptance. The requirement was not interpreted strictly as an
absolute condition of acceptance.
• In the case of acceptance by post, the contract is made as
soon as the letter is put in the post, even if it is delayed or
never reaches the other party at all.
• This rule was established in ADAMS v LINDSELL and was
applied in HOUSEHOLD FIVE INSURANCE v GRANT.
Grant offered to buy shares in the plaintiffs company and a
letter was posted accepting his offer. He did not recieve the
letter but the court held that a contract was made as soon as
the letter was posted and therefore Grant was a shareholder in
the company. And was liable to contribute when the company
went into liquidation.
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Obviously the rule creates a hardship but this is possible to
reduce through some factors.

- Factors reducing hardship to the rule:


• The rule is applicable only when the letter is correctly
stamped and addressed.
• The rule applies only when it is reasonable to the post.
• The parties have an option to opt out of the rule by excluding
it from the contract if they want to.
• In the case of HOLWELL SECURITIES LTD. v HUGHES [1974], it
was held that the notice implied that he/she should actually
know about the acceptance and so therefore there was no
contract.

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