1. Offers and acceptance

Question 1

Dickinson v Dodds [1876]

Answer 1

Area: Valid revocation communicated by a third party.

Facts: The defendant wrote to the claimant offering to sell his house but instead (validly) sold the house to a third party. This was communicated to the claimant by a fourth individual (who was a reliable third party) who told the claimant that the defendant was going to sell the house to someone else.

Outcome/importance: The revocation was valid as the claimant was aware that the offer had been revoked, by the conduct of the defendant selling the house to someone else, and the claimant had been made aware of this by the contract of the reliable third party.

Revocation made by a third party is valid provided that:

• The third party is a reliable source of information; and
• The third party is one on whom both parties can rely

Question 2

Lefkowitz v Great Minneapolis Surplus Store [1957]

Answer 2

Lefkowitz v Great Minneapolis Surplus Store [1957] Area: Does an advert which states “first come, first served” amount to an offer or an invitation to treat?

Facts: Canadian decision – ONLY PERSUASIVE TO UK COURTS
An advertisement indicated that the goods would be sold on a first come, first served basis and the male claimant met this requirement. However, the defendant company refused the sale as the house rules indicated that the store would only sell to females. The court rejected this argument finding that there was no qualification in the offer regarding female-only customers and the claimant had met the requirement of being first, it was bound to sell him the item.

Importance: An advertisement with such wording may amount to a unilateral offer, which can be accepted by the offeree satisfying the listed conditions.

Question 3

What is Professor Treitel’s definition
of an “offer”?

Answer 3

“an expression of a willingness to contract on clear terms. It contains certain terms made with the intention that it shall become binding as soon as it is accepted by the person to whom it was addressed”

Question 4

Stevenson, Jacques & Co v McLean [1880]

Answer 4

Area: Requests for further information being different to “counter-offers”

Facts: The defendant offered to sell some metal to the claimant for cash. The claimant enquired whether credit terms were available for the transaction, but when they received no response, they accepted the original offer. In the meantime, assuming the enquiry to be a counter-offer and having an effect of destroying the original offer, they sold the metal to someone else without informing the claimant.

Outcome/importance: The court held that the enquiry was not a counter-offer, but simply a request for additional information. This did not end the original offer, which was still open for the claimant to accept. Because there was a valid contract, the defendant was in breach by selling the iron to another party.

The key difference between a “request for further information” and a “counter-offer” is that a counter-offer includes an attempt to vary the terms of the offer, rather than just asking for more detail.

Question 5

Pharmaceutical Society of Great Britain v Boots [1953]?

Answer 5

Area: Goods for display in a shop being “invitations to treat” rather than “offers”.

Facts: Defendants had been charged with breaching s18 Pharmacy and Poisons Act 1933, which required a pharmacist to be present when certain poisons are sold. If the court took the view that the display of goods amounted to an offer, then the acceptance would arise from the customer placing the poison in their basket and therefore a pharmacist would be required to be present at every shelf.

Outcome: The Court of Appeal held that goods on the shelf constitute an invitation to treat not an offer. A customer takes the goods to the till and makes an offer to purchase. The shop assistant then chooses whether to accept the offer. The contract is therefore concluded at the till in the presence of a pharmacist.

Question 6

What is the “mirror image rule”?

Answer 6

Acceptance must correspond exactly with the terms of the offer. The acceptance must completely mirror the terms of the offer and not vary them in any way.

Question 7

Taylor v Laird [1856]

Answer 7

Area = The communication of an offer

Facts = A ship’s captain resigned his post in a foreign port, but he still helped crew the ship home. He then argued that he had started to work again under a new contract, but this was not communicated to the ship owners.

Outcome = The ship owners were entitled to refuse to pay him for this work, as he had not communicated the offer to them, so they had no opportunity to accept or reject the offer. The court held that there was no contract between the parties.

An offer must be communicated to a would-be offeree in order for it to be capable of acceptance. An offeree cannot be bound by an offer that they did not know about.

Question 8

What was the decision in Entores v Miles Far East Corporation [1955] concerning “instantaneous” and “non-instantaneous” communication?

Answer 8

This case concerned an offer made by telex, which at the time were deemed to be “instantaneous”. This is because when contacted, a telex printer gave an acknowledgment and an identity code. If the line was broken, the teleprinter would stop and so the sender would have a very good idea that a message had or had not got through to the recipient.

It was held that telex communications were “instantaneous” and that any instantaneous forms of communication are subject to the general/receipt rule, where as “non-instantaneous” forms of communication are subject to the postal rule (being post and telegraphs in 1955).

Question 9

Henthorn v Fraser [1892]

Answer 9

Area: The postal rule only applies to acceptances and not revocations.

Facts: A withdrawal of an offer had been posted at midday, but it was not received until 5pm. In the meantime, an acceptance had been posted at 3:50pm.

Outcome/importance: It was held that there was a binding contract at 3:50pm and the revocation was too late.

Lord Herschell said: “I think that a person who has made an offer must be considered as continuously making it until he has brought to the knowledge of the person to whom it was made that it is withdrawn…”.

Note that this is a useful example when considering the pros and cons of the postal rule

Question 10

Re London & Northern Bank, ex parte Jones [1990]

Answer 10

For the postal rule to take effect, the letter of acceptance must be properly stamped and addressed.

It must also be actually posted – handing it to a postman who was not authorised to collect post (as in this case), meant that the letter was not deemed to have been posted!

Question 11

Barry v Davies (t/a Heathcote Ball (Commercial Auctions & Co) [2000] ?

Answer 11

Area: Offers/invitations to treat at auctions

Facts: The claimant had submitted the highest (and only) bids at an auction stated to be without reserve. The items were two Alan Smart engine analysers which were worth £14,000. The claimant had submitted bids of £200 each. The auctioneer refused to sell them at that price. The claimant brought an action for breach of contract claiming damages of £27,600.

Outcome: In a standard auction, each bid is an offer which is then accepted by the auctioneer. However, in auctions without a reserve, the auctioneer makes a unilateral offer which is accepted by submitting the highest bid. There was thus a binding contract, and the claimant was entitled to damages covering the loss of bargain.

Question 12

What are is the general position on acceptance in unilateral contracts?

Answer 12

In a unilateral contract, the rule that acceptance must be communicated is waived:

• The offer can be accepted by fully performing the stipulated act or forbearance (Dualia Ltd v Four Millbank Nominees Ltd [1977]).

• There is no need to communicate acceptance to the offeror (Carlill v Carbolic Smoke Ball Company [1893]).

• The offer can be withdrawn before it is accepted, the offer being accepted only be some performance.

Question 13

Entores v Miles Fare East Corp [1955]

Answer 13

Generally speaking, an acceptance has no effect until it is communicated to the offeror.

In this case, Lord Denning explained:

“Suppose for instance that I shout an offer across a river, but I do not hear his reply because it is drowned out by an aircraft flying overhead. There is no contract at that moment. If he wishes to make a contract, he must wait until the aircraft is gone and the shout back his acceptance, so that I can hear what he says”.

Lord Denning went on to say “supposed for instance I make an offer to man over the telephone and in the middle of his reply, the line goes dead so that I do not hear his words of acceptance. There is no contract at that moment”.

Additionally, it was held that telex communications were “instantaneous” and that any instantaneous forms of communication are subject to the general/receipt rule, where as “non-instantaneous” forms of communication are subject to the postal rule (being post and telegraphs in 1955).

Question 14

Brogden v Metropolitan Railway Co [1877]

Answer 14

Area: Acceptance may be inferred from conduct without it being expressly communicated.

Facts: The parties drew up a draft written agreement and Brogden signed this and sent it to the railway company. However, it was never signed by the railway and they never provided verbal acceptance. Under the contract, Brogden was to provide coal to the railway company, at a specific price. Brogden delivered the coal on the dates in the contract, the railway company paid the price stipulated in the contract and on the date stipulated in the contract. Later, when the relationship broke down and a dispute arose, the railway company tried to argue that there was no contract, because it did not sign the document that Brogden had sent them.

Outcome/importance: The House of Lords found that by accepting the coal and by paying for it on the day on the date, which was set out in the written contract, the written contract had been accepted by virtue of the railway company’s conduct.

Question 15

Daulia Ltd v Four Millbank Nominees Ltd [1978]

Answer 15

Area: Revocation of unilateral offers

Outcome/importance: Goff LJ said that “An offeror can revoke the whole thing [a unilateral offer], but once the offeree has embarked on performance, it is too late for the offeror to revoke his offer”.

Question 16

Thomas v BPE Solicitors (a firm) [2010]

Answer 16

Confirmed that email acceptance is deemed to be “instantaneous” and therefore subject to the general receipt rule on acceptance.

Additionally, the “office receipt rule” applied, where, outside of office hours, it is expected that the communication will be read the next working day/when it would be reasonable to expect it to be read.

Question 17

Is email “instantaneous” or “non-instantaneous” and what rule of acceptance applies?

Answer 17

The common view is that the general receipt rule applies to emails, but there is no firm judgment to this effect. This is despite email having more similarities with post (non-instantaneous) than telex (instantaneous). Post is delivered by a third party, may not be read immediately on delivery, can get lost/damaged and it has to be opened by the recipient.

In support of the above, in Entores Ltd v Miles Far East Corp [1955], Lord Denning confirmed the importance of the countries of the world having the same rule. The Vienna Convention of Contracts for the International Sale of Goods, the Unidroit Principles of International and Commercial Contracts and the Principles of European Contract Law all operate using the general receipt rule for email communication of acceptance.

Thomas v BPE Solicitors (a firm) [2010] - agreed with the above by confirming that email is considered to be instantaneous.

Question 18

Holwell Securities v Hughes [1974]

Answer 18

The postal rule can be excluded/the general rule of acceptance can be asserted if expressly done so in the terms of the offer.

Here, the defendant granted the claimant an option to purchase property that was to be “exercisable by notice in writing to the intending vendor”. The judge held that:

“the requirement of ‘notice…to’, in my judgment, is language which should be taken expressly to assert the ordinary situation in law that acceptance requires to be communicated or notified to the offeror, and is inconsistent with the theory that acceptance can be constituted by the act of posting..”

Question 19

Brinkibon v Stahag Stahl [1983]

Answer 19

Area: Modern communication of acceptance, sent out of hours.

Facts: An acceptance was sent by telex out of hours.

Outcome/importance: The House of Lords held that a telex message that was sent outside office hours should not be considered to be an instantaneous means of communication and therefore acceptance could be effectively only when the office reopened.

Lord Wilberforce summarised the situation in relation to modern communication methods by stating that:

“No universal rule can cover all such cases; they must be resolved by reference to the intention of the parties, by sound business practice and in some cases by a judgment where the risk should lie”.

This has led to common practice being that if the communication is sent during normal office hours, it will have effect as soon it was received – regardless of when it is actually read. Otherwise, it takes effect at the time when the sender could reasonably to have expected it to be read by the recipient (i.e. the next working day if sent at 11pm on a Tuesday night).

Question 20

Clifton v Palumbo [1944]

Answer 20

Area: Pre-contractual negotiations and statements of case not amounting to offers

Facts: Negotiations were taking place regarding the sale of a large estate, during which the claimant wrote to the defendant – “I am prepared to offer you or your nominee my Lytham estate for £600,000. I also agree that a reasonable and sufficient time shall be granted to you for the examination and consideration of all the data and details necessary for the preparation of the Schedule of Completion”.

Outcome/importance: It was held that this letter was not an offer to sell at that price, but merely an indication as to the price of the estate should all other factors be satisfactorily resolved.

Where a party simply stats the minimum price at which they would be willing to sell, this is an invitation to treat and not an offer.

Question 21

What case is the leading/initial authority for the postal rule?

Answer 21

Adams v Lindsell [1818]

Question 22

Household Fire Insurance v Grant [1879]

Answer 22

The postal rule will still apply, even if the letter of acceptance is never received by the offeror. (as long as other requirements satisfied i.e. correctly stamped and posted etc).

Question 23

What is the historical rationale behind the postal rule?

Answer 23

The postal rule was introduced in the case of Adams v Lindsell [1818].

At the time of this decision, the post could take a considerable time to arrive and therefore, in having acceptance on posting, it provided certainty as to the time at which a contract was concluded, it being easier to prove posting than receipt.

Question 24

Mondial Shipping and Chartering BV v Astarte Shipping Ltd [1995]

Answer 24

Area: Postal rule/general acceptance rule when it comes to emails

If sent outside office hours, it is expected that emails/faxes will be read on the next working day.

Question 25

What are some "cons" to the postal rule?

Answer 25

The postal rule dates back to a time when the recipient had to pay for postage, rather than the sender. It was also a time where it was normal for all communication methods to be relatively slow, rather than the faster alternative methods which are now available through technology. An offeror may not actually know that they are subject to an enforceable agreement. This can be a rather harsh consequence of the rule. Postal rule is at odds with the law on revocation of offers, which states that revocation only takes effect upon receipt (as illustrated in Byrne v Van Tienhoven [1880] Worth noting that the courts have had ample opportunity to abolish the postal rule, but have rather decided to take an approach of developing and expanding exceptions to the rule.

Question 26

Fisher v Bell [1961]

Answer 26

Area: Does an advert in a shop amount to an offer or invitation to treat? Facts: A flick-knife was displayed in a shop window. Importance: It was confirmed that the display of article with a price on it in a shop window is merely an invitation to treat. The intention is for shop window displays to entice members of the public to go inside and make an offer to buy goods at the advertised price.

Question 27

When considering the postal rule with new communications technologies, what case left the position open and enables the courts to take a common-sense approach to contract formation in individual cases?

Answer 27

Brinkibon v Stahag Stahl [1983] and the comments of Lord Wilberforce

Question 28

Payne v Cave [1789]

Answer 28

Area = Auctions and whether they are offers or invitations to treat. Outcome = In this case, it was held that if the bid constitutes the offer, the auctioneer is free to accept the bid or not as the case may be. In other words, the auctioneer’s call for the bids is merely an invitation to treat (i.e. an invitation for people to make bids). This position is supported by s57(2) Sale of Goods Act 1972 which confirms an auction is complete by the falling of the hammer.

Question 29

What are the differing consequences between an “offer” and an “invitation to treat”?

Answer 29

An offer needs to be distinguished from an invitation to treat. Whereas an offer will lead to a binding contract on acceptance, an invitation to treat cannot be accepted it is merely an invitation for offers. In other words, it is a preliminary stage in which one party indicates that he is prepared to receive offers with a view to entering into a binding contract. There are four types of invitation to treat: • Exhibition of goods for sale/on display in a shop • Advertisements (e.g. price lists or newspaper advertisements) • Auction sales • Invitations for tenders

Question 30

Manchester Diocesan Council for Education v Commercial & General Investments Ltd [1970]

Answer 30

Area: Acceptance may still be valid, even if not carried out as per the stipulated method of acceptance. It was held that an acceptance that meets the offeror’s objective in prescribing a method of acceptance (albeit not by the specific method prescribed), will remain valid. For example, a stipulation that a reply to an offer must be “by return of post”, a telegram or verbal message will still give rise to valid acceptance, as long as it does not take longer than the stipulated method. The courts will take the view that any other equally quick or satisfactory method will be acceptable.

Question 31

What are some "pros" of the postal rule?

Answer 31

- The postal rule gives a point of certainty as to when an offer has been accepted, and therefore, a point in which the contract is formed and obligations are imposed on the contracting parties. - If the offeror has permitted the use of post, sent the offer by post or failed to expressly exclude the postal rule (Holwell Securities Ltd v Hughes [1974]), then it is reasonable for the offeror to bear the risk of loss, by using a third party carrier (AKA the Royal Mail) for delivery. - Worth noting that the courts have had ample opportunity to abolish the postal rule, but have rather decided to take an approach of developing and expanding exceptions to the rule.

Question 32

Reveille Independent LLC v Anotech International (UK) Ltd [2016]

Answer 32

Area: Acceptance may be inferred from conduct without it being expressly communicated Facts: A draft agreement contained a stipulation for the agreement to be signed if accepted. However, the agreement was not signed but parties’ subsequent conduct was as if the contract had been signed (i.e. complying with the obligations). Outcome/importance: It is the conduct of the parties that matters most. A draft agreement can have contractual force, although the parties do not comply with a requirement that to be binding it must be signed, if essentially all the terms have agreed and their subsequent conduct indicates this, albeit a curt will not reach this conclusion lightly.

Question 33

Byrne v Van Tienhoven [1880]

Answer 33

Area: Valid timings for an offeror to revoke an offer • 1st October – Defendants posted an offer to the claimants • 8th October – Defendants posted revocation of the offer. • 11th October – Claimants received offer letter dated 1st October and immediately sent a telegram to the defendants, accepting the offer. • 15th October – The claimants sent a letter to the defendant confirming the telegram of acceptance. • 20th October – The second letter of the defendants, revoking the offer, was received by the claimants. Outcome/importance: The Court held that a contract was formed on 11th October. The offer was accepted by sending the telegram and the postal rule meant that the acceptance occurs when it is posted, not when it is received. The revocation was too late, as it was received after the offer was accepted. REVOCATION MUST BE COMMUNICATED TO THE OFFEREE - REVOCATION IS EFFECTIVE WHEN IT IS RECEIVED AND NOT WHEN IT IS SENT

Question 34

Felthouse v Bindley [1863]

Answer 34

Area: Silence cannot amount to acceptance Facts: An uncle and nephew were negotiating the sale of the nephew’s horse. The uncle had stated that “if I hear no more from you, I shall consider the horse mine at 30 pounds and 15 shillings”. The nephew did not reply but asked an auctioneer to withdraw the horse from an auction. The auctioneer forgot the instruction and sold the horse anyway. The uncle sued the auctioneer, claiming that a contract had formed between him and his nephew for the sale of the horse. Outcome/importance: The court held that there was no contract, since the nephew had never communicated his intention to accept to his uncle’s offer. Silence cannot equate to acceptance. The offeror cannot stipulate that silence is valid acceptance.

Question 35

Generally, when can an offer be revoked?

Answer 35

Generally, an offeror can revoke or withdraw their offer at any time until it has been accepted. The offeror is normally entitled to do this even if they have promised to keep the offer open for a specified time. They will be liable only if they have bound themselves by a separate, specific promise to keep the offer open for a specified time period and this is supported by consideration from the offeree, as confirmed in Routledge v Grant [1828].

Question 36

What was the decision in Brinkibon v Stahag Stahl GmbH [1983] concerning "instantaneous" and "non-instantaneous" communication?

Answer 36

This case approved the approach from Entores v Miles Far East Corp [1955], in that acceptance sent by telex was deemed to be "instantaneous". This was because the acceptor/offeree would normally receive an error message if the message failed to deliver, whereas the offeror will have no awareness of any failed attempts. Therefore, it is reasonable for the acceptor should have the responsibility of ensuring that the message has been received, given that they are in a better position to know if was sent successfully or not.

Question 37

Routledge v Grant [1828]

Answer 37

An offeror can withdraw an offer at any time until it has been accepted. The offeror can do so, even if they have promised to keep the offer open for a specified period of time (and there has been no consideration by the offeree based on this promise).

Question 38

South West Terminal Ltd v Achter Land & Cattle Ltd [2023]

Answer 38

Area: Acceptance by informal digital means. Outcome/importance: Past dealings between the parties were informal and so a thumbs up emoji in a text message was valid acceptance. (The emoji was consistent not as a mere receipt of the offer, but an acceptance). *NOTE THAT THIS IS A CANADIAN CASE BUT IS LIKELY TO BE PERSUASIVE*

Question 39

Partridge v Crittenden [1968]

Answer 39

It was a criminal offence to “offer for sale” a live wild bird. The appellant’s guilt rested on whether his newspaper advert was an invitation to treat or an offer. The advert said: “Bramblefinch cocks, bramblefinch hens, 25/-each”. It was held on appeal that the advert was an invitation to treat and not an offer.

Question 40

What rules on acceptance apply to "instantaneous" and "non-instantaneous" communications?

Answer 40

As confirmed in Entores v Miles Far East Corp [1955] and approved in Brinkibon v Stahag Stahl GmbH [1983], instantaneous communications are subject to the general rule of acceptance (i.e. must be received by the offeror). Non-instantaneous communications are subject to the postal rule.

Question 41

What are some the points raised by Simon Gardner in "Trashing with Trollope: A Deconstruction of the Postal Rules in Contract" [1992]?

Answer 41

The postal rule "load the scales in favour of the offeree. His letter of acceptance is effective on posting, but the offeror's letter of revocation is effective only on delivery. So all misadventures are at the risk of the offeror". It could be argued that this rule corrects the "injustice" that an offer may be revoked by the offeror at any time, even though he promised that it would remain open for a certain period. "The idea is that making acceptance complete at posting rather than delivery at any rate minimizes the window within which such a revocation may take place". Also, considering the technological advances between the decisions in Adams v Lindsell [1818] and Byrne v Van Tienhoven [1880], could it be that the judges favoured a unitary approach for both acceptance and revocation to be effective only when received. However, that option was blocked by precedent and so they had to content themselves with adopting it only for revocation, at the expense of having a non-unitary approach? "It is noticeable that cases with dealing with these new technologies increasingly marginalize the postal acceptance rule. The decisions on telex communications, for example [in Entores [1955]], explicitly treat the rule for postal acceptance as artificial, and an exception". "The postal acceptance rule, which equates posting with delivery, thus stands alone as an exception to a general requirement for full communication" and ""the postal acceptance rule may be regarded as something of a museum piece".

Question 42

Errington v Errington & Woods [1952]

Answer 42

Area: Revocation of unilateral offers Facts: A father bought a house using a mortgage, for his son and daughter-in-law to live in. He promised that he would transfer legal title to the property to them if they paid off all the mortgage repayments. The couple did not make any promise in return. The father died after some repayments had been made. Other family members claimed possession of the house, which was still in the father’s name. Outcome/importance: The above claim failed. The contract was a unilateral contract, since it involved an act in return for a promise. Once performance had commenced (by some of the mortgage repayments being made), then the father’s promise could not be revoked. A unilateral offer may be incapable of being revoked, once an offeree has embarked on fulfilling the condition. (it would seem pretty unfair if the father was capable of revoking the offer just before the son paid the final instalment!).

Question 43

What legislation supports the case law position of an auction being an invitation to treat? (when not advertised as “without reserve”)*

Answer 43

s57(2) of the Sale of Goods Act 1979

Question 44

Does the postal rule apply to revocations, acceptances or both?

Answer 44

The postal rule only applies to acceptances. Revocation takes effect when it is received, not when it is posted. (Byrne v Van Tienhoven [1880])

Question 45

Carlill v Carbolic Smoke Ball Co Ltd [1893]

Answer 45

Area = When an advert is deemed as a unilateral offer rather than an invitation to treat Facts = The defendants sold a patent medicine (the “smoke ball”). They placed a newspaper advert stating that they would pay £100 to anyone who contracts influenza after having used the smoke ball. The claimant caught flu after using the ball and claimed the sum of £100. The defendants argued that the advertisement was a “mere puff” and that, in any case, there was no offer made to any particular person and it was impossible to contract with the whole world Outcome = The COA held that the offer in the advert as a unilateral offer to the world at large, which was accepted by the claimant. This unilateral offer waived the need for communication of acceptance prior to a claim being made on the basis of it. The claimant was therefore entitled to the £100. In unilateral contracts, there is no requirement for the offeree to communicate an intention to accept the offer, as acceptance is completed by the offeree’s performance

Question 46

How can a unilateral offer be revoked?

Answer 46

There can be difficulties in establishing how and when a unilateral offer has been revoked. There is domestic authority on this issue, but the courts may look to the American case of Shuey v United States [1875] for guidance. Here, it was stated that one must merely take reasonable steps to communicate the revocation of the offer and, provided that this done, it does not matter if it does not actually come to the attention of every offeree. The offering party is required to revoke the offer in a same, similar or more effective method of communication. In Dualia Ltd v Four Millbank Nominees Ltd [1978], the Court of Appeal stated (obiter) that once an offeree had embarked on fulfilling the condition, it was not open to the offeror to revoke their offer.

Question 47

Hyde v Wrench [1840]

Answer 47

Area: The effect of a counter-offer on an offer Facts: The offeror offered to sell land to the offeree for £1k. Two days later, the offeree replied offering £950, which was rejected by the offeror. Upon rejection, the offeree accepted the original offer of £1k. Outcome: It was held that the offeree’s counteroffer amounted to a new offer and operated as a rejection of the original offer, therefore destroying it. It was not possible for the offeree to accept the original offer as it had ceased to exist.

Question 48

Generally, are adverts deemed to be offers?

Answer 48

No, *The general rule is that advertisements are classified as invitations to treat and not offers. * An advert may only amount to an offer when it is unilateral offer e.g Carlill v Carbolic Smoke Ball Co [1893]

Question 49

Adams v Lindsell [1818]

Answer 49

The postal rule = The court held that the contract was made at the time the acceptance letter is posted, not when it is received by the offeror.

Question 50

With regards to acceptance, what are the two exceptions to the “receipt rule”?

Answer 50

Acceptance must be effectively communicated to the offeror, unless: 1. The need for communication has been waived (as in unilateral offers – Carlill v Carbolic Smoke Ball Co [1893]) 2. The postal rule applies

Question 51

What contextual conditions must be satisfied for the postal rule to apply?

Answer 51

1. Acceptance by post must have been requested by the offeror, or acceptance by post must be a normal, reasonable or anticipated means of acceptance. (Henthorn v Fraser [1892]). 2. The letter of acceptance must be properly stamped and addressed (Re London & Northern Bank, ex parte Jones [1990]). 3. The letter of acceptance must be posted. Handing it to a postman who was not authorised to collect post (as in this case), meant that the letter was not deemed to have been posted! (Re London & Northern Bank, ex parte Jones [1990]). 4. The postal rule must not have been expressly excluded in the offer. (Holwell Securities v Hughes [1974]). 5. Use of the postal rule must not create “manifest inconvenience or absurdity”. (Holwell Securities v Hughes [1974]).

Question 52

Ramsgate Victoria Hotel v Montefiore [1866]

Answer 52

Area: Lapse of time terminating an offer Facts: there was an offer to buy shares which was made on 8th June. Acceptance of the offer was received on 23rd November – more than 5 months later! Outcome/importance: The court held that this was too late. The offer had lapsed in the meantime. It is easy to see why in this case, because share prices are known to go up and down quickly and so it would be unfair to bind someone to a price set out more than 5 months ago in such a contract. Had the contract been something with a less volatile price change history, such as land, a longer period may have been reasonable for the offeree to accept within. In the absence of a particular date being specified for the offer to terminate, an offer will lapse after a “reasonable time”. What is “reasonable” will depend on the offer and subject matter of the contract.