Contract Law - Acceptance

Описание: In order for there to be a fully formed contract there has to be an offer but that offer also has to be accepted.

When we think of acceptance we can split it up into the fact of acceptance and the communication of acceptance.

The fact of acceptance means looking at the circumstances in each case. Acceptance can occur through words, documentation or even actions (Brogden v Metropolitan Rly Co. (1877)).

If the courts find that the parties have each acted on the basis of the contract then it is likely that there will be thought to be acceptance and an intention to be bound by the terms (Hillas & Co Ltd v Arcos Ltd (1932)).

However it is also important that there is a sufficient degree of certainty and the courts should not engage in speculation (Scammell v Ousten [1941]).

Any acceptance has to be unreserved. Any form of continued negotiation or counter-offer has the legal effect of destroying the original offer (Hyde v Wrench (1840)).

This can be a difficult process because the counter-offer itself has to be distinguished from a request for more information (Stevenson v McLean (1880)).

Where there is an agreement that is ‘subject to contract’ then this will not be binding until the actual contract is signed unless there are clear words to the contrary (e.g. ‘provisional agreement’ in Branca v Cobarro [1947]).

Although slighly unusual in the law in general it is possible for a contract to have retrospective effect and therefore to legitimise past conduct (Trollope and Colls Ltd v Atomic Powers Constructions Ltd [1962]).

Certainty is a must in any contract but this fact can sometimes be used by people in a bid to avoid certain liabilities. Nevertheless if the courts find there to be a sufficient degree of certainty then liability will arise (British Steel Corpn v Cleveland Bridge & Engineering Co Ltd [1984]).

Whether there is a binding contract is based on objective analysis of the behaviour of the parties (RTS Flexible Systems Ltd v Molkerei Alois Muller [2010]).

In some contracts, something as fundamental as the price might not have been agreed but if it is to be fixed based on some future condition then that will be sufficiently certain (Shell (UK) Ltd v Lostock Garage Ltd [1977]).

Tenders present an unusual problem because if a company agrees to take up to a certain amount of a particular item then that term lacks a certain amount of uncertainty. The law gets around this by determining there to be a separate contract for each requisition (Great Northern Rly Co. v Witham (1873)).

The second part of acceptance is the communication and this requires some form of words or action.

Silence will generally not constitute acceptance (Felthouse v Bindley (1862)).

However there may be instances in which the need for communication is waived by the offeror as in the famous case of Carlill v Carbolic Smokeball Co [1893].

An offeror can prescribe a mode of communication by which acceptance is to be made but generally any method which is equally effective will suffice (Tinn v Hoffmann & Co (1873)).

Acceptance is not complete until it is received by the offeror (Entores Ltd v Miles Far East Corpn [1955]).

When the parties are not in each other’s presence, the rule that acceptance must be communicated to the offeror is not very practical. As such the postal rule was created in Adams v Lindsell (1818) so that acceptance takes place when the letter is put in the post. However this raises further questions about whether acceptance can then subsequently be withdrawn by a quicker method.

Where the person who fulfils a contract has no knowledge of the offer there shall be no binding agreement (R v Clarke (1927)). However motive is not a relevant factor (Williams v Carwardine (1833)).

If two parties make identical cross-offers then this is not seen as creating agreement (Tinn v Hoffman & Co (1873)).