ACCEPTANCE

INTRODUCTION
 S 2(b) - when a person to whom the proposal is made signifies his assent
thereto, the proposal is said to be accepted, a proposal when accepted becomes a
promise. The person accepting the proposal is called the ‘promisee’ or the
‘acceptor’.
 A proposal when accepted becomes a promise.
 The person accepting the proposal is called the promisee.
 When an acceptance of any promise is made in words, the acceptance is said to
be expressed.
 If the acceptance is made other than in words, the acceptance is said to be
implied.
 For a proposal to be converted into a promise, the acceptance of that proposal
must be absolute and unqualified -S 7(a)
 NEGOTIATION
 the parties are still negotiating, an agreement is not yet formed
 Lau Brothers & Co v China Pacific Navigation Co.
 negotiations for the delivery of logs were conducted through series
of telegrams and letters. Whilst still in the negotiating stage, the D
withdrew.
 was there a binding contract between the two parties?
 The court held: - the parties were still in a state of negotiation and
no agreement was formed. Therefore, the D was justified in
withdrawing.
 COUNTER OFFER
Hyde v Wrench (1840)
The D offered to sell his estate to the P on June for 6 1000pound
On 8 June in reply, the P made a counterproposal to purchase at
950pound.
When the D refused to accept this offer on 27June, the P wrote again that
he was prepared to pay the original sum demanded.
The court held that, no contract existed between them because the P had
rejected the original proposal 8 june so that he was no longer capable of
accepting it later.
Low Kar Yit& Ors v Mohamed Isa
A purported acceptance which is qualified by the introduction of a new
term may be considered by the court as a counter offer destroying the
original offer.
 TIMING OF ACCEPTANCE
 Acceptance must be made within a reasonable time.
 What amounts to reasonable time is a question of fact depending on the
circumstances of each case, e.g. the nature of the subject matter or the method by
which the offer is communicated
 The rationale for this rule on, within reasonable time is given by Hashim
Yeop Sani J in the case of Macon Works & Trading v Phang Hon Chin as
follows:-
 An offer lapses after reasonable time not because this must be implied in the
offer but because failure to accept within a reasonable time implies rejection
by the offeree.
 As a consequence, the court can take into account the conduct of the parties after
the offer was made in deciding whether the offeree has allowed too long time to
lapse before accepting.
 MANNER OF ACCEPTANCE

 Acceptance must be expressed in some usual and reasonable manner unless the proposer prescribes the manner in
which it is to be accepted. The proposer cannot prescribe silence as a manner of acceptance.
 Felthouse v Bindley
 The P, Paul Felthouse , wrote to his nephew , John, on 2 February, offering to buy his horse for 30 pound 15 s , and
adding ‘if I hear no more about him, I consider the horse mine at that price.’
 The nephew made no reply to his letter, but intimated to the D, an auctioneer , who was going to sell his stock , that
the horse was to kept out for sale.
 The D inadvertently sold to a third party at an auction held on 25 February, and the P sued him in conversion.
 Held:-the action must fail as there had been no acceptance of the P’s offer before 25 February , and the P had at that
date no title to maintain conversion.
 The general rule is that the offeror cannot bind the offeree by stating that if the offeree does nothing he ( the
offeree) will be bound to a contract, but there may be exceptions to this rule depending on the facts of the case.
 For example; the offeree himself may stipulate that his silence shall constitute an acceptance or, in a counter-offer
situation, there is an intimation that silence would be regarded as an acceptance of the counter-offer.
 Silence may also amount to acceptance if there are other facts like the conduct of the offeree to indicate acceptance
 Weatherby v Bantham- the receipt and reading of a periodical after expiry of a subscription amounted to an
acceptance.
 POSTAL RULE

 Under S 4(2) of the CA there is a difference in time when the communication of acceptance
is complete as against the proposer and the acceptor (promisee).
 As against the proposer the communication of an acceptance is complete when it is
put into a course of transmission
 i.e when the letter is posted to proposer
 Legal effect??
 The proposer cannot revoke his proposal
 As against the acceptorthe communication of acceptance is complete when it comes
to the knowledge of the proposer.
 i.e when the letter is received by the proposer.
 Legal effect??
 Acceptor cannot revoke his acceptance
 What is the legal position when the acceptance does not reach the proposer, e.g where the
acceptance is contained in a letter which goes astray?
 POSTAL RULE
 Ignatius v Bell- The D Bell gave an option to the P to purchase a piece of land on the
condition that the option must be exercised on or before 20 August 1912 by a notice
in writing. The P exercised the option by posting a letter on 16 August. The D only
received the letter on the 25 August 1912. The P sued the D for specific performance
(for D to perform the contract).Court Held: the acceptance was complete when it was
out into the post on the 16 August.
 Household Fire Insurance Co v Grant [1879]
 The CA applied the postal rule in a case where the letter of acceptance was
permanently lost in the post.
 -The D’s letter agreed to buy 100 shares in a company.
 -He paid 5% of the price of 100pound .
 -A letter accepting his offer was posted but never received.
 -A company went into liquidation. A good contract was formed when the letter was
posted and the D was therefore obliged to pay the remaining 95pound.
 POSTAL RULE
 Adams v Lindsell
 On Tuesday 2 Sept 1818, the D sent a letter to the Ps, offering to sell wool and requiring an answer by return of post.
 The Ds misdirected the letter and this caused it to be delivered at 7pm on Friday 5 September
 If the letter had not been misdirected it would have arrived on 3 September
 The P posted an acceptance was carried via London; it was not received by the Ds until 9 September.
 If the Ds had not misdirected the letter containing their offer then a reply by return of post would have arrived on 7
September.
 As they had not received an acceptance by 7 September, the D s sold the wool to a 3 rd party.
 Held: there was a good contract on 5 September when the letter of acceptance was posted.

 In cases of acceptance through post, acceptance is complete upon posting may be excluded by the express terms of
offer.
 In the case of Howell Securities Ltd v Huges
 the offer prescribed that the acceptance must be by notice in writing to the intending vendor.
 Held:- in such a case, mere posting of letter of acceptance was not sufficient.
 The acceptance would only take effect when actually received by the offeror.
LIMITATIONS OF POSTAL RULE
 Only applies to acceptances and not to any other type of communication which may pass
between potential contracting parties.
 Offers, counter offers, revocation of offers, etc must all be properly communicated, even if sent
through the post or by telegram.
 It only applies where it was reasonable for the acceptance to be sent by post
 Where the offer was made by post, then in the absence of any indication from the offeror to the
contrary, it will certainly be reasonable to reply in the same form, and the postal rule will operate.
 Wherever the parties are communicating over a distance, it is likely to be reasonable to use post,
even if the offer has been made in some other way.
 Henthorn v Fraser
 Where the circumstances are such that it must have been within the contemplation of the parties
that, according to the ordinary usages of mankind , the post might be used as a means of
communicating the acceptance of an offer , the acceptance is complete as soon as it is posted.
 ACCEPTANCE BY PRIVATE COURIER
 There has been a growth in the availability of various kinds of private courier
service, which might also be used to deliver communications creating a contract.
 Does the postal rule apply to acceptances sent by such means?
 There is no authority on this point but there are 2 possible lines which the law
might take.
 1stit might be argued that the reasons for applying the postal rule in Adams v
Lindsell apply equally to communications via a private courier.
 The acceptor gives the letter to a private courier, and thereby puts the acceptance
out of his or her control.
 Provided that it was reasonable for the acceptor to use the courier service, the
acceptance should take effect as soon it is given to the courier.
 2nd line of argument might resist the notion of extending the postal rule
beyond its current application
 ACCEPTANCE BY PRIVATE COURIER
 It might well be said that communications have developed dramatically since 1818, when Adams v Lindsell was
decided.
 Nowadays, is an acceptor wants to proceed quickly on the basis of a contract, where the acceptance has been given to a
private courier, there is no need to wait a long time to receive confirmation that the acceptance has arrived.
 A telephone call to the offeror will enable the acceptor to find out very quickly whether thus has happened or not.
 If the need for speed is even greater, then the acceptance could be sent by fax or email with request for confirmation by
phone, fax or email, as soon it has arrived.
 It is difficult to predict which line of argument the courts would find more attractive.
 If the second approach were accepted , there would be a strong argument for saying the postal rule itself should be
reviewed.
 Currently there is no move by the courts in recent years to extend the postal rule to other media, which indicates the
application of the postal rule may be limited.
 It may well be that the tendency will be to limit its scope, and confine strictly to the area of communications via post
office by letter, telegram,(as regard international communications) and tele-message ( as regards national
communications).
 In the modern world, contracts may well be made by much more sophisticated means of communication than the post.
 Telexes, faxes and email are all widely used, in addition to letters and the telephone, as means of transmitting offers,
counter offers, acceptances and rejections.
 If one of these methods is used for an acceptance when and where it is effective?
 ACCEPTANCE BY PRIVATE COURIER
 The starting point for the law in this area is the case of Entores v Miles Far East Corp (1955)
 This case is concerned with communications by telex machine
 The primary issue before the court was the question of where the acceptance took effect if it was sent from telex machine in one
country and received on a telex machine in another country.
 The answer to this would affect the position as to which country’s law governed the contract.
 The leading judgment in the CA was given by Lord Denning.
 His approach was to take as his starting point a very simple form of communication over a distance, that is, 1 person making a
contract by shouting across a river.
 In this situation, he argued there would be no contract unless and until the acceptance was heard by the offeror.
 If for example, an aeroplane flew overheard just as the acceptor was shouting his or her agreement, so that the offeror could not hear
what was being said, there would be no contract.
 The acceptor would be expected to repeat the acceptance once the noise from the aeroplane had diminished
 Taking this as his starting point, he argues by analogy that the same approach should apply to all contracts made by means of
communication which are instantaneous or virtually instantaneous ( as opposed to post or telegram where there is a delay).
 On this basis, regarding telex as falling into the “instantaneous “ category , he held that the acceptance by telex took place where it
was received , rather than where it was sent.
 The same answer is generally presumed apply to all other forms of more sophisticated electronic communication which can be said
to be more or less instantaneous in their affect.
 They will all take effect at the place where they are received.
REVOCATION OF ACCEPTANCE
 When can an acceptance be revoked?
 S5 (2) of the CA: an acceptance may be revoked at
anytime before the communication of the acceptance
is complete
 i.e before the acceptance received by the proposer
 Dunmore (Countess of) v Alexander
 Offeree can withdraw letter of acceptance which was
sent by express
 REVOCATION OF ACCEPTANCE
 Communication of revocation of acceptance
 S 4(3) communication of revocation of acceptance
 As against the acceptor  when it is put into a course of transmission
 i.e when acceptor sent letter of revocation to offeror
 Legal effect??
 Acceptor can’t withdraw his revocation
 As against the proposer when it comes to the knowledge of the proposer
 i.e when offeror receive the letter
 Thus, if offeror received letter of acceptance on Tuesday and letter of
revocation on Wednesday, the letter of revocation is ineffective.
 Legal effect??
 Communication of revocation is complete