Acceptance
Accepting a deal means that you agree to all of its terms without any conditions. It must
also be in line with those terms. The case of Hyde v Wrench (1840) says that a message
that seems to be an acceptance but changes the terms of the offer is actually a counter-
offer, which replaces and cancels the original offer.
Definition:- is defined by Treitel as "A final and unqualified expression of assent to the
term of an offer"
How and When acceptance can be made?
- Orally [through words] * acceptance will often be oral or in writing
- In writing [through post]
- By conduct [indicating acceptance if it seems reasonable to infer]
Brogden v Metropolitan Rail Co [1877]
F - The complainants, Brogden, were suppliers of coal to the defendant, Metropolitan
Railway. They completed business dealings regarding the coal frequently for a number of
years, on an informal basis. There was no written contract between the complainant and
the defendant. However, the parties decided that it would be best for a formal contract
to be written for their future business dealings. The Metropolitan Railway made a draft
contract and sent this to Brogden to review. The complainant made some minor
amendments to this draft and filled in some blanks that were left. He sent this amended
document back to the defendant. Metropolitan Railway filed this document, but they
never communicated their acceptance of this amended contract to the complainants.
During this time, business deals continued and Brogden continued to supply coal to the
Metropolitan Railway.
D - The House of Lords held that there was a valid contract between suppliers, Brogden
and the Metropolitan Railway. The draft contract that was amended constituted a
counter offer, which was accepted by the conduct of the parties. The prices agreed in the
draft contract were paid and coal was delivered. Although there had been no
communication of acceptance, performing the contract without any objections was
enough.
Felthouse v Bindley [1862]
F - The complainant had a conversation with his nephew, about buying his horse. After
their discussion, the uncle replied by letter stating that if he didn’t hear anymore from
his nephew concerning the horse, he would consider acceptance of the order done and
he would own the horse. His nephew did not reply to this letter and was busy at
auctions. The defendant, Mr Bindley, ran the auctions and the nephew advised him not
to sell the horse. However, by accident he ended up selling the horse to someone else.
D - It was held that there was no contract for the horse between the complainant and his
nephew. There had not been an acceptance of the offer; silence did not amount to
acceptance and an obligation cannot be imposed by another. Any acceptance of an offer
must be communicated clearly. Although the nephew had intended to sell the horse to
Acceptance Page 1
must be communicated clearly. Although the nephew had intended to sell the horse to
the complainant and showed this interest, there was no contract of sale. Thus, the
nephew’s failure to respond to the complainant did not amount to an acceptance of his
offer.
LP:- Merely remaining silent cannot amount to acceptance, unless it is absolutely clear
that acceptance was intended.
Exception:-
Re Selectmove Ltd [1995]
F - The Inland Revenue petitioned the court for a winding-up order in respect of a
company, Selectmove, which had accrued arrears in the tax it owed under the PAYE
system of tax collection. The company appealed on the grounds that a tax collector had
met with the company and agreed that the company could pay the arrears in instalments
instead of being wound up.
D - The Court of Appeal held in favour of Inland Revenue. This was primarily because the
representative did not have (actual, ostensible or implied) authority to bind Inland
revenue to any representation.
:- The Court of Appeal in this case thought that it was in theory possible to accept an
offer by silence. For example, where the offeree says that offeror can treat the offer as
accepted if he does not hear a response within a particular period. By contrast, silence
is much less likely to amount to acceptance where the offeror states that if the offeree
does not respond he will treat the offer as accepted.
1. Acceptance of an offer to enter into a unilateral contract
• Unilateral contracts are usually accepted by conduct.
• There is no acceptance until the relevant act has been completely performed.
2. Acceptance must be unconditional
• An acceptance must precise terms of an offer.
Tinn v Hoffman [1873]
F - The defendant offered by letter to sell the claimant 800 tons of iron for 69s per ton. In
the letter, the defendant specified that the claimant should reply by post. By
coincidence, the claimant wrote to the defendant on the same day asking to buy the iron
on the same terms. The claimant contended that his letter to the defendant was a valid
acceptance, even though he sent it before receiving the defendant’s letter.
D - The court held in favour of the defendant. The claimant could not accept an offer of
which he was not aware, so the letter was not a valid acceptance.
Acceptance Page 2
which he was not aware, so the letter was not a valid acceptance.
:- The offeree must be aware of the offer before they can validly accept it.
3. Negotiation and the 'battle of the forms' ['last shot' wins the battle]
• The paradigm battle of the forms occurs when A offers to buy goods from B on its
(A's) standard terms and B purports to accept the offer on the basis of its own
standard terms.
• The battle of the forms occurs when one party sends a form stating that the
contract is on their standard terms of business, and the other party responds by
returning their own form and stating that the contract is on their terms. The
general rule in such cases is that the last shot wins the battle.
• Each new form issued is treated as a counter-offer, so that when one party
performs its obligation under the contract by delivering goods, that action will be
seen as acceptance by conduct of the offer in the last form.
British Road Services v Arthur V Crutchley & Co Ltd [1968]
F - The claimants delivered some whisky to the defendants for storage. The BRS driver
handed the defendants a delivery note, which listed his company's 'conditions of
carriage'. Crutchley's employee stamped the note 'Received under our conditions' and
handed it back to the driver.
D - The court held that stamping the delivery note in his way amounted to a counter-
offer, which BRS accepted by handing over the goods. The contract therefore
incorporated Crutchley's conditions, rather than those of BRS.
Exception:-
Butler machine Tool Ltd v Ex-Cell-O Corp (England) Ltd [1979]
F - The plaintiffs offered to provide delivery of a machine tool for the price of £75,535.
The delivery of the tool was set for 10 months, with the condition that orders only
qualified as accepted once the terms in the quotation were met and prevailed over any
of the buyer’s terms. The buyer responded to the offer with their own terms and
conditions, which did not include the ‘price variation clause’ listed in the seller’s terms.
This included a response section which required a signature and to be returned in order
to accept the order. The sellers returned this response slip with a cover letter signalling
that delivery would be in accordance with their original quotation. The tool was ready for
delivery but the buyers could not accept delivery, for which the sellers increased the
price which was in line with their initial terms. This was denied by the buyer and an
action was brought by the seller to claim the cost of delay and interest.
D - The court allowed the buyer’s appeal. The court found that the buyer’s order was not
an acceptance of the initial offer from the seller but a counter-offer which the sellers had
accepted by returning the signature section of the buyer’s letter. On this basis, the court
found that the contract was completed without the price variation clause and therefore
the seller could not increase the cost of the tool.
Acceptance Page 3
the seller could not increase the cost of the tool.
GHSP Incorporated v AB Electronic Ltd [2010]
• The High Court held that, although the parties had entered into a contract, the
terms of the contract were not to be found in either of the parties' respective
standard terms of business. The negotiations between the parties made clear that
neither was willing to contract on the other's terms. There is no implied term
limiting liability, so this decision favoured the claimant. While it is no surprise that
these terms were implied into the contract, what is surprising is that the contract
consisted purely of these terms.
Specified methods of acceptance
• If an offeror only intends to be bound by acceptances communicated in a particular
way, they need to make that clear, if not, they may still be bound by acceptances
communicated in a different way.
Manchester Diocesan Council of Education v Commercial and General Investments Ltd
[1969]
F - The complainants, Manchester Diocesan Council of Education, called for tenders
relating to property. The defendant, Commercial and General Investments Ltd,
submitted a tender offer to buy the property from the complainants. It was stated that
the acceptance of tender would be notified to the person by a posted document and to
the address that was to be given in the tender. The complainants decided to accept the
tender given by the defendants. They sent their acceptance of the tender. However, they
sent the document to the defendant’s solicitor and not the address given on the offer.
Later on, the complainant sent another acceptance to the defendant’s address detailed
on the tender.
D - The court held that there was no prescribed or mandatory method for acceptance of
a tender. If the offeror wanted to create a mandatory acceptance method, this would
need to be made clearly and explicitly to the other parties. An equally effective method
of acceptance would be enough to form a valid contract.
:- If the offeror specifies that the offeree should respond using a particular method or
in a particular way, a response which does not meet these requirements may still be
valid. This will be the case if the offer does not explicitly say that only that method will
be binding, and the offeree’s method is no less advantageous than the one the offeror
asked for.
Tinn v Hoffman [1873]
• An offeror specifies that they want acceptance communicated by a particular way,
an acceptance communicated by a method that is equally effective and carries no
disadvantage to the offeror can be valid.
Yates Building Co Ltd v R J Pulleyn & Sons (York) Ltd [1975]
Acceptance Page 4
F - The defendant granted the plaintiff an option to buy land, exercisable by notice in
writing to be sent by “registered or recorded delivery post”. The plaintiff sent a letter
accepting this offer by ordinary post, which was received by the defendant who refused
to accept it as valid.
D - It was held that this method of acceptance was valid and was no disadvantage to the
offeror, as the method stipulated was only to ensure delivery and that had happened.
Inland Revenue Commissioners v Fry [2001]
• The IRC claimed that Fry owed it $113,000 to the IRC with the letter starting that
the cheque that was in full settlement and that if presented for payment this would
be acceptance of her offer.
• The terms of the offer must be certain if the worlds of the offer are too vague then
the parties might not really know what they are contracting for and should not
then be bound.
ACCEPTANCE MUST BE COMMUNICATED
• An acceptance does not usually take effect until it is communicated to the offeror
Entores Ltd v Miles Far East Corporation [1955]
F - The claimant was a London-based company. They contacted the defendant’s agents in
the Netherlands by Telex and offered to buy a number of copper cathodes. The
defendant’s agents responded by Telex accepting the offer. The claimant later alleged
that the defendant had breached the contract. They sought permission from the English
courts to serve their claim out of the jurisdiction. To get permission, they had to show
that the contract was formed in London. The defendant claimed that the postal rule
applied to this case. If so, this meant that their acceptance was valid the moment it was
sent in the Netherlands. Accordingly, the contract was formed in the Netherlands.
D - The Court of Appeal held in favour of the claimant. This was not a case where the
postal rule applied. The defendant had to actually communicate their acceptance to the
claimant. Since the claimant was in London when they received the acceptance, the
contract was formed in London. The court therefore granted permission to serve outside
the jurisdiction.
:- The postal rule only applies to letters sent by traditional post. The normal rule is that
the offeree must actually communicate their acceptance to the offeror. This normal
rule applies in cases involving instantaneous forms of communication like Telex.
Exceptions to the communication rule
1. Terms of the offer
• An offer may state or imply that acceptance need not be communicated to the
offeror, although, as Felthouse v Bindley shows, it is not possible to state that the
offeree will be bound unless he or she indicates that the offer is not accepted.
Acceptance Page 5
offeree will be bound unless he or she indicates that the offer is not accepted.
• Unilateral contracts usually do not require acceptance to be communicated to the
offeror. In Carlill v Carbolic Smoke Ball Co, it was held that performance of the
terms would be enough to amount to acceptance.
2. Conduct of the offeror
• An offeror who fails to receive an acceptance through their own fault may be
prevented from claiming that the non-communication means they should not be
bound by the contract. [Entores is applied here]
• The acceptance is sent by telex during business hours, but is simply not read by
anyone in the offeror's office. [The Brimnes]
THE POSTAL RULE
GR:- If an acceptance is sent by post, it takes effect when it is posted, rather than when it
is communicated.
Adams V Lindsell [1818]
F - Adams wrote to Lindsell offering to sell him 800 tods of wool. Adams asked for a
response within two weeks. A few days later, Lindsell wrote back agreeing to the offer.
However, the letter was misdirected. As a result, it arrived two days after the deadline.
In the meantime, Adams had already sold the wool to a third-party. Lindsell sued Adams
for breach of contract.
D - The Court held in favour of Lindsell. The acceptance became valid from the moment
the letter was posted. There was therefore a contract between Adams and Lindsell.
LP:- An acceptance by post takes effect when it is posted, rather than when it is
communicated.
:- A posted acceptance is validly communicated to the offeror as soon as it is posted,
even if it arrives late. This is now known as the ‘postal rule’.
Getreide-Import Gesellschaft v Contimar [1953]
• The postal rule will not apply if the communication was incorrectly misaddressed.
D - The court held that the conditions for appeal had not been complied with by the
defendants in this case. The appeal notice had not been communicated within the 14-
day limit; the letter had been wrongly addressed to another company and the chances of
it being received were remote. The clause that details receipt within 24 hours would only
apply to a notice that was properly addressed.
Henthorn v Fraser [1892]
F - The defendant granted the claimant an option to purchase some of the defendant’s
properties. The defendant stated that the option would be open for 14 days. However,
the next day the defendant wrote to the claimant withdrawing the offer. They posted
the letter at midday, and it arrived after 5pm. At around 3 o’clock, the claimant wrote to
Acceptance Page 6
the letter at midday, and it arrived after 5pm. At around 3 o’clock, the claimant wrote to
the defendant accepting the offer. The claimant’s letter arrived after the defendant’s
offices had closed for the day. The claimant sued for specific performance of the sale.
D - The Court of Appeal held in favour of the claimant. The defendant had failed to
successfully withdraw the offer before the claimant accepted it. The claimant’s letter of
acceptance took effect the moment it was posted (under the postal rule). However, the
defendant’s withdrawal only took effect when the claimant received it. By then, it was
too late.
:- A posted acceptance is valid as soon as it is posted (this is known as the postal rule).
By contrast, the offeror must actually communicate the withdrawal of an offer to the
offeree: the postal rule does not apply.
Cowan v O'Connor [1888]
• Postal rule aslo applies to certain non-instantaneous modes of communication.
• PR was applied to acceptance by telegram
D - It was held that an acceptance came into effect when the telegram was placed with
the Post Office. Since 1981, the Post Office in England no longer offers a telegram
service, but the same rule would apply to the telemessage service which replaced it.
EXCEPTIONS TO THE POSTAL RULE
1. Offers requiring communication of acceptance
• An offeror may avoid the postal rule by making it a term of their offer that
acceptance will only take effect when it is communicated to them.
Holwell Securities Ltd v Hughes [1974]
F - The defendant, Dr Hughes, gave the complainants, Holwell Securities, the option to
purchase his house for £45,000. It was stated that this option was exercisable ‘by notice
in writing’ within six months. The complainants posted a letter agreeing to this option by
Dr Hughes and this was done five days before the six-month expiry. However, this
agreement letter was lost in the post and it never reached Dr Hughes.
D - This appeal was dismissed. It was stated by the court that the postal rule does not
automatically apply in every case, despite the post being an acceptable means of
communication in transactions or business proposals. It is important to look at all the
circumstances of the case to see what the parties intended, which may mean a binding
agreement does not apply until it is communicated. In this case, Dr Hughes stated the
option was exercisable ‘by notice in writing’ within six months, which meant that he
would have to receive the communication in writing before a valid contract would be
created. This specification meant that the postal rule did not apply.
:- The postal rule does not apply where this would be inconsistent with what the offer
requires. This will be the case where the offer specifies that the acceptance must reach
the offeror.
Acceptance Page 7
2. Instant methods of communication
• When an acceptance is made by an instant mode of communication, such as
telephone or telex, the postal rule does not apply.
Entores v Miles Far East Corporation [1955]
D - The Court of Appeal held in favour of the claimant. This was not a case where the
postal rule applied. The defendant had to actually communicate their acceptance to the
claimant. Since the claimant was in London when they received the acceptance, the
contract was formed in London. The court therefore granted permission to serve outside
the jurisdiction.
Brinkibon v Stahag Stahl [1983]
• The same approach was approved in here by the House of Lords.
F - The complainants, Brinkibon Ltd, were a company that was based in London. They
were buying steel from the defendants, Stahag Stahl, who were sellers based in Austria.
The complainants sent their acceptance of the offer by Telex, which was to the
defendants in Vienna. Brinkibon Ltd later wanted to sue Stahag Stahl for breach of
contract and applied to serve an out of jurisdiction party.
D - The House of Lords ruled against the buyers. The acceptance had taken place at the
time and in the place where the offeror received the telex. Since that was in Austria, the
contract was not formed in the UK.
:- Acceptance of an offer by instantaneous means of communication happens at the
place and time it is received by the offeror. The postal rule does not apply to
instantaneous methods of communication.
Mondial Shipping and Chartering BV v Astarte Shipping Ltd [1995]
• It was considered
D - The High Court held in favour of the charterers. The telex only counted as being
‘received’ by the charterers during business hours. Since the telex was sent outside of
business hours, the charterers technically received the notice at 9:00am on Monday. By
then, the obligation to pay was overdue. However, this kind of notice clause requires any
notice to clearly state why the notice is being sent and the consequences of failing to
comply. If it does not, then it is invalid. The fact that the notice did not say that the
owners would withdraw the boat therefore made it invalid.
Thomas v BPW Solicitors [2010]
D - The High Court held in favour of the defendant. The circumstances indicated that
completing the sale required a) the buyer’s solicitors to give a satisfactory undertaking;
b) the defendant to accept that undertaking; and c) a completion call between the two
solicitors’ firms.
Effect of the postal rule
Acceptance Page 8
1. The postal acceptance takes effect when it is posted, even if it gets lost in the post
and never reaches the offeror.
Household Fire Insurance v Grant [1879]
F - The defendant offered to purchase shares in the claimant’s company. The company
allotted those shares to the defendant. They then wrote him a letter informing him that
the shares were his. However, the letter never arrived. The defendant later denied that
he was a shareholder. He argued that the claimant had not accepted his offer because
their letter never arrived.
D - The Court of Appeal held in favour of the claimant. The postal rule was applicable to
this case, meaning that the claimant communicated their acceptance the moment they
posted the letter. It did not matter that the letter never arrived.
:- Where the offeree sends their acceptance by post, it is communicated to the offeror
immediately. This is true even if the letter never arrives. This is known as the postal
rule.
2. An acceptance is posted after the offeroe posts a revocation of the offer, but
before thatrevocation has been received, the accepatnce will be binding.
Henthorn v Fraser [1892], Byrne v van Tienhoven [1880]
3. The postal rule applies, it seems unlikely than an offeree could revoke a postal
acceptance by phone before it arrives.
Dunmore v Alexander [1830]
• Does appear to allow such a revocation, but the court's views were only obiter on
this point.
Acceptance Page 9
