ACCEPTANCE

Topic of the day

- What is the essence of acceptance in a contract

- When has acceptance occur in a contract

- What are the modes of communicating acceptance between parties to a contract

WHAT IS THE ESSENCE OF ACCEPTANCE IN A CONTRACT

The nature of acceptance in a contract involves several key elements and cases and below we are to talk about it;

1. Offer and acceptance

An offer is an express expression of willingness by one party (the offeror) to enter into a contract on certain terms while acceptance is expressed when the other party (offeree) agrees to the terms of the offer, thereby forming a binding contract.

2. Notification of acceptance

The general rule states that acceptance must normally be communicated to the offeror by words, deeds or actions while the mailing rule (or Postbox Rule) states that acceptance is usually effective when mailed, not when received by the offeror. (in the case Adams v Lindsell - if the letter is lost in the post, acceptance is valid after posting).

3. Unilateral contract

In a unilateral contract, acceptance is usually by performance rather than by direct communication. In the case of Carllil v. Carbolic Smoking Ball Co, the specific performance of the advertisement constituted an offer, and Mrs. Carlllil's act of using the smoke ball in accordance with instructions constituted acceptance.

4. Silence as acceptance

Generally speaking, silence does not constitute acceptance except in certain circumstances (for example, previous transactions, industry norms, or where the parties have previously agreed that silence constitutes acceptance).

5. Counteroffer

A counteroffer amounts to a rejection of the original offer and it becomes the new offer, which must then be accepted by the original offeror.

6. Mirroring rules

The offeree's acceptance must fully reflect the terms of the offer; any deviation may be considered a counteroffer.

7. Instant messaging

In the case of instant communications (such as e-mail or instant messaging), acceptance is usually effective upon receipt by the offeror.

8. Withdrawal of offer

An offer can be revoked before acceptance unless there is an option contract or the offer is irrevocable for a specified period.

WHEN HAS ACCEPTANCE OCCUR IN A CONTRACT

Below is a detailed explanation of when acceptance has happened in a contract, with various sections and relevant cases:

1. Unequivocal and unconditional acceptance of

Acceptance usually should involve clear communication between the offeree and the offeror. See the case of Felthouse v Bindley where silence or inaction does not constitute acceptance and positive communication or action is necessary for acceptance.

2. The moment of acceptance

The general rule states that acceptance is effective upon communication, unless exceptions such as postal regulations apply. See the case of Entores Ltd. v. Miles Far East Corporation where instant communication such as telex or email constitutes acceptance upon receipt by the offeree.

3. Postal rules (mailbox rules)

The principle here is that if the offeror specifies that acceptance may be made by post, acceptance becomes effective upon posting. See the case of Adams v Lindsell where an acceptance is sent by post and lost, the acceptance remains valid after being posted.

4. Behavioral acceptance

In a unilateral contract performance of the requested act constitutes acceptance.See the case of Carllil v. Carbolic Smoke Balls Co. where the use of smoke balls as directed constitutes acceptance in a unilateral contract.

5. Counteroffers and modifications

A counteroffer is a rejection of the original offer and becomes a new offer. See the case of Hyde v. Wrench where the counteroffer made for the sale of property negated the original offer, rendering it invalid.

6. Mirroring rules

Acceptance must be entirely consistent with the terms of the offer to be valid. See the case of Butler Machine Tool Co. v. Ex-Cell-O Corporation where it was held that any deviation from the terms of an offer constitutes a counteroffer and not acceptance.

7. Implied acceptance

Acceptance can be implied through consistent behavior or industry norms. See the case of Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd where even in the absence of explicit communication, the conduct and dealings of the parties may imply acceptance.

8. Withdrawal of offer

An offer can be revoked before acceptance, unless it is an options contract or the offer is irrevocable for a specified period. See the case of Payne v. Cave where an offer can be revoked before acceptance, even if made shortly before acceptance.

WHAT ARE THE MODES OF COMMUNICATING ACCEPTANCE BETWEEN PARTIES TO A CONTRACT

The following is an overview of the methods of communication acceptance between contract parties, including relevant cases:

1. Quick communication

This is where acceptance can be conveyed by spoken or written language. See the case of Powell v. Lee where acceptance by letter to the offeror is not valid because it is not communicated directly.

2. Implicit communication

This is where acceptance can be inferred by action or behavior without explicit verbal or written communication. See the case of Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd where acceptance was implied by the conduct of the parties involved in the negotiation.

3. Silence as acceptance

Generally speaking, silence does not constitute acceptance, except in certain circumstances, such as past transactions or agreements, where silence has been indicated to be valid as acceptance. See the case of Felthouse v Bindley where silence does not constitute acceptance and there must be clear communication or action.

4. Postal rules (mailbox rules)

If an offer permits acceptance by mail, acceptance will generally be effective upon posting. See the case of Adams v Lindsell where acceptance by post is effective when sent, even if it is lost and never received by the offeror.

5. Instant messaging

In the case of Email, fax or telex, acceptance is effective upon receipt by the offeror. See the case of Entores Ltd. v. Miles Far East Corporation where acceptance by means of instant messaging is effective upon receipt by the offeror.

6. Withdrawal of acceptance

The offeror may revoke an offer before acceptance, unless there is an option contract or the offer is irrevocable within a specified period. See the case of Dickinson v Dodds where the revocation of an offer communicated prior to acceptance will render the offer void.

7. Performance acceptance

This is seen under unilateral contract where acceptance can be valid by performing the requested action. See the case of Carllil v. Carbolic Smoke Balls Co where the use of smoke balls as directed constitutes acceptance in a unilateral contract.

8. Electronic Communications

Acceptance by electronic means, such as clicking "I Accept" on a website or digital contract is a valid acceptance and depending on the jurisdiction, laws such as the Electronic Signatures in Global and National Commerce Act (ESIGN) or the EU's eIDAS regulation governs electronic acceptance.