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CONTRACT FORMATION II :writing_hand::skin-tone-2: (identifying the…
CONTRACT FORMATION II :writing_hand::skin-tone-2:
identifying the acceptance
:one:
unqualified expression of assent
to the terms of the offer :check: :two: turns offer into binding contract :page_facing_up:
:three: is in response to the offer :arrows_counterclockwise:
:four: can be by conduct :mute:
:five: objective test applies
Brogden v Metropolitan Railway Co
(1877) 2 App Cas 666.
Brogen sold MRC coal, no formal contract in place so B proposed one and MRC agreed and they drew one up and sent it to him, he looked at it and agreed terms but added in new term about provision of arbitrator, they received it and nothing more done
Other examples: sending goods in response to offer to buy them; providing services in response to offer in form of request for them, etc.
Parties may perform for considerable time without there actually being acceptance of offer.
'mirror image'
rule :frame_with_picture:
Acceptance must be
unconditional and correspond with the exact terms
proposed by the offeror. (otherwise is a counter-offer)
Hyde v Wrench
[1840] 3 Beav 334 - typical haggling scenario
the
'battle of forms'
:crossed_swords:
Commercial parties will often exchange a number of offers and counter-offers during negotiations, each stating that they are contracting on their standard terms.
whose terms will govern the ‘battle of forms’? :question:
Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (England) Ltd
[1979] 1 WLR 401 – sale of a machine tool.
General rule in the ‘battle of forms’ =
party who gets the last shot will have the contract concluded in her own terms
, if it is true counter-offer and there is acceptance (which usually will be by conduct).
If one party wishes to
avoid contracting on the other party’s terms, she has to make this explicitly clear
.
communication of the acceptance
in general,
acceptance must be communicated
to the offeror, and is only valid when brought to their attention :telephone_receiver:
because:
:one: hard to prove acceptance without communication :speech_balloon:
:two: offeror should
know
they are now in a binding contract :eyes:
UNLESS:
:one: waiver of comm requirement :mute:
:two: acceptance by post :email: :postbox:
waiver of communication requirement
:mute:
in unilateral contracts:arrow_right: -
performance = acceptance
:dancer::skin-tone-2:= :check:
in bilateral contracts :left_right_arrow: - offeror
cannot waive the need for communication
and stipulate that silence will constitute acceptance :loud_sound:
Felthouse v Bindley
[1862] 11 CB (NS) 869 - uncle and nephew negotiating the sale of the nephew’s horse to the uncle
ratio
- :male-judge::skin-tone-2: Offeror
cannot impose contractual obligations
upon another party (the offeree) simply by stating things like "
unless
[offeree]
expressly rejects the offer, she will be held to have accepted it"
BUT if it is the offeree, rather than the offeror, who initiates the proposal that the offeree’s silence would constitute acceptance, this is fine
acceptance by post
:postbox:
communication an issue if parties not in each other's presence
so
when
does letter of acceptance become valid :question:
risk of loss/delay :wastebasket: - who should carry that risk?
Adams v Lindsell
(1818) B & Ald 681 – acceptance takes place when letter is posted by the offeree :postbox: :check:
Household Fire Insurance Co v Grant
(1879) 4 Ex D 216 - offered to buy shares in the insurance company which later became liquidated :fire: :moneybag:
PR
places risk of loss/delay on the offeror
since it follows that offeror will be bound by a contract despite the non-receipt of an acceptance that was posted
postal rule
justifications
:
:one: convenience, in the interests of certainty
:two: only applies when reasonable to use the post (i.e. unlikely if offer made by phone)
:question: but is it possible to r
evoke acceptance posted by letter before it reaches the offeror
, e.g. by a phone call? No English case authority on this yet
does not apply to instantaneous communication like phone, fax, email :forbidden::phone::email::computer:
Entores v Miles Far East Corporation
[1955] 2 QB 327 - Dutch company sent an offer by telex to an English company
But what if message is actually not received immediately (e.g. sent outside office hours, etc)? :night_with_stars:
Lord Wilberforce in
Brinkibon Ltd v Stahag Stahl GmbH
[1983] 2 AC 34, 42:
‘No universal rule can cover all such cases: they must be resolved by reference to the intentions of the parties, by sound business practice and in some cases by a judgment where the risk should lie.
’ :male-judge::skin-tone-2:
Most likely rule:
acceptance should take effect when the offeree might reasonably expect it to be communicated to the offeror
.
termination of offers
an offer must be
:
specific:mag_right:
current:timer_clock:
made with the intention of being bound:chains:
if already terminated, cannot be accepted :wastebasket::arrow_right: :forbidden::check:
main types of termination:
withdrawal
:back:
general rule in bilateral contracts:left_right_arrow:= an offer can be withdrawn by the offeror at any time
before it has been accepted
notice must be bought to the offeree :speaking_head_in_silhouette:
postal rule
does not apply
:postbox::forbidden:
Byrne v Van Tienhoven
[1880] 5 CPD 344
withdrawal in unilateral contracts :arrow_right:
Can the offer be withdrawn after the offeree attempted performance (e.g. started looking for the dog), but not completed the performance?
depends to a degree on
when exactly performance is deemed to amount to acceptance
possible solutions:
:one: assuming acceptance upon commencement of performance, rather than completion
:two:
estoppel.
the principle which precludes a person from asserting something contrary to what is implied by a previous action or statement of that person or by a previous pertinent judicial determination
Errington v Errington
[1952] 1 KB 290 – father bought a house for his son and daughter-in-law to live in, promising to transfer title if they pay off the mortgage
:three:
collateral contract
[side/ancillary]
Daulia Ltd v Four Millbank Nominees Ltd
[1978] Ch 231 –
Goff LJ: although the offeror is not bound until her conditions are performed in full, there must be an
implied obligation on the part of the offeror not to prevent the condition becoming satisfied
which arises as soon as the offeree starts to perform. :male-judge::skin-tone-3:
none of the above satisfactory, BUT seems to be that the courts will hold that a unilateral offer cannot be withdrawn once performance has started
lapse of time
:clock230:
an offer which is
expressly stated to last only for a specific period of time cannot be accepted after that
time :clock330::red_cross:
rejection
:red_cross:
rejection or counter-offer terminates the original offer
death
:skull:
death of offeror in most cases will terminate the offer (no authority on this)
where the contract is
not one for personal services
, etc if the offeree accepts
without knowing about the offeror’s death
, the deceased’s estate may be bound :house_with_garden::chains: