CONTRACT - THE ACCEPTANCE Flashcards
(26 cards)
What is the definition of “acceptance”?
unconditional assent to all the terms of the offer
Method of acceptance can be: __________, ________, _________ or ______________
Method of acceptance can be express, written or oral or implied by conduct.
What happened in Brogden v Metropolitan Railway (1877)?
Brogden (the claimant) was a coal supplier for Metropolitan Railway (the defendant).
They had an informal arrangement for years without a formal contract. Metropolitan Railway sent Brogden a draft contract for review. Brogden made changes to the contract, signed it, and sent it back.
Metropolitan Railway never formally accepted the changes but continued ordering and receiving coal under the revised terms.
A dispute later arose, and Brogden argued that no binding contract existed because Metropolitan Railway never formally accepted the modified contract.
Held: The House of Lords ruled in favor of Metropolitan Railway, holding that:
A Contract Can Be Accepted by Conduct + Silence Does Not Usually Equal Acceptance, But Performance Can+ Contracts Can Be Formed Even If Negotiations Are Incomplete.
Silence can NOT be __________
Silence cannot be acceptance
What happened in Felthouse v Bindley (1862)?
Felthouse (the claimant) wanted to buy a horse from his nephew. He wrote a letter stating: “If I hear no more about him, I consider the horse mine at £30 15s.”
The nephew did not reply, but he intended to accept the offer. Before confirming, the nephew’s auctioneer (Bindley) mistakenly sold the horse to someone else. Felthouse sued Bindley for wrongful sale, arguing that he already owned the horse through the agreement.
Held: The Court ruled in favor of Bindley, holding that: Silence Cannot Be Acceptance + A Contract Requires Clear Offer and Acceptance + No Ownership Passed Without a Valid Contract
The general rule is that acceptance _____________
The general rule is that acceptance must be communicated
What are the three exceptions to the general rule “acceptance must be communicated”?
- Conduct of offeror
- Terms of the offer/ unilateral contracts
- Postal acceptance rule
Why is “conduct of offeror” an exception to the general rule “acceptance must be communicated”?
Where reason acceptance not communicated is offeror’s fault.’
“If the recipient’s conduct (offeror or offeree) causes them to miss a valid message, it can still count as communicated — especially if it was during normal hours and they reasonably should’ve seen it.”
What happened in The Brimnes (1975)?
Owners of the ship “The Brimnes” (the claimants) chartered it to the defendants. The owners sent a telex message withdrawing the ship due to late payment. The telex was sent during business hours, but the charterers did not read it until the next day. The charterers argued that revocation was not effective until they actually read it. The owners argued that revocation was effective when the telex was received during business hours, even if it was not read immediately.
Held: The Court of Appeal ruled in favor of the shipowners, holding that: A Message is Effective When It is Received, Not When It is Read + Responsibility Lies with the Receiver to Check Communications + Instantaneous Communication Follows Different Rules from the Postal Rule
Why is “TERMS OF THE OFFER” an exception to the general rule “acceptance must be communicated”?
In a unilateral contract, the offeror promises something in return for an act, not a promise. So acceptance happens by doing the act — not by saying “I accept.”
→ e.g. Carlill v Carbolic Smoke Ball (1893)
Why is “POSTAL ACCEPTANCE RULE” an exception to the general rule “acceptance must be communicated”?
Where post is an appropriate method of acceptance , the acceptance takes effect as soon as the letter is put in the post box.
NOTES:
Only applies if post is a reasonable method.
Doesn’t apply to revocations or modern instant communication (email, etc.)
What happened in Adams v Lindsell (1818)?
Lindsell (the defendant) wrote to Adams (the claimant) on September 2, offering to sell wool. The letter was delayed in the post and reached Adams on September 5. Adams posted his acceptance immediately. However, Lindsell, assuming no response, sold the wool to someone else before receiving Adams’ letter. Adams sued for breach of contract, arguing that his acceptance was valid when he posted it, not when Lindsell received it.
Held: The King’s Bench ruled in favor of Adams, holding that: Acceptance is Valid When Posted, Not When Received + The Offeror Bears the Risk of Postal Delays
What happened in Household Fire and Carriage Accident Insurance Co Ltd v Grant (1878)
Mr. Grant applied for shares in Household Fire Insurance Co. The company posted a letter of acceptance, but it was lost in the mail and never reached him Later, the company went bankrupt and argued Grant was a shareholder (and owed money).
Grant said: “No contract — I never got the acceptance.”
Held: Yes — a contract was formed. The court applied the postal rule, which says: Acceptance is complete when the letter is properly posted, not when it’s received.
According to the postal acceptance rule, the risk of lost communication lies with ______________________________________
According to the postal acceptance rule, the risk of lost communication lies with the offerror, not the offeree, when post is a reasonable method of communication!
What are the conditions for the postal acceptance rule to apply?
- post must be appropriate
- letter must be properly posted
- communication must not be required (Holwell Securities v Hughes (1974))
What happened in Holwell Securities v Hughes (1974)
Hughes (the defendant) granted Holwell Securities (the claimant) an option to buy property. The contract required acceptance to be given “by notice in writing” within six months. Holwell posted their acceptance, but the letter never reached Hughes. Holwell argued that, under the postal rule (Adams v Lindsell [1818]), their acceptance was valid when posted, even though it was not received. Hughes refused to complete the sale, and Holwell sued.
Held: The Court of Appeal ruled in favor of Hughes, holding that: The Postal Rule Did Not Apply Because “Notice in Writing” Required Actual Receipt + The Postal Rule Can Be Excluded by Express Terms + Fairness and Commercial Certainty Matter
Should the postal rule apply where it causes unfairness?
NO
Allowing a contract when the offeror never received acceptance would lead to uncertainty. The postal rule is an exception, not a general rule, and should not apply where it would cause unfairness.
What happened in Quenerduaine v Cole (1883)
Cole (the offeror) sent a telegram offering to employ Quenerduaine. The offer was sent using telegraph — a fast method at the time. Quenerduaine didn’t respond immediately. Instead, he sent a letter accepting the offer later. By the time the acceptance arrived, Cole had already given the job to someone else.
Held: No contract was formed. The court said that when an offer is made using a fast method of communication (telegraph), it implies that a prompt response is expected.
== Acceptance by post must be appropriate – by what means did offer get communicated? Email? So faster method of acceptance may be anticipated:
Is it good enough to give the acceptance to the postman?
NO.
Postal acceptance must be properly posted/ not good enough to give the acceptance to a postman
Is an email response to an offer is capable of amounting to an acceptance?
YES!
What happened in Golden Ocean Group Limited v Salgaocar Mining Industries (2012)?
Golden Ocean Group Limited v Salgaocar Mining Industries (2012)
Golden Ocean and SMI entered into negotiations for a 10-year charter of a vessel. Negotiations were primarily conducted via email, by the end of February 2008, the main terms were agreed upon through this email correspondence.
In late 2009, Trustworth and SMI refused to take delivery of the vessel, denying the existence of both the charterparty and the guarantee.
Held: Ruling in favor of Golden Ocean. The court held that: A Guarantee Can Be Formed Through a Series of Emails + Electronic Signatures Are Sufficient
For instantaneous communication, where is the contract made?
for instantaneous communication (like telex), the contract is made where acceptance is received, not where it is sent.
What happened in Brinkibon v Stahag Stahl (1983)
Brinkibon v Stahag Stahl (1983)
Brinkibon Ltd (a UK company) sent a telex message from London to Stahag Stahl (an Austrian company) in Vienna, accepting an offer for the sale of steel.
A dispute arose, and Brinkibon tried to sue in England, arguing that the contract was formed in England because the acceptance telex was sent from there.
Held: The contract was formed in Vienna, when and where the telex was received. The court reaffirmed the rule from Entores Ltd v Miles Far East Corp (1955) — for instantaneous communication (like telex), the contract is made where acceptance is received, not where it is sent.
What are key differences between “postal acceptance rule” and “instantaneous communications” when it comes to “ACCEPTANCE”?
Post -> acceptance on posting
Instantaneous communication -> When acceptance is received
