In order to be valid and legally enforceable, contracts must show that the two parties agreed on its terms without duress and involve an exchange of consideration (something of value). Adams v Lindsell (1818) 1 B & Ald 681 <>, Holwell Securities v Hughes (1974) 1 WLR 155, Hyde v Wrench  EWHC Ch J90 <>, Sudbrook Trading Estate v Eggleton  AC AC 444. This intent must then be effectively communicated to the offeror to complete the acceptance of the offer. You must demonstrate that the offeror had the intention to be bound. What happens if the other party’s reaction does not match the offer exactly? Common sense notion of ‘for sale’ different from contract law notion. Held: No valid contract. Pl wanted to sue def- needed leave to serve out of jurisdiction. Invitation to treat is an initial communication not intended to be open to acceptance (steps in the pre-contractual process; negotiating steps). When the offer is accepted it becomes a promise. According to English Law, the acceptance of an offer is completed as soon as it is posted and cannot be revoked. It is not clear if this would be acceptable in an acceptance by post. As is trite, to every general rule there is an exception. If no manner of acceptance is specified by the offer, then acceptance may be made in a manner that is reasonable under the circumstances. Dr Hughes offered Howell Securities the option to purchase his house for £45,000. No binding contract because no offer capable of acceptance had been made. Acceptance of the offer must be in the prescribed manner that is … Equivocal language: ‘may be prepared to sell’ and ‘prepared to make a formal application to buy’. Harvey v Facey  UKPC 1 << Complete Case Analysis >>, Storer v Manchester City Council  1 WLR 1403, Gibson v Manchester City Council  UKHL 6. Additionally, requiring O for £100 to trade in old van. Claim failed-at relevant time horse still owned by n- no concluded contract with u bec no acceptance: H wrote to T an offer to sell him 800 tons of Iron.H requested in the letter to T to reply to the offer by post. This decision was applied in the case of Household Fire insurance Co vs Grant. Ahsante sana nimepata kitu kipya ambacho sikutarajia. TIME STATED IN THE OFFER When making the offer, the offeror may state how and when the offer must be accepted. This is a where an acceptance is subject to the fulfilment of a condition. This is a situation in which there is no external manifestation of acceptance. As specified in the definition, if the offer is accepted unconditionally by the offeree to whom the request is made, it will amount to acceptance. It is the elements of acceptance that underscores the bilateral nature of a contract. The House of Lords held that a valid contact had arisen even though there being no communication of acceptance. The offer must be accepted without modifications, otherwise it is a counter-offer. The acceptance must be communicated to the seller. The House of Lords held that in the absence of any other evidence of the details of the hire purchase agree… The respondent replied that it ‘accepted’ the offer but it asked for an extension of two weeks. Generally, an acceptance which is not by post can be revoked if the revocation reaches the offeror before the acceptance does. The request was however headed “subject to contract”. However, the defendant didn’t receive the letter of acceptance. However, the Supreme Court overturned the judgement. The telegram in this case got to the offeror before the acceptance by post. Harvela v Royal Trust of Canada  A.C. 207. The court held that this was an impossibility due to the absence of consensus ad idem between both parties. The offers crossed at the post. Generally, an acceptance which is not by post can be revoked if the revocation reaches the offeror before the acceptance does. Theisger LJ said in Household Fire and Carriage that "an acceptance which remains... As acceptance must be communicated, the offeror cannot include … The plaintiff subsequently sued the auctioneer for conversion. In contract law, the acceptance of the offer takes place, when any letter accepting an offer is posted, not when it arrives. ISSUE: whether a contract has been created and if the answer is yes on who terms? This is a situation in which there are two simultaneous offers between both parties which have similar terms but they ‘cross’ at the post. 2.The terms of the acceptance must exactly match the terms of the offer. If offer is written, acceptance should also be written. As provided in the case of Felthouse vs Bindley, an acceptance is invalid unless it is communicated to the offeror. In Orient Bank vs Bilante Intl the court identified three ways by which acceptance can be inferred: By words, by conduct and by correspondence passing between the parties. In Scammell v Ouston(1941), for example, the parties had agreed to the supply of a lorry on ‘hire purchase terms’. 22 Implied obligation without which no contractual relationship. Note the difference in legal vs common sense understanding of concepts. Only applies if reasonable for offer to be accepted by post. Specific performance sought by claimants. The Concept of Acceptance in Contract Law. The acceptance must be communicated to the seller. There were absolute conditions governing submission of tenders in a formal process. However, Nnaemeka Agu JSC added that if all the basic terms to the contract have been agreed upon, the insertion of ambiguous words was just mere “cosmetic surplussage.”. An invitation to tender could give rise to a unilateral contractual obligation to consider tenders. There was no intention to be legally bound merely in responding to a request for further information. Where the letter of acceptance is wrongly posted. acceptance. Offer is made by the customer bringing goods up to the till (cash register), not picking an item off the shelf. Statements were merely Invitations to Treat not offers capable of being accepted. It will not always be easy to tell the difference, as the cases will show. Acceptance of an offer under Dutch contract law. Fisher v Bell  1 QB 394 < Complete Case Analysis >, Pharmaceutical Society of Great Britain v Boots  EWCA Civ 6 <>, Partridge v Crittenden  2 All ER 421 <>, Carlill V Carbolic Smoke Ball Co  EWCA Civ 1, Thornton v Shoe Lane Parking  EWCA Civ 2. Letter arrives late to A who accepts the offer. There are several rules dealing with the communication of acceptance: The acceptance must be communicated. Acceptance must generally be made in the manner specified by the offer. A counteroffer isn't an acceptance because it materially changes the terms of the proposed contract. Disagreements occurred between the parties which ended up S refusing to supply the van. If the terms of the agreement are not the same, this will essentially be a counter-offer and no valid contract will be created. HELD: no binding contract was created. For an acceptance to be valid these three criteria s must be satisfied: 1. The terms of the acceptance must exactly match the terms of the offer. HS send an acceptance by mail which was nerver received by Dr H. ISSUE: whether postal rule can apply to this case? When the company got liquidated, the defendant was held liable for some sum of money. the plaintiff made an offer to his nephew and he stated that if he did not receive a reply he would assume that the offer has been accepted. This is due to the fact that someone can’t accept something which he has no knowledge of. Definition. The appellant immediately sold the assets to a third party. His nephew intended to sell him the horse however, it was mistakenly auctioned. In contract law, acceptance is an unqualified expression of agreement to all the terms set out in the offer. Claim in conversion by uncle F against auctioneer. Newspaper advertisement is an invitation to treat, not an offer for sale. Notify me by email when the comment gets approved. A proposal/offer and its acceptance is the universally acknowledged process for making a contract of which the former is the beginning point. In the case of Adams vs Lindsell it was decided that where acceptance is by post, it becomes valid when it is posted and not when it is received. To form a binding contract, acceptance should be relayed in a manner authorized, requested, or at least reasonably expected by the offeror. Page 6 Law for Business & Personal Use Adamson-Mietus, 2000 Pages 98-109 revocation removal of an offer before acceptance Modification or revocation is not effective until it is communicated to the offeree or received at the offeree’s mailing address. There are three rules to keep in mind when assessing whether/when parties have formed a contract: There must be an offer and acceptance of that offer. 2) agreeing verbally or in writing to the terms of a contract, which is one of the requirements to show there was a contract (an offer and an acceptance of that offer). n. 1) receiving something from another with the intent to keep it, and showing that this was based on a previous agreement. He resisted paying the money and was thus sued to court. Council send booklet to claimant announcing a scheme for tenants to buy their council houses. Acceptance proceeds an offer as the second requirement for a legally binding contract. Hogera kwa kuwa na moyo wa kutamani watu wajifunze kupitia kile ambacho wewe unafaham. Acceptance is a final and unqualified expression of assent to the terms of an offer [G.H. Bids were requested by a public authority. An option contract is the exception to the general rule that an offer can be revoked at anytime before acceptance. Depends on ‘the intention of the parties and surrounding circumstances’. Wins on a collateral contract between bidder and auctioneer. An Offer Must Be Communicated • Unless there is communication of the proposal as suggested in Section 2 (a) of CA 1950, ‘when one person signifies to another his willingness to do or abstain from doing anything…’, there can be no acceptance to form an agreement. However, in the Nigerian court of appeal case of Orient Bank vs Bilante Intl it was held that whenever a method of acceptance is prescribed, any other method used would be invalid. 5. An example is if an agreement is subject to a contract. 3.The agreement must be certain. T wrote an offer to buy the same items from H for the same price. Proposal is an offer.It can be a promise, an act or abstinence. The counter offer terminated the initial offer and was a new offer which the appellant could either accept or reject. In the English case of Manchester Diocesan council vs Commercial and general investments Ltd, it was decided that where the method of acceptance is prescribed, unless that particular method is mandatory, any other method of acceptance that is faster would be valid. Option contracts are generally found when dealing in securities, commodities, or real estate. The elements of acceptance in contract law are those elements that make up the valid acceptance of a contract's terms. Negotiations between uncle and nephew resale of n’s horse. Tenders were sought from a small number of firms. HELD: valid contract. ELEMENTS OF CONTRACT OFFER AND ACCEPTANCE Definition Offer / Proposal Offer + Acceptance = Agreement Section 2(a) CA 1950 : “ A proposal is made when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining of that other to such act or abstinence”. The respondent sued for breach of contract. Intention is the key for an offer to be established. In the case of Fitch vs Snedaker, the court that in this situation the act can’t be said to be a valid acceptance. Therefore there is a binding contract between parties. It is no defense to an action based on a contract for the defendant to claim that he never intended to be bound by the agreement if under all the circumstances it is shown at trial that his conduct was such that it communicated to the other party or parties that the defendant had in … The Indian Contract Act 1872 defines acceptance in Section 2 (b)as “When the person to whom the proposal is made signifies his assent thereto, the offer is said to be accepted. Even if there was an intention to accept, the absence of communication makes it invalid. Subsequently, one of the parties contended that there was a valid contract. Significance of deposit as indicative of seriousness of offer. This is referred to as the postal rule, a precedent which was established in English contract law by the case of Adams and Lindsell (1818) 106 ER 250 (KB). In the case of Entores vs Miles Far East co, Lord Denning held that an acceptance validly takes place where it is received not where it is posted. An example of this was provided in the case of. Inferred term that referential bids were invalid. 2. Postal rule was excluded as the means of communication which was ‘notice in writing’ was not meet. Where the method of acceptance is not prescribed, the method used should be the method used in making the offer. Section 2(h) of the Indian Contract Act, 1872 defines the term “contract” as an agreement enforceable by law. The court, in applying the decision in Adams vs Lindsell held that the letter of acceptance was valid even though it didn’t get to the defendant. In this case, the defendant offered to buy shares in the company and it accepted by post. Agreement stated that S must supply a van at an agreed price (£286) on “hire-purchase terms” for two years. Acceptance occurs when an offeree agrees to be mutually bound to the terms of the contract by giving consideration, or something of value like money, to seal the deal. The provisions of the English legal system would be considered then the provisions of the Nigerian legal system would also be examined. Blackpool and Fylde Aero Club v Blackpool BC  EWCA Civ 13. The court held that the presence of the phrase “Subject to contract” meant that subject to the drawing up of a formal contract, the parties are still in the negotiation stage. You can withdraw an offer any time before it's accepted. An offer needs to be distinguished from an invitation to treat. The offer required HS to accept “by notice in writing” to Dr H within six months. Section 2(a)defines a proposal as “when one person signifies to another his willingness to do or abstain from doing anything, with a view of obtaining the assent of that other to such act or abstinence, he is said to make a proposal.” The person who makes the proposal is c… Risk of rule falls on offeror. Save my name, email, and website in this browser for the next time I comment. Offer accepted by telex from sellers received on Pl’s machine in London. In the case of Tinn vs Hoffman & co, there were two simultaneous offers by both parties which had identical terms. Thus, if an acceptance is posted in Nigeria it becomes valid when it is received in America.Therefore acceptance is valid at the moment of acceptance. However, the appellant later rescinded from the agreement. The advertisement of the reward was an offer. In the case of. However, in the United States case of Dick vs Us there was an acceptance by post that was revoked by telegram. Subsequently, there was an agreement between both parties. 3. An acceptance is that, a concluding and incompetent expression of consent to the terms of an offer. 4. There must be communication of acceptance from the offeree's side. In other words, the acceptance must correspond to what was offered, and if there is some difference between the two, then there may not be an agreement at law. Where it would produce manifest absurdity and inconvenience. In the case of General George Innih vs Ferado Agro Consortiums Ltd, The appellant offered to sell some properties to the plaintiff provided acceptance was within three days. 75. No further negotiation or bargaining was intended. Automatic ticket machines bind C the moment he puts money in the machine and receives the ticket. For an acceptance to be valid these three criteria s must be satisfied: 1. This was an offer, not an invitation to treat. In the case of UBA vs Tejumola and Sons, the appellant requested for a lease from the respondent. Because no communication occurred between the parties no valid contract had arisen. The offer and acceptance must be based or founded on three components, that is, certainty, commitment and communication. Acceptance Acceptance of an offer is the expression of assent to its terms. To count as an acceptance, the other party’s reaction to the offer must amount to a clear, unequivocal, unqualified statement that the former accepts on exactly the terms of the offeror’s offer (the so-called “mirror image” principle). In this case, the offeree simply doesn’t communicate the acceptance to the offeror. Another issue to be considered is what happens if the method of acceptance is prescribed. In order to form a binding contract , there must one party (offeror) making an offer which is accepted by another party (offeree). As regards, acceptance and revocation of acceptance by post, there is a difference in Indian law as compared to that of English Law. A letter was send by the council stating “I enclose the agreement for sale. Machines thought to be worth £27,518 (manufacturer’s list price). Thus, the defendant was held liable. The court held that there was no valid contract between the plaintiff and his nephew due to the fact that the acceptance had no external manifestation, thus, it was invalid. It was only a demonstration of potential interest to sell at some point. Significance of criminal element in this case – the avoidance of harsh penalties. This is due to the fact that when a letter of acceptance is already posted, there is a binding contract. Treitel, The Law of Contract, 10th edn, p.16]. Also, S.32 Interpretation Act provides that rules of common law, doctrines of equity and statutes of general application before 1900 would be applicable in Nigeria only to the extent that the local jurisdiction allows for it. 666, Entores v Miles Far East Corporation  EWCA Civ 3, Acceptance by post takes effect where and when letter is posted: Despatch Rule. When one party responds to an offer with additional conditions or qualifications, the response is generally considered to be a counteroffer, not an acceptance. The doctrine of offer and acceptance has proved to be a viable and flexible tool to assess contract formation. In order to really understand the meaning of communication of acceptance, we should consider the following: A pertinent question to ask is “where does acceptance take place?”. To determine Sections 4 and 5 of Indian Contract Act deals with the acceptance and revocation of acceptance by post. Offer and Acceptance: The Basics of Contracts First, a brief review of contract law. There was no objective standard found by the court to know “what price was intended / or what a reasonable price might be”. Uncle offer: “If I hear no more about him, I consider horse mine for [ ] “. C send an application for the purchase of the house . The addition of an extra term terminates the initial offer and it thus becomes a new offer which the former offeror is at liberty to accept or reject. As was tritely stated in the case of Alli vs Okulaja, decisions of courts that are not of Nigerian jurisdiction are not binding but are persuasive on Nigerian courts. Where the offer expressly states that acceptance by post has to reach the offeror. The respondent won in the High Court and the Court of Appeal. For a valid contract to exist there must be an offer and communication between the parties on acceptance of that specific offer. You are not bound by an acceptance made by someone else on behalf of the offeree without his authorization. Communication was only an expression of willingness to negotiate, not a binding commitment. Here is a case “Felthouse v Bindley (1862)” which is about accepting an offer properly. Olamide is an avid reader who believes that no knowledge is wasted. This was the first case to establish the postal rule. C drove to the entrance of a garage and took a ticket from the machine; he then entered the car park and parked. There are several rules regarding the acceptance of an offer to enter into a contract: The acceptance must be communicated. However, there are situations in which the communication of acceptance is implicitly done away with. It can be defined as the instance in contractual formation where the parties’ intentions as to the terms of the contract are the same or unequivocal. It was held that due to this, the a… Thus, it can be safe to conclude that the Nigerian decision overrules the foreign decision. You can also define acceptance as an offeree’s assent, either by express act or by implication from conduct, to the terms of an offer in a manner authorized or requested by the offeror, so that a binding contract is formed. However, in the United States case of Dick vs Us there was an acceptance by post that was revoked by telegram. Where method of acceptance is not prescribed. Whereas an offer will lead to a binding contract on acceptance, an invitation to treat can not be accepted it is merely an invitation for offers. Uni-lateral contract: offer is in the form of payment in exchange for an act. Medium language of communication in East Africa most used in Tanzania. If you sign it and return it to me I will send you the agreement signed in exchange”. You may do away with the requirement of communicating the acceptance; sometimes this may be obvious from the construction of the contract. This was according to the provisions of S.109(1) of the Contract Law of Anambra state. Only the person to whom the offer is made can accept it. explanation of part of the rules on formation of contract in English law Defendant had no right to impose conditions on the contract which were not stated in the ad. S attempted to exercise the option, but E refused to appoint a surveyor. Exception to the rule of acceptance by post. Topic 2 – The Law of Contract: Offer and Acceptance Introduction Contracts are the very hub of commercial life People and organisations enter into contracts virtually every day; when they purchase the daily necessities of life or larger consumer item, buy or lease property, borrow money, buy goods off eBay The revocation of an offer could only be effective when communicated to the other party, while the acceptance of an offer by telegram is effective as soon as it was sent. The terms were clear and definite, there was no room open for negotiation. L specifically requests that the method of reply must be by post. This has led to the general rule on advertisements. A counter offer happens when offeree introduces a new term to the initial offer of the offeror. A mere acknowledgement of receipt of the offer or a request for further information in relation to its terms, will not generally be sufficient to constitute acceptance. It is the willingness of one party to enter into a contract with another party according to the terms set out by the offering party. In this context, acceptance means an absolute and unconditional agreement to all terms. Introduction An arrangement of a contract needs an agreement; it follows that, in sort for such agreement to be reached. The common law provisions are in conflict with Nigerian judicial and legal provisions. Silence cannot usually be considered acceptance. The burning issue then is which of the decisions is binding. Significance of the criminal element in this case – the avoidance of harsh penalties. Us there was a counter offer must exactly match the terms of the contract. The letter of acceptance is already posted, there is no external manifestation of acceptance in law... 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