Intro to Contract - Module 3 - Acceptance - Study Notes

Module Overview

• Study Notes for Contract Law focusing on Acceptance.

Acceptance

• Formula: OFFER + ACCEPTANCE = AGREEMENT

• Acceptance must be unqualified.

  • Graw: Acceptance is a final and unqualified assent to the terms of the offer.

  • Acceptance can occur:

    • Orally

    • In writing

    • Implied from the conduct of the offeree.

  • Paterson: Focus on whether acceptance represents actual consensus or a 'meeting of the minds'.

  • Carter & Harland: Acceptance must be unequivocal, indicating a definite decision by the offeree to be bound by the terms.

Reliance on the Offer

• Acceptance must be in reliance of the offer.

  • Reward cases (e.g., R v Clarke) illustrate the necessity of consensus.

Issues to Consider

• Who may accept an offer?

  • Anyone to whom it is made.

  • Other entities (e.g., nominee, lawful assignee).

  • Case References: Boulton v Jones (1857), Carter v Hyde (1923).

• What may be accepted?

  • Acceptance must be absolute, unqualified, and without modifications.

  • Graw: Acceptance should match the original offer without additions or deletions.

• What is a conditional acceptance?

  • Accepting with additional conditions (e.g., "subject to finance").

Conditional Acceptance Explained

• Examples:

  • "Subject to bank finance"

  • "Subject to a formal lease being prepared."

• Interpretation of "subject to contract":

  • Primary judgment (Masters v Cameron): signifies a formal contract to confirm the agreement.

  • Alternative interpretation recognizes that parties may intend to be immediately bound.

Summary of Conditional Acceptance

1. Using terms like "subject to contract" implies no contract is formed unless formalization occurs.

2. If all terms are agreed and signing is just a formality, the presumption is overturned.

Communication of Acceptance

• Must be communicated by the offeree directly to the offeror (Powell v Lee).

• Agreement is formed upon acceptance receipt by the offeror.

  • Offeror can stipulate the method of communication.

    • Rules:

      1. Acceptance must follow specified method exactly if stated as the only acceptable means.

      2. If a method is suggested but not exclusive, any fast or equivalent means is valid (George Hudson Holdings Ltd v French).

Postal Rule in Acceptance

• Definition: Acceptance is effective upon posting when mail is expected (Graw).

• Adams v Lindsell (1818): Validates acceptance at time of posting, not receipt.

• Considerations:

  • Issues with lost or delayed post (Household Fire v Grant).

  • Acceptance methods can negate postal rule if specified.

  • Incorrectly addressed letters can void acceptance.

  • Extended negotiations may necessitate actual communication (Tallerman v Nathan’s Merchandise).

Modern Electronic Communications

• Application of the postal rule to electronic communications.

• Acceptance by email is effective once actually communicated (Entores Ltd v Miles Far East Corp).

• Relevant Acts: Electronic Transactions Act 2011 (WA), United Nations Convention on Electronic Communication.

Acceptance by Silence

• Debate on whether silence constitutes acceptance.

  • Felthouse v Bindley highlights the issue of implied acceptance through silence.

  • Criteria for unsolicited goods - inertia selling legislation (Australian Consumer Law).

Acceptance by Conduct

• Established in cases such as Brogden v Metropolitan Railway Co and Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd.

  • Context matters; acceptance can be inferred from conduct where parties had a commercial relationship.

Revocation of Acceptance

• General rule: acceptance can be revoked before the offeror receives it (Graw).

• Conflicting situations arise when acceptance is sent but then revoked by phone.

• Selling or disposing of subject matter post-revocation impacts contract validity.