Offer and acceptance: Encyclopedia II - Offer and acceptance - Acceptance

Offer and acceptance - Acceptance

Offer and acceptance - Test of acceptance

Acceptance is a final and unqualified expression of assent to the terms of an offer [G.H. Treitel, The Law of Contract, 10th edn, p.16]. It is no defense to an action based on a contract for the defendant to claim that he never intended to be bound by the agreement if under all the circumstances it is shown at trial that his conduct was such that it communicated to the other party or parties that the defendant had in fact agreed. Signing of a contract is one way a party may show his assent. Alternatively, an offer consisting of a promise to pay someone if the latter performs certain acts which the latter would not otherwise do (such as paint a house) may be accepted by the requested conduct instead of a promise to do the act. The performance of the requested act indicates objectively the party's assent to the terms of the offer.

The essential requirement is that there be evidence that the parties had each from an objective perspective engaged in conduct manifesting their assent. This manifestation of assent theory of contract formation may be contrasted with older theories, in which it was sometimes argued that a contract required the parties to have a true meeting of the minds between the parties. Under the "meeting of the minds" theory of contract, a party could resist a claim of breach by proving that although it may have appeared objectively that he intended to be bound by the agreement, he had never truly intended to be bound. This is unsatisfactory, as the other parties have no means of knowing their counterparts' undisclosed intentions or understandings. They can only act upon what a party reveals objectively to be his intent. Hence, an actual meeting of the minds is not required.

This requirement of an objective perspective is important in cases where a party claims that an offer was not accepted, taking advantage of the performance of the other party. Here, we can apply the test of whether a reasonable bystander (a "fly on the wall") would have perceived that the party has impliedly accepted the offer by conduct.

Offer and acceptance - Rules of acceptance

There are several rules dealing with the communication of acceptance:

• The acceptance must be communicated: Depending on the construction of the contract, the acceptance may not have to come until the notification of the performance of the conditions in the offer as in Carlill's case, but nonetheless the acceptance must be communicated. Prior to acceptance, an offer may be withdrawn.
• An offer can only be accepted by the offeree, that is, the person to whom the offer is made.
• An offer is not bound if another person accepts the offer on his behalf without his authorisation: see agent (law).
• It may be implied from the construction of the contract that the offeror has dispensed with the requirement of communication of acceptance.
• If the offer specifies a method of acceptance (such as by post or fax), you must accept it using a method that is no less effective than the method specified.
• Silence cannot be construed as acceptance: see Felthouse v. Bindley (1862) 142 ER 1037.

The "mirror image rule" states that if you are to accept an offer, you must accept an offer exactly, without modifications; if you change the offer in any way, this is a counter-offer that kills the original offer. However, a mere request for information is not a counter-offer. It may be possible to draft an enquiry such that is adds to the terms of the contract while keeping the original offer alive.

Often when two companies deal with each other in the course of business, they will use standard form contracts. In Butler Machine Tool Co Ltd v. Ex-Cell-O Corporation (England) Ltd [1979] WLR 401, the question was raised as to which of the standard form contracts prevailed in the transaction. Denning MR preferred the view that the documents were to be considered as a whole, and the important factor was finding the decisive document; on the other hand, Lawton and Bridge LJJ preferred traditional offer-acceptance analysis, and considered that the last counter-offer killed all preceding offers.

As a rule of convenience, if the offer is accepted by post, the contract comes into existence at the moment that the acceptance was posted. This rule only applies when, impliedly or explicitly, the parties have in contemplation post as a means of acceptance. It excludes contracts involving land, letters incorrectly addressed and instantaneous modes of communication.

In Australian law, there is a requirement that an acceptance is made in reliance or persuance of an offer: see R v. Clarke.

Offer and acceptance - Rejection death or lapse of time

If the offeree rejects the offer, the offer has been killed and cannot be accepted at a further date. The offer also cannot be accepted after the time period specified in the offer, or if no time was specified, after a reasonable period of time. If the offeror dies, the offeree may accept only if the acceptance is done without the knowledge of the death; conversely, the estate of a deceased offeree may not accept an offer.

Adapted from the Wikipedia article "Acceptance", under the G.N U Free Docmentation License. Please also see http://en.wikipedia.org/wiki