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Simple notes on the communication of acceptance
Simple and concise notes on the communication of acceptance in contract law
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Contract Law – FormationLecture 4 – the communication of acceptance
Acceptance: some rules and difficulties
- Simple rule: acceptance must be aware of acceptance – consensus ad idem – the receipt rule
(Entores v Miles (1955)) but there are situations where the rule cannot be applied without
difficulty
- Acceptance by conduct, silence/inactivity, the transmission of acceptance and the postal
rule
When does acceptance take effect? Does it matter?
- Yes
- It will determine the time up until which a withdrawal of the offer remains an option for the
offeror
- The place at which the contract is concluded, since this is deemed to be the place at which
acceptance is received
- The place of the contract’s making may in turn determine the national law to which it is
subject, unless the parties have specifically agreed the governing law, and various
procedural consequences also follow e.g. if you make a contract with someone in Germany
is important – sometimes people will say they want to contract to be done per English law
etc
Conduct: Carlil an exception
- The offerees conduct may in certain circumstances validly constitute acceptance of an offer
made to him: exception to the rule that communication of acceptance is required
- In unilateral contracts, this exception has in fact assumed the status of a general rule itself
- Carlil: the facts again/she never told the company that she had used the ball… where was
acceptance then of their unilateral offer?
- Bowen: as rule is in favour of the offeror, he can waive… this is a gloss on the rule
- ‘expressly or impliedly intimates in his offer that it will be sufficient to act on the proposal
without communicating acceptance of it to himself, performance of the condition is a
sufficient acceptance without notification’
- Acceptance and performance merge?
- Have to work out why it is that Carlils conduct could amount to conduct – court accepts that
she was sick
- Performance is conduct and will suffice here
- This is quite an exception given the unilateral contract aspect
- Acceptance must be communicated always unless conduct is exception
Acceptance by conduct can occur in a bilateral contract
Brogden v Metropolitan Railway Co (1876)
- Conduct without formal notification of acceptance can lead to a binding contract… but
when?
- B, supplied coal to MRC for two years without a formal contract. To regularise the situation,
V was sent a draft contract. He filled in various gaps in the contract, added the name of a n
arbitrator, and returned the form (counteroffer). The company’s manager put the form in his
, Contract Law – Formation
desk. Coal was then ordered and supplied in accordance with the draft contract, until B
denied any obligation to make further supplies. The company sued for breach of contract
but needed to prove a contract had been made
- HoL said that a valid contract had come into existence; Bs counter offer had been accepted
by the conduct of the company in placing orders for coal on its terms
How important was performance?
Brogden reasoning:
- The notion that an incomplete negotiation can be overtaken by the parties subsequent
conduct in acting as if they had reached agreement. This departs from the usual rule in the
name of realism or fairness
- Reflect the courts unwillingness to undo bargains upon which the parties have acted
British Steel Co v Cleveland bridge
Conduct before formation?
- Letter of intent from C to BS – thought contract would shortly be agreed between the two
companies. As requested, BS began to manufacture the components in the interim
- Negotiations but no agreement/including on what standard terms were to govern
- BS claimed no contract but entitled to recover reasonable remuneration on a quantum
meruit basis for the work which they had done.
- It was held that there was no contract.
- But that the restitutionary quantum meruit claim succeeded – all 3 things for unjust
enrichment had been established
-
- Why? Role of performance
Acceptance by Silence/Inactivity
Issue:
- If the offeror is free to vary the usual requirement that he be notified of the offerees
acceptance, where do the boundaries to that freedom lie? Can the offeror nominate silence
as adequate acceptance?
- No
- Rule is that silence is not acceptance – generally
- Therefore putting the onus on the offeree to demonstrate ‘positive conduct’ that he has
accepted the offer – silence is not seen as positive conduct
- Issue is when/where contract will be made
- Unlimited supplied/unsolicited offers
- Law does not impose obligations on parties to act without agreement
- No reference to waiver will get around it – like in Carlil
- If we didn’t have the rule, then offerors would be able to make offers to people that didn’t
want one – if they could stipulate silence the person would have to say NO GO AWAY
- Don’t impose obligation without a contract
Felthouse v Bindley (1862)
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