The Means of Acceptance in Contract Law

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THE MEANS OF ACCEPTANCE Acceptance is the second stage of discovering whether an agreement has been reached under classical contract theory is to look for an acceptance which matches the offer that has been made. No particular formula is required for a valid acceptance. As has been explained above, an offer must be in a form whereby a simple assent to it is suf¬cient to lead to a contract being formed. It is in many cases, therefore, enough for an acceptance to take the form of the person to whom the offer has been made simply saying ‘yes, I agree’. In some situations, however, particularly where there is a course of negotiations between the parties, it may become more dif¬cult to determine precisely the point when the parties have exchanged a matching offer and acceptance. Unless they do match exactly, so the classical theory requires, there can be no contract. An ‘offer’ and an ‘acceptance’ must fitt together like two pieces of a jigsaw puzzle. If they are not the same, they will not slot together, and the picture will be incomplete. At times, as we shall see, the English courts have adopted a somewhat ¬‚exible approach to the need for a precise equivalence. Nevertheless, once it is decided that there is a match, it is as if the two pieces of the jigsaw had been previously treated with ‘superglue’, for once in position it will be very hard, if not impossible, to pull them apart. The acceptance can be in many circumstance in order to communicate the acceptance of offer. First is acceptance by conduct which usually in unilateral contract, the acceptance will always be by conduct. This issue was considered in Brogden v Metropolitan Railway where the plaintiffs sent the defendants a draft agreement for the supply of a certain quantity of coal per week from 1 January 1872, at £1 per ton. The defendants completed the draft by adding the name of an arbitrator, signed it and returned it to the plaintiffs. This constituted an offer. The plaintiffs’ manager, however, simply put the signed agreement into a drawer. There was no communication of acceptance by the plaintiffs. Coal was ordered and delivered on the terms speci¬ed in the contract for a period of time, until there was a dispute between the parties. The defendants then argued that there was no contract, because the plaintiffs had never accepted their offer, as contained in the signed agreement. The House of Lords con¬rmed that it was not enough that the plaintiffs should have decided to accept there had to be some external manifestation of acceptance. In this case, however, that was supplied by the fact that the plaintiffs had placed orders on the basis of the agreement. The defendants should therefore be taken to be bound by its terms.[1] Next is acceptance by silence which can be proven in the case Felthouse v Bindley (1862) where the uncle was negotiating to buy a horse from his nephew. The uncle wrote to his nephew offering a particular sum and saying ‘If I hear no more about him, I consider the horse mine’. The nephew did not respond, but told an auctioneer to remove this horse from a forthcoming auction. The auctioneer omitted to do so, and the horse was sold to a third party. The uncle sued the auctioneer, and the question arose as to whether the uncle had made a binding contract for the purchase of the horse. There was no contract, because the nephew had never communicated. The case was held that his intention to accept his uncle’s offer. It is true that he had taken an action (removing the horse from the auction) which objectively could be taken to have indicated his intention to accept, but because his uncle knew nothing of this at the time, it was not effective to complete the contract[2]. Lastly is the acceptance by post which I will explain in detail the reason by the court for the postal acceptance rule and in what circumstances will be postal acceptance not operate. I will also include the relevant case study in this section. INTRODUCTION OF POSTAL RULE A requirement of communication will not, however, answer all problems. In the modern world communication can take many forms such as face-to-face conversations, telephone, letters, faxes, or email. In some of these, there will be a delay between the sending of an acceptance and its coming to the attention of the offeror. The law of contract has to have rules, therefore, to make clear what is meant by ‘communication’. The simplest rule would be to say that no communication is effective until it is received and understood by the person to whom it is addressed. This is, in effect, the rule that applies to offers, though, as we shall see, there are some cases which suggest that it may be possible to accept an offer of which you are unaware. These cases are of dubious authority, however, and can only possibly apply in very restricted circumstances. In any case, they simply suggest that in some situations, communication of an offer may not be necessary. Where communication of the offer is required, which is the case in virtually all situations, it is safe to say that communication means that the person to whom the offer is addressed is aware of it. Why should the position be any different as regards acceptances? The problem ¬rst arose in relation to the post, where the delay is likely to be longest. Generally speaking, there will be a delay of at least 12 to 18 hours between the sending of an acceptance by post, and its receipt by the addressee. According to the Enfores v Miles Far East Corporation (1955) case, it state that long-understood need for acceptance to be communicated, what constitutes effective communication can be debatable. Here is the fact of the Enfores v Miles Far East Corporation case. Enfores sent a telex massage from England offering to purchase 100 tons of Cathodes from the Miles Far East Corporation in London. The offer was accept by the Dutch agent. Communication took place when a clerk type a massage that was at the same time and automatically printed by the recipient’s machine. Enfores argued that the contract was complete when the offeror received the telex massage of acceptance in England. But Miles Far East said that the contract was finish when acceptance massage was sent in the Holland. The court held that the contract was made in England because to amount to an effective acceptance the acceptance needed to be communicated to the offeree. WHAT IS DECISION IN ADAM V LINDSELL (1818) In the case Adam Lindsell (1818) the defendants sent a letter to the plaintiffs offering wool for sale, and he asking for a reply ‘in course of post’. The letter was misdirected by the defendants, and arrived later than would normally have been the case. The plaintiffs replied at once accepting, but the defendants, having decided that because of the delay the plaintiffs were not going to accept, had already sold the wool elsewhere. The plaintiffs sued for breach of contract. The court decided that to require a posted acceptance to arrive at its. The court held that destination before it could be effective would be impractical and in ef¬cient. The acceptor would not be able to take any action on the contract until it had been con¬rmed that the acceptance had arrived. The court felt that this might result in each side waiting for con¬rmation of receipt of the last communicational in¬nitum. This would not promote business ef¬cacy. It would be much better if, as soon as the letter was posted, the acceptor could proceed on the basis that a contract had been made, and take action accordingly. The plaintiffs therefore succeeded, the defendants were in breach of contract. The court, in coming to this conclusion, was thus giving priority to the practicalities of doing business over the question of whether, at the time the contract was formed, the parties were in agreement. It was quite possible that by the time the letter of acceptance was posted, the offeror had had a change of mind and sent a withdrawal of the offer, or made a contract with someone else. Nevertheless, because in the court’s view the conduct of business would in general be better served by giving the offeree certainty in this situation, the postal rule was established[3] The reason that have been given by court for the Postal rule is, an exception to the general rule citing that an acceptance is only create when communicated directly to the offeror. The posting regulation stated, by contrast, that acceptance takes effect when a letter is posted. It also state that if an offer are made by post, then the acceptance are made during the time of post. While the decision in the Henthorn v Fraser (1892) is it was held to be reasonable to post acceptance in response to an oral offer because the parties lived some distance away from each other[4]. This is the brief about the case that I understand which is on 7th July Henthorn from Birkenhead, called office of land society in Liverpool. Henthorn negotiated to buy some houses belonging to the land society. Secretary agreed to sell to him, giving him an option of purchase for 14 days at £750. After that, on 8th July Morning, Another person called, offered £760 for the property, offer accepted. At 12-1 pm, Secretary withdrawed the offer made to Henthorn. 3.50pm, Claimant delivered letter accepting the offer, but letter arrived at 8.30 pm, after the office was closed. At 5pm, Withdrawal offer arrived at Birkenhead. Secretary opened the letter on the next morning. Claimant sued for specific performance. The court held the case for specific performance granted, Postal Rule applies as acceptance occurred before. Defendant was told to sell the land. In conclusion, the offeree in Henthorn, on the other hand, certainly knew of the offeror’s promise to give him an option “for fourteen days” and quite possibly relied on it. Arguably, therefore, the “mailbox” rule should work in favor of offerees but not against them. But this might allow offerees to speculate at the offeror’s expense, using the telephone or telegraph to overtake a letter of acceptance in transit when the market shifts[5] EXCEPTION TO THE POSTAL RULE Here is some cases that exception to the postal rule. First is Quenerduaine v Cole (1883) which is the defendant made an offer by telegram where the plaintiff be told to accept by letter. The court said that an offer which are made by telegram, shows that the quick acceptance are required so that the postal rule was not applied. Second in the Household Fire and Carriage Accident Insurance Company v Grant which Grant offer to buy the shares from Household Fire and Carriage Accident Insurance Company. Then the company accept Grant offer and allotted the shares to him. Later, the latter of allotment was sent to him to the address that he give. The latter never reached to him until a month later then he received the letter that ask him for a payment of a partly paid and demand by the company for Grant to pay the next instalment due on shares. So that the court conclude that Grant does not receive his allotment later. This is means in practice a contract complete upon the acceptance of an offer being posted, but liable to be put an end to by an accident in the post, would be more mischievous than a contract only binding upon the parties to it upon the acceptance actually reaching the offerer. Third in Yates Building Co. Ltd v. Pulleyn & Son (York) Ltd (1975) case which they make a states that any requirements about the method of acceptance must be clearly stated to be valid. In this case, Pulleyn give Yates to buy a building land. 'The option hereby granted shall be exercisable by notice in writing given by or on behalf of Yates to Pulleyns or to Pulleyns' solicitors at any time between April 6 1973 and May 6 1973 such notice to be sent by registered or recorded delivery post to the registered office of Pulleyns or the offices of their said solicitors. On Monday April 30 1973 Yates's solicitors posted a letter to Pulleyns' solicitors to formally exercise the option; they enclosed a cheque for £1,890 for the deposit. The letter was sent by ordinary post and not by registered or recorded delivery post but it arrived well in time. It was opened by Pulleyn's solicitors at some time on or before Friday May 4 1973. On that Friday Pulleyn's solicitors wrote back to Yates's solicitors returning the cheque for the deposit and said: ‘we write to acknowledge receipt today of your letter of April 30 1973 with its enclosure. You will recall that clause 2 of the option agreement provides for notice to be sent by a registered or recorded delivery post. Your letter was not so sent. Yates brought proceedings for specific performance, but the judge refused it. He held that this requirement that the letter had to be sent by registered or recorded delivery post was a requirement which must be complied with, and as it had not been complied with, there was no contract. Yates appealed.[6] Fourth is Tinn v Hoffman (1873) case which means that where a requirement for a certain type of reply has been made, an equally effective mode of communication will also be deemed acceptable provided it is just as quick and does not disadvantage the offeror. An offer by e-mail could therefore be accepted by telephone[7]. In this case the judge held that an acceptance could be effective even though it departed from the wording of the offer by making express some term which the law would in any case imply. And reply add some new provision by way of indulgence to the offer may be acceptance. Conversely, an acceptance in which acceptor ask for extra time to pay may be effective, so longs as he makes it clear that he is prepared to perform in accordance with the term of the offer event if his request is refused. WHAT DOES PROPERLY POSTED MEANS In the case in Re London and Northern Bank (1900), the letter of acceptance was not properly posted because the letter of acceptance was handed to a postman only authorised to deliver mail and not to collect it. In this case, even though the letter was actually posted, the courts held that handing the letter to a postman was not accepted way of ‘posting’. They referred to the actual “Postal Guide” which clearly described instructions where postmen were allowed to take letters only from a post box. It is apparent that the courts wanted to prevent the situation where the postal rule would apply to any means of ‘posting’ or ‘sending’ letter and therefore restricted it only to Post Office and its guidelines. It is imperative to remember that the postal rule will also not be applicable where it would cause manifest inconvenience and absurdity. DOES THE POSTAL RULE APPLY TO REVOCATION It is clear from the abovementioned, that the application of the postal rule can have different variations and implications. When considering its function, it is essential to know when an acceptance becomes legally effective and also whether it can be revoked. The ‘arguable’ point when considering relevance of postal rule in 21st century is that in view of courts, before the acceptance is made the offeror can call the offer off, but once the acceptance has even made this is no longer possible.[8] Fundamentally, the offer may be revoked by the offeror only until that time it is being accepted and furthermore the revocation must be communicated to the offeree otherwise desired revocation will be ineffective. In this case, there are two case that relate with this situation. First is Byrne & Co v. Van Tienhoven & Co (1880) where Van Tienhoven mailed proposal to sell 1,000 boxes of tin plates to Byrne at fixed price on October 1st. later, Van Tienhoven mailed a revocation of offer on October 8th. But Byrne does not receive the revocation until 20th. In the middle on October 11th Byrne receive the original offers and accepted by telegram and turned around and resold the merchandise to a third party on the 15th. He brought an action for non-performance. However, the courts confirmed the long-standing idea that any revocation of an offer must be communicated to the offeree, although again there are some exceptions to this rule. Next case is Dickinson v. Dodds (1876) case which the revocation can be informed by a reliable third party. This can proved by the situation where the Dodds accepted an offer from a third party to purchase the house. Dodds then asked a friend to tell Dickinson that the offer was withdrawn. On hearing the news, the Dickinson went round to the house first thing Friday morning purporting to accept the offer. He then brought an action seeking specific performance of the contract. In this case the court held that the offer had been effectively revoked. Therefore no contract existed between the parties. There was no obligation to keep the offer open until Friday since the claimant had provided no consideration in exchange for the promise. The offeror is free to withdraw the offer at any time before acceptance takes place unless a deposit has been paid[9] CONCLUSION In order to apply the postal rule, both parties need to really understand the condition of their contract. They must aware to the risk that they will faced during the period of affair agreement such as delaying of the letter, the missing of the letter and also misdirect the letter. Not only that, while the posting of the acceptance, they must know at the time they post, the acceptance are made. Moreover, it is evident that the arguments relating to retention or desertion of the general rule are advanced, it is also clear from the aforementioned that in order to provide the valid conclusion the legislators have to consider many aspects of communication that is conducted by electronic means. In addition, it is essential to also asses the rule applicable to revocation of contract as the technology development has changed the way how and when the acceptance takes place and therefore it can be often discriminatory to bind offeror and leave alternatives largely open for the offeree. 1
[1] http://www.scribd.com/doc/90693946/The-Modern-Law-of-Contract-Eighth-Edition [2] http://www.scribd.com/doc/90693946/The-Modern-Law-of-Contract-Eighth-Edition [3] THE MODERN LAWOF CONTRACT, Eighth Edition, Richard Stone Elston, Newark April 2009 [4] http://www.lawteacher.net/contract-law/cases/adams-v-lindsell.php#ixzz2yJ3tw2dg [5] http://lawstudent94.blogspot.com/2012/05/henthorn-v-fraser-1892-mailbox-postal.html [6] http://www.legalmax.info/members2/conbook/yates_bu.htm [7] https://suite.io/zoe-kirk-robinson/3a99230 [8] MacIntyre, 2010: 84 [9] http://www.e-lawresources.co.uk/Dickinson-v-Dodds.php
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