WEEK 3

LECTURE 5

ACCEPTANCE

• An offer can only be accepted by a person to whom the offer is made.

• As in, an offer cannot be accepted by any other person other than the person to whom
the offer is made.
• Why? Because he/she is not the intended offeree
• However, an offer made to the world at large (general offer) can be accepted by any
person

RULES REGARDING ACCEPTANCE

1. IT MUST BE AN ABSOLUTE AND UNQUALIFIED ACCEPTANCE OF ALL THE TERMS OF

THE OFFER

Neale v Merrett (1930)

• FACTS: Merrett offered land to Neale at £280. Neale accepted the offer and
enclosed £80 in an envelope, and promised to pay the remaining £200 balance in
monthly installments of £50.
• HELD: There was NO contract since the acceptance was not unconditional

2. THERE IS NO SUCH THING AS A CONDITIONAL ACCEPTANCE OF AN OFFER

Hyde v Wrench (EWHC, 1840)

• FACTS: On 6 June 1840, Wrench wrote to Hyde's agent offering to sell a farm
owned by Wrench, for £1,000 — stating that it was the final offer and that he would
not alter from it. Hyde offered £950 in his letter by 8 June, and after examining the
offer, Wrench refused to accept it and informed Hyde of this on 27 June. On 29
June, Hyde agreed to buy the farm for £1,000 without any additional agreement
from Wrench. However, Wrench refused to sell the farm to him and Hyde he sued
for breach of contract.
• RATIO: Accepting a contract with a variation is a counter-offer — it is not an
acceptance of an offer. And a counter-offer kills the original offer.

Livingstone v Evans (CQBA, 1925)

• FACTS: Evans wrote to Livingstone proposing to sell a piece of land for $1,800.
Livingstone wired in return, “Send lowest cash price. Will give $1600 cash.” Evans
responded with, “Cannot reduce price.” Livingstone then wrote to accept the
original offer of $1,800. However, Evans no longer wanted to sell to Livingstone
and Livingstone sued for specific performance.

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 • ISSUE: (1) Was the first telegram from Livingstone a counter-offer; and (2) If so, did
this counter-offer constitute a rejection of Evans’ offer and free Evans from it?
• HELD: (1) Yes; and (2) No
• Under Hyde v Wrench, a counter-offer constitutes a rejection. Because of this
long standing precedent, Livingstone’s first telegram is a counter-offer.
• However, the court finds that Evans’s second telegram, “Cannot reduce price”
constitutes a renewal of the original offer and Livingstone's acceptance makes it
a binding contract.
• R ATIO : (1) A counter-offer kills the original offer; (2) However, an offer can be
renewed after a counter-offer through ambiguous language. As in, Evans’ response
of, “Cannot reduce price” constitutes a renewal of the original offer.

Butler Machine Tool Co v Ex-Cell-O Corp (EWCA, 1979)

• FACTS: Butler Machine Tool Co made and sold machine tools. They sent a letter to
Ex-Cell-O on 23 May1969 offering Ex-Cell-O some new machinery for £75,535.
• With it, was Butler’s standard contract terms, which included a price variation
clause (as in, if their manufacturing costs went up, that price rise would be
passed on to Ex-Cell-O)
• Ex-Cell-O replied on 27 May and said that they would order the machinery, but
on Ex-Cell-O’s own standard terms. Ex-Cell-O’s standard terms did not have a
price variation clause.
• Butler replied on 5 June on the tear-off slip from Ex-Cell-O’s terms. At the
bottom of this slip it read, “We accept your order on the terms and conditions
stated therein.” However, Butler added a letter reasserting that the price was
being entered in accordance with the sellers quotation from the letter sent on 23
May.
• A while later, nothing further had been said, and Butler delivered the machinery.
They asked for £75,535 — plus £2,892 according to their price variation clause.
Ex-Cell-O refused to pay the extra.
• Butler sued Ex-Cell-O. The lower court held that the seller's price variation
clause continued through the whole dealing and so the sellers were entitled to
rely upon it.
• ISSUE: (1) On whose terms was the contract made; and (2) Is butler breaching the
contract?
• HELD: The quotation of the price was an offer subject to terms and conditions and
the order by Ex-Cell-O constituted a counter-offer — which Butler accepted.
• However, Lord Denning also lays out a “better way” to analyze such situations
— applying an objective test of the conduct and language.
• Lord Laughton & Bridge discuss general principles of offer & acceptance and
determine that, generally in such situations, the last of the forms (the “last
shot”) is the victor.
• They find the tear away slip being returned as the offer being accepted from the
buyer’s and their terms, and find the letter that accompanies this from the seller
to be just reiteration of price.   
• RATIO: In a battle of forms generally the last shot wins

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Tywood Industries Ltd v St Anne Nackawic Pulp & Paper Co Ltd (Ontario High Court,
1979)

• FACTS: On 19 September 1977, St Anne-Nackawic Pulp & Paper Co Ltd sent “A

Request for Quotation” to Tywood, which set forth the goods required. On the
reverse side were thirteen “Terms and Conditions” none of which contained a
clause regarding arbitration.
• On 26 September, Tywood replied with a quotation and on the reverse were
their twelve “Terms and Conditions of Sale” — again, none of which contained
a clause regarding arbitration.
• The 12th condition stated that no modifications of the terms would be
recognized.
• There were subsequent telephone and telex communications between parties,
and on 7 November, Tywood submitted a revised proposal, with the same
“Terms and Conditions of Sale”
• On 6 January 1978, St Anne sent a purchase order with new “Terms and
Conditions” — the 19th condition stipulating that any controversy shall be
settled by arbitration.
• The order included instructions that Tywood should mail an acceptance
copy of order and give the shipment date
• On 3 July, another identical purchase order was sent
• Neither of the above purchase orders were signed by Tywood. However, the
goods were delivered.
• Tywood brought an action for the price of goods sold and St Anne moved to
stay the action — stating the contract stipulated disputes would go to
arbitration instead.
• I SSUE : Under whose conditions was the contract formed?
• HELD: Under the classical model, St Anne’s contract would hold
• Similarly, under either a first shot or a last shot model, St Anne would prevail
• The court, however, takes an interventionist tack. They want to prevent
inefficiency by working out what they think is a reasonable agreement between
the parties.
• Tywood imposed non-arbitrable conditions when they quoted initial price
and never acknowledged St Anne’s terms.
• The defendant tried to smuggle in arbitration terms and did not complain
when the purchase orders were not returned. The conduct of the parties
indicates both parties were interested only in the specifications and the price
and that consummation of the business deal was paramount for the parties.
• R ATIO : (1) If there is a discrepancy look to the essence of the contract; (2) One
cannot sneak terms into contracts without proper notification; and (3) Look to
actual conduct of business (do people really read the terms?).
• This case represents a move away from classical contracting model to
reasonable contracting.

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 ProCD v Matthew Zeidenberg and Silken Mountain Web Services Inc (USCA 7th, 1996)

• FACTS: Matthew Zeidenberg purchased a telephone directory database,

SelectPhone, on CD-ROM, produced by ProCD. ProCD had compiled the
information from over 3,000 telephone directories at a cost of more than $10
million. Zeidenberg purchased a copy of SelectPhone, and after opening the
packaging and installing the software on his personal computer, Zeidenberg created
a website and offered the information originally on the CD to visitors (of the
website) for a fee that was less than what ProCD charged its commercial customers.
• At the time of purchase, Zeidenberg may not have been aware of any prohibited
use. However, the package itself stated that there was a license enclosed.
Moreover, because, “[T]he software license splashed across the screen and
would not let him proceed without indicating acceptance,” Zeidenberg had
ample opportunity to read the license before using SelectPhone.
• Zeidenberg was presented with this license when he installed the software,
which he accepted by clicking assent at a suitable dialog box — this type of
license is commonly known as a “click-through license” or “clickwrap.” The
license was contained, in full, on the CD.
• I SSUE : Are clickwrap licenses offers and does clicking “I accept” constitute
acceptance?
• RATIO: Clickwrap licences constitute a reasonable offer and confirming such a
license constitutes acceptance of the offer — forming a binding contract.

3. CLARIFICATION

U. P. State Electricity Board and another v M/S Goel Electric Stores Chandigarh

• RATIO: Seeking clarification of an offer is not (i) an acceptance of an offer; nor is it

(ii) a counter-offer

4. ACCEPTANCE OF AN OFFER MUST BE EXPRESSED IN SOME USUAL OR REASONABLE

MANNER
• FOR EXAMPLE: By word of mouth, telephone, telegram, text message. Or, it can also be
accepted by conduct

Brogden v Metropolitan Railway Company (HL, 1877)

• FACTS: The complainants — Brogden — were suppliers of coal to the defendant —

Metropolitan Railway. They completed business dealings regarding the coal
frequently for a number of years, on an informal basis. There was no written
contract between the complainant and the defendant. However, the parties decided
that it would be best for a formal contract to be written for their future business
dealings. The Metropolitan Railway made a draft contract and sent this to Brogden
to review. The complainant made some minor amendments to this draft and filled in
some blanks that were left. He sent this amended document back to the defendant.
Metropolitan Railway filed this document, but they never communicated their

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 acceptance of this amended contract to the complainants. During this time, business
deals continued and Brogden continued to supply coal to the Metropolitan Railway.
• ISSUE: Whether there was a contract between Brogden and the Metropolitan
Railway and if the written agreement they had was valid.
• HELD: There was a valid contract between suppliers, Brogden and the Metropolitan
Railway. The draft contract that was amended constituted a counter offer, which
was accepted by the conduct of the parties. The prices agreed in the draft contract
were paid and coal was delivered. Although there had been no communication of
acceptance, performing the contract without any objections was enough.

Household Fire and Carriage Accident Insurance Company Ltd v Grant (EWCA, 1879)

• FACTS: Grant had negotiated to purchase shares in Household Fire Ltd. His
application was accepted, and his name was added to the list of registered
shareholders. However, the letter informing Grant of this (that he was the owner of
the shares) never reached him. Thus, Grant never paid for the shares. His earnings
from dividends were credited to his account. Eventually Household Fire Ltd went
into liquidation and the liquidator applied for money from Grant. He refused to pay
on the grounds that he was not a shareholder — as in, he had never received the
notification in the mail and was not aware that Household Fire accepted his offer.
• ISSUE: When do acceptances becoming binding when they are sent via mail?
• HELD: Contract was formed when the acceptance was mailed. The court states that
the offeror can always choose how communication of acceptance is to be
transmitted. But, in the case of mail, the offer is accepted as soon as the mail of
acceptance is deposited with the post office.
• RATIO: A contract becomes binding the instant that the acceptance is put in the
mail, so long as the parties have contemplated the mail as a viable means of
communication in their dealings.

Holwell Securities Ltd v Hughes (EWCA, 1974)

• FACTS: Hughes granted Holwell Securities a six-month option to purchase a

property, and stated that the option had to be exercised “by notice in writing.”
Before the six months ended, Holwell's lawyer wrote to Hughes’ lawyer stating that
his client (Holwell) was exercising his option. The letter also included a cheque for
the deposit, which was not accepted. Holwell’s lawyer sent a copy of the letter to
Hughes by mail, but it was never delivered. Hughes refused to sell the property and
Holwell sued for breach.
• ISSUE: Does the postal rule always apply
• HELD: If the postal acceptance rule applies, then there is clearly a contract as the
agent of Holwell mailed the acceptance.
• However, although the parties intended to use the post as the means to
communicate acceptance, they have not displaced the general rule of acceptance
— that it requires communication.

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 • As in, the use of the words “notice in writing” meant that Hughes required
actual notice of acceptance — not just when the acceptance was posted in
the mail.
• The postal acceptance rule does not apply when the terms of a contract point
to the necessity of actual communication — EVEN IF the post is the desired
medium of communication. The recipient does not actually have to read or
understand the acceptance; it only must arrive and be seen by the offeror.
• RATIO: The postal rule does not apply in situations where a notification of
acceptance has been specified.

Dawson v Helicopter Exploration Company (SCC, 1955)

• FACTS: There were a series of letters exchanged between Dawson, who had staked
a mineral claim (which had by this point lapsed), and Springer (employee of
Helicopter Exploration) discussing a contract to explore a certain area of BC and
decide whether or not it was worth mining there. When they set the terms, it was
agreed that Springer would notify Dawson when he had obtained a pilot for his
helicopter so that Dawson could leave his post with the military and come with
them to show them the area, and was entitled to a percentage of the earnings if they
decided to develop the land. When a pilot became available Springer notified
Dawson, however he also stated that based off of third party advice they would
probably not be exploring the area that year. Dawson did not reply. Without
notifying Dawson, the defendants explored the region and later contracted with
another party for the development of the land. Dawson sued for breach
• ISSUE: Was there a valid offer and acceptance to form a contract?
• HELD: Yes
• The performance that was required of Springer was notifying Dawson that a
pilot was ready, and taking him along on the exploration. However, by their
actions Helicopter Exploration prevented the complementary performance of
the appellant that would have entitled him to his share of the earnings, and in
doing so they breached the contract.
• RATIO: Where a complementary action is contemplated for both parties, the offeror
in a bilateral contract cannot terminate the contract for want of performance if he or
she fails to discharge his or her complementary obligation to perform.
• Silence may be evidence of repudiation but NOT in this particular case because
of the circumstances: (1) Communication of acceptance need NOT be expressed
to be effective. It can be found via the language and the conduct of the parties;
(2) If one of the parties is silent, then you CANNOT assume that they have
accepted the repudiation of the contract and abandoned their rights.

Carlill v Carbolic Smoke Ball Company (EWCA, 1892)

• FACTS: An advertisement disseminated by the Carbolic Smoke Ball Company said

the following:

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 £100 reward will be paid by the Carbolic Smoke Ball Company to any person who
contracts the increasing epidemic influenza colds, or any disease caused by taking cold,
after having used the ball three times daily for two weeks, according to the printed
directions supplied with each ball. £1000 is deposited with the Alliance Bank, Regent
Street, showing our sincerity in the matter.

• Mrs. Carlill saw the advertisement, bought one of the balls, and used it three
times daily for nearly two months until she contracted the flu on 17 January
1892. She claimed £100 from the Carbolic Smoke Ball Company. They ignored
two letters from her husband, a solicitor. On a third request for her reward, they
replied with an anonymous letter that if it is used properly the company had
complete confidence in the smoke ball's efficacy, but "to protect themselves
against all fraudulent claims" they would need her to come to their office to use
the ball each day and be checked by the secretary. John brought a claim to court.

• ISSUE: (1) How does one interpret vague terms; (2) Was the ad a “mere puff”; (3)
Does performance of the conditions advertised in the paper constitute acceptance of
an offer; and (4) Was there any consideration made?
• HELD: (1) Court said it was an offer made to the whole world, but the contract is
made with the limited number of people who perform the conditions on the good
faith of the Ad; (2) No notification of acceptance is necessary here. The Ad you put
in the paper was construed as being that the performance of the condition in the Ad
was sufficient notice of acceptance and satisfying conditions in the Ad is acceptance
of the offer; (3) Court said there was a request to use this product involved in the
offer and the inconvenience sustained by the plaintiff at the request of the other
party is enough to create consideration under the law; and (4) Company's claim that
£1000 was deposited at the Alliance Bank showed the serious intention to be legally
bound.
• RATIO: (1) Just because a person chooses to make extravagant promises does NOT
mean in law they do NOT have to fulfill them; (2) The advertisers are NOT
contracting to the whole world. But they are making an offer to their customers
whose performance of the conditions in the Ad constitutes acceptance. And this
amounts to a unilateral contract under the law; (3) The offeror is entitled to set out
what constitutes notice of acceptance, or if any notice is required at all.

Goldthorpe v Logan (ONCA, 1943)

• FACTS: Elizabeth Goldthorpe responded to Ann Logan’s newspaper Ad, which

claimed “Results Guaranteed” to remove hair via electrolysis. Goldthorpe was met
by a nurse, who told her face could definitely be “cleared” with no physical exam.
Despite the treatment, the hair on her face continued to grow and she brought suit.
Her claim failed at the lower court and she appealed.
• ISSUE: Was there a contract between Logan and Goldthorpe?
• HELD: Yes
• The defendants were careless in their promise — they did not suggest that
“results may vary.” They suggested no exceptions for their guarantees.

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 • The court states that the defendant pandered to the weakness of a distressed
client. As in, the strong cannot be allowed to prey on the weakness of the weak,
the gullible, or the misguided.
• There is an allusion to inequality in bargaining powers. This was an offer made
to the public, which the plaintiff accepted by submitting to the procedure.
However, the defendant did not live up to the terms of their offer, and thus,
breached the contract.
• Perhaps they made the offer negligently. However, they breached their
contractual obligations
• RATIO: (1) Look to words and actions to determine if a contract is made; (2) An
advertisement constitutes an offer that can be accepted on the terms it proffered;
and (3) The offeror bears the risk of extravagant promises.

5. SILENCE DOES NOT CONSTITUTE ACCEPTANCE OF AN OFFER

Felthouse v Bindley (EWHC, 1862)

• FACTS: Felthouse negotiated to purchase a horse from his nephew. There was a
mix-up with the price, as the uncle offered less than the nephew desired. The uncle
gave a definite offer to the nephew in January, however no response was given, and
no actions were performed as the horse remained in the possession of the nephew.
In February the nephew sold all of his farm stock in an auction, and the horse,
despite the nephew's instructions that it be reserved, was sold. Felthouse sued the
auctioneer, Bindley, in conversion to recover the horse. Felthouse was successful at
trial, receiving £33, which Bindley appealed.
• ISSUE: id the nephew accept his uncle’s offer, or was the horse still his property at
the time of the auction?
• HELD: Nothing had been done at the time of the auction to imply that the property
had changed hands to the uncle, and the nephew had given no acceptance.
Therefore, with no acceptance or implied acceptance through actions, the property
remained that of the nephew at the time of the auction, and the uncle has no case
against the auctioneer for selling goods that were owned by the nephew.
• If the nephew wanted to enter into the contract he must have given clear
indication of his acceptance, which he had failed to do.
• There was no contract because Bindley remained silent and silence does not
amount to the acceptance of an offer
• R ATIO : (1) Acceptance cannot be assumed if there is no notification of acceptance,
or implied acceptance through action present; (2) Silence does not amount to
acceptance (you cannot impose obligations on an unwilling party).

Saint John Tug Boat Company Ltd v Irving Refining Ltd (SCC, 1964)

• FACTS: Saint John Tug Boat had a deal with Irving to supply them the use of their
tugboats for assisting incoming oil tankers to their shipyard. However, with no firm
arrangements having been made, Saint John stated that they would only have two

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 boats available unless special arrangements were made, and advised Irving to look
elsewhere for help.
• Saint John ended up having two more tugs available, and told Irving that they
could use them if they paid $450/day to have them “on call” until a certain date.
• This date passed and Saint John continued to keep the tugs on call and Irving
continued to use them for a few months
• However, when billed for these months after the original end of the contract,
Irving refused to pay and Saint John sued for payment.
• I SSUE : Can a party, in their actions, imply acceptance?
• HELD: Yes
• After the original deadline passed, Saint John were essentially serving Irving a
new offer every time they sent them an invoice and kept the tugs on call, and
that Irving continued to imply acceptance by their continuation of using the
service
• Irving must have known that the tug was still standing by and that Saint John
expected to be paid for their services.
• R ATIO : (1) Silence can constitute acceptance when combined with conduct; and (2)
If a party allows another party to work for them under such circumstances that no
reasonable person would suppose that the work was being done for nothing, then
the first party will be liable to pay for it — the doing of the work is the offer; the
permission to do it (or the acquiescence in its being done) is the acceptance.

6. MODE OF ACCEPTANCE
• If the offeror tells the offeree how he wants to be communicated acceptance, then the
offeree MUST communicate the acceptance through that method.
• FOR EXAMPLE: You make an offer and tell someone that he/she must communicate
acceptance by telephone. However, what he/she does is email you.
• At this time, you (as of the offeror) can insist that the offeree call you to
communicate acceptance. If you insist, then he/she MUST telephone you.
• However, if you do not insist, then the offer can be counted as having been
accepted.

Eliason v Henshaw (SCOTUS, 1819)

• FACTS: On 10 February 1813, a letter written from Eliason to Henshaw proposing

to buy flour at Georgetown and asking “Please write by return of wagon whether
you accept our offer” to Harper’s Ferry. The letter was delivered to Henshaw on the
14 February, but the wagoner informed them that he would not be returning to
Harper's Ferry.
• Henshaw wrote in acceptance on the 15 February and the letter was sent by
regular mail carriage to Georgetown on the 19 February — the next available
wagon.
• Eliason sent a reply on the 25 February acknowledging receipt of letter, but said
that the response was too late, as it was not returned by the wagon. Henshaw
sued for non-performance.
• ISSUE: Was the offer accepted in the right time, place, and manner?

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 • HELD: There was no acceptance; hence, no contract was formed. Three things were
amiss:
1. The contract was not accepted within the proper time — not sent back by the
wagon;
2. The contract was not accepted in the right place — the acceptance should
have been sent back to Harper's ferry, not to Georgetown; and
3. The contract was not accepted by the correct manner — should have been
sent by wagon, but was sent by mail.
• In fact, it is perfectly reasonable for Eliason to have dictated the terms of
acceptance. Thus, since the diction was not followed, there was no contract, and
consequently, no breach.
• However, the court does leave open the possibility that you can use another
means of acceptance SO LONG AS it reached Harper’s Ferry sooner than the
wagon
• R ATIO : A contract is not formed where the terms of the acceptance do not mirror
the terms of the offer.
• As in, the offeree must follow the terms of the offeror (time/place/manner of
acceptance) for an acceptance to be valid and binding.

7. TIME OF ACCEPTANCE
• If the offeror prescribes a time by when the acceptance must be communicated, then
you must communicate that acceptance within that time frame.

Carmichael v Bank of Montreal (1972)

• FACTS: There was a deadline to accept the offer by 6:00 pm. Method of acceptance
was NOT discussed. Letter of acceptance was left with the real estate agent.
• ISSUE: Whether there was sufficient acceptance of the offer that was made
• HELD: Yes, there was acceptance. (1) If an offer stipulates that there is a particular
deadline established for acceptance of the offer, then the offerer MUST make it
possible for the offer to be accepted; (2) Verbal acceptance of such an offer is
sufficient.
• If you stipulate that there is a deadline to the expiration of the offer, you MUST
be there to accept the offer within the designated expiration time.

• If, HOWEVER, the offeror does not prescribe a time frame, then the offer must
be accepted within a “reasonable time”.

Ramsgate Victoria Hotel Co v Montefiore

• RATIO: What is “reasonable time” will depend on the facts of the case

8. WHEN ACCEPTANCE IS COMPLETE

• Acceptance is said to be complete when it is no longer in the hands of the offeree.
• As in, if you are sending your acceptance by letter, the acceptance is complete when
you put the letter in the mail to the offeror (postal acceptance rule).

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 • It is different if you are calling someone to accept the offer. Because if you are
calling someone, you are not communicating acceptance until you have uttered the
words, “I accept.”

Kanhaiylal v Dineshwar Chandra

• RATIO: Offer and acceptance can be made through telephone, but it must be
“audible, heard and understood.”

Brinkibon Ltd v Stahag (UKHL, 1983)

• RATIO: Contract is formed when communication of acceptance is communicated

from the offeree to the offeror. The general rule of “instantaneous communication”
shall apply that a contract is made when and where acceptance was received. As in,
where you see the offeree has accepted the terms, is where the contract is made. So
when I open a letter in Austria (I’m the offerer), that the offeree has accepted the
terms, the contract has formed in Austria — NOT from where the offeree has sent
the letter.

Rudder v Microsoft Corporation (ONSCJ, 1999)

• FACTS: Rudder brought a class action on behalf of MSN subscribers in Canada for,
inter alia, improperly charging MSN subscriber’s Credit Cards — violating the
terms of the contract. Microsoft filed to dismiss the class action on the grounds of
forum non conveniens.
• Microsoft argued that the contract between them and the subscribers contained a
forum selection clause, which gave exclusive jurisdiction to Washington State
to resolve any disputes.
• Rudder argued that the particular clause was not valid as it was not adequately
brought to the attention of the user. The provision was sufficiently important
that it required special notice.
• ISSUE: (1) Are clickwrap licenses valid; and (2) should a clause that binds the
individual be upheld even if that clause is not seen?
• HELD: (1) Clickwrap agreements are as valid as agreements in writing; (2) The
onus is on the Plaintiff to show strong cause to override a term of exclusive
jurisdiction. In absence of a strong cause, an exclusive jurisdiction term will be
enforced for the benefit of commercial certainty.

9. AN OFFER CAN ONLY BE ACCEPTED AFTER AN OFFER HAS BEEN MADE

10. OFFER MUST BE ACCEPTED WHILE THE OFFER IS STILL IN FORCE

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HOW IS AN OFFER TO BE COMMUNICATED?

• An offer may be communicated by word of mouth (viva voce), writing, or conduct

• Even an advertisement can be written in such a manner that it amounts to an offer (Carlill v
Carbolic Smoke Ball Company)

OPTION CONTRACT

• An option contract reduces the offeror’s ability to revoke the contract

• FOR EXAMPLE: You own a car. You tell someone that you will sell your car to them. You
tell someone that they have six months to buy the car for $2,000. This offer cannot be
revoked if the offeree pays consideration to keep the offer open.
• As in, if the offeree pays $200 to keep the offer open, then the offeror must keep the
offer open

TERMINATION OF OFFER

1. REVOCATION
• If the offeror gives notice of revocation to the other party (expressly), then the offer is
revoked. However, the revocation MUST be clearly communicated to the offeree.
• An offer can be revoked BEFORE acceptance — NOT after acceptance

Byrne v Van Tienhoven (UK Court of Common Pleas, 1880)

• FACTS: On 1 October, Van Tienhoven mailed a proposal to sell 1,000 boxes of tin
plates to Byrne at a fixed price. On 8 October, Van Tienhoven mailed a revocation
of offer. However, that revocation was not received until 20 October.
• In the interim — on 11 October — Byrne received the original offer and
accepted by telegram and turned around and resold the merchandise to a third
party on 15 October
• Byrne brought an action for non-performance.
• ISSUE: What is the relation between the postal acceptance rule and revocation?
• HELD: Rule in plaintiff’s favor
• Revocation of the offer was not effective until it had been communicated to
Byrne.
• While the postal acceptance rule remains good law for acceptance, the court
finds no support for the premise that revocation of an offer is also completed
once it has been put in the mail. As a result, revocation was not communicated
to Byrne until 20 October, at which point the contract was already formed, and
thus, the revocation is of no effect. To rule otherwise would be impractical for
commercial realities.
• RATIO: (1) Revocation must be communicated to the offeree so that the offeree has
knowledge of the revocation; and (2) Mere posting of a revocation is not sufficient
communication.

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Dickinson v Dodds (EWCA, 1876)

• FACTS: John Dodds delivered an offer to sell a house and land to George Dickinson
on Wednesday — stating that the offer was to stay open until 9:00 am on Friday.
Dickinson apparently decided to accept the offer on Thursday, but said nothing to
Dodds because he thought he had until Friday morning.
• However, he was informed that Dodds had sold the property to someone else on
Thursday evening and tried to reach Dodds — leaving a letter with Dodds’
mother-in-law where he was staying.
• An agent of Dickinson found Dodds on Friday morning at around 7:00 am, but
was informed that the property had already been sold.
• Dickinson brought an action of specific performance. He was successful at trial,
which Dodds appealed
• ISSUE: (1) Was the letter just an offer, or something more; and (2) Is an offeror
bound to not revoke the offer and sell to someone else?
• HELD: The letter was merely an offer and nothing more
• When an offer has been made, the offeror is as free to revoke it as the offeree is
to accept or reject it.
• Dickinson argued that the only way the offeror can revoke the offer is by
explicit communication to the offeree, but this is rejected by the court.
• It is clear in law that an offer does not amount to an agreement and can be
withdrawn at any point. Even though it was said that the offer was to remain
open until Friday, this was not binding on Dodds.
• There must be a “meeting of the minds” at the time the contract is formed, and
this obviously could not occur here (as Dodds had already agreed to sell the
property to a third party), so there could be no contract.
• R ATIO : (1) An offeror is free to withdraw their offer at any point until the offeree
has accepted it, so long as the offeree has not provided any sort of consideration;
and (2) An offeree must have knowledge of a revocation, but explicit
communication is not required.
• POSTAL ACCEPTANCE RULE: Post office is acting as agent for the offerer (and
the offeror is the principal) and the offeree. When you post a letter of
acceptance to the post office, it becomes a valid contract EVEN if the offerer
never actually never receives it.
• However, in order for the postal acceptance rule to apply, the offer MUST
have been made by post

Errington v Errington (KB, 1952)

• FACTS: In 1930, a father bought a house for his son and daughter-in-law (Wood) to
live in, telling her that the down-payment was a gift, but they were expected to pay
the mortgage and that, “The house will be your property when the mortgage is
paid.” He also said that when he retired he would put the house in their names.
Wood paid mortgage installments regularly, but when they found both the rates
(property taxes) and the mortgage too burdensome, the father agreed to pay the
rates as well. The father died leaving his estate to his wife (Errington). After the

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 father’s death, Wood split from Errington’s son. Errington sued for possession of
the house.
• ISSUE: Can a unilateral contract be revoked after the death of the offeror?
• HELD: There was no express promise by the son and daughter-in-law to pay the
installments, and the court cannot imply those terms. The Father’s promise is a
unilateral contract; the performative act paying for the mortgage, and thus, it would
only be revocable if the couple did not make the payments.
• Once performance has started, the offeror cannot revoke the offer. The father’s
implied intention was to keep house in their possession if they paid the
mortgage
• The couple were on a license, short of a tenancy but a contractual, or at least
equitable right to remain, which would grow into good equitable title as soon as
the mortgage was paid.
• As in, once you start the payments, you CANNOT revoke the contract.
• RATIO: (1) Once the party has embarked on the payments of the offer made to
them, you cannot revoke the offer. But then the court asked itself, “If the offeree
starts to embark on the payments, when can the offer be revoked”; (2) Modern
approach is that offer in a unilateral contract CANNOT be revoked if the contract is
in the process of being completed. If the conditions stop being met (in this case, if
the Son and Daughter-in-Law stop making payment), then you can revoke the offer.

Baughman v Rampart Resources (BCCA, 1995)

• HELD: (1) An attempt to revoke an offer cannot deprive an offeree of the right to
accept the contract according to its terms; (2) If the offeree communicates his/her
acceptance, then there is a binding contract; (3) If the offeree does NOT perform
the requirement for the acceptance of the offer, then there is NO binding contract
for which to sue.

2. LAPSE OF TIME
• If the offeror says you must accept an offer within 1 week, and you don’t communicate
the acceptance within that 1 week, then time has lapsed and the offer is automatically
said to be revoked

Manchester Diocesan Council of Education v Commercial and General Investments Ltd

(HL, 1969

• FACTS: The complainants — Manchester Diocesan Council of Education — called

for tenders relating to property. The defendant — Commercial and General
Investments Ltd — submitted a tender offer to buy the property from the
complainants.
• It was stated that the acceptance of tender would be notified to the person by a
posted document and to the address that was to be given in the tender
• The complainants decided to accept the tender given by the defendants
• They sent their acceptance of the tender. However, they sent the document to
the defendant’s solicitor and not the address given on the offer. Later on, the

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 complainant sent another acceptance to the defendant’s address detailed on the
tender.
• I SSUE : Whether there was a contract between the complainant and defendant. There
was also a question of if there was a mandatory form of acceptance indicated by the
complainants.
• HELD: There was no prescribed or mandatory method for acceptance of a tender
• If the offeror wanted to create a mandatory acceptance method, this would need
to be made clearly and explicitly to the other parties
• An equally effective method of acceptance would be enough to form a valid
contract.

Barrick v Clark (SCC, 1951)

• FACTS: Offer to buy land. There was a counter-offer, which killed the original offer.
The offerer was away when the counter-offer arrived. Ultimately, the counter-offer
was accepted. But in the interim, the land was sold to a third party.
• ISSUE: Whether too much time had passed between the offer made, and the
acceptance of that offer
• RATIO: If no time is stipulated in the offer, then the offer is impliedly withdrawn
after a “reasonable amount of time.”
• Factors to be considered for what amounts to “reasonable amount of time”:
(i) How much money is involved in the transaction and is the item hard to sell;
(ii) Look at the normal character of the transaction in question. If we are dealing
with land and it is valuable, and there is a lot of money involved, then it is
presumably okay to extend the time for “reasonable amount of time”;
(iii) It is critical to look at important deadlines in the offer;
(iv) Look at the conduct of the parties — was there a continuing intention to
extend that offer?

3. COUNTER-OFFER

Livingstone v Evans (Alberta Supreme Court, 1925)

• RATIO: A counter-offer kills the original offer

4. SUBSTANTIAL CHANGE IN ITEM BEING OFFERED

Reitzel and Ridgecott Manufacturing (1985)

• FACTS: Before the expiration of the offer, the subject building was destroyed in a
fire. Both parties knew what happened. The vendor did NOT revoke the offer and
the buyer still wanted the offer.
• ISSUE: Was there a contract even though the subject building, which is a material
part of the contract, destroyed?
• HELD: No, there was no contract because there was an implied condition in the
offer. That is, the subject matter of the offer would still be in existence when the

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 offer was accepted (as in, the building). The vendor did not revoke the offer even
after the subject matter of the offer was destroyed. Why? Well, because once the
subject matter of the offer was changed, there was simply no offer to accept.
• RATIO: If goods are destroyed, or there is a substantial change to them, any offer to
buy, or any offer to sell, is simply not in motion anymore.

REVOCATION OF ACCEPTANCE

SECTION 5, The Contact Act, 1872

An acceptance may be revoked at any time before the communication of the acceptance
is complete as against the acceptor, but not afterwards

• As in, in Bangladesh, you can revoke the acceptance of an offer AS LONG AS the
acceptance of the offer has not reached the offeror
• But, once the offerer has received acceptance, it is a valid contract

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