What is acceptance?

2- Acceptance

What is acceptance?

An acceptance is the final expression of assent to the terms of an offer. Acceptance of the offer clinches the contract. However, acceptance must meet certain conditions: It must exactly correspond with the offer made and, it must also be clear, unqualified, unequivocal and unconditional. The principle according to which, a valid acceptance must exactly correspond with the terms of the offer is known as the Mirror image rule.

An acceptance which modifies the offer or attempts to get a better deal constitutes in the English law of contracts, a counter offer. A counter offer is not an offer, because it introduces new terms different from the terms proposed in the original offer. It destroys the original offer and renders it incapable of acceptance. A counter offer operates a rejection of the original offer and the making of a new offer.

Sometimes, there may be a situation where one or both parties rely on their standard terms: this is known as the Battle of the forms.

Example: John makes an offer to Tyrone on a form containing John’s standard terms of business. And Tyrone accepts John’s offer on a form containing Tyrone’s standard terms of business. But a conflict arose between John’s standard terms and Tyrone’s standard terms. At this stage, there is no contract since the offer and the acceptance do not correspond. In case of conflict, each communication is considered to be a counter offer so that if a contract is formed it must be on the terms of the last counter offer.

How acceptance must be communicated?

Generally speaking, an acceptance has no effect until it is communicated to the offeror. Acceptance can also be inferred from conduct without being expressly communicated. This is also known as Acceptance by conduct. This principle was set out in the case Brogden v. Metroploitan Railway Co. (1877).

Furthermore, acceptance can be sent to the offeror by post. Acceptance by post is an exception to the general rule according to which, acceptance must come to the attention of the offeror before it is valid. Acceptance by post is governed by the Postal rule. In the postal rule, the legal principle is that the contract is made at the time the letter is posted. The postal rule principle was set out by the case Adams v. Lindsell (1818). The postal rule applies to acceptance only and not to the revocation of an offer by post. Therefore, the general “postal rule” is that acceptance by post takes effect upon posting rather than delivery.

However, there are certain conditions which relate to the use of the postal rule as follows:

a- Acceptance by post must have been requested by the offeror or acceptance by post must be a normal, reasonable or anticipated means of acceptance (Henthorn v. Fraser (1892)).

b- The letter of acceptance must be properly stamped and addressed (Re London & Northern Bank, ex parte Jones (1990).

c- The letter of acceptance must be posted; that is to say in the control of the Post Office. In Re London & Northern Bank, ex parte Jones (1990), a letter of acceptance that had been handed to a postman who was authorised only to deliver (not to collect) was held not to have been posted.

d- The postal rule must not have been expressly excluded in the offer. In Holwell Securities v. Hughes (1974), it was held that an offer which required acceptance “by notice in writing” meant that actual communication of acceptance must reach the offeror and as such the claimants could not rely on the postal rule to assert the existence of the contract.

e- The use of the postal rule must not create manifest inconvenience or absurdity (Holwell Securities v. Hughes (1974)).

The postal rule also applies:

1- If the letter of acceptance is received after notice of revocation of the offer has been sent (Henthorn v. Fraser (1892));

2- If the letter of acceptance is never received by the offeror (Household Fire Insurance Co. v. Grant (1879)).

Non-instantaneous communication of acceptance

Since the postal rule was developed, advances in communications technology have led to a number of situations where its use is irrelevant. Virtually instantaneous communications methods, such as telephone conversations, are treated in the same way as face-to-face personal conversations and are, therefore, unproblematic because acceptance takes place when and where the acceptance is received (Entores v. Miles Far East Corporation (1955)).

However, the situation is more difficult when answering machines are used. A message may be left which is not played back for some time. The same is true for telex, fax and e-mail: all systems (when working correctly) deliver messages virtually instantaneously, but those messages may not be read instantly if the receiving party is away from the receiving machine. The question then becomes the following one: when and where a contract is formed with non-instantaneous methods of communications?

As an answer to that question, let us consider the case Brinkibon v. Stahag Stahl (1983) concerning acceptance by non-instantaneous communications.

Facts (summary)

An acceptance was sent by telex out of office hours.

Legal principle

The House of Lords held that a telex message that was sent outside office hours should not be considered to be an instantaneous means of communication, and therefore, acceptance could only be effective when the office re-opened.

Finally, since acceptance must be communicated, silence can never constitute a valid acceptance. However, there are certain circumstances under which, silence may give rise to acceptance. They are as follows:

1- If the offeror observes the offeree acting in response to the offer, and says nothing, there may be a contract.

2- The parties can mutually agree that silence will constitute acceptance by the recipient of goods that are shipped to one of the parties.

3- If the parties, by previous dealings, have considered silence to be acceptance, the silent party must reject the offer if he or she wishes to change the customary practice.

Nowadays, it should be preferable to send a written rejection to the offeror, if silence could be reasonably considered as ambiguous or the outcome doubtful.

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