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Creation of a contract Assignment

LLB CONTRACT LAW COURSEWORK
Critically examine the law relating to acceptance of an offer
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1 We will discuss that ‘acceptance’ is
not always as straightforward as it would seem
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This approach has been criticised as artificial and inflexible and on occasions
the courts have found agreement in absence of these traditional criteria, particularly where there has been
performance
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3 This has practical relevance where goods are advertised at dramatically
reduced prices on retailers’ websites in circumstances where it is clear that there is no obvious special
offer
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5 Furthermore, offer and acceptance must be properly communicated in order to be
effective, whereby actual communication is required ie has to reach the intended recipient
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6

Similarly, the legal status of a

website/emails is unclear
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The courts look at the external evidence, as objectively indicating the parties’ intentions and ask whether,
on the basis of this evidence, the reasonable man would say that the parties were in agreement
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8 Of course, this gives rise to a further question: whose views
determine the impression given and who is the reasonable person for this purpose?9 There is no agreed
view on this question and debatable ‘unfair’ outcomes arise in cases such as Maple leaf Macro Volatility
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Insite Law Magazine (2012), Acceptance, Available from http://www
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com/ch4acceptance
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3
Storer v Manchester City Council [1974] 1 WLR 1403
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5
Ibid
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7
Smith v Hughes (1871) LR 6 QB 597
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9
Poole, Contract Law (n 2) 35
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Traditionally, agreement must be demonstrated by an unequivocal offer made by one party (the offeror)
and by complete acceptance of that offer by the other party (the offeree)
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As a result, there have been instances of courts either ‘finding’ the
necessary offer and acceptance, or ignoring the traditional approach and simply recognising the existence
of agreement by means of other external evidence,12 such as in Butler Machine Tool Ltd v Ex-Cell-O
Corporation Ltd13
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14 The question in such case is to
determine whose terms govern in this ‘battle of the forms’
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’15 Lord Denning MR expressed that in many of these cases traditional analysis of
offer, counter-offer, rejection, acceptance and so forth is out of date
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M
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The acceptance must be unconditional and correspond with the exact terms of the offer proposed by the
offeror ie a mirror image
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Although, even where
there is an agreement on the major terms (eg price and subject matter), there may still be no contract
because of failure to agree on the ancillary terms
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Brogden is the authority that a
bilateral offer need not be expressly accepted by words but can be accepted by conduct
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Poole, Contract Law (n 2) 40
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13
[1979] 1 WLR 401
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15
Trentham Ltd v Archital Luxfer Ltd [1993] 1 Lloyd’s Rep 25
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17
[1975] A
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154
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T
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Ltd v Hydranautics [1981] 2 Lloyd's Rep 211, 215
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20
(1840) 3 Beav 334
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22
(1877) 2 APP Cas 666
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Creation of a contract Assignment

clear that conduct must be referable to the offer and be identifiable as acceptance of the offer terms
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25 Treitel makes
the point that an acceptance could be effective even though it departed from the wording of the offer by
making express some term that the law would in any case imply
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g
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Conversely, an acceptance in which the acceptor asks for extra time to pay may be effective,
so longs as he makes it clear that he is prepared to perform in accordance with the terms of the offer even
if his request is refused
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In general terms an acceptance has no contractual effect until it is communicated ie brought to the
attention of the offeror
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In Henthorn v Fraser30, if the agent of the offeree had
full authority to transmit such acceptance, the acceptance would be binding
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32 Although, if
there has been a course of dealing whereby the offeree has taken benefit of the services offered, or if it is
the offeree who is attempting to hold the offeror to the offeror’s stipulation of the silence, then the
offeree’s silence/conduct can constitute acceptance
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35 Again, there is no clear rule
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This may result in the court refusing to acknowledge the existence of a
contract at all
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Tinn v Hoffman & Co (1873) 29 LT 271
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27
Lark v Outhwaite [1991] Lloyd's Rep
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28
Insite Law Magazine (2012), Acceptance (n 1)
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30
[1892] 2 Ch 27
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32
Poole, Contract Law (n 2) 66
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34
[1995] 1 WLR 474
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36
[1966] 1 QB 304
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25

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‘agreeing to agree'
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However, in Williams v
Carwardine41, as long as the offeree did have knowledge of the offer, and thus accepted in response to it,
his/her motives in doing so are irrelevant
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44 It appears that these cases are
decided on a case-by-case basis and the whole scenario
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There are also two important exceptions to this general rule that acceptance needs to be communicated:
implied waver of communication requirement in the case of unilateral contracts, and acceptance by post,
where the parties are necessarily not in each other’s presence
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In relation to the latter exception,
generally, words of acceptance must not only be spoken, they must be heard by the offeror, but when the
parties are not in each other’s presence communication becomes a more critical issue, especially when a
post office or machine is involved
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This rule applies even if the postal acceptance never arrives and
the offeror is ignorant of the fact that an acceptance was posted49 eg if it is lost or damaged (Household
Fire and Carriage Accident Insurance Co
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The postal rule therefore places the risk of loss
on the offeror
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51
However in, Henthorn v Fraser52, it was made clear that the postal rule is applicable only where it was

38

Lattimore v Mott [2005] All ER 415 and Sale of Goods Act s
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Boulton v Jones (1857) LJ Ex 117
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41
(1833) 5 C & P 566
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43
(1891) 64 LT 594
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45
Ibid
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47
Poole, Contract Law (n 2) 68
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49
Poole, Contract Law (n 2) 69
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51
Poole, Contract Law (n 2) 69
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39

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Creation of a contract Assignment

reasonable in all the circumstances for the offeree to have used the post
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In Howell Securities Ltd v Hughes54
Lawton LJ also stated that the postal rule probably does not operate if it application would produce
‘manifest inconvenience ands absurdity’
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There has been much academic
discuss on this moot point in English law, which again illustrates the lack of clarity in this area
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57 However, it too can be argued that
the postal ‘rule’ is nothing more than a rule of convenience adopted in the interests of certainty, so that as
long as a postal acceptance is retracted before that postal acceptance arrives, the offeror suffers no
disadvantage
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Communications by these means of telephone or fax are virtually instantaneous and stand on a different
footing than postal acceptance ie acceptance is not complete until received, but again this is not definitive
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In
Entores Ltd v Miles Far East Corporation59, Lord Denning MR found that the regular postal rule did not
apply for instantaneous means of communications such as a telex
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That there are instances when actual communication would
be non-instantaneous, despite the use of an instantaneous method of communication, was explicitly
recognised in Brinkibon Ltd v Stahag Stahl60, in which Lord Wilberforce commented that acceptance
should take effect when the offeree might reasonably expect it be communicated to the offeror
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62 If an acceptance has been communicated during office hours, the offeree could reasonably
expect the offeror to be monitoring the communicative device
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[1974] 1 WLR 155
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56
(1830) 9 S 190
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58
Ibid
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60
[1983] 2 AC 34
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62
Ibid
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54

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day if it was received outside of normal working
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66
Even these principles leave open some difficult questions, such as: when is there communication of an
acceptance message left on an answering machine? Applying the general rule, communication would be
when the message was played back, since anyone leaving a message should reasonably assume that, as the
machine is switched on, the message would not be communicated immediately
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The same problems apply to websites and emails
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69 Website contracting will be deemed
received when the parties to whom they are addressed are able to access them, but it excludes contracts
made exclusively by exchange of emails
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70 However, given the complexities of individual email systems, it would
seem preferable to apply the receipt rule, because the sender will know if the message has not been sent
and can resend it, as supported by Chwee kin Keong v Digilandmall
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There are problems with the
applying the receipt rule: the contract will be formed in the customer’s jurisdiction and the meaning of
‘receipt’, taking into account the delays caused by multiple servers, spam filters, is undecided
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”73
64

Mondial Shipping and Chartering BV v Astarte Shipping Ltd [1995] CLC 1011
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66
Ibid
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68
Coote, ‘The instantaneous transmission of acceptance’, (1971) 4 New Zealand UL Rev 331
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70
Ibid
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72
Poole, Contract Law (n 2) 75
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65

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In most situations the role of acceptance is crucial but without legal difficulty, despite the lack of clarity in
some areas surrounding acceptance
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It is the principle of seeking to take advantage the courts particularly object to
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75 As Scott VC expressed that
the intended effect of a purported acceptance would need to be judged objectively from the language used
and the surrounding circumstances, depending on the facts of the particular case
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Insite Law Magazine (2012), Acceptance (n 1)
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75

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STUDENT DECLARATION
I, student number 150062, declare that this piece of work contains 2622 words
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BIBLIOGRAPHY
Books:
Adams J and Brownsword R (2007), Understanding Contract Law (Sweet and Maxwell)
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Ewan M (2003), Contract Law: Text, Cases and Materials (Oxford University Press, Oxford)
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Poole J (2010), Contract Law (Oxford University Press, Oxford)
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Journals and Articles:
Adams, ‘The Battle of the forms’, (1979) 95 LQR 481
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Coote, ‘The instantaneous transmission of acceptance’, (1971) 4 New Zealand UL Rev 331
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Howarth, ‘A note on the objective of objectivity in contract’, (1987) 103 LQR 527
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Mitchell and Phillips, ‘The contractual nexus: Is reliance essential?’, (2002) 22 QJLS 115
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Boulton v Jones (1857) LJ Ex 117
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Brogden v Metropolitan Railway Co (1877) 2 APP Cas 666
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Carlill v Carbolic Smoke Ball Co [1983] 1 QB 256
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com [2004] SLR 594
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Day Morris Associates v Voyce [2003] EWCA Civ 189
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Felthouse v Bindley (1962) 11 CB 869
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Hartog v Colin Shields [1939] 3 ALL ER 566
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Hyde v Wrench (1840) 3 Beav 334
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Ltd v Grant (1879) 4 ExD 216
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Jones v Daniels [1984] 2 Ch 332
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Lark v Outhwaite [1991] Lloyd's Rep
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Maple leaf Macro Volatility fund v Rouvroy [2009] EWHC 257 (Comm)
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New Zealand Shipping Co Ltd v A
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Satterwaite & Co Ltd [1975] A
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154
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T
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Ltd v Hydranautics [1981] 2 Lloyd's Rep 211, 215
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Re Selectmove Ltd [1995] 1 WLR 474
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Smith v Hughes (1871) LR 6 QB 597
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Taylor v Allen [1966] 1 QB 304
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Creation of a contract Assignment

Tinn v Hoffman & Co (1873) 29 LT 271
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Williams v Carwardine (1833) 5 C & P 566
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insitelawmagazine
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htm [Accessed on the 15/04/2012]
LexisNexis

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