O&A - Acceptance

Question 1

What is acceptance?

Answer 1

The final and unqualified agreement to all the terms contained in the offer.

Question 2

What formal characteristics must effective acceptance satisfy?

Answer 2

Acceptance must be clear and unequivocal.

Question 3

How may acceptance be determined?

Answer 3

On the basis of a written document or inferred objectively from conduct, signature or observance of written terms.

Question 4

What is the potential added complication with oral acceptance over written acceptance? (1)

Answer 4

While both are valid acceptances, oral acceptance may involve increased evidential burdens
Authority - ‘He who alleges must prove whether the allegation is negative or positive’ - Joseph Constantine SS Line Case

Question 5

What are the three key functions of written acceptances/contracts that counter-balance there inherently more onerous nature?

Answer 5

1. Evidential Function
2. Cautionary Function
3. Channelling Function

Question 6

Which particular types of contract need to be written?

Answer 6

1. Those that are required to be written under legislation

2. Those that are unenforceable unless evidenced in writing

Question 7

Can silence bind a party? (1)

Answer 7

No - silence shall not be deemed to be consent/acceptance

Authority - Felthouse v Bindley

Question 8

What are the 3 key components for effective acceptance (2 central ones and 1 peripheral one)?

Answer 8

1. The response must correspond exactly to the terms of the offer - mirror-image rule
2. The acceptance must have been effectively communicated to the offeror (following any prescribed means)
3. The acceptance must be made in response to and with knowledge of the offer (peripheral)

Question 9

What is the mirror-image rule?

Answer 9

Acceptance must be unconditional and correspond exactly with the terms proposed by the offeror.

Question 10

What occurs when an offeree fails to comply with the mirror-image rule and alters the terms of an offer or introduces new ones when trying to accept? (1)

Answer 10

Rather than accepting the offer, the offeree has made a counter-offer
Authority - Hyde v Wrench

Question 11

What impact does a request for further information have? (1)

Answer 11

A request for further information with no variation of the existing terms doesn’t constitute acceptance but rather a request for information
Authority - Stevenson v McLean

Question 12

What is the difference between a counter-offer and a request for further information?

Answer 12

A request for further information does not ‘kill’ the original offer as a counter-offer does and cannot subsequently itself be accepted.

Question 13

How can acceptance of counter-offers be done? (2)

Answer 13

1. Explicit agreement to the new terms and conditions
   Authority - Butler Machine Tool Co Ltd v Ex-Cell-O Corp Ltd
2. Through conduct
   Authority - Brogden v Metropolitan Railway Co

Question 14

Does acceptance need to be communicated to the offeror? (1)

Answer 14

Generally yes, acceptance is not normally complete unless/until it is communicated to the offeror
Authority - Entores Ltd v Miles Far East Corporation

Question 15

What are the two exceptions to the general rule of communication of acceptance laid down in Entores?

Answer 15

1. There is a waiver of communication and/or promise for an act (in the case of unilateral contracts)
2. Application of the postal rule (acceptance occurs before actual communication is made)

Question 16

Can an offeror prescribe a particular method by which acceptance is to be communicated?

Answer 16

Yes, this can be done explicitly or through inference.

Question 17

Are mandatory prescribed methods of acceptance binding upon the offeree?

Answer 17

Where there is a mandatory method prescribed it must be complied with to constitute effective acceptance.

Question 18

How may an offeror establish a mandatory prescribed method of communication of acceptance?

Answer 18

To establish a mandatory prescribed method of acceptance it must be made clear by the offeror that no other means of acceptance is acceptable.

Question 19

What happens where an offeror chooses not to stipulate a particular mode of acceptance?

Answer 19

In such cases whether the acceptance is effective or not is judged depending on the nature of the offer and the broader circumstances.

Question 20

What happens where an offeror prescribes a method of acceptance but fails to make it mandatory?

Answer 20

If there is a non-mandatory prescribed method of acceptance, any other method will suffice provided it is no less advantageous to the offeror.

Question 21

What factors should be considered when determining whether the acceptance used was no less advantageous than the non-mandatory means prescribed? (2)

Answer 21

1. What was the purpose of the originally prescribed means?
2. Who was the originally prescribed means designed to benefit?
   The offeree has the ability to waive acceptance stipulations designed to benefit himself
   Authority - Yates Building Co Ltd v Pulleyn & Sons Ltd
3. Was the actual acceptance no less advantageous in fulfilling the purpose of the originally prescribed method?
   Authority - Manchester Diocesan Council fo Education v Commercial & General Investments Ltd

Question 22

What are the two key rules governing the effective acceptance of offers?

Answer 22

1. Receipt Rule

2. Postal Rule

Question 23

What is the receipt rule?

Answer 23

This rule applies only to instantaneous forms of communication and holds that acceptance takes effect only upon it being received.

Question 24

What is the postal rule?

Answer 24

This rule applies to non-instantaneous forms of communication and holds that acceptance takes effect once it has been dispatched.

Question 25

When there are issues with communication involving instantaneous communication methods what are the three key approaches outlined in the Entores case?

Answer 25

1. Communicator Fault
2. Recipient Fault
3. No Fault

Question 26

What is the concept of communicator fault?

Answer 26

Where the offeree seeking to communicate acceptance knows the message hasn’t been communicated, they must repeat it to ensure it is.

Question 27

What is the concept of recipient fault?

Answer 27

Where the offeror is aware a message has been attempted to have been sent to him but he hasn’t received it and the offeree mistakenly believes the message to have been communicated, the recipient must ask for the message to be repeated.

Question 28

What is the concept of no fault?

Answer 28

Where a message is believed to have been sent by the offeree but hasn’t been and thee offeror is unaware of this, there has been no effective communication of acceptance.

Question 29

When the recipient is a business when can actual communication be said to have occurred? (1)

Answer 29

Communication of acceptance (to a business) within office hours will constitute actual communication as the communicator has done all he can and failure to monitor his own machines is the fault of the recipient
Authority - Tenax Steamship Case

Question 30

When will communications outside of office hours constitute effective communication? (1)

Answer 30

Communication of acceptance (to a business) outside office hours will not constitute actual acceptance until it can reasonably be expected to be read
Authority - Mondial Shipping Case

Question 31

Is the concept of ‘ordinary office hours’ at all flexible? (1)

Answer 31

Yes, ordinary office hours may change depending on the circumstances
Authority - Lehmann Brothers International v Exxonmobil Financial Services BV

Question 32

What role do objective and subjective approaches have in relation to ‘ordinary office hours’?

Answer 32

Objective knowledge of working practices will be assumed but subjective matters dependent on the relevant firms working practices may not be.

Question 33

How does the postal rule allocate the burden of proof? (1)

Answer 33

It holds that so long as acceptance is posted a binding contract is formed, regardless of whether the offeror receives the acceptance - the burden is thus on the offeror
Authority - Household Fire & Carriage Accident Insurance Case

Question 34

What are the justifications for the operation of the postal rule?

Answer 34

1. Without it offeree’s would never know when they were bound and would have to wait for further notification from the offeror - delaying the contractual process further
2. The offeree may be prejudiced by delays in the post
3. It prevents the offeree from watching the market by accepting by post and then later revoking by phone call if the situation makes the deal less profitable/desirable

Question 35

What is the key criticism of the postal rule?

Answer 35

It binds the offeror without his knowledge - thus it is in the interest of the offeror to avoid the application of the postal rule.

Question 36

What are the five potential ways in which the offeror may avoid the application of the postal rule? (1)

Answer 36

1. Specifying a particular type of communication (other than post)
2. Stating no specific type of communication but explicitly requesting not post
3. Stating or inferring that a quick response is required - making postal communication ‘unreasonable to the ordinary man’
4. Specifying that acceptance will not take effect until notice reaches them in writing
   Authority - Holwell Securities Ltd v Hughes
5. Acceptance can be made ineffective on the grounds of an incorrectly addressed letter

Question 37

Can other communications overtake postal communications?

Answer 37

There are two key arguments beneath this question;

1. No - to allow this would give the offeree the best of both worlds: protection from revocation but also the ability to withdraw their offer
2. Yes - there is no disadvantage to the offeror as he never knew of the acceptance in the first place, in some cases it may even be beneficial to him

Question 38

Does acceptance need to be made in response to an offer? (1)

Answer 38

Yes, acceptance must be made in response to, and with knowledge of the corresponding offer
Authority - Tinn v Hoffman & Co