An acceptance is a "final and unqualified expression of assent to the terms of an offer". The idea of finality and meeting of minds is important. However, there are many situations in which the meeting of minds will not be clear, e.g. what if:
• The terms of the acceptance are not identical to those of the offer,
• Acceptance hasn't been communicated,
• There is a prescribed method of acceptance,
• Silence is used to accept,
• Can an offer be accepted if the offeree is unaware of it?
The general rule is that the acceptance is an unqualified expression of consent to the terms the offeror has offered. Thus an acceptance which tries to vary the terms of the offer is not an acceptance. In fact it will be a counter-offer, which implies a complete rejection of the terms in the original offer. With counter-offers, the offeree then becomes the offeror. Thus in Hyde v Wrench (1840) 3 Beav 334, the D offered to sell his farm to C for ?1000, C then offered ?950 but D refused. C then wrote back agreeing to pay ?1000 but D never replied. The court held that no contract had been formed as the offer to pay ?950 was a counter-offer which completely rejected the earlier offer and thus the C could not go back and later accept it.
It is important to be careful, however, when construing statements as counter-offers as they may in fact be requests for information. Thus if Claimant had written back saying "are you willing to pay ?950" rather than "I'll pay ?950", this would have been a request for information and the original offer would have remained open for acceptance.
In modern business, many industries will adopt their own standardised terms and modes of negotiating contracts. Thus it can be increasingly hard to tell whether there has been an acceptance. In Butler Machine Tool v Ex-Cell-O Corporation [1979] WLR 401, the C quoted D a price for some machinery and stated delivery would be within 10 months. On the back of the quotation was a set of terms, one of which provided for an increase in price if the cost of the machinery, delivery etc. increased. By the time the machinery was delivered there had been a massive increase in price and the D rejected the excess charge. They relied on a clause in their own terms and conditions on the back of their order (which they sent after the quotation) which did not contain any variation clause. The court held that the terms on the terms on the order had been different enough to constitute a counter-offer and the acknowledgment of order by C had been the acceptance. Thus the Defendant's terms prevailed, notwithstanding that the Claimant had made reference to their own terms after the acknowledgement.
The court, however, has been criticised for adopting a strained view of the facts. The acknowledgment was simply a tear-off slip which C signed. If there had been no such slip what would the situation have been? The Claimant proceeded to refer to their own terms during the contract and the goods were produced and delivered. Would it have made sense to say that there was no acceptance and thus no contract? It is clear though that the parties thought there was a contract even though there was no meeting of minds as to the increased payment clause. The courts will, however, hold that no contract existed in the absence of proper acceptance, making and delivering the machinery is not sufficient: conduct alone does not constitute acceptance. The reason for this is that the basis of contract is the agreement of the parties and conduct by one party does not evidence that agreement. The court must determine whether the intention was to perform task A or B, the fact that one party performs A and not B does not prove that this was the agreement between the parties: he may simply be acting in breach of contract.
The general rule is that in order to be valid, an acceptance must be communicated to the offeror. Otherwise, an offeree would be unaware that they were bound in a contract. There are, however, exceptions to this. It is possible for a person making the offer to waive the right to receiving an acceptance as in Carlill v Carbolic Smoke Ball (above). In cases of unilateral offers the acceptance is performing the action specified by the offer and this need not be communicated to the offeror.
The general rule doesn't apply when the reason for the lack of communication is the offeror's fault. Thus in Entores v Miles Far East Corporation [1955] 2 QB 327, the C in London made an offer by telex (which is like a fax) to the D (who were in Amsterdam), who were acting as agents for an American company. The D sent their acceptance by telex. The C later applied to the court to be allowed to serve a claim form on the American company (where a party wishes to serve a claim form against a non-English party they need the court's permission. One of the questions the court will ask is whether the contract was concluded in England). The court held that the contract had in fact been made in England when the acceptance was received by the Claimants in London.
The court distinguished between cases involving instantaneous communication (like a fax or email) and communication by post. In cases involving post the rules are different, as is considered below. In cases involving instant communication, the contract will be concluded in whichever country the acceptance fax or email is sent to. As the acceptance was sent to London, the contract was concluded there. A more intricate question is whether acceptance is at the moment that the acceptance arrives or only when it is read. It is likely that a court would hold that the moment of acceptance is the moment the message arrives, as long as it is within office hours.
An offeror is permitted to state how the acceptance must be communicated. If the terms of the offer state that an acceptance must be in a certain format, then any deviation is likely to render th acceptance invalid. Whereas, it is possible that if the terms do not stipulate the mode of acceptance in a mandatory way, then any form of acceptance will be valid as long as it is not more disadvantageous to the offeror (e.g. if the offeror says acceptances by email or phone, but the offeree faxes and the offeror has no fax machine to receive the fax). The answer will depend on an interpretation of the term.
Generally, silence cannot be an acceptance as, obviously, there would be extreme uncertainty as to whether a contract has been concluded or not. The rule seems less obvious in a situation where an offeror makes and offer and says that they will consider it accepted within 7 days unless the offeree rejects it. The offeree wants to accept the contract and so says nothing, but the offeror later seeks to assert that there is no contract. Arguably it is unfair to the offeree. In Felthouse v Bindley (1862) 11 CBNS 869, the C claimed he had bought a horse from his nephew. After negotiations C wrote to his nephew offering to bu the horse. He ended the letter saying "if I hear no more about him, I consider the horse mine at ?30 15s". The nephew didn't reply. The horse was sold by accident by an auctioneer and the C brought an action for conversion (the tort of taking a possession for which one doesn't have ownership). The court held that there had been no valid contract.
Acceptances mailed by post do not follow the general rule that an acceptance is only valid when it is communicated to the offeror. An acceptance is valid at the moment when it is put into the post box by the offeree in order to send it to the offeror: Adams v Lindsell (1818) 1 B&Ald 681. This validity upon posting is called the "postal rule". This rule is well settled but has been frequently criticised.
Thus in Henthorn v Fraser [1892] 2 Ch 27, the Claimant was given a written offer in person. The next day, however, the Defendant tried to revoke their offer and the letter of revocation reached the Claimant's office at 5pm. However, earlier that day the Claimant had mailed his acceptance of the offer and it reached the Defendant at 8.30pm. The Defendant refused to honour the contract and argued that because he had given the Claimant the offer in person, he had indicated that the postal rule did not apply to this case. The court held against the Defendant saying that the use of the post had been contemplated and thus the postal rule applied. The Claimant's acceptance was valid when he posted it which was before the revocation.
In Holwell Securities v Hughes [1974] 1 WLR 155, the C tried to exercise an option to purchase some land by mailing a written declaration to that effect. The D never received the letter. C then sought the remedy of specific performance (where the court forces the party at fault to perform the action they contracted to do, in this case transfer land). The court rejected the claim on the grounds that the Claimant had failed to give notice. The reasoning for this was that the postal rule did not apply. Had the postal rule applied then there would have been a valid contract even if the letter had been lost in the post. The rationale of the court was that the wording of the clause said that C must give "notice in writing to" the Defendant which required communication to the Defendant and not just posting. Leaving the particular fact that there was a clause in this case, the decision of the court is authority for the principle that whether or whether not the postal rule applies depends on what the parties contemplated. Thus if the parties contemplated that the acceptance might be by post, the postal rule applies. If, however, as in this case, the parties say that the written acceptance must be "to" the Defendant, then the acceptance is only valid when it reaches him. It is still possible to send it by post but the postal rule doesn't apply.
As mentioned in the discussion of the Carlill case, above, the courts are prepared to accept that in cases of unilateral contracts the offeror has waived their right to have an acceptance communicated to them. Another general rule would be that the offeree must perform the entire act specified by the offer before there has been acceptance. Thus a person who finds a leaflet for a missing dog cannot spend 10 minutes looking for the dog and claim that they accepted the offer of a reward upon finding the pet.
A different question is when a unilateral offer can be revoked. Arguably once someone has begun performance there should be an implied term preventing them from withdrawing the offer. Thus if the performance is long and arduous it would unfair for the offeror to withdraw it halfway through. In Errington v Errington [1952] 1 KB 290, the Court of Appeal considered the situation where a father bought a house and was paying the mortgage on it. He allowed his son and daughter-in-law to live there if they paid the mortgage. The father died and left the house to his widow in his will, she wanted the house back. The court held that a unilateral contract had arisen between the father and the son and his wife and the payment of the mortgage was performance of the contract. It was not possible for the widow to claim the house anymore than it would have been for the father to withdraw his offer once they had started. As long as they were performing the obligation and did not stop until it was complete, it was not possible to revoke the offer.
Is it possible to accept an offer you don't know exists? For example, if a person returns a lost wallet to its owner but wasn't aware that the owner was offering a reward. As a general rule, you must have knowledge otherwise you may find yourself subject to contracts you didn't know existed. But where the offeree performs the act in question unknowingly but then becomes aware of the offer right before speaking with the offeror, it is arguable that they should be allowed to assert a contract came into existence.
A more likely situation, is where a party performs an action which would constitute acceptance but they did so without any intention of accepting the offer. An example from an Australian case is where a man was arrested for murder, he was aware that there was a reward for information leading to the arrest of the murderers and he gave information to the police. The court did not allow him to recover the reward because they held that he had given information to the police "exclusively to clear himself" and not because he wanted the reward. It would seem, however, that as long as the offeree was aware of the offer then they will be allowed to assert there was valid acceptance, unless their motive was completely different. This would be hard for an offeror to prove.
When does an offer cease to be open for acceptance? As touched on above, the general rule is that an offer is capable of being revoked until it has been accepted. The revocation, however, must have been communicated to the offeree prior to their acceptance. Thus, in Byrne v Van Tienhoven (1880) 5 CPD 344, the court held that an offer posted on 1 October was validly accepted by the Claimants in America. There had been a massive leap around 3 October in the price of tin and the offeror immediately sent a revocation of their offer of October 1 to sell tin at a low price. By the time the revocation reached America on 20 October the Claimants had already accepted.
An offer will expire after a period of time stated in the offer. However, a promise to keep an offer open for a certain period can only be enforced by the offeree if consideration is provided for that promise: Dickinson v Dodds (1876) 2 Ch D 473.
Beale, Chitty on Contracts (28 th ed 1999), para 2-024.
Household Fire and Carriage Insurance v Grant (1879) 4 Ex D 216.
