Acceptance must be communicated

Question 1

What are the general rules relating to the communication of acceptance?

Answer 1

• Acceptance must be communicated to the offeror.
• Acceptance applies from the moment it is communicated.
• Mental assent is not sufficient.
• The offeror may not stipulate that they will take silence to be acceptance and thus bind the offeree.
  *It is possible for a third party to inform the offeror of acceptance but only if the third party acted with the authority of the offeree.

Question 2

What case laid down the postal rule and what is this rule?

Answer 2

• Adams v Lindsell (1818) 1 B & Ald 681. [Important case]
• It held that where post is deemed to be a proper means of communication, the acceptance takes effect from the moment the letter of acceptance is properly posted – not from the moment it is received by the offeror.
• A letter is properly posted when it is put into an official letter box or into the hands of a postal operative who is authorised to receive letters (as opposed to simply deliver them).

Question 3

When does the postal apply?

When does the postal rule not apply?

Answer 3

• Applies even where the acceptance is delayed or lost in the post (Household Fire and Carriage Accident Insurance Co. v Grant (1879) 4 Ex D 216.
• Does not apply if not contemplated post would be used. Henthorn v Fraser [1892] 2 Ch 27 makes it clear that postal rule is applicable only where it was reasonable in all the circumstances for the offeree to have used the post. It has been held to be unreasonable to use the post when there is an implied condition that prompt acceptance is required.
• To letters revoking offers. Byrne v Van Tienhoven (1880) 5 CPD 344: revocation of an offer must be received in order to be effective.
• If the acceptance is incorrectly addressed, the rationale being that the offeree, by their own carelessness, has lost the benefit of the postal rule.
  If disapplied by the offeror. It is always open to the offeror to require actual communication (e.g. requiring receipt of acceptance). If the offeror ‘ousts’ (sets aside) the postal rule, a letter of acceptance would only be effective if and when it is received. This has been interpreted quite broadly: in Holwell Securities v Hughes [1974] 1 WLR 155 where the offer stipulated that ‘notice in writng’ was required the court held that this implied that the acceptance had to be received and the postal rule was set aside.

Question 4

What are the general rule for acceptance by instance communication?

Answer 4

• The general rule is that the acceptance takes place at the moment the acceptance is received by the offeror (Entores v Miles Far East Corporation [1955]). Denning LJ explained: in the case of instant communication, the person sending the message of acceptance knows, or ought to know, whether their message has been received.
• However, if the acceptor reasonably believes that they have communicated their acceptance but this is not so because of the fault of the offeror (e.g. bad phone signal means they do not hear the entirety of the acceptance but they do not ask for it to be repeated), then the offeror may be prevented from stating that they did not receive acceptance.

Question 5

what are the general rules relating to email as a mode of acceptance?

Answer 5

• The postal rule is inapplicable to email communications. Acceptance by email is not effective when sent, but only when received (Thomas v BPE Solicitors [2010] EWHC 306, Blair LJ).
• That a message is effective when received during ordinary office hours. The Brimnes [1975] QB 929, in which the Court of Appeal concluded that a message sent during office hours on a Friday, but not seen by office staff until the following Monday, was effective when received. The decision recognised the possible negligence of the office staff in failing to note the message in circumstances where the offeree could reasonably assume that there was an effective communication.
• Mondial Shipping and Chartering BV v Astarte Shipping Ltd [1995] CLC 1011 elaborates on the question of what the position will be if instant communication is sent outside ordinary office hours: a message sent on 23:41 on Friday 2 December. It was held that the message was received at the start of business of Monday, 5 December.
• Thomas v BPE Solicitors (as above): what is ‘office hours’ will depend on the context of the communications (think about international communications in this context).

Question 6

How does communication of acceptance apply to unilateral contracts?

Answer 6

• The communication of acceptance is waived in unilateral contracts.
• Carlill v Carbolic Smoke Co. (1893) is general authority for this principle: in this case, acceptance was based on performance of the acts required in the offer and was sufficient in itself to amount to acceptance. There was no need for separate notification of acceptance to be given to the offeror.