Acceptance
Acceptance
Acceptance
ACCEPTANCE
(2022-2023)
1. INTRODUCTION
2
Meaning of Acceptance
Section 2(b) CA:
“when the 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.”
Section 7(a) CA:
“In order to convert a proposal into a promise the acceptance must—
(a) be absolute and unqualified;
(b) be expressed in some usual and reasonable manner, unless the
proposal prescribes the manner in which it is to be accepted. If the
proposal prescribes a manner in which it is to be accepted, and the
acceptance is not made in that manner, the proposer may, within
a reasonable time after the acceptance is communicated to him, insist
that his proposal shall be accepted in the prescribed manner, and not
otherwise; but, if he fails to do so, he accepts the acceptance.
3
2. Requirements of Acceptance
According to Chitty on Contracts, 26th Ed (1989) Vol 1, para 54, p 44, 'an
acceptance is a final and unqualified expression of assent to the terms of
the offer'. But, where the reply is qualified or attempts to vary the terms
of the offer or attempts to accept an offer on new terms (not contained
in the offer), then such a reply is not a communication of an acceptance
but may be a rejection accompanied by a counter-offer which the
original offeror can accept or reject.
5
Three Situations of Acceptance is not Absolute
and Unqualified
6
A classic case to illustrate this point is Hyde v Wrench (1840) 3 Beav 334.
Counter-offer by Offeree
The defendant wrote to the plaintiff on June 6 offering to sell his farm for
£1,000.
The plaintiff immediately called on the defendant and offered to purchase
the farm for £950. On June 27, the defendant replied that he was unable to
sell at £950. Upon receipt of the letter on June 29, the plaintiff immediately
wrote to the defendant accepting the defendant's earlier offer of £1,000.
The question was whether a contract had been concluded between the
parties. The Court held that there was no binding contract. In this case, the
plaintiff did not absolutely and unconditionally accept the defendant's
offer price of £1000. By proposing a different figure of £950, the plaintiff
had rejected the defendant's offer and now makes a new offer (a counter-
offer). This counter-offer destroys the original offer and he cannot now
revive it by tendering a subsequent acceptance.
7
These principles have been applied by the Malaysian courts in Malayan
Flour Mills Bhd v Saw Eng Chee (Administrator of the estate of Saw
Cheng Chor, deceased) & Anor [1997] 1 MLJ 763 wherein the relevant
portions have been reproduced as follows:
In deciding whether there is a concluded contract in a given case, the
court will have to examine all the circumstances to see if a party may
be assumed to have made a firm offer and if the other may likewise be
taken to have accepted that offer - a situation often referred to as a
meeting of the mind upon a common purpose or consensus ad idem.
In as much as an offer must consist of a definite promise to be bound
on the terms specified, the acceptance must be communicated to the
offerer by 'an external manifestation of assent, some word spoken or
act done by the offeree or by his authorised agent which the law can
regard as the communication of acceptance to the offerer'.
8
A counter-offer by the offeree not only fails as an acceptance. It also
generally amounts to a rejection of the original offer, which
therefore cannot subsequently be accepted.
9
In Stevenson, Jaques & Co v McLean (1879-1880) 5 QBD 346, the parties
were negotiating for the sale of iron and ultimately the defendant wrote to
the plaintiffs fixing 40s, per ton, net cash, as the lowest price for the sale,
and stating that he would hold the offer open till the following Monday. The
plaintiffs on Monday morning at 9.42 a.m. telegraphed to the defendant:
"Please wire whether you would accept forty for delivery over two months,
or if not, longest limit you could give".
The defendant did not reply and on the same day he sold the iron to
someone else and telegraphed the plaintiffs at 1.25 p.m. that he had done
so.
Before the arrival of the defendant's telegram, the plaintiffs, having at 1
p.m. found a purchaser for the iron, sent a telegram at 1.34 p.m. to the
defendant stating that they had secured his price.
Upon the defendant's refusal to deliver the iron, the plaintiffs brought an
action against him for non-delivery of the same.
10
Lush J held:
11
Terms of offer amended at time of acceptance
If the acceptance contains clauses adding on or amending the terms
of the offer, it is not absolute and unconditional and there is no valid
acceptance
In Jones v Daniel [1894] 2 Ch. 332, in reply to a written offer by the
defendant to purchase the plaintiff's property for £1,450, the
plaintiff's solicitors wrote accepting the offer, and continued: "We
enclose contract for your signature. On receipt of this signed by you
across the stamp and deposit we will send you copy signed by him".
The enclosure was a contract with the usual conditions of sale
providing for a deposit of 10%, fixing a date for completion, and
limiting the period of the defendant's title.
The Court held that by the addition of a new document (the enclosed
contract), the acceptance was not absolute but amounted to a
counter-offer which was never accepted by the defendant. 12
Acceptance made "subject to contract"
or to fulfil condition precedent
It is not unusual to find commercial documents containing phrases such
as "subject to contract", "without prejudice" or "a formal agreement
would be prepared and executed".
The question arises whether these qualified statements constitute a
valid acceptance/agreement bringing forth legal obligations to the
parties. There are two approaches to this matter:
1. There is no contract and the court will construe such words so as to
postpone liability until the formal document is signed.
2. The parties have already entered into a legally binding contract and
the execution and signing of the document is a mere formality.
13
In Daiman Development Sdn Bhd v Mathew Lui Chin Teck & Anor
Appeal, 1978] 2 MLJ 239, FC; [1981] 1 MLJ 56, PC (Appeal from
Malaysia), the Privy Council analysed the effect of the phrase "subject
to contract":
“The purpose of the construction is to determine whether the
parties intend presently to be bound to each other or whether, no
matter how complete their arrangements might appear to be, they
do not so intend until the occurrence of some further event,
including the signature of some further document or the making of
some further arrangement.
The Privy Council held that the express terms of the purchase
contained in the booking pro forma were not made "subject to
contract". The clauses pointed strongly towards obligations
presently accepted rather than to a suspension of obligations until
some further event or agreement had occurred or been made.
14
In Kam Mah Theatre Sdn Bhd v Tan Lay Soon [1994] 1 MLJ 108, SC, the
alleged contract contained a proviso that the sale and purchase
agreement shall incorporate "other usual terms and conditions". In the
circumstances, the Supreme Court was of the view that the proviso would
have the same effect as if the formula "subject to contract" had been in
the document.
The Court held that the formula "subject to contract" gives rise to a
strong presumption of the necessity of a further formal contract. Cogent
evidence is required to displace this strong presumption. There was no
contract at all and that the document was dependent on the signing of a
formal contract to be further negotiated and approved by both parties.
Similarly, in Lim Chia Min v Cheah Sang Ngeow & Anor [1997] 2 CLJ 337,
FC, the Federal Court held that when the parties "proposed that a formal
agreement would be prepared and executed", they must have meant
what they said.
15
There are cases where the court held that the execution and signing of
the agreement is a mere formality. In Prism Leisure Sdn Bhd v Lumut
Marine Resort Bhd 16 [2002]5 CLJ 391 , Abdul Malik Ishak J stated:
Even in the absence of a "formal agreement", ... the courts have on
numerous occasions found that the parties were at consensus ad
idem even though the formal agreements have yet to be executed …
In the context of the present case, it was my judgment that the
requirement of a 'formal agreement' was merely intended as a
solemn record of an already complete, valid, legal and binding
contract …
The Court held that there was a valid, legal and binding contract
between the parties and that the defendant had breached that
concluded contract.
16
In Charles Grenier Sdn Bhd v Lao Wing Hong [1996] 3 MLJ 327, FC. the
Court followed the earlier Federal Court decision, Lim Keng Siong & Anor
v Yea Ah Tee [1982] 2 MLJ 39 on this point.
The Federal Court held that the phrase "subject to the sale and
purchase agreement" relating to two shophouses did not point to an
intention that no contract was to come into existence until a formal
sale and purchase agreement had been prepared and executed.
Rather, when read in the context of correspondence and the objective
aim of the transaction, it was indicative of an intention to merely
formalise the agreement already concluded between the parties.
In this case, the parties to the transaction, the property, the price and
the essential terms had all been identified with sufficient clarity.
17
Cases on manner of acceptance - section 7 CA
Brogden v Metropolitan Rly Co (1877) 2 App Cas 666
Section 7(b) - if acceptor deviates from form prescribed by proposer,
proposer to protest.
Low Kar Yit & Ors v Mohd Isa & Anor [1963] MLJ 165
cf. English Law: Manchester Diocesan Council of Education v
Commercial & General Investments [1970] 1 WLR 241, 246
Inter Diam Pte Ltd v PJ Diamond Centre Sdn Bhd [2002] 4 CLJ 715 (HC)
TT Martech Sdn Bhd v Wing Construction (M) Sdn Bhd [2005] 2 MLJ
463
18
Acceptance must correspond to offer
19
Cross offers not an acceptance
There can be no valid acceptance if there are two cross offers. In Tinn v
Hoffman & Co (1873) 29 LT 271, the Court discussed the effect of two
offers (one from each party), identical in terms, which had crossed in the
post.
Blackburn J held that:
“The promise or offer being made upon each side in ignorance of the
promise or the offer made on the other side neither of them can be
construed as an acceptance of the other.”
20
Knowledge of offer before Acceptance
There are two conflicting decisions whether acceptance can take place
if the acceptor is not aware of the offer.
In Gibbons v Proctor, (1891) 64 LT 594, the Court allowed the claim for
a reward even though the claimant was not aware of the offer of the
reward. In this case, the defendant published on May 29 a handbill for
a reward of £25 to any person who could give information leading to
the conviction of a perpetrator of a certain crime, such information to
be given to a superintendent of the police named Penn.
The plaintiff was a police officer and in the early morning of May 29,
before the bill was published, communicated to a fellow policeman
named Coppin important information which led to the conviction of the
offender. …
21
This information was eventually conveyed to Superintendent Penn the
following morning of May 30, after the time when the said handbills had
been delivered to and had been distributed to the neighbouring police
stations.
The defendant's counsel submitted that the plaintiff was not entitled to
the reward since he knew nothing of any promise, nor was any in
existence at the time he gave the information.
The Court ruled that the plaintiff was entitled to the reward, since the
information had reached Superintendent Penn after the publication of
the handbill and the announcement therein contained the defendant's
offer of the reward to the informant.
22
A different decision was given in a similar case in Fitch & Anor v
Snedaker 38 NY 248 (1868).
In this case, the sheriff of a county offered a reward for information
leading to the apprehension and conviction of the murderers associated
in a crime.
The informers (the plaintiffs) provided information concerning the
murder, but failed to obtain the reward from the sheriff.
With respect to the first informer, he was not entitled because his
information was given before the sheriff made the offer of a reward.
With respect to the second informer, he was not entitled because his
information was given before he was aware of the sheriff's offer of a
reward.
23
Woodruff J stated:
24
Motive of acceptor at time of acceptance
25
A different decision was arrived at by the Australian court in R v Clarke
(1927) 40 CLR 227.
In this case, the Government of Western Australia offered a reward "for
such information as shall lead to the arrest and conviction of the person or
persons who committed the murders" of two police officers. Clarke, who
had seen the offer, gave information that led to the arrest of one person,
and the conviction of that person and one other. When giving that
information, he was under arrest on a charge of murder. He then claimed
payment of the reward.
The Court held that the government was under no contractual obligation to
pay him the reward:
“… in giving the information he was not acting on or in pursuance of or
in reliance upon or in return for the consideration contained in the
proclamation, but exclusively in order to clear himself from a false
charge of murder ... he has, in my opinion, neither a legal nor a moral
claim to the reward. 26
3. Modes of Communicating Acceptance
An acceptance to be effective must be communicated. The acceptor/offeree must
do something to signify his intention to accept, i.e., he must communicate his
acceptance to the offeror.
In Brogden v Metropolitan Railway Co (1877) 2 App Cas 666, the defendants had
for some years supplied the plaintiffs with coals. It was suggested by the
defendants that a contract should be entered into between them. After their
agents had met, the terms of the agreement were drawn up by the plaintiffs'
agent and sent to the defendants. The head of the defendants' firm filled up
certain parts of the agreement which had been left blank, inserted the name of
the proposed arbitrator, wrote "approved" at the end of the page, and signed his
own name. The defendants' agent sent the document back to the plaintiffs' agent,
who put it in his desk. Nothing further was done to execute the agreement.
27
For some time, both parties acted in accordance with the
arrangements stated in the document. Subsequently, the defendants
declined to continue the supply of coals in this manner. The plaintiffs
brought an action for damages for breach of contract. The defendants
denied the existence of any contract for the supply of coals.
In this case, the House of Lords held that there was no acceptance of
the offer. Although there may be mental assent, the act of the
plaintiff's agent putting the document into his desk would not amount
to communication of the acceptance; however, in this case, the House
of Lords held that by virtue of the course of dealings of the parties in
the ordering and supply of the coals, such conduct amounted to an
acceptance.
28
Section 3 of the Contracts Act 1950
Section 3 of the Contracts Act 1950 provides for the communication of
offer and acceptance as follows:
29
Section 4(2) of Contracts Act 1950
Section 4(2) of the Contracts Act 1950 provides that the communication
of an acceptance is complete –
(a) as against the proposer, when it is put in a course of transmission
to him, so as to be out of the power of the acceptor; and
(b) as against the acceptor, when it comes to the knowledge of the
proposer.
30
Section 9 of the Contracts Act provides, inter alia, that as far as an
acceptance is made in words, the promise is said to be express. If the
acceptance is made otherwise than in words, the promise is then said to
be implied. Acceptance may thus be made through conduct.
Section 7(b) of the Contracts Act provides that where the mode of
acceptance is specified in the offer, the acceptor must communicate his
acceptance in that mode. If no mode is specified, acceptance by any
usual and reasonable manner which shows the acceptor's intention to
accept is sufficient.
31
Modes of communicating Acceptance
By By By By By perfoming
Post/tele- telex/tele- Conduct Silence Conditions Stipulated
gram phone in the Offer
32
Acceptance by post /telegram
While the general rule at common law is that acceptance is complete
when it is brought to the notice of the offeror, an exception is the
postal acceptance rule. This rule stipulates that acceptance is complete
when the letter containing such acceptance is posted, or when the
telegram containing such acceptance is handed in.
34
The postal rule has also been applied in Adams v Lindsell (1818) 1B & Ald 681.
In this case, the defendants, who were dealers of wool, had on September 2,
written to the plaintiffs, woollen manufacturers, offering to sell to them a
number of fleeces. They required an answer "in course of post". The letter was
misdirected by the defendants, and consequently was not received by the
plaintiffs until September 5. On the same evening, the plaintiffs wrote an
answer, agreeing to accept the offer on the terms proposed. The acceptance
did not reach the defendants until September 9. On September 8, the
defendants, not having received an answer on September 7, as they had
expected (which they would have, if their letter had not been misdirected),
sold the wool to a third party.
The Court applied the postal rule of acceptance and held that the acceptance
was complete as against the defendants on September, 5 ,i.e., prior to the
revocation of their offer through the sale of the wool to the third party on
September 8. 35
• The Court held that if the rule was that no contract could be formed
until the acceptance was actually received, no contract could ever be
completed; for if the defendants were not bound by their offer till the
answer was received, the plaintiffs ought not to be bound till after they
had received the notification that the defendants had received their
answer and assented to it, and so it might go on ad infinitum.
• In the above case, the defendants specified that the acceptance be
made via the post. Where it is not specified, an acceptance is to be
made in the usual and reasonable manner.
36
In Henthorn v Fraser [1892] 2 Ch 27, CA the Court of Appeal inferred
that both parties would have contemplated that the letter be sent by
post.
In this case which involved the offer of an option to purchase some
houses, Lord Herschell stated:
“In the present case an authority to accept by post must be implied.
Although the Plaintiff received the offer at the Defendants’ office in
Liverpool, he resided in another town, and it must have been in
contemplation that he would take the offer, which by its terms was
to remain open for some days, with him to his place of residence,
and those who made the offer must have known that it would be
according to the ordinary usages of mankind that if he accepted it he
should communicate his acceptance by means of the post... Where
the circumstances are such the acceptance is complete as soon as it
is posted”
37
However, in Holwell Securities Ltd v Hughes [1974] 1 WLR 155, CA,
also a case of an option to purchase property, the Court of Appeal had
refused to make a similar inference. In this case, the defendant
granted the plaintiffs an option to purchase certain property. The
option provided that it "shall be exercisable by notice in writing to the
[defendant]". The plaintiff's solicitor sent a written notice exercising
the option by ordinary post to the defendant but it never reached the
defendant.
Lawton LJ referred to the postal rule and to Henthorn's case above but
held that it would not apply if the offer expressly specifies that the
acceptance must reach the offeror and if application of the rule causes
"manifest inconvenience and absurdity".
The Court placed much emphasis on the meaning of notice which
must mean that it must be known or intimated to the vendor who
never was since the letter carrying the information went astray.
38
In Lee Seng Heng & Ors v Guardian Assurance Co Ltd [1932] MLJ 17, the
plaintiffs insured their stock in trade with the defendants against fire.
Subsequently, a fire broke out on the insured premises and the plaintiffs
made a claim under the policy.
The defendants' solicitors wrote to the plaintiffs saying that on the date
of the fire, the policy had ceased to exist as they had previously written
to the plaintiffs cancelling the policy. This letter was never received by
the plaintiffs as there was no post office at Buloh Kasap (where the
insured property was situated). The nearest post office was at the town
of Segamat and the practice at Segamat was to send a postman to Buloh
Kasap only when the amount of correspondence justified a special
journey.
The letter in question had been kept at Segamat and had only been
brought to Buloh Kasap by the postman after the fire. As the plaintiffs'
premises had been burnt down, the addressee could not be found.
39
Munson CJ stated:
“The only point, therefore, left for me to decide is whether the post
was properly used here as an agent by the Defendants in sending their
letter of the 27th March. The Plaintiffs acted from Buloh Kasap five
miles from Segamat which is some 125 miles from Singapore and some
50 miles from Malacca.
It is difficult to see how they were ordinarily to communicate if not by
post ...I hold as Farwell J. did in Bruner v. Moore, that "the parties in
this case contemplate that the post might be used as a means of
communicating on all subjects connected with the contract." In these
circumstances it is clear that the sender of the letter is not responsible
for any delay in the post I hold, therefore, that the rescission of the
policy was effected at the moment that the letter of the 27th March
was posted, that is on the 27th March, 1931, and that the policy was
non-existent at the date of the fire…”
40
Acceptance by telex/telephone
The Court ruled that the communication through telex in this case was
instantaneous and the contract was made at the place where
acceptance was received, in this case, in London.
42
In this case, Denning LJ considered the matter in stages:
44
The appellant was convicted of using a motorcar on the road without insurance
against third party risks. He argued that he was covered by the cover note which was
offered to him on April 6 and that he had accepted it by conduct. The Court rejected
his argument as he had not shown that "he knew of the temporary cover, that he
acted in reliance on it, and thereby had accepted the offer contained in it“.
In this case, when the appellant was stopped by the police and was asked to produce
his insurance certificate, he produce the expired certificate of insurance and the cover
note from the new insurance company which commenced on April 16. When the
police pointed out that, therefore, on April 15 he was not covered, he did not refer to
the temporary cover note, but said that he had been negotiating a change of
insurance companies, and did not realise that the original certificate had run out.
Where parties conduct themselves in a manner which indicates that they consider
themselves bound by an agreement between them, a contract will be held to have
come into existence.
45
Two Malaysian cases also illustrate acceptance through conduct. In Woon
Yoke Lin (Berniaga sebagai Syarikat Ceritaku) v United Estate-Projects
Berhad [1998] 4 AMR 4052, the High Court held that the defendants, by
their conduct, had accepted the plaintiff's offer to rent a kiosk in Subang
Parade which was owned by the defendants.
46
In EMS Bowe (M) Sdn Bhd v KFC Holdings (M) Bhd & Anor [2000] 1
AMR 677, the plaintiffs submitted a tender for some works to the
defendants. Subsequently, the second defendant issued to the plaintiffs
a draft letter of award for the works and had also instructed the
plaintiffs to order in advance materials for the works. The plaintiffs
ordered the materials but the award was given to another contractor.
The High Court held that a draft offer acted upon by one party with the
knowledge and concurrence of the other party has converted it into a
written agreement and thus there was a valid and binding contract in
this case.
47
Acceptance by silence
An issue that arises is whether silence can amount to an acceptance.
In Fraser v Everett (1899) 2 SLJ 81; (1889) 4 Ky 512, the Court held
that the defendant who had contracted for the transfer of scrip was
entitled to obtain what he had bargained for and could not be
compelled to accept a bearer-warrant. It was the plaintiff's contention
that, by not replying to the broker's letter of April 25 informing him
that the certificates were being exchanged for bearer-warrants, the
defendant must be taken to have waived this objection. In relation to
this submission, the Court held that "... there is rule of law like the
saying "Silence gives consent" applicable to mercantile contracts. In
this case, the omission to reply does not constitute a waiver".
48
In Felthouse v Bindley (1862) 11 CBNS 869; 142 ER 1037, the plaintiff
wrote to his nephew offering to buy the nephew's horse and adding
that "If I hear no more about him, I consider the horse is mine at £30
15s".
The nephew did not reply and no money was paid. The horse remained
in the nephew's possession.
Six weeks afterwards, the defendant, an auctioneer who was employed
by the nephew to sell his farming stock, was directed by the nephew to
reserve the horse in question, as it had already been sold, but by
mistake had put it up with the rest of the stock and sold it.
The plaintiff sued for conversion of the horse and the issue arose
whether there was a concluded contract between the plaintiff and his
nephew for the sale of the horse.
49
The Court held that there was none. Although the nephew had
intended to sell the horse to the plaintiff at the price at which the
plaintiff had named, this was not communicated and silence did not
amount to an acceptance.
Willes J stated:
“It stood an open offer ... the nephew in his own mind intended his
uncle to have the horse at the price which he (the uncle) had
named £30 15s but he had not communicated such intention to his
uncle, or done anything to bind himself . ...”
50
In Weatherby v Banham (1832) 5 C & P 228, "silence" was held to
have legal consequences, especially where reasonable opportunities
exist to reject the offer but the acceptor had failed to do so.
In this case, the plaintiffs were the publishers of the Racing Calendar.
For some years, they had supplied a copy of the Racing Calendar to one
Mr Westbrook. Upon the death of Mr Westbrook, the defendant
succeeded to his property and went to live at his house. The plaintiffs,
not knowing of Mr Westbrook's death, continued to send the Racing
Calendar, which was directed to him. They were received by the
defendant, and there was no evidence that the defendant had ever
offered to return them. The plaintiffs subsequently brought an action
to recover the price of the Racing Calendars supplied to the defendant.
51
Lord Tenterden CJ held that:
If the defendant receive the books, and use them, I think that the
action is maintainable. These books come addressed to the
deceased gentleman, whose estate has come to the defendant,
and he keeps the books. I think that the defendant is clearly
liable . . .
52
Mode of acceptance stipulated by offeror
An offeror may prescribe the mode of acceptance.
In Manchester Diocesan Council for Education v Commercial & General
Investments Ltd [1970] 1 WLR241, Buckley J laid guidelines on this matter:
(i) If an offeror stipulates by the terms of his offer that it may, or that it shall,
be accepted in a particular manner a contract results as soon as the offeree
does the stipulated act, whether it has come to the notice of the offeror or
not. In such a case the offeror conditionally waives either expressly or by
implication the normal requirement that acceptance must be communicated
to the offeror to conclude a contract.
53
(ii) If an offeror, who by the terms of his offer insists on acceptance in a
particular manner, he is entitled to insist that he is not bound unless
acceptance is effected or communicated in that precise way, although if
the other party communicates his acceptance in some other way, the
offeror may by conduct or otherwise waive his right to insist on the
prescribed method of acceptance.
(iii) If the offeror has prescribed a particular method of acceptance, but not
in terms insisting that only acceptance in that mode shall be binding,
acceptance communicated to the offeror by any other mode which is no
less advantageous to him will conclude the contract.
(iv) If an offeror intends that he shall be bound only if his offer is accepted
in some particular manner, it must be for him to make this clear.
54
Under the Contracts Act 1950, s 7 provides that “the acceptance must
—
(a) be absolute and unqualified;
(b) be expressed in some usual and reasonable manner, unless the
proposal prescribes the manner in which it is to be accepted. If the
proposal prescribes a manner in which it is to be accepted, and the
acceptance is not made in that manner, the proposer may, within a
reasonable time after the acceptance is communicated to him, insist
that his proposal shall be accepted in the prescribed manner, and not
otherwise; but, if he fails to do so, he accepts the acceptance.”
57
5. Formation of Electronic Contracts
An issue of particular importance in electronic contracts formation is
the rules governing acceptance.
Different rules governing the acceptance of offers, particularly the
rules governing communication of acceptance, apply to different
modes of acceptance.
For electronic transactions, a prospective purchaser who intends to
purchase an item or service may make the acceptance through
electronic mail (email) or on the web page itself (click wrap contracts).
58
An email is considered the digital equivalent of a letter. After typing
the content and the address of the desired recipient, the sender puts
it into his outbox (the digital equivalent of the post box).
This is then collected by his mail server, which forwards it to the
recipient's mail server, which then delivers it to the recipient's inbox
(the digital equivalent of the recipient's letter box).
As for click wrap contracts, these are formed using the link between
server and client machines which is in place during data exchanges on
the Web.
On the web page where "webvertisements" are placed, there is a
hypertext order form which the customer may fill out. At the end of
the form, there is a button with the words, "Submit" or “I accept" or
the equivalent. Once the customer clicks this button, the order is
submitted to the website operator.
59
But, there is a case in UK that state otherwise. That email is an
instantaneous communication and postal rule does not apply.
In Thomas v BPE Solicitors (2010) EWHC 306 (Ch), the English High
Court held that the general rule in communication of acceptance is that
the acceptance of an offer is not effective until communicated to the
offer. (See Entores Ltd v Miles Far East Corp and Brinkibon Ltd v
Stahag Stahl and Stalhwarenhandelsgesellschaft mbH).
This applies to acceptance made by some instantaneous menas of
communication. The same principle applies to communication by
email, at least where the parties are conducting matter by email. The
postal rule does not apply.
60
Cases on Communication of acceptance and revocation
Sections 4(2) and 4(3) CA - Different times when communication is
complete.
Ignatius v Bell [1913] 2 FMSLR 115
Dunmore (Countess of) v Alexander (1830) 9 Shaw 190 (Scotland)
Lim Keng Siong & Anor v Yeoh Ah Tee [1983] 2 MLJ 39
Lee Chin Kok v Jasmin Arunthuthu Allegakoen & Ors [2000] 4 MLJ
481
61
Thanks!
62