Once you have identified the existence of an offer, it is necessary to then determine whether there has been an acceptance of the offer in order to know if an agreement has been reached. Acceptance can be made orally, in writing, or by conduct. Acceptance requires three things:

• It must be the ‘mirror image’ of the offer (the mirror image rule)

• It must be unconditional

• It must be communicated to the offeror

NOTE: The rules of acceptance for unilateral offers differ form those for bilateral offers

Communication of acceptance - bilateral offers

The offeree’s acceptance must be in respect of the offer, i.e. knowledge of the offer is necessary

Communication of acceptance will only be effective if made by an authorised person – Powell v Lee (1908) 99 LT 284

The general rule is that silence cannot constitute acceptance - Felthouse v Bindley (1862) 11 CB NS 869

Note: you will find some caselaw exceptions to this general rule

If the offeror makes it clear that a specific mode of acceptance is mandatory, then that method must be used – see, for e.g. Manchester Diocesan Council of Education v Commercial & General Investments Ltd. [1970] 1 WLR 241

Communication of acceptance of bilateral offers- conduct.

The courts can infer acceptance through conduct.

Brogden v Metropolitan Railway Co. (1877) 2 App Cas 666

The appellant was a supplier of coal to the railway. It had been on an informal basis but later a contract was drafted. The railway company sent a draft contract to Brogden, who then edited it, marked it as ‘approved’, and sent it back. The respondents never communicated their acceptance. However, the railway company continued to order coal from Brogden, and he continued to deliver. A dispute then took place and Brogden argued that there was no binding contract. The court held that the written contract was valid despite no communication of the acceptance. The acceptance took place by performing the contract without any objections to the terms – the company’s conduct in performing their obligations evidenced acceptance of Brogden’s counter-offer.

Communication of acceptance of bilateral offers – instantaneous communication.

Acceptance is communicated only when the offeror has actually received notice of it

Where the parties communicate face-to-face (an instantaneous form of communication) it will usually be obvious when the offeror has received acceptance. 

Entores Ltd v Miles Far East Corp. [1955] 2 QB 327

“Suppose for instance, that I shout an offer to a man across a river…but I do not hear his reply because it is drowned out by an aircraft flying overhead. There is no contract at that moment. If he wishes to make a contract, he must wait till the aircraft has gone and then shout back his acceptance so that I can hear what he says. “Not until I have his answer am I bound.” - Lord Denning

Some general rules from Entores regarding acceptance and instantaneous communication: The ‘receipt rule’ applies, the offerors must receive acceptance. The offeree is responsible for ensuring that the offeror has received acceptance, unless it was the offeror’s fault the acceptance was not received.

If acceptance is sent to a business during office hours, communication is held to have occurred at the time it is received by the electronic device (fax, email etc.) – The Brimnes [1975] QB 929. If acceptance is sent outside of ordinary business hours, it will be deemed to have been received when the offeree could reasonably expect it to have been; generally it will be deemed to have been received on the next working day – Brinkibon Ltd v Stahag Stahl und Stahlwarenhandels GmbH [1983] 2 AC 34, and Mondial Shipping and Chartering BV v Astarte Shipping Ltd. [1995] CLC 1011.

Communication of acceptance of bilateral offers - the postal rule.

Non-instantaneous communication. An exception to the rule that there must be actual communication of acceptance in bilateral contracts. The offeree’s acceptance takes place as soon as the letter is posted, not when received – Adams v Lindsell (1818) 1 B & Ald 681. Acceptance occurs even if the letter is delayed or lost in the post (so long as it is properly addressed and posted using a post box or Royal Mail office) – Household Fire & Carriage Accident Insurance Co. Ltd. V Grant (1879) 4 Ex D 216

Understandably, there are strong limitations on the application of the postal rule. The rule will only apply if:

It was reasonable for the offeree to have used the post. This will usually be where the offer was made by post – Henthorn v Fraser [1892] 2 Ch 27

The postal rule will not apply where the offeror excludes the use of the postal rule, this is often done by specifying an alternative means of communication or using language to indicate actual receipt is required. The courts are often keen to limit the application of the postal rule in such circumstances:

In Holwell Securities Ltd v Hughes [1974] 1 WLR 155 the court interpreted the words ‘notice in writing’ to require actual receipt of the acceptance, and to oust the postal rule.

Communication of acceptance - unilateral offers.

The general rule that the offeree’s acceptance must be in respect of the offer applies, i.e. knowledge of the offer is necessary, but prior communication of acceptance is not required, the performance of the requested act constitutes acceptance– Carlill v Carbolic Smoke Ball Co. [1893] 1 QB 256